The Unitary Patent System – Considerations for Business
The Unitary Patent System (UPS) refers to a European patent with unitary effect in the European Union. The UPS is an extension of the current European patent system and for the first time offers the opportunity to have a truly pan-European patent. Although Unitary patents will be applied for and granted by the European Patent Office (EPO under the existing law of the European Patent Convention (EPC) unlike the EPC, the UPS will only be open to members of the European Union (EU). In conjunction with the UPS, a new judicial system, the Unified Patents Court (UPC), will also be established which will hear revocation and infringement actions in relation to Unitary patents and conventional European patents. Both the UPS and the UPC are expected to become operational in early 2023.
Notably, since Brexit the United Kingdom (UK) is no longer part of the EU, but remains part of the EPC. Therefore, the UK will not be covered by a Unitary patent and European-UK Patents will not fall within the jurisdiction of the UPC.
How does a Unitary patent differ from a conventional European patent?
There is no difference between a European patent and a Unitary patent until the point of grant. At the grant stage, you will have the choice of continuing in the conventional way by validating in each of the EPC Contracting States of the applicant’s choice, or choosing a unitary patent, or having a combination of the two. At this point, the conventional European patent falls under the jurisdiction of the national courts of the states in which the granted patent is validated. That is, with the notable exception of the EPO’s opposition procedure and the central limitation and revocation procedure, all post-grant matters are dealt with on a country-by-country basis by the relevant national court.
In contrast, a Unitary patent is a pan-territorial right which is at once effective in all EU member states (with the present exceptions of Spain, Poland, and Croatia). As the territorial coverage of a Unitary patent is not considered on a country-by-country basis, a new court has been set up to deal with matters which would otherwise be handled by a national court e.g. infringement and revocation actions. All Unitary patents will therefore fall under the exclusive jurisdiction of the UPC. It is important to note that, after a transitional period (currently seven years but which may be extended by another seven years), even conventional European patents (to the extent that the conventional patent covers a participating EU state) will fall under the exclusive jurisdiction of the UPC.
How will conventional European patents and Unitary Patents co-exist?
An applicant may choose to pursue its application to grant as a conventional European patent with the national validation step as mentioned above. Alternatively, an applicant may choose to have its application designated as a Unitary patent in which case all participating EU member states will be designated en bloc. It is important to note, however, that if coverage in non-EU member states of the EPC e.g. Norway and the UK, or any EU member states which are not at present participants of the UPS e.g. Spain, then the granted European patent will still need to be separately validated in those territories i.e. the hybrid route. Thus, both systems will co-exist. Since the UK, which is a significant market, will not be covered by a Unitary patent, it is expected that many businesses will opt for the hybrid approach or continue with the conventional route.
What are the advantages and disadvantages of a Unitary Patent?
Intellectual property rights are a key asset to a business and as with any decision regarding a business’s assets, due attention must be paid to the risks and benefits of a given course of action. The two major costs associated with the validation and maintenance of a European patent are translation costs and renewal fees. For a Unitary patent, a translation into English or another EU language will be required (depending on the language of the application proceedings), then renewal fees, which are approximately equivalent to the sum of four conventional renewal fees, will need to be paid but for these costs, protection will be obtained in all of the 17 states presently participating in the UPS. If protection in the UK and Spain is also required, then additional renewal fees will need to be paid. For a conventional European patent, additional translations may be required and renewal fees will need to be paid to each of the national patent offices. As a rough guide, if coverage is required in nine major EPC contracting states (including UK and Spain), then using the UPS could result in a saving of approximately 15,000 Euros over the life of the patent.
The EPO has published a guide to the UPS, which can be accessed here.
The benefit of reduced translation and maintenance costs of a Unitary patent and the convenience of its being under the jurisdiction of a single court must be weighed against the potential disadvantage to a patentee that a Unitary patent is vulnerable to central revocation in multiple territories at once, whereas a conventional European patent may only be revoked by national courts on a territory-by territory basis, which can be significant deterrent
What if I don’t want my European patent to be a Unitary patent or fall under the jurisdiction of the UPC?
If you choose to designate your European patent as a Unitary patent, then you have no choice – Unitary patents are under the exclusive jurisdiction of the UPC. Conventional European patents will also fall under the jurisdiction of the UPC, but there is a seven-year transitional period (which may be extended by another seven years), where conventional European patents which have a filing date of 1 March 2007 or later may be litigated before a national court or the UPC unless the patentee ‘opts-out’ of the UPC. For key patents it is worth considering opting-out sooner rather than later because, if a revocation action is filed at the UPC before the patentee opts-out, then the UPC has jurisdiction. After the transitional period, conventional European patents which have not been ‘opted out’ will also fall under the exclusive jurisdiction of the UPC. European patents with a filing date earlier than 1 March 2007 are unaffected by the UPC.
Timings and Next Steps
The UPS and the UPC clearly raise some very important questions relating to the funding and management of a patent portfolio, especially for important existing patents relating to commercial assets or licensing arrangements, and in particular whether they should be in or out of the jurisdiction of the UPC. The exact date on which the UPS and UPC takes effect is as yet unknown as it is dependent on the date of Germany’s ratification of the Unitary Patent Agreement, which is expected very soon. The date of ratification is of vital importance as not only does it determine the date of entry into force of the UPS/UPC, but it marks the beginning of a three month ‘sunrise’ period during which critical business decisions will need to be made about whether to use the UPS, stay with conventional validations or a hybrid of the two. In addition, it will be necessary to decide whether to ‘opt-out’ of the UPC because of the risk of central revocation.
For specific and detailed advice, please do not hesitate to contact an attorney at Avidity IP.