Unified Patent Court
A Brief Guide to the Proposed European Unified Patent Court (UPC)
What is the UPC?
When will the UPC arrive?
The agreement was set to come into force once 13 member states including the three states (UK, France and Germany) in which the highest number of European patents had effect in 2012 had ratified it.
Until July 2020, only Germany needed to ratify the agreement for it to come into effect. However, on 20 July 2020, the UK announced its official withdrawal from the UPC agreement.
The UK will leave the transitional arrangement with the EU at the end of 2020 and, in theory, the agreement should come into effect if Germany ratifies. But, due to the withdrawal of the UK, it is unclear if the UPC can come into effect without amendment of the UPC agreement.
Therefore, it is now uncertain when the UPC will come into force.
In Nov 2020, the German parliament approved the UPC bill (required for Germany to ratify the UPC) to committees for consideration. The remaining steps necessary for the act to be put into effect ing Germany are a countersignature by the Federal Government and the signature of the Federal President, followed by the publication in the Federal Law Gazette (by which the law enters into force). However, two constitutional complaints were filed in Dec 2020, which may delay or even prevent the legislation coming into force.
How many countries will the UPC cover?
There are currently 24 UPC participating EU Member States: Austria, Belgium, Bulgaria, Cyprus, the Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Latvia, Lithuania, Luxembourg, Hungary, Malta, the Netherlands, Portugal, Romania, Slovakia, Slovenia and Sweden.
The UPC was intended to cover all the EU Member States, but Spain, Poland and Croatia have not participated to date.
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 request. There will be no associated opt out cost. 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 UPC will comprise: a Court of First Instance, a Court of Appeal, and a Registry. The Court of First Instance will be composed of a central division and several local and regional divisions. The central division will be split between different countries based on the technical fields of the cases it will hear.
The central division based in Munich will hear cases in the field of mechanical engineering and the central division based in Paris will hear cases in the fields of electronics, software and physics. The central division based in London was due to hear chemical, metallurgical and life sciences cases. However, following the withdrawal of the UK from the UPC agreement, the London central division will be relocated (possibly to Italy or the Netherlands).
At present, it seems likely that there will be a local division in at least Germany, France, the Netherlands and probably Belgium and Italy, and a regional division based in Stockholm (covering Sweden, Lithuania, Estonia and Latvia). The Court of Appeal will be located in Luxembourg.
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 either will be based 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 uncertain, 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.
Opting out would require filing of a request to the UPC (assuming no litigation has started in the UPC already). An opt-out must be authorised by all the applicant(s)/proprietor(s) of the EP patent to be effective and the request can be made by the applicant(s)/proprietor(s) or their patent attorney. You can change your mind about opting out by withdrawing the opt-out at any time (assuming no litigation has started in the UPC already), but it will not be possible to opt out again.
Further information and links