Unitary Patent and UPC: a progress report (February 2016)

The Preparatory Committee has decided that European patent owners will not pay a fee to opt-out (or withdraw an opt-out) of their patents from the jurisdiction of the UPC. This decision comes after a public consultation last year on its proposals on court fees and recoverable costs - which included an opt-out fee of €80 per patent. Our last UPC survey of in-house counsel indicated that the proposed court fees were “too high”. 

Other decisions made by the Committee include:

(a) 40% discount on court fees for qualifying SMEs, with a penalty for an incorrect claim;

(b) where multiple parties or patents are involved, only one fixed fee and, if applicable, one value-based fee shall apply;

(c) a successful party can recover a maximum of €2 million in cases over €50 million, but upon request the court may lower or raise the ceiling up to an absolute maximum of €5 million;

(d) there will be a reimbursement of fixed and value-based fees to encourage certain behaviours such as early settlement of disputes.

The Committee also published guidelines which UPC judges may take into account when determining the value-based fee payable and recoverable costs. This should address the concern raised during the public consultation on how the courts (and indeed parties) should conduct this assessment. There was discussion and agreement on other matters such as judicial salaries and UPC Registry rules. 

The Germany Ministry of Justice (BMJV) has published two draft bills which will amend both the German Patent Act and Law on International Patent Agreements, and ratify the UPC Agreement (UPCA).

German patent practitioners have told us that the bill includes a proposal to permit double patenting: one can simultaneously own a German national patent and a Unitary Patent or a classical European patent (not opted out of the UPC) for the same invention. However, if certain criteria are met, a defendant will be allowed to object to the enforcement of both patents. The UK plans to prohibit double patenting.

The BMJV’s proposals may well be revised before they are presented to the German Parliament this year. The bills are here and here (in German).

The State Secretary for Economic Affairs and the Minister of Foreign Affairs have presented to the Dutch parliament a draft bill to ratify the UPCA and its Protocol. This follows the Netherlands’ declaration last year to be bound by the Protocol once it has received parliamentary approval. The draft bill (in Dutch) can be found here.  

Last year we received information on the location of some of the UPC divisions. The Preparatory Committee has now started publishing information on this, as locations are confirmed by the host countries. The confirmed courts are:

• the Court of Appeal in Luxembourg;

• the central and local divisions in Germany; and 

• the Nordic-Baltic regional division in Sweden (covering Estonia, Latvia, Lithuania and Sweden).

We already know about the central and local divisions in the UK, so expect this to be added at some point. There is no official confirmation on the French location, yet. Details and photos of these courts are available here.

The Preparatory Committee has agreed on the rules of mediation of the Patent Mediation and Arbitration Centre (PMAC). It is clear from the rules that the mediation service of PMAC will be available to all disputes relating to European patents and Unitary Patents [see Article 2 (1) and (3)]. The rules also allow party autonomy on issues such as language and conduct of the mediation. PMAC costs, list of neutrals and rules of arbitration are yet to be published. The draft rules can be found here. For a discussion on some of the issues surrounding the PMAC read our interview with Sam Granata, a member of the UPC Legal Framework Group.

It is now official that on June 23 the UK will hold a referendum on whether or not to remain a member of the EU. Only EU members can participate in the Unitary Patent and UPC system. Despite uncertainty over its outcome, the UK government has selected a location for the UPC divisions in London; signed the UPCA Protocol; and commenced legislative steps towards ratification.

The UK IP Office (IPO) last year indicated that the government intends to ratify by spring this year. We now learn this is “likely to be post-referendum”, according to an IPO spokesperson (see this blog post by law firm Pinsent Masons). If the UK completes its domestic legislative steps by June and the public votes to leave the EU, it will be interesting to see if the government will still proceed with depositing its instrument of ratification to help start the UPC. Read our blog post on Brexit and how it could affect the UPC, among other things IP here.

One may take comfort in the fact that the UK government has shown strong indications to prepare and ratify. There is still optimism that the UPC will start in early 2017 - and according to the Preparatory Committee's latest meeting report - with over 13 member states.

Further major developments expected this year include:

• UK’s EU referendum (June 23);

• recruitment and appointment of UPC judges (expected late spring 2016);

• handover of the UPC website and e-filing/case management system (March 2016);

• completion of the Preparatory Committee's work (summer 2016);

• ratification by Germany, the Netherlands and, perhaps, UK or Italy;

• entry into force of the UPCA Protocol.

You can follow our coverage of the Unitary Patent and UPC, including our new series of UPC case scenarios, at www.managingip.com/upc