OUT-LAW GUIDE 15 min. read
25 Jan 2023, 11:15 am
The European patent landscape is set to change significantly later this year as the unitary patent and Unified Patent Court (UPC) are introduced.
Here is everything you need to know about unitary patents, the UPC and how the new patent system will impact your business.
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The new patent regime in Europe
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The European patent landscape will change significantly in 2023 with the introduction of the unitary patent and Unified Patent Court (UPC).
The unitary patent will provide patent protection in all participating states, with a single patent registration, without the need for national validation.
The UPC will provide a one-stop shop for patent litigation throughout a large part of Europe.
The unitary patent and UPC system is expected to become operational on 1 June 2023. Transitional measures, during which applicants may file early requests for unitary effect and requests to a delay issuing a decision to grant a European patent with the European Patent Office (EPO), took effect on 1 January 2023. The period in which proprietors of classic European patents (EPs) may opt out of the jurisdiction of the UPC, known as the ‘sunrise period’, is planned to start on 1 March 2023.
The target start date for the UPC to become operational is 1 June 2023, but this is subject to certain actions which are due to be undertaken by Germany. The UPC will only enter into force three months after Germany formally deposits its ratification of the underlying Unified Patent Court Agreement (UPCA) with the European Council. Germany will only do so as soon as the UPC is expected to be functional. This timescale may therefore be subject to change, although the UPC itself has indicated that no further delays are expected.
The UPC is a new European court that will have exclusive jurisdiction for disputes relating to infringement and validity of unitary patents and classic European patents, for participating member states, which have not been "opted out" of the new system. The UPC will not have any competence to hear cases concerning, or rule on, national patents. UPC litigation will therefore sit alongside, rather than replace, national patent litigation.
For classic European patents that have not been opted out, there will be a dual jurisdiction in the transition period, and an election can be made by the claimant as to where to bring proceedings i.e. in the national courts or the UPC. After the transitional period, the dual jurisdiction will be removed, and all classical European patents which designate participating member states will become subject to the exclusive competence of the UPC unless they were opted out during the transitional period.
While a unitary patent cannot be opted out of the exclusive jurisdiction of the UPC, patentees will need to make positive decisions as to whether to opt classical European patents out of the system. Opt-outs are possible during the transitional period of seven years, which may be extended to 14 years. If opted out, the UPC will have no jurisdiction and the patent will be subject to the exclusive jurisdiction of the national courts.
Once notified and registered, an opt-out takes effect for the European patent for all participating member states where the patent has been validated. An opt-out normally remains in force for the lifetime of the European patent, unless the proprietor withdraws it. A unitary patent cannot be opted out of the exclusive jurisdiction of the UPC.
The choice as to whether to opt out a classical European patent can be made as soon as the ‘sunrise period’ – the three-month period between the final instrument of ratification being deposited, and the UPC opening its doors – commences, to one month before the end of the transitional period. The sunrise period is planned to commence on 1 March 2023.
An opt-out application must be signed, and not just registered, by all proprietors of a patent for all European Patent Convention (EPC) states for which the EP has been granted or the application designated. If a supplementary protection certificate (SPC) has been granted, the proprietor of the SPC, if different, must also sign the opt-out application. This is not required if the SPC application is still pending. Licensees do not have the right to opt out, unless the licence agreement states otherwise.
An opt-out may be withdrawn from the UPC’s jurisdiction at any time as long as proceedings regarding that European patent, European patent application or SPC have not been commenced in the national courts. An opt-out can only be withdrawn once. A European patent, European patent application or SPC which is the subject of an application to withdraw an opt-out cannot be opted out again.
At present, inventions can be protected in Europe either by national patents, granted by the national intellectual property authorities in EU countries or by European patents granted centrally by the European Patent Office (EPO). The new European patent with unitary effect, or ‘unitary patent’ , will provide businesses with new choices as to how and where to best protect their innovations. The unitary patent will co-exist with, and be an alternative to, national patents and classic European patents. It will provide patent protection in every EU country that participates, with a single patent registration, without the need for national validation.
The prosecution does not differ from the classic European patents and is via the EPO. The prosecution of a unitary patent will be the same as a European patent; within one month of the grant, the applicant can decide to convert the patent into a unitary patent. Once a positive decision has been made to convert the patent into a unitary patent, the proprietor no longer needs to validate the patent nationally, and only needs to pay a recurring fee to the EPO. Once unitary effect is established, it will no longer be possible to drop certain country designations over the lifetime of the patent.
