Thought leadership from our experts

The unitary patent and the unified patents court – at last?

Rowan Freeland, Simmons & Simmons, United Kingdom

The European Unitary Patent and Unified Patents Court (UPC) have been the Godot of European patent law for at least sixteen years (the current legislation can be traced back to the working party on an optional patent litigation protocol which was set up in June 1999 as part of the negotiations on EPC 2000).

But the Preparatory Committee now has the bit between its teeth, premises are being identified and, following a wide consultation on a working prototype, the IT system has been put out to tender with a January 2016 delivery date. It is increasingly likely that the new court will open its doors in Autumn 2016, and the first unitary patents will be granted at the same time (unitary effect can be requested up to one month after grant, so unitary patents can in effect be granted as soon as they are available).

Of course, the whole project could be derailed if the Court of Justice upholds the current Spanish challenge to the Unitary Patent, and it could be delayed if the required 13 ratifications of the UPC Agreement are not forthcoming. However, it is widely expected that the Court will follow the Advocate General's opinion to reject the Spanish challenge, and plans are in train in sufficient states (including the UK and Germany) to achieve the necessary ratifications in time.

What then should Industry be doing about the new system? Unless you are planning to infringe a patent in Europe after September 2016, or expect someone to infringe a patent of yours (or unless you are a patent litigation lawyer), there is no need to try to master the details of the new court and its procedures. There are, however, two related decisions which need to be made in the coming year: first, whether some or all of your new patents in Europe should be unitary patents, and second, whether any or all of your existing patents should be "opted out" from the jurisdiction of the UPC.

Unitary Patent -v- European "bundle" patents

Compared to the traditional European "bundle" patent, the unitary patent will avoid translation costs at the time of grant (although the application of the London Agreement in most member states is reducing translation costs generally). In addition, the renewal fees for unitary patents, the proposal for which was published just as this was going to press, has given rise to concern at the total amount payable over the full life of a patent, particularly as the option of cutting down the coverage in the later (more expensive) years of the patent life is not open for a unitary patent.

Unitary patents can be enforced (or attacked) only in the UPC, whereas "bundle" patents can be litigated in either the UPC or in national courts (see below). For some patents, it is possible to assess at the time of grant that they are likely to be litigated during their lifetime, which would make the flexibility of "bundle" patents desirable. For most patents, however, the decision will probably be driven by numbers – will the lifetime cost of a unitary patent be greater or less than the lifetime cost of the number of patents which your company would validate if it stayed in the "bundle" system?

Opting Out – why?

The proprietor of a "bundle" patent can decide whether to enforce it against infringers in the UPC or in one or more national courts, and does not need to opt in or out in order to do so. However, opting out will prevent a possible infringer from starting a revocation action or an action for a declaration of non-infringement against the whole "bundle" in the UPC.

Why might you want to avoid revocation or declaratory proceedings in the UPC? The original justification for the opt-out was to allow valuable patents to be kept out of the system until patentees could see how the new court was working in practice. The extensive debate over the Rules, and particularly statements by judges about their expectations as to how the rules will operate, has gone some way to assuage concerns about the ability of the system to function, although there remain uncertainties about how the rules will operate in detail.

More significant is that the outcome of most patent disputes is not entirely predictable, and a number of well-publicised decisions of different national courts on the same "bundle" patents have shown that, indeed, patent infringement and validity are frequently matters where reasonable men may differ. Many patentees in such circumstances will prefer "win some, lose some" in the national courts than "all or nothing" in the UPC.

Opting Out – how?

The opt-out applies to all national designations of a "bundle" patent, and all proprietors (plus all proprietors of any related SPCs) must be parties to the opt-out application. The UPC Registry, and the EPO during the proposed "sunrise" period, will process opt-out applications, but will not examine them, so it is incumbent on those who register opt-outs to get the details right.

This will be a non-trivial exercise, especially for the many major groups of companies for whom efficient tax structuring has come ahead of accurate record keeping and up to date registration of assignments and licences (where such registration is possible). Although the opt-out fee is expected to be small or non-existent, the administrative cost of the necessary due diligence will be an additional factor to be weighed in the decision whether and what to opt out.

And before you decide to opt out all your patents, remember that the early procedural groundwork will be laid by companies which do not opt out. Different sectors of industry have different business models and the position of patents, patent licensing and patent litigation within those business models varies substantially between different industries. The ground rules will be set against the background of the business models of the first movers. You need to consider whether