Are you creating a global patenting plan that includes the European market? Then it’s time to introduce the Unitary Patent (UP) and the Unified Patent Court (UPC) in the latter half of 2022 or the first half of 2023.
The proposal to create a patent having a unitary effect throughout the European Union (EU) will shortly materialise after many years of work, uniting all member states under a single international jurisdiction: the UPC. Assuming that further EU countries ratify the UPC Agreement in the coming years, Germany will rapidly do so, bringing the total number of participating EU nations to 17. Spain, Croatia, and Poland have decided not to participate.
Any patent issued by the European Patent Office (EPO) by the provisions of the European Patent Convention (EPC) shall be eligible for this unitary effect. Thus, UPs will act as a new form of protection in Europe, comparable to national and “traditional” European patents (EPs). The Court will initially serve as a new venue for the enforcement of patents issued by the EPO, with jurisdiction over Austria, Belgium, Bulgaria, Denmark, Estonia, Finland, France, Germany, Italy, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Portugal, Slovenia, and Sweden.
Four months after Germany submitted its instrument of ratification to the European Council, the UPC is looking to start operations. When this happens is still a mystery. However, it is still conceivable that the UPC may commence by the end of 2022 or the beginning of 2023. Thus European patent applicants should immediately complete their strategic choices regarding this new system.
The “sunrise period,” which begins three months before the UPC Agreement goes into effect, will allow for some measures, making these choices crucial. The UPC system will eventually be fully operational following a seven-year transitional period, which may extend to 14 years.
The new possibilities are made possible by unitary patents.
Owners of European patents may apply for unitary effect as of the UPC’s start date to safeguard their intellectual property rights across all participating member states. Must submit this request within a month following the grant’s mention in the European Patent Bulletin’s publication date. Upon approval of this request, UPs will provide the granted patent’s subject matter uniform protection, granting exclusive rights throughout all UPC member nations.
The first benefit of this new approach is that, after the transitional time, the only translation of the claims into the three official languages of the EPO (English, French, and German) will be necessary. As some EPC nations, including Austria, Italy, and Greece, need a complete specification translation into their national language, this will significantly lower translation costs than EPs.
Another benefit of the UP is that there will only be one annuity fee due following the grant rather than numerous payments made to all states that have ratified the UPC Agreement.
Advantageously, this annuity covers several nations at a cheaper cost than the corresponding EP protection because the sum corresponds to the cumulative yearly maintenance fees of a classic EP in France, Germany, the Netherlands, and the United Kingdom. After establishing the renewal fee, the United Kingdom left the UPC system. However, this had no impact on the cost.
Because the EPC and the UPC Agreement have different geographical scopes, proposing a unitary effect will not replace the EP validation process. Only those participating states that will have ratified the UPC when the application deposit can provide unitary protection. It will become common, if not desirable, to combine unitary protection for EU member states taking part in the UPC with the national validation system of the EPC for non-participating and non-EU situations.
That is especially important given that the unitary effect will not affect the top 10 GDP-producing nations on the continent—Poland, Spain, Switzerland, Turkey, and the United Kingdom. The payment of annuities to each national patent office separately would still be required, and translations would be required to confirm their legality.
Therefore, the UP’s inability to be restricted, transferred, cancelled, or abandoned other than with all participating UPC states will be a severe drawback. It will not be possible to choose the participating jurisdictions’ forum. As a result, some or all of these territories may be free under the UP.
A newly established central patent court
Most crucially, the UPC will be a pan-European court capable of impartially deciding on patent validity and infringement across the majority of the EU. All 24 UPC-participating states, or the present 27 EU member states except Croatia, Poland, and Spain, will ultimately fall under this competence. Despite joining the Preparatory Committee in 2013, the United Kingdom left in 2020.
Regarding infringement claims, revocation claims and counterclaims, provisional measures and injunctions, declarations of non-infringement, proceedings for damages or compensation, and private prior-use claims involving UPs or traditional EPs, the UPC shall have exclusive jurisdiction. The UPC will require more expertise in areas like employee innovation compensation and invention entitlement (apart from as a defence), among others. National courts will continue to have exclusive jurisdiction over national patents, which opens up various tactical options, notably about priority or double-patenting claims. First-application submissions in Poland, Spain, or the United Kingdom can attract attention as a way to get protection early while avoiding costs associated with validation in these nations.
However, it will qualify for the UPC’s exclusive jurisdiction right away. During the transitional period, European patent owners and applicants will have a license to leave the UPC’s exclusive jurisdiction (initially seven years, extendable to 14 years). Unless the “opt-out” is withdrawn or validly challenged, it will be possible to leave the UPC’s jurisdiction for the time of the European or European patent application. After the UPC Registry has registered the opt-out, applicants and owners of classic EPs will be able to file infringement or invalidity lawsuits with the National Court of their choosing, albeit this may result in litigation taking longer than is typical under the UPC. Only during the aforementioned transitory period will people be able to opt-out.
Therefore, opt-out motions are defensive since they protect European patents from being invalidated by a single action at the UPC rather than through country-by-country litigation. Conservative IP rights holders may wish to pursue portfolio-wide bulk opt-outs during dawn shortly.
However, over time, businesses adhering to this strategy will only be able to reap the rewards of the UPC’s prospective advantages. They will also miss the chance to influence European case law by bringing quite powerful patents before the UPC for litigation. That is especially important in light of the likelihood that patentees will fare better in the initial rulings of a brand-new international jurisdiction like the UPC.
