Those who have waited almost 40 years for a single European patent have just a little longer to go: if all goes to the European Commission’s plan, 25 member states will sign a deal setting up a Unified Patent Court for Europe at the February 18 meeting of the Competitiveness Council.

Once done, 13 EU member states – including France, Germany and the UK - will need to ratify the agreement before it can come into force. This is what patent owners are likely to do next.

Pharmaceutical companies

Companies that have a small number of highly valuable patents – such as those in the pharmaceutical sector – are most wary about making use of the new unitary patent. They have little financial or strategic incentive to protect their IP rights in a system that could see their patent revoked across Europe as the result of a single legal action.

“There’s a real risk to us,” David Rosenberg of GSK told Managing IP’s Patent Forum last year. “One bad-quality decision could knock out a patent. Even if we had any blockbusters any more we can’t take that risk.”

GSK is not alone. “I can’t see our life science clients willing to test the new system until it has a track record and they know the courts will deal with them like the existing courts,” says Daniel Brook of Hogan Lovells.

The new court system will apply to existing European patents unless the patentee opts out. That opt out will last for at least seven years after the new rules come into force – unless, of course, somebody applies to revoke the patent under the Unitary Patent Court system.

Brook added that he suspected few big pharmaceutical companies would put their patents in the unitary patent system, preferring to use national designations of European patents or even national patents instead, but ready to re-enter the system if they see the benefits in the future.

But if owners of high-value patents shy away from the new court, that could mean that it becomes a forum for weak patents, says Gwilym Roberts of Kilburn & Strode.

Telecoms and IT companies

Businesses in this litigation-heavy sector have an incentive to file plenty of patents to ensure that their IP arsenals can withstand legal attacks from rivals. High volumes of patent filings and a scramble to buy patent portfolios suggest that companies believe that more is best when it comes to patents. But obtaining piles of patents comes at a price. Some companies will decide that they can economise by obtaining patents in key European markets – likely to be Germany, the UK and France – while others in this sector will be attracted by the cost savings that applying for a unitary patent may offer – so much so that they may be willing to provide test cases to the as-yet unproven Unified Patent Court.

How much money applicants may save, however, is unclear and they will only be able to calculate potential savings once filing fees and renewal fees (as well as fees for using the Unified Patent Court) are agreed. Until then, applicants are reliant on what Hugh Dunlop of Jenkins describes as zombie facts: misinformation that simply won’t die about the potential cost savings of the unified patent.

One of the biggest litigation concerns for telecoms and IT companies is the rise of lawsuits from patent trolls (see below). The way the unitary patent system works means that if even a patentee doesn’t use the system, it may be sucked into litigation before the Unified Patent Court if its competitors file unitary patents and sue it for infringement there.

Companies that do business across the EU

The potential cost savings of the unitary patent are most likely to be attractive to companies that sell their products across the EU. Businesses that focus on a small number of key markets are likely to find that filing nationally is most cost effective. “There’s a geographical split – many people don’t do business in Slovenia,” says Brook. Even those that do tend to focus their litigation strategy on a handful of markets: Germany, the UK, the Netherlands and, to a lesser extent, France. Brook says that these companies may be best served by applying nationally for patents in key markets and using the EPO for the rest.

Roberts agrees: “I can envisage a blended approach by the bulk filers – spreading their IP across different systems so as to hedge the effects of the UPC being as bad as detractors fear.” That implies that national patent offices need to ready themselves for what Roberts calls a “potential deluge” of filings by patentees unwilling to put all of their eggs in the UPC basket.

Non-practising entities

Patent trolls are interested in the trip-trapping of applicants towards the unitary patent, say lawyers. At the moment Europe offers less-fertile ground for non-practising entities than the US, where the threat of triple damages and the lack of costs awards often encourages would-be defendants to license patents rather than litigate. The unitary patent, however, holds out the potential of an EU-wide injunction, which could tip any pre-litigation negotiations in an NPE’s favour. That risk could rise, along with forum shopping, if some of the new court’s regional divisions develop a pro-patentee reputation.

“I think the opportunities for forum shopping will also attract users,” says Roberts. “We need to see how many courts are eventually available, but all we need is for one to become the Eastern District of Europe and patentees everywhere will be delighted.”

Small-and medium-sized entities

One of the key arguments made by the Commission in support of the unitary patent system is that Europe’s fragmented patent system disadvantages SMEs who want to protect their rights and litigate their patents across Europe. It seems clear that patenting across the EU will be cheaper under the unitary patent system. But there are doubts as to whether SMEs will save much money by using the new litigation system.

That’s because most SMEs don’t fight patent disputes in multiple jurisdictions. Having to pursue actions in local divisions, a central division in Paris, Munich or London and potentially up to the Court of Justice in Luxembourg could be more than the litigation budgets of many small companies could bear, putting pressure on them to settle rather than fight. There may be other reasons why SMEs want to stick with the present system. In the UK, for example, small companies that own patents can make use of cheap and user-friendly reforms implemented three years ago at the Patents County Court. They may believe that switching to a system than grants jurisdiction to the Unitary Patent Court will give them few practical advantages.