A Brief Guide to the Proposed European Unified Patent Court (UPC)
What is the UPC?
The UPC is a proposed European patent court system able to give a single decision covering multiple EU countries. At present, European patents can only be enforced country-by-country using national court systems. The aim of the UPC is to simplify and reduce the cost of patent litigation in Europe.
When will the UPC arrive?
The UPC will start to operate once at least 13 countries have ratified the agreement setting up the court. This is expected to happen sometime in 2015 or 2016, although it is hard to say with any certainty given that referendums are required in some countries before the agreement can be ratified.
How many countries will the UPC cover?
It is currently expected that the UPC will eventually cover 26 countries, which are the EU countries minus Spain and Poland. However, we do not expect all of these countries to have ratified the UPC agreement on day one so there will probably be a smaller number of countries involved at the outset. All of France, Germany and the UK must have ratified the agreement for the UPC to start operating.
Which patents will the UPC deal with?
The UPC will cover all of the new unitary European patents, which will become available at the same time as the UPC begins operating. The UPC will also cover existing European patents (which are in effect bundles of national patents), except for patents that the patentee has asked to be opted out of the new court system.
Patentees will be able to opt their existing European patents and pending applications out of the UPC system by filing a written request and paying an opt out fee (yet to be fixed). Opted out European patents will continue to be dealt with by the national court system. We expect to handle such opt out requests for our clients on a regular basis. For at least the first seven years of the UPC, patentees will have a choice between the current court system and the UPC.
What will the effect of the UPC be?
The UPC will enable patentees to obtain injunctions and damages covering a much larger market than under the current national court system with a single court action. However, it will also allow patents to be revoked in multiple countries simultaneously via a revocation action at the UPC. The new system presents patentees with both opportunities and risks.
It is yet to be seen how patent-friendly the UPC courts will be. Only time will tell how the decisions of the UPC will differ from the established case law of the various national patent courts, case law which itself varies significantly across Europe. It is also possible that different local courts of the UPC will differ in their approach, although the existence of a central appeal court should ensure harmonisation over time. It is intended that patent law will gradually become more uniform and predictable across Europe as a result of the new system.
Given the size of the market covered by the court’s jurisdiction and the flexibility offered by the opt-out, the UPC offers a great opportunity for patentees to enforce their patents more effectively across Europe.
Where will the UPC be based?
The court structure as a whole is complex and there will be local and regional divisions of the UPC spread across Western Europe, in addition to three central divisions. For example, the UK will have a local division based in London as well as part of the central division, and a group of Scandinavian countries may join to form a regional division working in English.
The central divisions of the UPC will be divided between London, Paris and Munich. London will hear chemical and life sciences cases, whereas Paris will hear cases in the fields of electronics and physics. The Munich division will hear cases in the field of mechanical engineering.
The rules for deciding the appropriate location for hearing a given action are complicated. The basic premise is that the location will be determined based on the type of action, with local and regional divisions hearing infringement actions and the central divisions hearing revocation (invalidity) actions. For infringement actions, the division will either be based dependent on where the defendant is located or will be where the infringement of the patent occurred. Where several appropriate divisions are available, the claimant will be able to choose where to start an action. Obtaining good legal advice will be more important than ever when deciding whether to bring an action and in which division.
What needs to be done in preparation?
The UPC start date is likely to be at least two years away and various important features of the court system are yet to be finalised, such as the fees. 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.
The first decision that will need to be made in relation to the UPC is which patents to opt out of the new system. This will involve assessing the balance between the risk of a patent being revoked for a large part of Europe in one go and the potential benefit of an infringement decision covering multiple countries. Patents with strong validity and the potential to be infringed in several countries would tend to benefit more from the new system, whereas weaker patents and those that are too important to risk losing may be better opted out.