A Brief Guide to the Proposed European Unitary Patent (UPC)
What is the Unitary Patent?
The ‘European Patent with unitary effect’ (or, more simply, the ‘Unitary Patent’) is a single patent which will cover all participating states of the EU. Most EU Member States have agreed to participate in the Unitary Patent, with the notable exceptions of Spain and Italy.
Unitary Patents will be granted by the European Patent Office (‘EPO’) in the same way as a classical European Patent under the current system using the rules and procedures of the European Patent Convention (‘EPC’).
How does the Unitary Patent differ from the current system?
At present, under the European Patent Convention (‘EPC’) the European Patent Office (‘EPO’) searches, examines and grants patents by way of a single procedure. Once granted, a European Patent is then treated as a bundle of separate national patents, each requiring validation in the European states selected by the owner to ‘switch on’ the patent in the respective states. A European patent may cover up to 38 European states.
This validation procedure can be costly, and each validation requires the payment of annual renewal fees to the relevant national patent office.
Under the Unitary Patent system, the EPO will continue to search, examine and grant patents by way of the same single procedure.
However, when the patent is granted, the applicant will be able to choose between obtaining the ‘usual’ bundle of national rights, or the single Unitary Patent covering all Unitary Patent participating states. There will be a deadline of one month for making this choice. If the patent is registered as a Unitary Patent, one single renewal fee for the Unitary Patent will be payable annually to the EPO.
If the applicant chooses a Unitary Patent, they will continue to be able to choose countries not covered by the Unitary Patent in the usual way.
Importantly, the Unitary Patent system will exist in parallel with the current system, so it will still be possible to choose national validations for all countries instead of choosing a Unitary Patent.
When will the Unitary Patent arrive?
It is not yet clear when the Unitary Patent will come into force.
At present, there are European regulations in place which cover the Unitary Patent, but these regulations will not come into force until the Agreement on a Unified Patent Court is ratified by at least 13 participating states (including the UK, Germany and France).
In addition, Spain has launched two as yet unresolved challenges against the Unitary Patent regulations at the Court of Justice of the European Union. The court hearing for both cases took place on 1 July 2014, and these cases may delay the introduction of the Unitary Patent.
How many countries will the Unitary Patent cover?
At present, it appears that a Unitary Patent will eventually cover all EU member states, except for Italy and Spain. Additionally, there are presently doubts as to whether Poland will ratify the legislation.
It is worth noting that the list of member states of the EU is not the same as the list of EPC contracting states. It will, however, be possible to obtain both a Unitary Patent and ‘standard’ European Patent validations to cover EPC contracting states that are not EU member states (and member states which are not participating in the Unitary Patent).
Ratification of the legislation may also be a gradual process, with it being possible for as few as thirteen member states (including at least France, Germany and the UK) to be covered by the Unitary Patent to begin with. This may necessitate a filing regime which uses a combination of national validations alongside a Unitary Patent.
What are the translation requirements for the Unitary Patent?
As with the current European Patent system, it will continue to be a requirement that a translation of the claims be filed before grant. The translation of the claims must be filed in the two official languages of the EPC which were not used during prosecution. As an example, if the patent was prosecuted in English, it would be necessary to file French and German translations of the claims.
Further, there are transitional provisions for additional translations which may last for up to twelve years. Under the transitional provisions, if the application was prosecuted in English, a translation of the whole specification must be filed in an official language of one of the other participating EU member states (not including Italian or Spanish). Applicants may, however, choose one of the cheaper languages for the required translation to reduce costs.
Once a ‘high-quality machine translation’ system has been implemented fully, the requirement to file full translations of Unitary Patents will cease.
What will the costs of the Unitary Patent be?
The cost implications of the Unitary Patent can be divided into two categories – grant and translation costs, and renewal costs.
Grant and Translation Costs
As stated in the section above, there will continue to be a requirement for the claims of the granted patent to be filed before grant. The pre-grant translation requirements for a Unitary Patent will effectively mirror those of the EPC system, so the cost of obtaining pre-grant translations will remain at a similar level when the Unitary Patent comes into force.
The EPC system of granting European Patents is rather ‘back-end’ weighted, with much of the associated cost being borne at the grant stage, when the patent is validated. At the grant stage, the cost of validation of a European Patent is based largely on both the length of the specification and the EPC contracting states selected for validation.
