Are you ‘Unitary Patent ready’?

The fast approaching new European patent system poses a challenge for every field of innovation. Review your licenses, even consider opting out.

With the fresh rejection on 4th May 2015 of Spain’s claims to The Court of Justice of the European Union (CJEU) that EU regulations establishing the Unitary Patent were invalid, the last barrier to a uniform patent protection stretching across the majority of the EU single market seems to have been removed.

Latest estimates suggest the legal regime, with its new form of Unitary Patent protection and new Unified Patent Court (UPC), a connected pan-European patent litigation system, will come into effect at the beginning of 2017.

All innovative industry players, anyone with granted European Patents validated in relevant, contracting EU member states, anyone whose business is affected by such patents, and any entity engaged in research activity which may result in the creation of intellectual property (IP), needs to familiarize themselves with and understand the new litigation system, particularly the transitional period where national litigation forums and the UPC will enjoy parallel jurisdiction for European Patents. Many fail to realize, though, that the UPC’s jurisdiction will not only cover future Unitary Patents, but also extend to existing European Patents, where license agreements may already be in place. Here rights holders will need to decide whether to opt out their European Patent from the UPC’s jurisdiction. They will also need to evaluate the enforcement scenarios which the new system will typically give rise to and the resulting strategic decisions they may need to make. With probably less than two years to go, parties need to start reviewing patent license agreements to reflect their positions on the UPC. These should also be considered in negotiating new agreements; failure to do so may give rise to conflicting interests between IP owners and their licensees later and with the threat of infringement looming these may only be resolved at great expense and the risk of rights being lost.

The new system also requires industry players to strategically rethink and position their patent portfolios, and weigh up the pros and cons of opting out their granted European Patents from the jurisdiction of the UPC. Granted European Patents which are not opted out may be revoked centrally by the UPC resulting directly in any validated national patent based on the same European Patent being rendered invalid in every contracting EU member state. However, choosing not to opt out will enable the patent holder to stop infringers in Germany, France, the UK and other EU countries with a single infringement procedure, instead of submitting the patent to the decisions of a whole host of national courts. Under the current draft Rules of Procedure a first instance infringement decision from the UPC may be expected within 12-14 months.

Those intending to launch a new product on the EU market which may be affected by an existing European Patent will have the opportunity to invalidate the blocking patent, provided this has not been opted out, in a single procedure before the UPC, saving the cost of separate national revocation actions.

A few questions still need resolving, though. The exact fees for obtaining a Unitary Patent and the cost of litigation before the UPC, as well as the fee for opting out a granted European Patent from the exclusive jurisdiction of the UPC, are yet to be determined. The first publicly available proposal suggests renewal fees will be proportionate to those for validating a European Patent in four or five countries, so those who would otherwise validate a European Patent EU-wide will clearly benefit from the availability of the Unitary Patent.

Importantly, any market player choosing to take the traditional approach to validating a national or European Patent will face no limitations in the new system, with national courts maintaining their jurisdiction for patents filed at national patent offices.

With the Unitary Patent and the UPC broadening the horizon of protection of European Patents, all sectors of industry need to ensure they are fully prepared for the new system to make the most of the opportunities it will undoubtedly bring.