Seven years after the Member States of the EU signed the Agreement on a Unified Patent Court (“UPCA”), the Unitary Patent (“UP”) and the Unified Patent Court (“UPC”) are likely to commence during the second half of 2022. This promises to bring significant changes to patent protections across Europe, potentially making it easier to both assert and invalidate a patent in 24 Member States. Importantly, if current European Patent (“EP”) holders wish to opt out of the UP in favor of the existing EP regimen, it will require that they take affirmative steps to do so.
Currently, an applicant can seek patent protection in 38 Member States of the European Patent Convention (“EPC”) by filing and prosecuting a single patent application at the European Patent Office (“EPO”). EPC Member States include all members of the European Union, along with, among others, the UK, Turkey, Switzerland, and Norway. Once granted, an EP only has effect in each individual EPC Member State in which the patent holder validates and later pays to maintain the EP. Validation and maintenance can become extremely expensive. Each EPC Member State has its own requirement for translations of the patent claims and/or specification. Further, each Member State charges its own annual maintenance fee.
Enforcement actions and challenges to an EP take place in the national courts of each individual Member State. This can both benefit and disadvantage a patent holder. Currently, if a patent holder wishes to enforce an EP against an infringer, the patent holder must do so in an individual action in each validated Member State of interest — an extremely expensive proposition for a patent holder. Likewise, if a third party wishes to invalidate an EP, they must do so in an individual action in each validated Member State of interest — an extremely expensive proposition for a third party. Further, the decisions of any one Member State’s courts have no legally binding effect in those of another Member State. Thus, while it can be difficult and expensive to enforce an EP, it can also be difficult and expensive to invalidate an EP.
The Unified Patent Court (“UPC”) is a new transnational court for EU Member States, which will have sole jurisdiction over actions involving the Unitary Patent (“UP”). To participate in the UPC, an EU Member State must ratify the UPCA. As of March 1, 2022, 17 Member States have ratified or are in the final process of ratifying the UPCA. The Ratified Member States (“R-MS”) include/will include France, Italy, Germany (currently in the process of ratifying the UPCA), the Netherlands, and Ireland. It is noteworthy that EU Member States Spain and Poland are among those that have not taken and do not plan to take steps to participate in the UPC. Further, as non-EU Member States, the UK, Turkey, Switzerland, and Norway, among others, cannot participate in the UPC. This also means that five of the current top ten healthcare-spending countries in Europe are UPC ineligible.
To obtain a UP, an applicant will still file and prosecute a patent application at the EPO. They will need to designate UP at the filing of the application. Following grant of the application, the UP will take effect in all R-MS that had ratified the UPCA as of the filing date of the patent application. If prosecution before the EPO takes place in English, the patent owner will only need to translate the patent into one other official language of the EU. Further, an owner of a UP will only need to pay one annual maintenance fee across all R-MS. To obtain protection in non-UPC countries (e.g., the UK and Spain), the applicant will need to validate (e.g., translate the patent) and maintain (by individual annuity payments) the patent in those individual countries.
The new UPC will enable UP holders to use a single procedure before the UPC to enforce their patent rights across all UPC R-MS. Likewise, a third party wishing to challenge an UP across all R-MS will be able to do so in a single procedure before the UPC.
UPC Transition and Opt-Out
All existing European patent applications and patents will transition to the new UP/UPC regimen for R-MS unless their owners are prepared to affirmatively opt out of the UP/UPC prior to the UPC coming into force.
The Provisional Phase of the UPC commenced on January 19, 2022. During this phase, the UPC will establish protocols and recruit and train its judges. The Provisional Phase will last a minimum of eight months. The UPC will start at the later of the end of the eight-month provisional phase or four months after the German ratification. Assuming Germany ratifies the UPC by May 2022, the UPC could commence by September 2022.
Owners of European patent applications or EPs can choose to opt-out of transitioning into the UP/UPC during a Sunrise period that will commence three months prior to the UPC starting. To opt-out, the owner of the European patent/application must affirmatively do so by filing an application to opt-out. There are no official fees for filing an application to opt-out of the UPC. Opt-out applications will be reviewed to make sure they comply with all requirements and a patent/application is only exempt from the UPC once the opt-out application is approved and registered in the UPC Registry.
Patent owners that do not opt-out during the Sunrise period will also be able to opt-out of the UP/UPC for at least seven years following the start of the UPC. However, an EP can be involuntarily and irreversibly forced into the UPC by a third party if, prior to an EP’s opt-out application being approved and entered into the UPC Registry, the third party files a challenge to a newly-designated UP at the UPC. Importantly, EPs approved for opt-out during the Sunrise period are considered registered as of the UPC start date. If the owners of an EP wish to ensure their patent does not transition into an UP under the jurisdiction of the UPC, their opt-out application must be approved and successfully registered in the UPC Registry during the Sunrise period. Thus, patent owners who want to opt-out should be prepared to file an opt-out application as early as possible during the Sunrise period to ensure that their patent is not subject to the UPC.
It is worth noting that once an opt-out application for an EP or European patent application is approved and entered into the UPC Registry, the patent/application can remain outside of the UPC for the remaining life of the patent/application. If, at any time, the owner of the patent/application later chooses to be subject to the jurisdiction of the UPC, the owner can withdraw their opt-out.
Benefits/Disadvantages of the UP/UPC
The UP/UPC has the potential to provide cost savings to patent owners in Europe by eliminating the need for multiple validations, translations, and annuity payments. There will be no validation costs, and only one official translation required. Moreover, the annual maintenance fees for the UP are set to be about equal to or less than the total annuities if the patent owner was to opt-out of the UP/UPC and validate the patent in more than approximately three to six individual EPC Member States. Importantly, the UP/UPC will enable a patent owner to assert their patent across multiple major European states in one enforcement action.
Just as a single action to enforce the UP is a benefit, it can also be a major disadvantage. A challenger will be able to use a single action that, if successful, would invalidate the UP across multiple major European states. A potential temporary disadvantage comes from the newness of the UPC system itself, making it more difficult to predict outcomes than under the current EPC.
Balancing the advantages and disadvantages of the UP/UPC, patent owners may wish to limit utilization of the UP/UPC to patents/applications that will not be the primary means of protecting a commercial product. Alternatively put, patent owners may wish to limit utilization of the UP/UPC for less commercially central patents and/or applications that will be validated in three or more EP Member States. For those cases, the cost savings associated with the UP/UPC may outweigh the disadvantages/risks of a single invalidation procedure.
Maria C. Smith Ph.D.Associate