As an example, a patent having a specification of average length can cost in the region of €30,000 to validate in all of the EPC states. Of course, if validating in fewer states, this cost will be lower. For that reason, applicants commonly only validate in three or four states.
A significant portion of the cost of validating a European patent is the cost of obtaining translations. The overall cost of translations during validation has been reduced since the implementation of the London Agreement, but many EPC states still require a full translation of the specification to be filed as part of the validation process.
It is likely that the Unitary Patent will significantly reduce the costs incurred at the grant stage where many countries are validated, as the requirement for multiple translations of the entire specification will be not apply.
If protection is only required in countries that have signed the London Agreement (including the UK, France, and Germany), the costs associated with a Unitary Patent may be significantly higher than obtaining protection in these countries using the more ‘traditional’ EPC route. However, for filing regimes that cover much of Europe, the Unitary Patent will likely be more cost effective than using national validations.
It is important to bear in mind that if protection is required in Spain and Italy, this will be additional to the Unitary Patent, and owing to the full translation requirement in both places, is relatively expensive.
A single renewal fee for a Unitary Patent will be payable annually to the EPO. The cost of Unitary Patent renewal fees is not yet known. The annual renewal fees for a Unitary Patent are expected to be equal to the current cost of renewing a European patent in around four or five EPC contracting states.
Where a Unitary Patent has been obtained, it will not be possible to stop paying renewal fees for European Union member states that are not of interest to reduce the renewal fee payable – the Unitary Patent designation will cover all participating member states and will carry one set renewal fee. This is less flexible than the system of national validations.
If protection in fewer than four or five EPC contracting states is required, it may be more cost-effective to pursue protection in these countries using the traditional EPC route. It is important to bear in mind that, if protection is required in Spain and Italy, this will have to be using the EPC system and renewal fees (in addition to the Unitary Patent renewal fee) will be payable to the national patent offices in these countries.
What will the effect of the Unitary Patent be?
In essence, the Unitary Patent aims to provide a simple ‘one stop shop’ for patent protection in Europe. It will offer a single patent right covering almost all of the European Union with simpler post-grant procedures and a single annual renewal fee.
Under the present system, after the nine-month opposition period has expired, the individual European Patent validations may only be attacked separately before the respective national courts and may not be ‘knocked out’ centrally. In the same way, damages and injunctions for successful infringement actions can only be awarded on a country by country basis.
A Unitary Patent, however, may be attacked centrally. If successful, a central attack will result in the loss of the whole patent across all member states, as opposed to losing a single national right. In the same way, however, if an infringement action is successful, damages and injunction covering all participating member states may be awarded.
Thus, the Unitary Patent has the advantage that injunctions and damages of much larger territorial scope can be awarded with much cheaper litigation and the disadvantage that all patent rights can be lost in a single court action. Since the Unified Patent Court has not yet been established, it is impossible to say how patent friendly it will be compared to the various national courts.
Before which Patent Office will applications for Unitary Patents be prosecuted?
The EPO will to search, examine and grant patents in the usual way, with the Unitary Patent being ‘designated’ on grant of the European Patent. Infringement and validity issues relating to Unitary Patents will be heard before the [link to UPC details page]Unified Patent Court [/link] (‘UPC’).
Which Court will have jurisdiction?
The Unified Patent Court (‘UPC’) will have sole jurisdiction over the enforcement of Unitary Patents.
The UPC will hear all actions which relate to the infringement and validity of Unitary Patents, issues relating to SPCs, revocation actions, actions relating to provisional protection, matters relating to damages awarded under provisional protection and the like, matters relating to injunctions, and actions against EPO decisions which relate to Unitary Patents.
It is intended that by providing a single court for enforcing patents across all member states, the process for enforcement of Unitary Patents will be both streamlined and cost-effective.
What needs to be done in preparation?
The roll-out date for the Unitary Patent is unlikely to be before 2016, and there are still a number of aspects of the Unitary Patent that are yet to be finalised, including the official fee structure.
It is still too early to make any definite decisions but it is worth considering how the new system might influence patent filing strategy and existing portfolios. Key considerations will include cost and the balance between the risk of central invalidity actions and the reward of wide ranging injunctions and damages awards.
The Unitary Patent and the UPC will potentially have a large impact when they come into force. Further details on the UPC can be found here.
Further information and links