A new European patent system

The new European patent system consists of two parts: the unitary patent itself and the Unified Patent Court (UPC). The regulations and the agreement that form the basis for the new system are available here.

The new system will come into force three months after 13 countries have ratified the underlying agreement. The current ratification status can be viewed here. The countries that have ratified so far are France, Belgium, Bulgaria, Denmark, Austria, Sweden, Luxembourg, Malta, Portugal and Finland. Germany and the United Kingdom will also participate. It is highly likely that the Netherlands will also take part from the beginning. Other EU countries can join at a later stage.

However, before the system actually comes into force, there will be a period of around six months (sometimes called the ‘sunrise’ period) during which certain aspects of the regulations, such as opt-out registration and the appointment of judges, will already begin to be implemented to allow the system to hit the ground running once the ratifications have been completed.

The new system adds a layer of complexity to the European patent law, meaning strategic choices will need to be made.

The new European patent system will also apply to legal protection afforded by SPCs (supplementary protection certificates).

Unitary patent
The unitary patent has been created to serve as a true European patent: it is a single patent that is valid practically anywhere in the European Union. However, it is not a ‘new’ patent - instead, it seamlessly supplements the existing European patent system. To explain properly how this works, we should have a look at the current situation first.

Current European situation
The current situation in Europe is that there are two co-existing patent systems.

National patents are the first and oldest system. These can only be requested in a single country, and only offer protection for that same country. In addition, only the national courts have jurisdiction in respect of such patents, and different maintenance fees are applicable in each country.

The other type is the European patent, which is granted by the European Patent Office. Once an application has been examined and approved, a European patent is granted for all 38 contracting states (which can be seen here). Certain countries outside the European Union also participate in the scheme.

Once granted, a European patent is split into a so-called bundle of national patents. These are not automatically valid: the patent needs to be validated in each country separately. For a large number of countries, the complete patent specification or at least the claims need to be translated into the official language.

Once validated, the European bundle patent has the same effect as a national patent in that country. This means that any patent proceedings (for example regarding infringement) take place in the national courts, under the law of the country in question. In addition, a European patent is subject to separate renewal fees of maintenance fees in each country that has validated it.

What is changing under the unitary patent system?
The unitary patent rules have no effect on the examination and granting process. As with the traditional bundle patent, this will continue to be dealt with by the European Patent Office. However, the difference is in what happens next. Within a period of one month after the European patent is granted, there will be an option to request for ‘unitary effect’. Such a request is optional. : the patent proprietor may still seek to validate the European patent in the existing way. The application for the unitary effect should be made to the European Patent Office. In countries that do not participate in the unitary patent system, protection can still be obtained through the existing validation route.

The effect of the registration of the unitary effect of a patent is that the patent becomes a single unitary patent for all participating countries. Choosing to register a patent as unitary will have the following consequences:

1. No separate validations are needed in the countries taking part in the unitary patent system, meaning that the patent specification will no longer need to be translated. There is however a transitional period of 6 years during which a translation of the patent will still need to be provided. If the patent is granted in English, a translation into any chosen EU language can be submitted. If the patent has been granted in German or French, an English translation will need to be provided.

2. The renewal fees for the unitary patent are payable to the European Patent Office, meaning no more fees will be owed in individual countries. The amount of the renewal fee has been calculated to be equal to the sum of the renewal fees for four countries under the current system. This means that the unitary patent will offer protection in at least a further 9 countries essentially for free compared to the current system.

One potential disadvantage of the unitary patent is that if renewal fees are no longer paid, the patent will cease to exist in all participating countries. This means that, it will no longer be possible to reduce costs by keeping the patent in force in one or two countries only towards the end of the patent term.

3. The patent will be valid for the entire area covered by the system, which means that any infringement and validity proceedings will also be conducted across that area. The advantage of this is that in case of infringements in more than one country, the patent holder will no longer need to initiate separate court proceedings in each country. However, if a patent is declared invalid, this ruling will apply across all countries using the system (but see also opt-out).

4. There will be a single register for unitary patents, which will greatly simplify the process of transferring and licensing them for all countries.


Requirements for granting unitary effect
Any European patent granted after the agreement comes into effect will be eligible for registration as a unitary patent. However, there are two exceptions. Registration as unitary patent is not possible for patents having a filing date before 1 March 2007. A second exception applies for the very rare patents that are granted with different sets of claims for different (participating) countries.

Countries participating in the unitary system
The following countries will take part in any case: Germany, France, the United Kingdom (but see also Brexit ), and the countries that have already ratified the agreement, being Belgium, Bulgaria, Denmark, Austria, Sweden, Luxembourg, Malta, Portugal and Finland. The current ratification status can be viewed here.

