The European patent system is undergoing major changes that will impact all patent filers in Europe. After years of legal and political hurdles, the long-awaited Unitary Patent and Unified Patent Court should soon see the light of day, and possibly by the end of 2022.
The current European patent system
Under the current European patent system, a European patent granted by the European Patent Office (EPO) is split into a bundle of independent national patents, based on the countries in which the patent holder chooses to "validate" their European patent. The resulting national patents (or "national validations") are separate legal rights. Consequently, enforcement and revocation of the European patent must be initiated on a per-country basis, by taking action via the national courts.
The Unitary Patent
In parallel to existing European patents, a new pan-European patent right, the Unitary Patent, is expected to come into force in late 2022/early 2023. A Unitary Patent will be obtained through the EPO in the usual way, i.e. by filing a European patent application at the EPO and prosecuting the application to grant. However, unlike a European patent which has effect only in those countries in which the European patent is validated, a Unitary Patent will provide a single patent right with unitary effect across multiple European countries (see below for a full list).
For the time being, Unitary Patents will not replace existing European patents, but rather will operate alongside them. Therefore, after the Unitary Patent has come into force and once a European patent application is allowed by the EPO, patentees will have the option of:
1) Validating their European patent in select countries according to the current system;
2) Converting their European patent into a Unitary Patent (providing unitary coverage across a number of jurisdictions); or
3) Opting for a hybrid approach in which the European patent is converted into a Unitary Patent but also validated in select countries not covered by the Unitary Patent.
The yearly cost of renewing a Unitary Patent is expected to be roughly equivalent to the cost of renewing six nationally validated patents. Therefore, patent holders that regularly validate their European patents in more than six countries may see a significant cost savings if they opt to pursue Unitary Patents instead.
The Unified Patent Court (UPC)
In tandem to the Unitary Patent, Europe will see the introduction of a new, centralized patent court, the Unified Patent Court (UPC). The UPC will provide an exclusive 'one-stop shop' for infringement and validity proceedings relating to Unitary Patents. In other words, Unitary Patents will only be enforceable via the UPC, and decisions handed down by the UPC will have unilateral effect in all countries that are party to the UPC (and that have completed the ratification of the UPC Agreement). Conversely, a Unitary Patent can only be challenged via the UPC. If the invalidity challenge is successful, the Unitary Patent will be revoked in its entirety, and patent protection will be lost in all countries covered by the Unitary Patent.
In addition, owners of existing European patents will also have the option of litigating the national validations of such patents before the UPC. Since decisions handed down by the UPC will have effect in all countries that are party to the UPC (and that have completed the ratification of the UPC Agreement), a patent owner may simultaneously enforce the national validations of their European patent via the UPC and obtain an injunction covering all territories associated with the national validations. Conversely, a potential infringer may apply to the UPC to revoke all national validations of a European patent that fall under the UPC's jurisdiction (or make a claim for a declaration of non-infringement).
When is this happening?
While the UPC and Unitary Patent were originally intended to come into force a number of years ago, Brexit in combination with some legal challenges have delayed the ratification of the UPC Agreement. However, with many of these roadblocks having recently been removed, experts are forecasting that the UPC and Unitary Patent could potentially come into force in 2023, if not by the end of 2022.
Which countries are party to the UPC and Unitary Patent?
The following countries are signatories to the UPC Agreement (although not all of them have completed the ratification process): Austria, Belgium, Bulgaria, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Portugal, Romania, Slovakia, Slovenia, and Sweden.
Countries that are covered by the current European Patent Convention, but that are not EU member states (such as Norway, Switzerland, and the UK), are not participating in the UPC and will not be covered by the Unitary Patent. Neither will it be possible for existing patent rights in these countries to be tested under the UPC system. Patent protection for these countries must continue to be sought either nationally or via traditional European patent validations.
Do I have to be involved in the new system?
During a transitional period of at least seven years after the coming-into-force of the UPC, owners of European patents will have the option to OPT OUT of the UPC's jurisdiction for any of their existing and future European patents and European patent applications. The period for opting out existing European patents (dubbed the "sunrise period") is expected to commence prior to the coming-into-force of the UPC, although the precise timing of this is as yet unclear.
Those European patents that are opted out will proceed as normal, i.e. as a bundle of separate, individual national patent rights that can only be enforced and challenged via the national courts. On the other hand, those European patents that are not opted out will fall under the jurisdictions of both the national courts and the UPC once it comes into force. As explained above, this means that European patents that are not opted out may be litigated via the UPC. Theoretically, the national validations of a European patent that is not opted out during the sunrise period could, on the very first day the UPC Agreement comes into force, be subject to a central revocation action brought before the UPC. If successful, the revocation action would invalidate, in all countries that have ratified the UPC Agreement, any and all national validations of that European patent.
Should I opt out?
This is an important question, the answer to which will depend on many factors. On the one hand, European patents that are not opted out of the new system may be enforced in multiple European countries using a single procedure. On the other hand, these same patents may be invalidated via a single revocation action. In addition, the new UPC system is not without a large degree of uncertainty. No one really knows how the UPC will function in practice, and for the time being the prevailing view is that it may be wiser to adopt a "better safe than sorry" approach and opt out existing European patents, especially those of relatively high value. Furthermore, although there is no official fee to opt out a European patent, there may be a cost involved in preparing and filing any opt out applications, and this could be significant if a company owns many European patents.
A European patent which has been opted out may be "opted in" to the UPC at a later time by withdrawing the original opt out, provided that litigation has not been initiated against any of the national validations of the European patent. Therefore, it is useful to bear in mind that just because you opt out a European patent from the UPC does not mean that you are permanently barred from accessing the UPC's wide-ranging jurisdiction at a later time.
What should I be doing?
- Review your European patent portfolio
- Determine which patents should be opted out of the UPC , and which (if any) should be left to opt in. This is likely to involve a multi-factorial analysis, e.g. how important is the patent? What are the lifetime costs of maintaining the patent in force?
- If interested in obtaining a Unitary Patent, consider slowing examination of a pending European application until the Unitary Patent comes into force, and/or filing a divisional application
- Review licence agreements and discuss with any co-owners
- Some agreements may need to be updated to provide control over the opt-out procedure
- Contact your patent agent at Gowling WLG to discuss options further