A realistic timetable unitary patent
Three months before the UPC opens its doors, European patent owners and applicants should have their patenting plans ready for the dawn period.
The most crucial action will be deciding if we must give an opt-out request for each European patent (application) in a particular portfolio.
Opt-out requests differ from unitary patent effect requests in that applicants and owners may submit them at any point between the start of the dawn period and one month before the conclusion of the transitional period unless legal action has already led the way before the UPC. Opt-outs may also be back if necessary, as long as no legal action has been taken hold of in a national court. It’s important to remember that once a patent chooses to return to the UPC’s jurisdiction, this decision cannot be back.
Applicants can choose between EP, UP, or national patents according to the flowchart below. Additionally, it lists the many ways to request a unitary effect or an opt-out.
The applicant will have a wide range of options whenever a decision to award a European patent is build during the sunrise period:
- Validating their EP(s) without asking for a UPC opt-out
- confirming their EP(s) and asking a UPC opt-out
- By submitting Form 2025, you can ask for a postponement of the decision to grant you a European until the UPC’s first day, allowing for a later choice of alternatives.
- I am submitting and registering Form UP 7000 on the first day of launch to obtain an early unitary patent effect.
Notably, the opting-out mechanism will only be active during the transitional time, even though applications can be particular during dawn. By choosing not to, applicants can keep their patent’s enforcement in crucial locations where it must be individually contested or declared invalid. Furthermore, depending on distinct national judicial systems allows for advanced defence tactics for one or more opted-out EPs. For instance, choosing the UK Patents Court rather than the UPC opens up additional legal alternatives, such as Gillette-style defences or submitting material after the deadline.
In conclusion, with the upcoming implementation of the UPC, all owners of a portfolio of European patent applications should begin determining the best course of action for
- Should we exclude intellectual property rights under European patents?
- Which intellectual property rights in pending European patent applications require “conventional” validation, and which need unitary effect at issuance?
- Which third-party IP rights could restrict freedom to operate after the UPC’s launch? Are European patents that competitors have either been granted or are still pending?
Choosing to stay in versus choosing to opt out is a dilemma.
When during the transitional period should the unitary effect be considered or avoided?
Strategies are rooted in individual case analyses. The centralised enforcement of a UP is unquestionably a compelling justification. They must weigh this choice against the possibility of a competitor successfully attacking the UPC to have a European patent awarded to them cancelled.
Economical restrictions are also necessary when weighing the risks of entering the UPC jurisdiction against the drawbacks of switching to national jurisdictions. By providing a single method for nearly the entire EU, obtaining a UP maximises efficiency if, on the one hand, an applicant has limited resources (R&D money, time, IP management system) to enforce their IP. While this strategy excludes several nations, including Poland, Spain, and the United Kingdom, these regions can still enjoy protection by national patents or traditional EPs.
On the other hand, choosing unitary patent effects depends on whether a company has a sufficient budget to protect its IP rights.
- Compared to rivals, how strong is the portfolio in the desired markets?
- How many critical items are covered by patents?
- Is the portfolio used for royalties, differentiation, or both?
- Which legal options is the right holder willing to seek or confront?
These elements make it possible to develop broad pharmaceuticals, biotechnology, mechanics, and electronics standards.
Protecting the crown jewels: As high-priority assets, pharmaceutical or biotechnological inventions are frequently subject to extensive territorial protection across the European market and are, therefore, possible candidates for legal action. In this context, opting out makes sense because the substantial commercial value of the relevant patents frequently makes up for cost concerns.
Pharmaceutical firms must also consider the possibility that their goods could qualify for supplemental protection certificates (SPCs), extending their patents past the average 20-year lifespan. National patent offices alone presently review, award, and register SPCs. As a result, the validation of traditional EPs continues to be a key tactic because no proposal for extensions based on UPs has succeeded.
Diversification: Applicants may find a balance between opted-out assets – for weaker patents – and UPC protections whenever economic considerations are pertinent, but litigation is less likely. This situation frequently arises in mechanics, electricity, and electronics, and a patent is available in many EPC contracting states, including Germany, France, and Italy. The individual value of a particular European patent may also need to be higher because large corporations in the mechanical and electrical industries frequently protect their products with significant, overlapping portfolios. Revocation actions are also uncommon in these industries. Therefore, whether to opt out of or remain in the UPC system will generally come down to cost-effectiveness.
Wait and see A “wait and watch” may advise strategy in the case of software and telecommunications technologies, where development cycles are frequently shorter. Businesses in this circumstance can maximise their forum-shopping prospects by opting out of most of the IP rights in a given portfolio and then opting back in as needed. Having benefited from a more acute understanding of the business situation, However, there would always be a chance that any IP rights will be subject to national prosecution, making it impossible to return to the UPC’s jurisdiction.
More market awareness: One may anticipate that SMEs would be more ready to take advantage of the UPC than applicants with large portfolios if prices are one of the most critical elements in choosing which strategy to employ. The new system’s maintenance savings and other benefits will benefit startups and SMEs. The advantages for minor applicants are simpler post-grant processes, significantly lower translation expenses, and a decreased administration and annuity workload for the European patent if protection is after in more than three European nations that are a part of the UPC system.
An expert European patent attorney should always be asking when weighing the pros and downsides of leaving or staying in the UPC system.