Applicants likely to use Unitary Patent but uncertain about UPC

Managing IP's UPC Survey gauges how the views of potential users of the Unitary Patent and UPC system change over time.

Our first online survey (UPC1) was conducted in the first quarter of this year, when certain information was not available. We have now conducted a second online survey (UPC2) which was open from June 16 to July 27.

UPC2 included three new questions, two of which were on Unitary Patent renewal fees and the proposed UPC court fees, and repeated three questions from UPC1 to see how attitudes have changed.

The survey was targeted at in-house patent counsel, many of whom work for the top filers at the EPO. UPC2 received 58 responses (five less than UPC1). We also conducted telephone interviews with some of the UPC2 respondents and will continue with these in the coming weeks.

What the appropriate level of renewal fees should be was hotly debated. When we launched UPC2 it was already clear that the EPO Select Committee only had two viable options (TOP 4 and TOP 5), but we wanted to know which structure was the most attractive to potential users. We asked: "What level of renewal fees would make the Unitary Patent attractive to you?"

The majority of respondents selected "TOP 3", followed by those who selected "TOP 4". Those who said TOP 5 were in the minority. We also received additional comments from two respondents. One said: "No more than 50% higher than a US patent." The other, who selected TOP 3, added: "TOP 4 would still be useful for important patents, but TOP 5 would be too expensive."

We asked: "How likely is your company to use the Unitary Patent system for some of your patent portfolio?" The majority of respondents (68.9%) expressed an interest in the Unitary Patent system, with an exact split between those saying "Very likely" and those saying "Somewhat likely".

This is similar to the responses in UPC1 (38.7% on each side). The cost of maintaining a Unitary Patent is an important consideration; however, it is not a decisive one for many, so it is not surprising to see that the majority of UPC2 respondents still supported the system despite the responses to the question on renewal fees.

The legal effect of the opt-out provisions under Article 83 of the UPC Agreement and the fees on opt-out are some of the important issues holders of existing classical European patents will consider before the UPC becomes operational.

Post-UPC1, there has been clarification on Article 83 (Kevin Mooney also addressed this at a consultation event in London last June), and €80 per patent has been proposed as the opt-out fee. Have these developments changed views on opt-out since UPC1?

To find out, we repeated the question: "Will you opt out existing European patents from the UPC?" Similar to UPC1, there were more respondents who said they would opt out "some patents" than those who were still "not sure". Also the number of respondents who said they "would not opt out any of their patents" was slightly higher than those who said they "would opt out all their patents".

The UPC has to be self-financing, eventually. This is why the UPC Preparatory Committee is faced with the difficult task of striking a fair balance between the interests of users and that of the UPC.

Out of its proposals last May, fees for opt-out and stand-alone revocation action have been the most contentious. Both may well have contributed to the responses to our new question: "What do you think of the latest UPC fees that have been proposed?"

A majority of the respondents said the fees were "too high", whereas those who said "about right" were in the minority. A high proportion of respondents said they "don't know".

Another new question was: "What are your biggest concerns about the UPC?" Respondents could tick more than one option.

The top five concerns were: experience of judges; cost; forum shopping; bifurcation; and injunction gap.

The 'fear of unknown' was a common theme among those we interviewed. This was also reflected in the additional comments in the survey responses. They included: "Advising the business about risks in the early days is going to be tough"; "Uncertainty about true consistency of decision-making and enforcement"; and "One shot invalidity". These are long-established concerns.

The UPC Rules of Procedure are yet to be finalised, but some practitioners are already reporting that the latest draft does not address substantive issues such as the injunction gap. A final draft is expected later this year.

In UPC1, a majority of respondents (58.7%) said there was not enough information available about the new system. The top three selected issues on which they required further information were: costs (75.8%), Rules of Procedure (56.5%); and judges and courts (37.1%).

This is also the general view in UPC2 (59.6%), though this time we did not ask respondents to be specific on the required information. Those who felt otherwise were in the minority.

We know that the planners have stated what the Unitary Patent renewal fees will be, but have only made proposals for court fees. It was only recently that the latest draft of the UPC Rules of Procedure has been circulated via unofficial sources and we reported on the location of the central divisions. To our knowledge, there has been no further information on judges.

At the UPC costs consultation event last June it was clear that stakeholders need more information on how the planners come up with their decisions. Those we interviewed also expressed similar concerns, with one suggesting that up-to-date information (especially official documents) should be published on the websites of the Select Committee and UPC Preparatory Committee. We will look into this in our next survey.

We will share these findings with some of those responsible for implementing the system and invite them to respond over the coming weeks. Further developments are expected in the next few months so we will be repeating the survey, refining the questions where necessary, later this year or early next year.

Read all our coverage of the Unitary Patent and UPC at managingip.com/UPC