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How the Unified Patent Court will affect filing strategy




Jakob Pade Frederiksen of Inspicos describes the changes that will be brought by the Unified Patent Court, and how they should inform patent filing and practice

As national ratification of the European patent reform is well in progress, reconsideration of pre-grant patent strategies is inevitable in many organisations. Despite the fact that the entry into force of the new system is still one or two years away, strategic choices for today's patent applications should be made with due regard to the possibilities provided by the Unified Patent Court (UPC) and the unitary patent (UP). The present article lines up certain aspects which IP executives may advantageously take into account when (re)defining patent strategies as the UPC and the UP soon turn into reality.

The structure of the new regime

Under the future regime, the European Patent Office (EPO) will remain in charge of the grant of pan-European patents (UPs and traditional European patents which develop into a bundle of national rights after grant). Contrary to the latter type of European patents, UPs will not undergo national validation, and renewal fees will be collected centrally by the EPO during the entire term of the patent.

At the stage of grant at the EPO, the patent may, at the proprietor's request, achieve unitary effect (turn into a UP). Alternatively, the patentee may decide to take the patent through country-by-country validation.

As of the day of entry into force of the new regime, the UPC will retain exclusive competence over any court dispute relating to UPs and traditional European patents, including patents granted before the date of entry into force, and including supplementary protection certificates (SPCs). Thus, lawsuits in respect of UPs and court cases relating to validated EP bundles will, as a general rule, be dealt with by the UPC, and national courts will accordingly – as regards patent and utility model cases – merely be left with the task of deciding cases relating to national rights (patents and utility models granted by the national patent offices).

As regards EPO states not participating to the UP and the UPC framework, national courts remain in charge of deciding all patent cases, including cases relating to granted EP patents; the UPC has no jurisdiction in such states. Table I lists the existing EPO states and their affiliation to the UPC and UP system. As a special peculiarity, Italy participates in the UPC, but does not allow UPs to extend to the Italian territory.

As part of the political compromise providing the foundation for the UPC, legislators have provided the so-called opt-out mechanism. This allows patentees to remove their traditional European patents (including those already granted or pending before the date of entry into force of the new system) from the UPC umbrella and get them under the competence of the national courts. The opt-out scheme is available for a transitional period of seven years, which the legislative bodies may prolong by a further seven years. An opted-out patent may be opted back in at any time, but only once. There will be no possibility to opt out a UP, and it will not be possible to opt out a patent, in respect of which an action has already been brought before the UPC.

The UPC will consist of a first-instance court with a central division in Paris and divisions in London and Munich, and a number of local and regional divisions spread across the territory of the participating states. A central appeal court will be established in Luxembourg. In first-instance proceedings, the venue of infringement proceedings will be the local or regional division hosted in the state or region, where the alleged infringement occurs, or where the defendant is domiciled. A counterclaim for revocation will be decided by the local or regional division entrusted with the infringement case, or it may be referred to the central division in so-called bifurcated proceedings. Direct actions for revocation will be brought before the central division.

Table 1

Country code State Member of the EPO Member of the EU Participant to the unitary patent* Participant to the Unified Patent Court*
AL Albania X


AT Austria X X X X
BA Bosnia and Herzegovina X**


BE Belgium X X X X
BG Bulgaria X X X X
CH Switzerland X


CY Cyprus X X X X
CZ Czech Republic X X X X
DE Germany X X X X
DK Denmark X X X X
EE Estonia X X X X
ES Spain X X

FI Finland X X X X
FR France X X X X
GB United Kingdom X X X X
GR Greece X X X X
HR Croatia X X Undecided Undecided
HU Hungary X X X X
IE Ireland X X X X
IS Iceland X


IT Italy X X
X
LI Liechtenstein X


LT Lithuania X X X X
LU Luxembourg X X X X
LV Latvia X X X X
MC Monaco X


ME Montenegro X**


MK Former Yugoslav Republic of Macedonia X


MT Malta X X X X
NL Netherlands X X X X
NO Norway X


PL Poland X X Undecided Undecided
PT Portugal X X X X
RO Romania X X X X
RS Serbia X


SE Sweden X X X X
SI Slovenia X X X X
SK Slovakia X X X X
SM San Marino X


TR Turkey X


* Agreement ratified or future accession decided by government
** Extension state; not full member


Filing strategies

Patentees may put themselves in three alternative positions under the new European system. The available types of patent protection are:

  • Group A consists of patents granted by the EPO and under the competence of the UPC. Such patents include patents that have attained unitary effect and patents granted under the existing regime but still under the UPC's competence.
  • Group B consists of European patents granted by the EPO and outside the competence of the UPC (opted-out patents and patents granted in countries not participating to the UPC).
  • Group C consists of national patents.

Evidently, at least the option of filing patent applications nationally (group C) is to be made at the filing stage. The choice between options A and B can be deferred until the time of grant in respect of patents not yet granted at the date of entry into force of the new system, or until the time of entry into force in respect of patents already granted at that time.