The following EU countries have not yet ratified the agreement, but are likely to participate from the beginning, or join at a later stage: Cyprus, Estonia, Greece, Hungary, Italy, Ireland, Latvia, Lithuania, the Netherlands, Romania, Slovenia, Slovakia and the Czech Republic.

A few EU countries have decided not to participate for the time being: Spain, Poland and Croatia.

Countries in which European patents currently apply, but which are not part of the EU, will not be able to participate in the unitary patent system. These are Albania, Iceland, Liechtenstein, Macedonia, Monaco, Norway, Serbia, San Marino and Switzerland. The extension countries (Bosnia-Herzegovina and Montenegro) and the validation countries (Moldova and Morocco) will also be ineligible.

For these non-participating countries, a granted European patent can be validated in the usual way, regardless of its unitary status in the participating states.

Brexit
Now that the British have voted for a Brexit, it does not seem likely that they will ratify the UPC Agreement as yet. In that case, ratification by the UK, required for the start of the system, will be delegated to the next major EU state: Italy. However, since it will take at least another two years before the Brexit actually takes place, the ratfication by Italy will not be effected until after that period. This would mean a serious delay of the system.


UPC
Because the unitary patent is enforceable across all participating countries, it has been necessary to create an entirely new European court structure (see UPC structure). This consists of two courts, being the Court of First Instance and the Court of Appeal. Taken together, the new European court structure is referred to as the Unified Patent Court (UPC). 

The UPC will have exclusive jurisdiction in cases involving unitary patents. In addition, it has been decided that for all participating countries, the new court will have the authority to deal with ‘old-style’ European patents, i.e. those that have been validated separately in each country. In the longer term, the UPC will exclusively deal with proceedings concerning validity and infringement of all European patents, meaning they will no longer be able to be brought before the national courts. In the mean time, there is a transitional period of 7 years, during which patent holders will still have the choice to bring proceedings before the national courts (under the existing system) instead of the UPC. 

At any time, third parties may bring revocation proceedings before the UPC, to have a patent in all countries. An opt-out procedure exists if a patent holder would prefer to keep their European patents other than unitary patents outside the jurisdiction of the UPC.

The UPC has a number of remarkable characteristics: it will have technically trained judges (see UPC judges), legal representation by European patent attorneys will be allowed, and it will become possible for a patent infringement case and a counterclaim disputing the validity of that same patent to be dealt with separately (bifurcation).

In addition, the costs (court fees) for bringing a case to the UPC have already been made public.

Two courts
Just like national courts, the UPC has two levels: the Court of First Instance and the Court of Appeal (see UPC structure).

The Court of First Instance and its administrative office are based in Paris, and the Court of Appeal with its administration will be situated in Luxembourg.

The Court of First Instance is divided into two functional units, the central division and the local/regional divisions. The local/regional divisions will mainly deal with infringement cases, while the central division will mainly deal with revocation cases. During the creation of the UPC, the place where the central division would be situated was a political point of contention. It was eventually decided that the central division will have three seats: headquarters in Paris, and two branches in Munich and London.

Although the UPC is an independent court and is not subject to the national courts, the UPC must apply EU law. The UPC must refer questions for preliminary ruling to the European Court of Justice as necessary.

Local/regional division
One of the intentions of the UPC is that each country or region should have its own local division. Member states can choose whether to set up their own local division, or whether to form a regional division together with others. The currently known locations for local divisions are London, Munich, Düsseldorf, Hamburg, Mannheim, The Hague, Brussels, Paris, Milan, Helsinki, Copenhagen, Dublin and Vienna. Stockholm will host a regional division for Sweden and the Baltic states: Estonia, Latvia and Lithuania. Countries not mentioned here have not yet reached a final decision, but a number of them are expected to host a local/regional division (see UPC structure).

The local/regional divisions will largely be dealing with infringement cases, but potentially also with revocation counterclaims. If patent proprietors believe there may have been an infringement (both of unitary patents or the traditional bundle patents) in one of the countries where the patent is valid and falling under the UPC system, they may initiate infringement proceedings at the UPC. Which local/regional division is to hear the case depends on where the infringer is based and/or the location where the infringement took place.

The extent to which forum-shopping is possible and useful under the UPC is yet to be seen. It is however the case that the choice of certain local/regional divisions may have consequences as to which procedural language is used.