Despite the name, a European patent does not result in one patent that is effective over the whole of Europe. Instead, while one single application is made to the EPO, the applicant can choose to obtain patent protection through a single application in up to 38 European countries that have acceded to the European Patent Convention (EPC). The EPC is not part of the EU, but all current members of the EU are members of the EPC. A European patent is therefore essentially a bundle of national patents, which is enforced before national courts, which may lead to different decisions across Europe.
The unitary patent will coexist with, and be an alternative to, national patents and classic European patents. In contrast to classic European patents which it will provide patent protection in every EU country that participates, with a single patent registration, without the need for national validation. The UPC is a new European court that will have exclusive jurisdiction for disputes relating to infringement and validity of unitary patents. In other words, unitary patents will only be enforced via the UPC. Decisions of the UPC will have effect over all participating member states.
In contrast, classic European patents that have been opted out of the new system will continue to be enforced nationally. For classic European patents that have not been opted out, there will be a dual jurisdiction in the transition period, and an election can be made by the claimant as to where to bring proceedings: the national courts or the UPC.
The geographical scope of the unitary patent will eventually cover all the 25 EU member states that have joined the enhanced cooperation in the creation of unitary patent protection. To be covered by the unitary patent, a member state must not only be participating in this enhanced cooperation but must also have ratified the Agreement on a Unified Patent Court (UPCA) when the unitary patent is registered.
The 25 states participating in enhanced cooperation to bring about the Unitary Patent system are: Austria, Belgium, Bulgaria, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Sweden.
The 16 states in enhanced cooperation which already ratified the Agreements and will participate in the Unitary Patent and UPC when it starts are: Austria, Belgium, Bulgaria, Denmark, Estonia, Finland, France, Italy, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Portugal, Slovenia, Sweden. Germany will make this 17 once it deposits its instrument of ratification of the UPCA, which will trigger the start of the new unitary patent and UPC system.
Following Brexit, the UK has withdrawn from the unitary patent and UPC system. Switzerland and Norway are not members of the European Union and therefore cannot participate in the unitary patent system.
SPCs based on unitary patents are possible. A SPC based on a unitary patent cannot be opted out. The Commission has invited evidence to help shape a proposed new regulation that would establish a new unitary SPC and a unified procedure for granting national SPCs. The consultation closed on 5 April 2022, but so far no further updates are available. However, the responses to the consultation broadly indicate support for the proposals for a unitary SPC and a streamlined application and enforcement process.
Yes, unitary patents supplement the existing patent system and do not replace it.
The Unified Patent Court (UPC) is an international court set up by contracting EU member states to deal with both unitary patents and classic European patents, thereby creating a single hub which enhances legal certainty and endeavours to end costly parallel litigation.
The UPC will consist of a Court of First Instance, a Court of Appeal, and a Registry. There will also be a Patent Arbitration and Mediation Centre, and a Training Centre. The Court of First Instance will be divided into local, regional and central divisions. Which division of the Court of First Instance proceedings will be in depends on a number of factors, including whether the claim is for infringement or invalidity, where the infringement has taken place or where the infringer is based and the type of technology.
The central division will have its seat in Paris, with a section in Munich. The Paris seat will have competence for performing operations, transporting, textiles, paper, fixed constructions, physics, software and electricity and the Munich section for mechanical engineering, lighting, heating, weapons, blasting cases. Human necessities, including pharmaceuticals and life sciences cases, along with chemical and metallurgical cases, were due to be heard in London. Following Brexit, and the UK’s withdrawal from the unitary patent and UPC system, however, it is likely that this seat will be relocated, with Milan the most probable destination. Until an official decision is made, it appears that the relevant cases will be distributed between Paris and Munich.
The Court of Appeal will be located in Luxembourg. When a question of interpretation of EU law arises, the UPC will send a request for a preliminary ruling to the Court of Justice of the European Union (CJEU).
The language of proceedings – the language of any written pleadings and communications, and of the oral hearing and judgment – will depend on the court and the division. At first instance, in the local and regional divisions the language will be the official language, or one of the official languages, of the member state hosting the local or regional division. In the central division, proceedings will be in the language in which the patent was granted: either English, French or German.
The language of proceedings before the Court of Appeal will be the language of proceedings before the Court of First Instance. There are, however, certain exceptions to the rules, for example, the parties may agree to use the language of the patent in the Court of First Instance as well as the Court of Appeal.
If the local or regional division provides a choice of language a claimant may choose which language it wishes for proceedings to be conducted in. However, if the defendant to the relevant claim only conducts its activities in one member state, and that member state has more than one official language, the claimant must start proceedings in the language of the region where the defendant has its principal place of business or is domiciled.
