European Patent System Sets Date for Unitary Patent to Begin
As a follow up to my recent article on the European Patent System’s new Unitary Patent and Unified Patent Court, the date has now been set for the changes to the European Patent System to commence. The Unified Patent Court Agreement will come into force on June 1, 2023. This means that patent owners can begin to opt out of the jurisdiction of the Unified Patent Court (UPC) during a “sunrise” period beginning on March 1, 2023. This also means that any European Patent having an allowance date (an EPO Rule 71(3) EPC Communication) of January 1, 2023 or later can opt-in for a Unitary Patent.
It is important to note that not all countries that are part of the existing European Patent System have signed on for the Unitary Patent or the UPC. Of the 39 countries that are presently members of the European Patent Organization, currently only 25 countries have signed on to, or are cooperating under, the new Unitary Patent System and UPC. Other countries may, and are expected to, sign on in the future.
As of June 1, 2023, the UPC will automatically have jurisdiction over all Unitary Patents and will have jurisdiction over all traditionally-secured European Patents in existence on that date unless an opt-out has been filed with the European Patent Office. That is, European Patents that have been obtained through the traditional European Patent validation route, will be subject to the UPC, again, unless an opt-out has been filed.
There will be a transitional period of seven years (which may be extended) during which a traditionally-secured European Patent can be enforced or revoked in any national court in which the European Patent is validated, but such enforcement or revocation will be effective in only that country. That is, the enforcement or revocation will not have pan-European effect, but will be effective only in the country in which the enforcement or revocation action is brought.
Unitary Patents will, of course, be the sole province of the UPC. And, the UPC’s decision will have pan-European effect in those countries that have signed on to, or are cooperating under, the new Unitary Patent System and UPC.
Opt-In, Opt-Out, or Abstain?
If, on the one hand, you decide to “abstain” and not make any decision at this point, your traditionally-secured European Patents will be subject to the jurisdiction of the UPC and the national courts in which those patents are validated. It is important to recognize that enforcement or revocation in the UPC will have pan-European effect, whereas enforcement or revocation in a national court will not have a pan-European effect, but will be effective in only the country in which the enforcement or revocation action is brought.
An opt-out for traditionally-secured European Patents can be filed at any time during the seven-year transitional period, except if an enforcement or revocation action has been filed on that patent in the UPC. In such a case, the UPC will have sole jurisdiction for that action, and any UPC court decision will have unitary or pan-European effect.
On the other hand, if you decide to opt out, your traditionally-secured European Patents are subject only to the jurisdiction of the countries where the patents are validated and then only on a country-by-county basis. So, an enforcement or revocation action of that patent is effective only in the country where that action is brought. The decision on that action has no effect in any other country in which the patent is validated. A current provision allows you to opt out now and later opt back in if you decide that the Unitary Patent System and the UPC are the right choice. However, this option is only available one time – you can’t toggle back and forth – and is only available if no enforcement or revocation action has commenced on the patent.
Pros and Cons of the Unitary Patent
The principal advantage of the Unitary Patent is cost. If you would otherwise validate your European Patent in more than four to five countries, then the Unitary Patent could result in a significant savings in cost and time. Only one translation is required and only one annuity payment maintains the patent in force. This can free up your internal and external resources and, in the long term, reduce the cost to maintain the patent. Of course, if your patent is validated in only a few countries, then there are little, if any, cost savings in annuity fees.
As to enforcement and revocation actions, again, success in the UPC means success in 25 countries throughout Europe. It is anticipated that litigation costs in the UPC will be significantly less than enforcing or defending the patent in multiple jurisdictions. Success at the UPC also eliminates the potential unpredictability of different decisions by different national courts.
The downside of the Unitary Patent is that once lost at the UPC by, for example, a successful revocation action, the patent is lost throughout the countries that have signed on to, or are cooperating under, the new Unitary Patent System. Similarly, a decision of non-infringement also results in non-infringement in the 25 countries that have signed on to, or are cooperating under, the Unitary Patent System.
Another potential downside of the UPC is its lack of a track record. While some judges may be well versed in technology and patent laws, other judges may not. As such, there is a risk that your patent may be in a court with a judge with little experience in the nuances of technology and patent law.
Should You or Shouldn’t You?
This really is the $64,000 (or the €45,000) question. And there are a lot of factors that go into answering the question. First, how extensive is your European portfolio? Is it less than four or five countries? If so, the cost savings of a Unitary Patent likely do not weigh in your favor.
How key is your patent and are you open to a single challenge that could result in your patent being revoked? If your patent is key and you could be hurt by its loss, you may consider opting out. Given that there is no track record for the UPC, is this a chance you are willing to take?
Other Considerations
It is important to note that the Unitary Patent and UPC cover only those countries that have signed on to, or are cooperating under, the new Unitary Patent System and UPC. So, if you want protection in a county that has not signed on to, or is not cooperating under, the new Unitary Patent System and UPC, you still have to go the traditional route of validation in that country.
Our Recommendations
For most clients, we strongly suggest opting out at this time. If, at a later date, you decide that the Unitary Patent is for you, you can opt back in. This is particularly true for clients with smaller European portfolios. The risks associated with losing your patent across Europe by one court’s decision are high, especially given that the UPC has no track record.
In addition, not opting out at this time can subject traditionally-secured European Patents (those patents validated on a country-by-country basis) to the jurisdiction of both the UPC and the national courts in which the patent is validated. This increases the risks and uncertainty associated with that patent.
Last, there are still many nuances to be worked out with the Unitary Patent and UPC, which may increase the risks and uncertainty associated with that patent. Until such time that these nuances are worked out and a track record established for the UPC, our recommendation, generally, is to take the safer route and opt-out of the jurisdiction of the UPC.
Of course, every patent and every portfolio should be evaluated on a patent-by-patent and portfolio-by-portfolio basis. We are always available to discuss your patents and portfolios and to align these decisions so that you can attain your goals. Please feel free to contact any of the attorneys in our IP Group for a more detailed discussion of your goals and how we may be able to assist. Reminder: the sunrise period opens on March 1, 2023. We expect there will be a rush at the European Patent Office for opt-out filings, so please let us know as soon as possible if you decide you would like to opt out of UPC jurisdiction so that we can move forward with preparing your opt-out filings.