Costs of litigation under new unified patent court framework not sufficiently clear, warns policy think tank

Out-Law News | 10 Mar 2014 | 2:40 pm | 5 min. read

Businesses may be put off from defending their patent rights under a new court framework being developed due to uncertainties over the cost of litigation, an EU consultative body has warned.

The European Economic and Social Committee (EESC) said that the structure of a new unified patent court (UPC) system being created among 25 EU member states was "confusing" and suggested that the various stages of litigation that businesses could become embroiled in could "undermine the defendant's rights to have access to justice".

The EESC is a body that consults on EU policy making. Its members include representatives from employers' organisations, trade unions, consumer groups and professional associations.

"The fact that the total amount of court fees payable cannot be known in advance may inhibit a defendant from taking action through UPC to defend his rights," Henri Malosse, president of the EESC, said in a new opinion the body has issued. "This may undermine the defendant's rights to have access to justice."

A new UPC system is expected to become operational alongside a new unitary patent regime next year. The UPC system will see local, regional and central divisional courts hear disputes about the validity and infringement of unitary patents. Unitary patents are protections businesses will soon be able to obtain for their inventions that will apply across 25 of the EU's member states. Italy and Spain have objected to the plans and Croatia, a new joiner to the EU last year, has not yet signed up to participate in the unitary patent regime.

Under the new framework, businesses will be able to obtain unitary patent protection across all of the participating countries by filing just a single patent application at the European Patent Office (EPO). A complex range of legislation, agreements and rules needed to make the new regime operational has either already been created or are in the process of being finalised.

Two separate legislative proposals on the terms of unitary patent protection and the language regime to be adopted for the filing and processing of unitary patent applications have already received EU backing, however others changes to EU laws on jurisdictional matters and procedural rules for the operation of the UPC have yet to be finalised.

In addition, before the framework can be finalised and unitary patent protection can become reality, at least 13 EU member states, including the UK, France and Germany, must ratify an agreement reached on the formation of the UPC in February 2013.

Under the agreement, London would be the base for a new central division of the unified patent court and would be responsible for handling disputes relating to pharmaceutical patents. The other central divisional courts would be based in Paris and Munich where judges would deal with disputes over unitary patents covering industrial processes, and mechanical engineering respectively, among other things. The Court of Justice of the EU in Luxembourg is to become an appeal court for the disputes.

Austria became the first EU member state to ratify the February 2013 agreement at the end of August last year. In a progress report last month, the European Patent Office (EPO) confirmed that France and Malta have completed "the relevant parliamentary procedures" necessary for ratifying the agreement in future and that "preparations for ratification are also well under way in Belgium and the UK". Denmark is scheduled to hold a national referendum to determine whether to ratify the agreement in May.

Earlier this week the European Commission announced that Sweden, Lithuania, Latvia and Estonia had agreed to set up the first regional division of the UPC.

"The creation of a regional division will allow resources to be pooled most effectively while providing the necessary proximity to the parties," Michel Barnier, the EU's commissioner for the internal market, said on Tuesday.

Changes to the EU's Brussels Regulation, which would acknowledge the jurisdiction of the UPC and ensure its judgments have legal effect, have been agreed on by MEPs and EU Ministers. However, the changes have yet to be formally approved.

According to a document detailing the outcome of a meeting of justice and home affairs ministers from across the EU earlier this week, "lawyer-linguists" within the European Parliament are in the process of reviewing the agreement on the Brussels Regulation reforms. Following the conclusion of the review, MEPs will adopt the agreements in April and the Council of Ministers will then adopt the text in June, it said.

In its opinion, the EESC said it had identified an apparent contradiction in the wording of the February 2013 UPC agreement and the proposed rules of procedure of the UPC around how the issue of different languages used by parties in disputes is to be addressed. It called for specific wording within the draft procedural rules to either be "deleted or substantially modified" to address its concerns. The 16th draft of the rules of procedure (143 page / 1.54MB PDF) was published earlier this week.

"[The UPC agreement] gives the parties the right to agree on the language of proceedings subject to the approval of the competent panel while [the proposed rules of procedure of the UPC] states that 'the statement of claim shall be drawn up in the language in which the defendant conducts its business in its contracting member state'," the EESC opinion said.

In addition, the EESC stressed the need for "high professional training" of judges who will adjudicate on disputes under the new UPC system. 

"The success of the unified patent court depends greatly on the quality of the selected judges," the EESC said. "Though coming from different member states and with greatly varying experiences due to the many differences in member states' procedural systems, judges must follow the new unified patent court procedures. The quality and depth of training of appointed judges is therefore very important for the success of UPC not only on applicable new rules of procedure, but also in terms of language capabilities that are essential for the court."

In a blog post last month, however, EPO president Benoît Battistelli sought to allay fears about the quality of UPC judges.

"[In March 2014], the training centre for UPC judges will open in Budapest," Battistelli said. "This is a key element in the UPC project, and the EPO, with its long experience in training specialist patent judges, will be doing everything it can to support the new centralised jurisdiction in this respect. Another very positive element is the fact that more than 1,300 candidacies have been sent to the body in charge of selecting the future UPC judges. So there are all reasons to believe that those judges will be fully qualified and experienced."

Patent law expert Adrian Murray of Pinsent Masons, the law firm behind Out-Law.com, said that there are a number of other major issues to be ironed out before the unitary patent regime could be introduced.

"Among the issues yet to be decided upon include the cost of renewing unified patents," Murray said. "The circumstances in which preliminary injunctions will be awarded by the regional divisional courts is also still unresolved. Until these and other major facets of the new regime are clarified, there will continue to be consternation and uncertainty among businesses, as demonstrated by a range of major companies such as Google, Microsoft, Apple and Samsung in a recent open letter.”