Here Comes the Unified Patent Court and Unitary Patent

The UPC will have exclusive jurisdiction over the new UPs, providing a single forum for pan-European infringement and revocation. The UPC’s jurisdiction will also extend to all EPs already granted by the EPO unless an opt-out is filed. An opt-out keeps the EP in the current system, in which litigation must occur state-by-state in the national courts. It seems likely that patentees will need to be ready for the opt-out process sometime in the next six to twelve months. Further details on opting-out EPs from the UPC’s jurisdiction are provided at the end of this article. Irrespective of the opt-out, the UPC will have no jurisdiction over patents in non-EU Member States (e.g. UK, Switzerland, Turkey etc.) and EPs in non-participating EU states. Nonetheless, the UPC is likely to be an attractive forum e.g. for parties who missed the EPO opposition period or patentees who want a single decision on enforcement across several participating Member States.

For the UPC to come into force, a number of EU Member States were required to approve an administrative update (the Protocol on the Provisional Application of the UPC Agreement) to enable a soft-start period before the court opens its doors. Austria was the last EU Member State to approve the Protocol following ratification by Germany and Slovenia, as previously reported here. The soft-start period could last as little as eight months and will allow staff and judges to be recruited and the underlying systems to be made ready for the new court. Once the new court becomes operational, it will start hearing disputes regarding any patent granted by the EPO (unless those patents have been opted out) and the EPO will start granting UPs. The UP will be granted by the EPO following the existing procedure for European Patents (EPs) and, in light of these recent developments, the EPO recently announced a ‘sunrise’ period that will effectively allow applicants to request a UP several months before they are formally available. Applicants wishing to take advantage of the UP may therefore wish to delay grant to then later file a UP request at the EPO.

Once a European patent has been granted by the EPO, it is necessary to undertake a number of administrative steps in each state of interest, a process known as national validation. Following national validation the EP is split into separate national patents.   Wide validation strategies are costly, and it can be difficult to justify the cost of a wide validation strategy when the ultimate value of the patent is unclear at grant. The cost of national validation in different states across Europe varies based on the requirements that each state has in place, with translation requirements causing validation across a large number of states to be expensive. As well as the cost of national validation itself, innovators must consider the cost of national renewal fees that are payable annually in each state. When deciding where to validate, innovators often consider both the likely markets for their inventions and the implications of their validation strategy on future enforcement. A primary driver for the validation strategy can be a prediction of major markets, particularly when validation decisions need to be made early in a product’s life cycle. Looking ahead to loss of exclusivity, it is also worth keeping in mind that generics companies have set up manufacturing and/or batch release sites in states that have traditionally not been regularly validated. While at the time of validation a particular state might not be expected to be an important market, gaps in protection can allow early entry of generics. As generics manufacturing can, in theory, take place in any state, some innovators consider it to be worthwhile validating patents widely across all EPC states, particularly when infringement is a real concern, to prevent a gap in protection that could be exploited.

With UPs becoming available when the new system is fully up and running, the strategy of innovators at grant is expected to change. For life sciences companies that have had concerns in the past regarding the justification of wide validation of a patent and the resulting annual renewal fees, the UP may prove to be a useful cost-saving tool, making the decision to obtain broad geographical protection easier from a cost perspective. Our online cost estimator allows you to visualise the possible cost savings that could be achieved by choosing a UP over the current system of obtaining separate national patents. However, conventional national validation will still often be required in the new system. EPs can be validated in any of the 38 contracting states of the EPC (including all EU states plus 11 additional states). UPs are based on EU legislation and so, as explained above, provide coverage in participating EU states only, and then only the states that have ratified the relevant agreement. The scope of a UP will be fixed at the date of grant, so when new states ratify the agreement the scope of a granted UP will not expand (but the new state will be covered by UPs granted after ratification). It will still be possible to obtain national patents in the usual way in states not covered by the UP, so there is no need for any coverage to be lost by choosing to obtain a UP. Our online landscape tool shows this complex mix of different states and will show how the system changes as more countries sign up.

Another consideration that innovators will need to weigh up when deciding whether to obtain a UP is the fact that UPs can be litigated only in the UPC. Central enforcement across all the states covered by the UP could be a significant advantage, particularly for innovators in the life sciences field who wish to enforce their patents in multiple states across Europe. Rather than having to bring multiple actions in separate national courts, all of which apply the law slightly differently, a single enforcement action can be brought at the UPC. However, with the possibility of central enforcement comes the risk of central revocation. Additionally, it is difficult to know how the untested UPC will operate in practice until it opens its doors, and the challenges of litigating in an untested court will be another element of risk that will need to be considered.

There will be a “sunrise” period a few months before the UPC opens its doors, during which patentees can opt their existing granted EPO patents out of the court’s jurisdiction. Preparing for the opt-out process should be the focus for all patentees given the importance of filing any opt-outs before the UPC opens its doors.

With the new court and new patent both arriving in a matter of months, it is now time for everyone to start preparing for this new system in earnest. The UP may offer help in the form of reduced costs to obtain wide geographical protection, something that might be particularly useful for early-stage biotech and pharma companies with products that are in the early stages of development. This advantage comes with the further benefit of central enforcement, but at the risk of central revocation at the UPC. Patentees who do not want existing granted EPO patents to fall under the jurisdiction of the UPC should get ready to opt them out before the new court gets up and running. Further updates and information on the development of the UPC system are available here.