There are pros and cons associated with each of the three groups.

Group A patents obtain the benefits of the UPC: one verdict is achieved for the entire geographical territory covered by the UPC. Further, litigation costs will be somewhat lower in respect of such patents, at least compared to multinational litigation in a number of similar jurisdictions. Further, in respect of UPs, no validation is required, and annuities are to be paid centrally, which might lead to cost savings when compared to the costs of validating and maintaining patents in a large number of countries. The cons of group A patents include the uncertainties of UPC practice and standards, and the fact that all eggs are being placed in a single basket; if the UPC decides in the defendant's favour in respect of invalidity or non-infringement, the patentee's case is lot once and for all.

Group B patentees benefit from predictability of national court proceedings in major European jurisdictions with a well-established tradition of patent litigation. They face a substantially reduced risk of cross-border invalidation or non-infringement verdicts, as the patentees' eggs are not all in a single basket. However, multinational infringement is to be pursued through multinational litigation potentially incurring high litigation costs as compared to UPC proceedings.

Group C patentees achieve the same advantages as patentees of group B (predictability of national courts, and reduced risk of cross-border invalidation or non-infringement verdict) but also the downsides relating to the possible need for multinational litigation and therefore the drawback of high litigation costs. Further, costs of pre-grant prosecution in national patent offices may eventually be higher than EPO prosecutions costs, unless the proprietor is seeking protection in only approximately four countries or fewer. However, in view of the fact that the opt-out scheme will be available for a transitional period only, filing through national patent offices will, in the long run, be the only tool available to patentees desiring to escape the UPC.

Opting-out strategies

At the time of entry into force of the new system, proprietors of granted EP patents and pending EP applications will have to make up their minds concerning the opt-out possibility. In this regard, there are several strategic considerations that will come into play.


"An opted-out patent may be opted back in at any time, but only once"


Obviously, an important goal underlying the establishment of the UPC is to harmonise European patent practice. It is beyond doubt that the centralisation of patent litigation will be the primary driver in achieving this objective. However, in the absence of any prior UPC decision, let alone a well-established practice in relation to fundamental issues such as equivalence, claim interpretation, file history estoppel, and inventive step, parties to infringement and revocation proceedings are left without guidance from prior decisions and face substantial uncertainties. National practice will be of limited value, as the practice of national courts in Europe is far from harmonised. One can only guess how long it will take until the appeal court of the UPC has decided a sufficiently large number of cases to allow a clear picture of essential elements of future European patent practice to be drawn, but it is unquestionable that the count should be made in years if not decades. On the one hand, UPC proceedings will by nature suffer from a certain degree of unpredictability. On the other hand, it must be assumed that proceedings before the UPC will be at least as predictable as national court proceedings before courts or judges with only very little patent experience, which parties may face in a number of small jurisdictions in Europe.

Patentees looking for legal predictability in major European jurisdictions with a well-established tradition of patent litigation should seriously consider opting out their most important patents from the outset. Patentees expecting infringement battles over markets in states less familiar with patent litigation may prefer the presumed quality of UPC proceedings over possibly less predictable national procedures.

In terms of costs and pendency time of litigation proceedings, it can be expected or at least hoped that litigation before the UPC will be (nearly) as time-efficient as the fastest national courts operating today. In comparison to multinational proceedings, it is safe to assume that litigation before the UPC will imply significant cost savings as only one team of attorneys needs to involved on each party's side. In general, the cost of litigation most likely speaks against opting out. From a cost point of view, owners of patents which have been opted out on a precautionary basis should consider opting back in before initiating litigation proceedings.

In view of the opt-in possibility, commercially significant core patents may in general safely be opted out on a precautionary basis. Most executives will probably refrain from running the risk of putting all eggs in a single basket by putting such patents under the competence of the UPC, at least until the UPC has proved its ability to consistently render sound decisions.

Other factors may come into play when deciding for or against opting out a particular patent. In particular, the size of the market, the balance of economic power between the parties, and the estimated chances of success in each particular case may well have an influence on the choice between the centralised UPC procedure and national proceedings.

As a general conclusion, one may assume that the possibility to opt back in an opted-out patent at any moment provides a significant encouragement to opt out at least essential patents from the competence of the UPC.

Jakob Pade Frederiksen

 

Jakob Pade Frederiksen is a partner and European patent attorney at Inspicos, and has represented clients in a large number of opposition and appeal cases before the EPO. He regularly acts as an expert judge at the Copenhagen Maritime Commercial High Court, and has served as a court-appointed expert in a variety of patent disputes before the Danish courts, including the Supreme Court. Frederiksen holds a degree in mechanical engineering and a diploma in patent litigation from the University of Strasbourg in France. He is included on MIP's list of IP Stars, and he is listed in IAM 1000.



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