Imagine that you have created the most amazing invention and that you are able to file one single patent application to secure protection for your invention within almost the whole EU, with one application fee and with the ability to manage infringement procedures centrally at one single place. This vision is now becoming reality with the implementation of the Unitary Patents (“UP”) and the Unitary Patents Court (“UPC”) which is entering into force on the 1st of June 2023.
Which countries are included?
As of today, 17 EU member states, including Sweden, have ratified the Agreement on a Unified Patent Court (the “Agreement”), thereby authorizing the UPC to handle European patent procedures. There are 24 member states participating in the UP system, but not all of them have yet ratified the Agreement. The member states that have ratified the Agreement are Austria, Belgium, Bulgaria, Denmark, Estonia, Finland, France, Germany, Italy, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Portugal, Slovenia, and Sweden. It is anticipated that Cyprus, Czech Republic, Greece, Hungary, Ireland, and Slovakia will also ratify the Agreement in the future. However, Spain, Croatia, and Poland have decided to decline participation in the UP system.
The UPC will be structured with both central, regional, and local divisions, and a Court of Appeal situated in Luxembourg. In addition, a Nordic-Baltic regional division covering Sweden, Latvia, Lithuania, and Estonia will be established here in Stockholm.
The Unitary Patent and the Unitary Patent Court
At present, the validity of a European Patent (“EP”) is a matter for the courts of each member state, and any invalidity claims must be brought separately in national courts. In other words, a single EP may be valid in some member states and declared invalid in others which creates legal uncertainty. The new UPs centralize patent litigation since validated patents are automatically valid in all participating member states. The UPs can be based on any EP granted by the EPO after the UPC Agreement has entered into force.
The UPC constitutes a new intergovernmental body that will be authorised to rule on European patent cases, such as infringements and invalidity claims. The UPC will have exclusive jurisdiction over UPs, but also a concurrent jurisdiction over the national validations of EPs during a transitional period. This will include EPs granted prior to the entry into force of the UPC Agreement provided that the patent holders do not actively “opt out” of the jurisdiction of the UPC in the UPCs Case Management System during the transitional period.
The transitional period will last for seven years but may be prolonged by another seven years. If an EP case has already been brought before the UPC, it will no longer be possible to “opt out” from the jurisdiction of the UPC. After the transitional period, the UPC will have exclusive jurisdiction over the validation of all EPs that have not “opted out”. Besides the transitional period there has also been a “sunrise period” between the 1st of March 2023 and 1st of June 2023, during which patent holders had a possibility to “opt out” before the UPC Agreement enters into force. Where holders of current EPs “opt out” from of the unitary system, their bundle of national patents constituting the relevant EP will remain in the existing system.
Below, some pros and cons of the new UPC system which we have identified from a patent holder perspective are summarized.
•Less administration - patent holders are only required to file one application for protection of their invention in a number of member states. The management of UPs, e.g., transfers and licenses, does not need to be registered separately “member state-by member state”.
•Reduced costs compared to filing and renewing patents separately in each member states. There is also no need for costly translations or hiring of local patent counsels.
•Efficient system for dealing with infringements - instead of bringing costly and time consuming cross-border infringements actions separately in each member state, actions may be brought centrally before the UPC. This makes it possible to deal with infringements that have previously been difficult to stop at a national level, e.g., cloud-based services and international supply chains.
•Uniformity – the decisions of the UPC will have unitary effect, meaning that individual member states will no longer be able to make different assessments regarding the validity of the same patent.
•Faster proceedings – the aim is that decisions in patent proceedings will be issued within 14 months, which is considerably faster than current proceedings.
•Availability of international remedies – the possibility of imposing remedies with effect in all participating member states, e.g., damages and injunctions.
•Vulnerability for “central attacks” – if a patent is declared invalid by the UPC, it will automatically be declared invalid in all participating member states.
•Less flexibility – inability for patent holders to structure and manage their portfolios at a national level, e.g., in order to avoid registration in countries that poses a high risk for infringement claims.
•Risk of uncertainties – the UP system is novel, and it is difficult to say what the exact effect of the system will be. The procedural rules are relatively unregulated and there will be limited guidance until the Unitary Patent Court of Appeal has established case law on UPs. There is also a risk that local courts will make different assessments.
•Does not cover all member states – the UPC may not cover the states where some patent holders are most interested in receiving protection, e.g., member states which have decided not to join the UPC system such as Spain, Croatia and Poland, and non-EU states such as the UK and Turkey.
Generally, if the patent applicant considers it likely that third parties will commit infringements against the EP in question, it may be a good idea to stay within the jurisdiction of the UPC and make an application for a UP. This is due to the possibility of bringing actions against infringements in all participating member states with one single action. However, if an EP has potential “weaknesses” and proceedings against the EP are likely, it may be risky to be a part of the UPC because of possible “central attacks”. If this is the case, and an “opt out” has not yet been conducted during the “sunrise period”, the patent holder should seek to “opt out” as soon as possible since this possibility will be lost if someone brings action against the EP at the UPC before it is “opted out”.
We welcome the new system with open arms and follow the development of the UPC with great interest. We look forward to the effects of the new system on patent litigation and the case law that will be established by the UPC.
And don’t forget – you can always reach out to the IPR experts at Synch if you are in need of any strategic advice or have any questions regarding anything in relation to the new UPC system. We are happy to help!
Written by Hugo Snöbohm Hartzell