A new patent right and patent enforcement system is coming for patent protection in the Europe which the new court's Preparatory Committee states is likely to start mid-2022. There are two main elements:
- A Unified Patent Court (UPC) which will have jurisdiction over all European patents (current and future) designated to participating EU Member States which have ratified the UPC Agreement (UPCA) (Spain, Croatia and Poland are not participating, and neither is the UK, EU status aside, now it has withdrawn from the UPCA) unless they have been opted out of the new court's jurisdiction, and also all unitary patents.
- A unitary patent right (UP) (also known as a European patent with unitary effect) established via enhanced cooperation under Regulation 1257/2012 of 17 December 2012, will provide a single patent right covering all the Member States which took part in the enhanced cooperation. This right will not cover Spain or Croatia which did not participate in the enhanced cooperation, but will also exclude Poland which, although it did participate, has not signed the UPCA, and therefore there will be no means to enforce a UP in Poland. No UPs can be granted by the EPO until the UPC comes into effect. This new right will become available as soon as the new court system - the UPC - set up to enforce it comes into effect. Read more here on applying for UPs, EP opt-out, and EP, UP and patent portfolio strategy in the light of the new UPC & UP system.
- The Protocol on a Unified Patent Court on provisional application also needs to come into effect to allow a period during which the final preparations for the UPC can be made such as recruiting judges and finalising the courts facilities. This still requires ratification by additional Member States beyond Germany (see below).
The UPC will come into effect on the first day of the fourth month after the month in which the last ratification required by the UPCA is deposited. The UPCA requires that 13 participating Member States ratify before it can come into force, these must include the “three States in which the highest number of European patents was in force in the year preceding the year in which the signature of the Agreement takes place”. With the UK having withdrawn, those three countries are France, Germany and Italy. So far 15 contracting Member States have ratified, including France and Italy (see the ratification table here), so Germany’s ratification is the last piece of the jigsaw for the run-up period to be triggered UPCA to come into force. Germany has now passed the legislation enabling it to ratify and must only now deposit its instrument of ratification with the EU Council for the 4 month run-up period to be triggered.
UPC and national courts' jurisdiction: To add to the complexity, for a transitional period, national courts will continue to have jurisdiction over non-opted out EPs also. Once this transitional period is over, the UPC will provide an exclusive court for all decisions involving the UP. The transitional period will last at least 7 years but could be extended by up to another 7 years following an assessment at the 5 year point. At any time during this transition period, EPs can be opted out (and opted back in) but once this period has come to an end, all new EPs (and current non-opted out EPs) will fall under the exclusive jurisdiction of the UPC. For more on this see the Jurisdiction and opt-out section of this hub.
The UPC structure will have local divisions, regional divisions and a central division. Regional divisions are a form of local division providing a UPC for several MSs at once where the number of patent cases a year is too low to merit individual local divisions. Infringement actions can be brought in a local division but the central division has exclusive jurisdiction to decide applications for declarations of non-infringement and revocation (see the section of this guide on UPC structure).
The central division had been split between Paris (the main seat of the central division), Munich and London. Each seat of the central division will deal with cases dependent on their content, based on IPC classifications. The London central division was assigned cases on patents involving human necessities and pharmaceuticals/chemistry including genetic engineering and Metallurgy (International Patent Classification of WIPO sections (A) and (C)). Munich will hear cases involving patents in IPC class F, concerning mechanical engineering. All other patent classifications will fall to be heard before the Paris central division. The London seat will need to be moved now that the UK is no longer participating. This is likely to be Milan or Amsterdam but a final decision is yet to be made. Paris will deal with the caseload London would have taken in the interim.
For the Protocol on a Unified Patent Court on provisional application (PPA) to come into effect, 13 signatory states - which have signed the UPCA (and which must include France, UK and Germany) and have also ratified the UPCA or informed the depositary that they have received parliamentary approval to do so - must have signed and ratified, accepted or approved the PPA (in accordance with Article 2(2) PPA) or declared by unilateral declaration or in any other manner that they consider themselves bound by the provisional application of the articles of the UPCA mentioned in Article 1 PPA. These Articles cover, inter alia, the establishment of the UPC, the Registry, the Mediation and Arbitration Centre, the training and appointment of judges, and the provisions allowing for the UPC Statute and Rules, legal aid, remuneration of judges, the setting up of local or regional divisions, and the establishment of the pool of judges. The UPC Preparatory Committee has stated that two more states as well as Germany are still required to ratify the PPA for PPA to come into force and the provision application stage to start but they appear confident that these other two states will ratify in 2021. Germany has now passed the legislation to ratify the PPA (as well as the UPCA)
By signing the PPA, the signatory states agree to apply the institutional, organisational and financial sections of the UPCA provisionally. Once the Protocol enters into force, the UPC organisation (as such) will be created and acquire legal personality. The Administrative Committee, the Budget Committee and the Advisory Committee will be established at the start of provisional application stage and will then take over the responsibility of the preparations from the UPC Preparatory Committee.