Central division
The main function of the central division of the UPC is to settle disputes regarding the (in)validity of patents – so-called revocation or nullity cases – and to deal with declarations of non-infringement. As a result of political discussions during the conclusion of the UPC agreement, the central division has actually been split into three parts, based in Paris, Munich and London. This three-way split has certain consequences for the types of cases that can be dealt with at each location. The type of patent is the decisive factor: London will handle patents regarding human necessities, chemistry and metallurgy (classified under IPC classes A and C), patents for mechanical engineering, lighting, heating, weapons and blasting (IPC class M) will be dealt with in Munich, and all other patents (performing operations, transport, textiles, paper, fixed constructions, physics and electricity) will be handled in Paris.

Procedural language
In infringement cases, the UPC procedural language will be determined by the choice of local/regional division. The UPC structure overview shows the possible procedural languages for each place in which a local/regional division will be set up. Many but not all divisions will allow proceedings in English.

The central division will hear cases in the language used by the European Patent Office when the patent was examined and granted, regardless of the location of the central division where proceedings are being conducted.

The procedure language used in the Court of Appeal will be the language used in the Court of First Instance, or if the parties agree, the procedural language of the patent (French, English or German).

UPC judges
The new court system will of course need new judges, and it is the intention to recruit these from the participating countries.

The UPC will have both legally qualified judges and technically qualified judges. Technical judges do not need to be lawyers, but they should have an understanding of the technical subject of the patent, e.g. a PhD or university degree in the technical field. Three judges will usually be appointed in proceedings. For infringement proceedings, all three will be legally qualified, but in revocation cases, two legal judges and one technical judge will be appointed.

The exact composition of the panel of judges dealing with a case will also depend on the division. In local/regional divisions in countries that have plenty of experience with patent litigation cases, two of the three judges will originate from that country, while a third will be brought in from abroad. To facilitate this, there will be a pool of judges. This method will apply in countries such as the United Kingdom, Germany and the Netherlands. In countries that have less experience of patent law, only one national judge will be appointed to the panel, while two will be drawn from the pool. In the central division, all three judges will be chosen from the pool. The purpose of this system is to ensure exchange of knowledge between the judges. For each particular case, the president of the UPC will appoint the judges of the panel, taking into account the language to be used.

Panels in the Court of Appeal will have five judges, three of which will be legally trained and two technically trained. Steps have already been taken to gauge the level of interest in appearing as a judge at the UPC. An initial announcement drew 1300 reactions, including reactions of 300 candidates meeting all requirements. Therefore it is generally expected that the UPC will be able to start operating with a high calibre of judges. However, because of the fact that certain countries do not have extensive legal practice with patent disputes or judges experienced in this matter, the UPC agreement provides for the establishment of a training centre for (prospective) UPC judges. This centre will be situated in Budapest. An initial training course for prospective judges from these countries has already taken place. All judges will receive additional training, which was deemed necessary because the new legal system brings a new set of procedural rules with it. These rules have almost been finalized, and can be viewed here.

Bifurcation 
If an alleged infringer invokes the invalidity of a patent as defence , he needs to lodge a revocation case. This can be done in the same procedure by means of a counterclaim. This means that the infringement case (normally dealt with by local/regional divisions) and the revocation case (normally heard by the central division) will run concurrently.

In such situation, the UPC can decide to split these matters, as is current practice in Germany. Such a split is known as bifurcation. The choices open to a local/regional division when a counterclaim for revocation is submitted are as follows:

1. The local/regional division can deal with the proposed revocation and hand down a ruling on the validity or invalidity of a patent. In such cases, it is mandatory to appoint a fourth, technically qualified judge.

2. The local/regional division continues to hear the infringement case, but refer the counterclaim to the central division. The local/regional division will then have the option to defer the infringement case until the central division (and the Court of Appeal, if applicable) has handed down a ruling on the validity of the patent, but it can also make a decision without waiting for the central division’s judgment. Infringement cases will however be suspended if there is a significant likelihood that the patent, or the relevant patent claims, are invalid.

3. The local/regional division may decide to transfer the entire case (infringement and revocation) to the central division. This can only be done with the agreement of all parties involved.

Which of the above options will be chosen will eventually depend on the judges in the local/regional division. For the time being, it seems that the parties involved in the case will have little influence on this.

Legal representation
One of the new provisions of the agreement is that aside from lawyers, European patent attorneys will also be allowed to represent parties before the UPC. However, this does not apply for all European patent attorneys, but only to those who hold the additional European Patent Litigation Certificate. Almost all of V.O.’s patent attorneys will be able to act as representatives. In practice, it is expected that lawyers and patent attorneys will often represent a party together in the procedures.

Costs
The UPC agreement stipulates that the court should be financially independent, and source their own income. This means that the fees for bringing a case before the UPC will be higher than the court fees for proceedings in the Netherlands.

