The latest on the Unitary Patent (UP) and the Unified Patent Court (UPC)
For the unitary patent package (which includes a Unitary Patent and a Unified Patent Court structure) to come into effect, Germany, France and the UK must ratify the relevant agreements. This is because it is a requirement that the three Contracting Member States with the highest number of European patents in force in the year before the agreement is signed ratify the agreement. However, the fate of the unitary patent package is uncertain because of the UK’s decision to leave the EU (of which the unitary patent package is a part through a procedure known as enhanced co-operation) and the forthcoming general election – we currently don’t know whether the UK will ratify the package.
Before the Prime Minister called the snap election, the UK patent office indicated that the government was proceeding with ratification despite Brexit. It has since indicated that ratification is paused until we know the election’s outcome. While each party includes EU-related statements in its manifesto, there’s nothing specifically addressing the unitary patent package, so it is difficult to predict the future of the package.
Here are three scenarios for the package’s future.
Scenario 1 – UK ratification before Brexit
The UK ratifies the unitary patent package soon after the general election. The package comes into effect in late 2017 or early 2018. The UK’s continued participation (or otherwise) becomes part of the Brexit negotiations.
Continued participation in the package’s current form would require that the UK acknowledge the supremacy of EU law, which is more likely to be acceptable to a Labour government than a Conservative one.
Scenario 2a – No UK ratification before Brexit, and the package proceeds without the UK
The UK does not ratify the unitary patent package at all. After Brexit, either Italy or the Netherlands becomes the third necessary Contracting Member State required for complete ratification (it’s sufficiently close that it’s not possible to predict at this stage). The treaties are ratified and the package comes into effect in 2019 or later. The UK either does not participate or it negotiates participation at a later date.
Scenario 2b – No UK ratification before Brexit, and the package dies without the UK
As in Scenario 2a, the UK does not ratify the unitary patent package. After Brexit, the ratification process stalls and the package doesn’t come into existence at all. This could be for any number of reasons. For example, the package presently requires a central division court in London – which will likely be thought silly if the UK is not a participating State. Once treaty renegotiation is on the table again, the process may (yet again) stall in political deadlock. Or some countries could get cold feet at the idea of participating without the UK, which has a large market (about 15% of the EU market) and is generally regarded as a centre of expertise in patent litigation.
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To opt out or not to opt out – that is the question
If the treaties are ratified and the package comes into effect, patent owners and applicants will have a choice – to opt their patent or application out of the UPC or to opt it in (the default option, absent any action).
I set out the options for owners, applicants, and third parties below.
At present, no single court can revoke a European patent for the whole of Europe (the exception is the EPO’s opposition procedure, which is only available for nine months following the grant of a European patent). Once the UPC comes into existence, a third party will be able to seek revocation before the UPC for all UPC Contracting Member States. It is unclear how the UPC will apply the law on substantive matters of validity, such as inventive step and sufficiency. Further, there is no renewal fee reduction for patents granted before the package comes into effect. Therefore, a cautious approach of opting out granted patents seems to be appropriate in most cases. The option of opting back into the UPC is available and may be recommended once the legal position becomes clear.
Here at Forresters, we are preparing to advise all our patentee clients on their options and to register opt-out requests on your behalf. As soon as we know that the unitary patent package is going to come into effect, we’ll be in touch.
Patent applicants may wish to opt out their European patent applications for the same reasons as patent proprietors. However, upon grant of their European patent, you will have an additional reason to opt in. You will be able to request unitary effect (which is not compatible with a UPC opt-out), which means you file fewer translations and pay lower renewal fees for broad country coverage. The exact break-even point will depend on the countries chosen; however, this is likely to be around four or five countries. Therefore, if you’re seeking protection in all EU states (except Spain, Poland and Croatia), you may choose unitary effect, where previously such broad country coverage was cost prohibitive.
As with patent proprietors, we are preparing to advise all our patent applicant clients and to register opt-out requests on your behalf as soon as we know the unitary patent package is going to come into effect.
At present, third parties cannot seek revocation of a European patent for the whole of Europe in a centralised procedure (save for the EPO’s opposition procedure, mentioned above). Once the unitary patent package comes into effect, it will be possible to seek revocation of non-opted out patents before the UPC. Therefore, if you’re a third party delaying R&D spending or a European product launch because of an invalid patent, you may choose to launch a revocation action on the day the UPC opens for business. Launching a revocation action before the UPC before an opt-out request is registered prevents a patent proprietor from validly making an opt-out request.
Forresters is lining up clients to file revocation actions on the first day the UPC opens for business (if it does). Please get in touch if you’d like our advice or assistance in this regard.
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There is still much uncertainty surrounding the unitary patent package, and any of the three scenarios above are plausible. We will, of course, keep you informed as the situation develops. If you would like further information, or just to talk things through, feel free to contact me or your usual Forresters contact.