The provisional application stage allows the final preparations to be made for the commencement of the UPC in the certain knowledge that it will actually commence. It enables the necessary legal and practical arrangements to be made in contemplation of the establishment of the UPC, including the appointment of judges. The EPO has commented that the Protocol "should ensure that the Court is fully operational and ready to hear cases on the very day the Agreement formally enters into force".
There is no prescribed time-frame for the provisional application period, however the UPC Preparatory Committee expects this period to take approximately 8 months. The UPC rules of procedure also need to be finalised during this period.
UPC and UP system start date? This is very much dependant on the provisional application stage start date (which is dependent on full ratification of the PPA). If, as the UPC Preparatory Committee estimate, this will last for around 8 months, it would need to be triggered shortly for there to be a 2022 start date for the UPC. During the provisional application stage, once the administrative and practical arrangements are looking likely to be settled within the following 4 months, Germany could then deposit its instrument of ratification of the UPCA in order to trigger the 4 month run-up to the UPC opening, at which UPC start-point unitary patents would also become available at the EPO. Within this provisional application period, the sunrise period for opt-out would need to be commenced also (possibly 4-6 months prior to the UPC start date). For more on opt-out see the Jurisdiction and opt-out section of this hub.
EPs, UPs or national patents? UPs cannot be granted without the UPC in place. Regulation 1257/2012 establishing the UP is already in force but the grant of UPs is dependent on the UPC being established. Once the UPCA is in force and thus the UPC and UP established, any European patent (EP) application coming to grant can be converted into a UP at grant if the applicant chooses.
Currently, EPs are applied for centrally, at the European Patent Office (EPO), and then on grant are converted into a bundle of national patent rights, designated to whichever European Patent Convention signatory states have been selected by the applicant. Although there is a central system for opposition before the EPO, post grant infringement and revocation actions must be brought in relation to individual designations and cannot be litigated centrally. This frequently leads to multiple actions across Europe in relation to EPs derived from the same initial application.
The Commission and the European Parliament have sought to resolve the multiplicity of actions based on the same EP, by allowing the new UPC to hear EP litigation as well. However, for a transitional period, the proprietor of an EP may choose to "opt-out" of the UPC system and retain the right to litigate designations separately in national courts. Once this period has passed (after 7 years, although this may be extended to 14 years), all EPs which have not been opted out will be litigated "centrally" using the UPC system. For more on the consequences of opting out or not doing so see the section of this guide on opt-out and our article for Managing Intellectual Property (see below).
Once the UPC & UP system has commenced, it will not be obligatory to apply for UP status on grant of an EP by the EPO, EPs will continue to be granted as now. It will also still be possible (as it is now) to apply for national patents (NPs) instead of EPs (or UPs) by lodging separate applications at each of the national patent offices. These national patents will not be under the jurisdiction of the UPC and actions relating to them will continue to be heard by national courts. National patents are therefore one way of avoiding the new UPC system if there are strategic reasons for doing so. All UPs and EPs will be under the jurisdiction of the UPC however, although EPs can be opted out at grant during the transition period, as discussed above and here.
Non-EU EPC states (such as Switzerland, Norway and Turkey) were not allowed to take part in the UPCA (only EU MSs could take part) and thus for patent protection in these states and any MSs which have not signed up to the UP or UPCA, the only option for protection will continue to be via an EP (or an NP). See below for more on where UP will have effect
The cost of a UP: The EPO has adopted a "business friendly fee pattern" for the new UP equivalent to the current charges for the "top 4" most popular validation jurisdictions for EPs - see our e-bulletin "EPO adopts "business friendly" Top 4 approach to UP renewal fees".
The contents of this publication are for reference purposes only and may not be current as at the date of accessing this publication. They do not constitute legal advice and should not be relied upon as such. Specific legal advice about your specific circumstances should always be sought separately before taking any action based on this publication.
© Herbert Smith Freehills 2021