The amounts to be paid to the UPC can increase significantly, because for a number of procedures including infringement cases, a variable fee depending on the value of the case will be added. For example, this variable element is €2,500 for cases with a value between €500,000 and €750,000, but can run up to €325,000 for cases with a value over €50 million.

The fees are shown in the table below:

Table 1: Fixed fees for cases at first instance, in which a variable fee (see Table 2) is also applicable.

Procedure

Fixed fee

Infringement

€11,000

Counterclaim for revocation
(variable fee up as for infringement with limit of € 9,000

€11,000

Declaration of non-infringement

€11,000

Determining compensation for licence of right

€11,000

Determining compensation for damages

€3,000



Table 2: Variable fees for Table 1 proceedings

Dispute value

Additional variable fee

≤ €500,000

€0

€500,000 - €750,000

€2,500

€750,000 - €1,000,000

€4,000

€1,000,000 - €1,500,000

€8,000

€1,500,000 - €2,000,000

€13,000

€2,000,000 - €3,000,000

€20,000

€3,000,000 - €4,000,000

€26,000

€4,000,000 - €5,000,000

€32,000

€5,000,000 - €6,000,000

€39,000

€6,000,000 - €7,000,000

€46,000

€7,000,000 - €8,000,000

€52,000

€8,000,000 - €9,000,000

€58,000

€9,000,000 - €10,000,000

€65,000

€10,000,000 - €15,000,000

€75,000

€15,000,000 - €20,000,000

€100,000

€20,000,000 - €25,000,000

€125,000

€25,000,000 - €30,000,000

€150,000

€30,000,000 - €50,000,000

€250,000

≥ €50,000,000

€325,000



Table 3: Selection of fixed fees for proceedings before the UPC (no variable component)

Procedure

Fixed fee

Revocation proceedings

€20,000

Provisional measures

€11,000

Action against a decision of the European Patent Office

€1,000

Order to preserve evidence

€350

Filing a protective letter

€200

 

Similar fees apply in appeal procedures.

There are no fixed rules to determine the value of a dispute, but the guidelines provided suggest that this value is best/most easily decided assuming a licence situation. If both parties agree with the value estimate, it will in principle be accepted by the court.

SMEs are eligible for a fee discount of 40%, and the court can set different fees for reasons of fairness and reasonableness. 

In addition, it will be possible to obtain (partial) reimbursement of any fees paid if the case is dealt with by a single judge, the case is withdrawn, or if the parties reach a mutual settlement.

Opt-out 
The UPC has the authority to deal with unitary patent cases, but also with cases concerning existing or future European patents. However, it does not have exclusive authority for the latter, because of the seven-year transitional period during which such cases can still be brought before the national courts. In an infringement case, it is up to the patent proprietor to decide whether it is handled by a national court or the UPC. If a third party initiates revocation proceedings, they will have the right as claimants to choose whether the case brought before the national courts or the UPC (central division). A potential consequence of choosing the UPC is that, if the patent is revoked, this will apply in all participating countries. This is a clear difference with national revocation proceedings, where any declaration of invalidity will apply in that country only, and the patent will in principle remain in force in other countries.

The UPC agreement includes a provision (in the form of an opt-out) for the patent proprietor to decide that they do not want the UPC to deal with validity/invalidity claims for one or more of their patents. This provision has been included to address possible concerns about revocation actions before the UPC. By filing an opt-out, the proprietor can avoid having to defend the patent before this court.

If the proprietor of a certain European patent submits an opt-out to the UPC, no revocation cases can be brought against that patent in that court. However, the patent proprietor will likewise not be able to initiate any infringement proceedings for that patent before the UPC. To allow patent proprietors to bring such proceedings to the UPC, the opt-out can be withdrawn. This choice for such an “opt-in” will however be final: no further opt-out can subsequently be requested.

An online tool has been developed to allow patent proprietors or their attorneys to register their patents for an opt-out. This requires that the patent owner for each European patent in each participating country is known, and that the person submitting the opt-out request has been authorised to do so by all patent owners. Opt-out requests where such authority is lacking or where incorrect ownership details are provided will be deemed invalid.

Requests for opt-outs can be submitted up to seven years after the entry into force of the UPC system. During this period, requests can be submitted for any pending and granted European patents, but not for unitary patents. The participating countries have the option to extend this seven year period to maximally fourteen years. Once an opt-out has been submitted, this will remain valid for the entire term of the patent, including after the transitional period (unless the opt-out is revoked at any stage).