The UPC will have both legally qualified judges and technically qualified judges. Legally qualified judges will be qualified for appointment to judicial office in a contracting member state. Technically qualified judges will have both a university degree and proven expertise in a technological field. They must also have knowledge of civil law and procedure relevant to patent litigation. Both types of judge will be a national from a contracting member state. They must have experience in the field of patent litigation and speak at least one official language of the European Patent Office.
The UPC judicial panel will have a multinational composition and each case at first instance will be heard by three legally qualified judges. Any panel of the Court of Appeal will sit in a multi-national panel of five judges – three legally qualified judges who are nationals of different participating member states and two technically qualified judges.
If an infringement action and a counterclaim for invalidity are brought before the central division of the UPC, both infringement and validity will be dealt with together. However, if an infringement action and a counterclaim for invalidity are brought before a local or regional division of the UPC, then there are three options for the local or regional division:
Referring the counterclaim to the central division would effectively result in bifurcation of the proceedings. This has been a controversial topic during the UPC preparations, as while patent proceedings are bifurcated in Germany, in other jurisdictions like France, Ireland or the Netherlands one court hears both infringement and validity issues. In reality, bifurcation is likely to be limited. Appeals against separate decisions on infringement and validity proceedings can be heard together by the UPC’s Court of Appeal.
The UPC has the power to grant provisional measures, including preliminary injunctions, seizure or delivery up of goods suspected of infringing a patent to prevent their entry into or movement within the channels of commerce, precautionary seizure of moveable and immoveable property, including blocking of bank accounts and other assets and interim costs awards.
Parties are required to inform the UPC of any pending EPO opposition proceedings, and any requests for accelerated processing before the EPO. The UPC may itself, or at the request of a party, request that EPO proceedings be accelerated and may stay the UPC proceedings if a rapid decision is expected from the EPO.
UPC litigation is intended to be quicker and cheaper than multiple national litigations, the aim being that first instance decisions, on both infringement and validity if in issue, should be handed down within 12 to 14 months of proceedings being commenced.
Depending on the facts, more than one division may be competent, which allows for a certain amount of choice as to in which division a party may choose to bring an action. Claims for infringement, provisional and protective measures and injunctions, damages or compensation derived from provisional protection or prior use shall be brought before either the local or the regional division in the certain member state.
Revocation or declaration of non-infringement claims will normally be brought before the central division unless an action for infringement of the same patent between the same parties has already been brought before a local or regional division.
A respondent to a proceeding may lodge a preliminary objection to the jurisdiction and competence of the UPC or the competence of the division where the claim has been brought, within one month of service of the statement of claim.
Claims for infringement, provisional and protective measures and injunctions, damages or compensation derived from provisional protection and/or prior use shall be brought before either the local or regional division of the member state:
If neither of the above apply, or the member state does not have a local or regional division – if, for example, the defendant is domiciled outside the UPC territories – then the proceedings will be before the central division.
Claims for revocation or non-infringement will normally be brought before the central division, unless an action for infringement between the same parties and for the same patent has already been brought before a local or regional division, in which case these actions may only be brought before the same division again. Where a counterclaim for revocation is filed responding to a claim for infringement, the local or regional division can:
An exclusive licensee is entitled to bring actions before the UPC, except where prohibited by the licence agreement. A non-exclusive licensee is not entitled to bring actions before the UPC unless expressly permitted to do so by the licence agreement. In both cases, the proprietor of the patent must be given prior notice and shall be entitled to join the action.
The validity of a patent cannot be contested in an action for infringement brought by the holder of a licence where the patent proprietor does not take part in the proceedings. The party in an action for infringement wanting to contest the validity of a patent shall have to bring actions against the patent proprietor.
Court fees before the UPC comprise fixed fees and value-based fees. Infringement actions and actions for a declaration of non-infringement will have fixed court fees of €11,000. The fixed fee for revocation actions is €20,000. Value-based fees are determined according to a rising scale for infringement and declaration of non-infringement claims with a value of more than €500,000. The minimum value-based fee is €2,500 on an action with a value of up to €750,000, with the maximum value-based fee being €325,000 for actions with a value of more than €50 million. Value-based fees will not apply to revocation actions or counterclaims.
In the UPC, a successful party may recover reasonable and proportionate legal costs. However, there is a ceiling on recoverable costs, which is subject to the value of the claim, with the maximum award of recoverable costs being €2m for a case valued at more than €50m. The ceiling may be raised in particularly complex cases but cannot exceed a maximum of €5m. Upon request by a party, the UPC also has a discretion to lower the ceiling if the amount of recoverable costs would threaten the economic viability of the requesting party, particularly if that party is a university, non-profit organisation, university, public research organisation or natural person.
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