To prevent a flood of opt-out requests on the UPC’s first day of business, and considering the possibility that revocation proceedings can be initiated against the patents concerned on the same first day, it will be possible to submit opt-out requests a few months before the UPC begins work. As such, it has been decided that early opt-out requests can be made during the sunrise period, which is expected to start in the autumn of 2016.

UPC structure

UPC component

Country/location

Subject

Language

Court of Appeal

Luxembourg

Appeals against Court of First Instance decisions

Language of proceedings at first instance

 

Luxembourg

Administration

 

Court of First Instance

Paris

Administration

 

Central division

Munich

(In)validity of patents concerning mechanical engineering, lighting, heating, weapons and blasting

Language of procedure of the patent

 

London

(In)validity of patents concerning human necessities, chemistry and metallurgy

 

Paris

(In)validity of patents concerning performing operations, transport, textiles, paper, fixed constructions, physics and electricity

Regional division

Stockholm (Sweden, Lithuania, Estonia, Latvia)

Infringement  actions, requests for determination of damages, requests for seizure or inspection

English

 

Budapest (Hungary and Croatia) (not yet certain)

?

 

Prague (Czech Republic and Slovakia) (not yet certain)

?

 

Athens (Romania, Bulgaria, Greece, Cyprus) (not yet certain)

?

Local division

London

English

 

Düsseldorf

German and English

 

Munich

 

Mannheim

 

Hamburg

 

Paris

French and English

 

The Hague

Dutch and English

 

Brussels

Dutch, German, French and English

 

Milan

Italian (and English?)

 

Helsinki

Finnish, Swedish and English

 

Copenhagen

Danish and English

 

Dublin

English

 

Vienna

German

 

(Ljubljana - not yet certain)

Slovenian and English

Patent Arbitration and Mediation Centre

Ljubljana and Lisbon

Arbitration and mediation

Determined by parties

Judge training centre

Budapest

Training of judges

English


Sunrise period
The UPC and the option to request unitary effect for European patents will commence three months after the agreement has been ratified by thirteen countries, including France, Germany and the United Kingdom.

As there are a significant number of matters that need to be arranged in order to ensure the system can work as intended from its first day, the participating countries have decided to implement certain elements of the UPC agreement a few months in advance. This preliminary stage is called the sunrise period.

The sunrise period will be used to organise a large number of practicalities, such as the selection and appointment of judges, and the preparation of IT systems, supporting services and locations. In addition, it will be possible to file opt-out requests during the sunrise period.

Strategic choices
The entry into force of the unitary patent and UPC system adds another dimension to the already complicated field of European patents. So, what are the current options for obtaining protection in Europe?

National patents are the first and oldest component. These can only be requested in a single country, and only offer protection for that same country. In addition, only the national courts have jurisdiction in respect of such patents, and different maintenance fees are applicable in each country.

The European patent system, which quickly gained in popularity, followed. Through this system, a patent can be granted for 38 countries with a single application procedure. Once granted, the patent will need to be validated in most of the countries, which usually requires a translation of the patent specification or its claims.Maintenance fees are to be paid to the European Patent Office up to the grant of the patent, but once granted, fees will need to be paid separately in each country where the patent is validated. Because a granted (and validated) European patent stands on equal footing with a national patent, the national courts in each country have jurisdiction to deal with any disputes. However, once the UPC comes into being, it will also be able to deal with court cases for this type of patent.

There are no differences in the examination procedure for unitary patents (UP). Rather, the granted patent can be registered as unitary patent after grant, such that the patent is in force in all (participating) European Union No changes will take place in countries that are not participating in the UP/UPC system. The UPC has exclusive jurisdiction for unitary patents, and there will be a single maintenance fee, which will be equal to the sum of the maintenance fees in four countries under the current system. However, a unitary patent will provide protection in at least thirteen countries, and potentially more.

In summary, the advantages and disadvantages of the three types of patent are as follows:

 

National patent

European patent (existing)

Unitary patent

Examination procedure

National

European Patent Office

European Patent Office

Granted patent

National

National (validation)

Unitary patent in participating countries + national validation elsewhere

Maintenance fee

National

EPO for pending patents, then national

Single fee for unitary patents, national in other countries

Competent court

National

UPC (choice of national court for first 7/14 years)

UPC

Lapse of the patent

 The patent can be allowed to lapse for individual countries.

The patent can be allowed to lapse for individual countries.

A unitary patent can only be allowed to lapse in its entirety.

Extent of protection

No harmonisation

Harmonised, with national differences

Harmonised

Peculiarities

Granted patent can be converted to utility model in certain countries

Granted patent can be converted to utility model in certain countries

Initially not available in some countries, e.g. Spain.

 

 See also the webpage FAQs on Unitary patent and UPC