This article is a follow-up to our article introducing the Unitary Patent (UP) and the Unified Patent Court (UPC) in Europe. In this article, we provide further clarity into the process and insight into how to make the relevant decisions in the process.
Reviewing the Process
In the diagram below, S denotes the beginning of a sunset period, which is when Germany deposits its ratification of the UPC Agreement probably later this year; G denotes the beginning of a transitional period when the UP/UPC becomes applicable, which is expected to be three or fourth months from S[i]; E denotes the end of the transitional period, which is expected to be seven years from G. A and B denote the two decision processes or rather the beginning thereof. Each shaded arrow indicates an optional route.
Decision A for an European (EP) patent application (application) that has been allowed can be implemented any time after the sunset period begins. However, the decision-making process should start now. This is especially so when you are interested in having your EP application issue into an UP because certain steps can be taken to delay the grant process until the UP/UPC becomes applicable. By default, an EP application issues into a classic EP patent, and a request needs to be submitted soon following the decision to grant for the EP application to issue into a UP. It is possible to withdraw the request, as long as no decision has been taken by the European Patent Office (EPO), i.e., registration of unitary effect or rejection of the request. Therefore, once an EP application issues into a patent, it will not be possible to switch between a classic EP patent and a UP.
Decision B for a classic EP patent can be implemented anytime during the sunset period and the transitional period. Being subject to the competence of the UPC is the default option, and thus if you have no interest in the UPC, you need to submit an opt-out request. If you would like to opt your classic EP patent (including all national validations) out of the UPC, however, you should do so as possible. This is because once your patent is subjected to infringement or validity proceedings in the UPC, an opt-out is no longer permitted. On the other hand, it is possible to withdraw the opt-out request but impermissible to submit a second opt-out request.
Considering the Role of the UPC
For both decisions, the role of the UPC is a main consideration. The UPC is a court system for litigating an EP patent while supporting the UP, including the validation and maintenance thereof. The UPC has a tiered structure with a Court of Appeal in Luxembourg, a central division in Paris and Munich, and local and regional divisions.
Some of you may not be or expect to be active in enforcement activities. You can then skip over this consideration. You can also choose the option that avoids the UPC while the UPC is being tested during the early stage, especially since you can opt your classic EP patent back into the UPC during the transitional period, as noted above (with no official fee to opt-out or opt-in). Choosing this option means doing nothing for decision A and opting out for decision B.
For those of you who litigate frequently across multiple countries, the UPC has several expected advantages for which it is built, including having both legal and technical judges at least in upper courts, specific upper courts dedicated to specific arts, English as the main language, a relatively short timeline, and potential cost efficiency, not to mention the pan-European enforcement. You can then embrace the UPC now by applying for the UP for decision A, where decision B becomes moot. Depending on what the role of UP means to you, as further discussed below, you could also do nothing for decision A and do nothing in for decision B. However, you can also choose the option that avoids the UPC before the UPC matures, as discussed above.
Considering the Role of the UP
The role of the UP is another consideration. The main draw of the UP is the convenience of centrally validating and renewing an EP patent. It is worth noting that this convenience may be offset to a certain extent by the use of a renewal agent at a relatively small expense. On that note, one potential downside of the UP is the cost. Currently, only the claims of a classic EP patent need to be translated into English and two other official languages. During the transitional period, though, the specification of a UP has to be available at least in English and one other official EU language. For an EP application of around 50 pages (including claims and drawings) written in English, this could mean an estimated extra cost of $2,000.
More significantly, for a UP, one single fee will be payable each year for the entire territory of the member states[ii] participating in the UPC (without separate validation fees). As that fee is approximately equal to the sum of renewal fees for the top-four validation states[iii], the convenience may not be worth the money when you are interested in enforcing the EP patent in fewer than four member states. For example, it has been relatively common to validate a classic EP patent in only the U.K. (not a member state), France, and Germany. In that case, the annual fee required by the UP and the U.K. would be approximately more than 60% higher than the total renewal fees for a classic EP patent[iv].
Therefore, assuming that the role of the UPC is not significant to you, when you are generally interested in enforcing your EP patent in fewer than three or even four member states, you can choose the option that avoids the UP, namely doing nothing for decision A.
Evaluating Other Factors
In terms of the nature of an EP patent, when your EP patent has a high value or stake, it may be best to minimize uncertainty resulting from new rules and practices of the UPC and maximize flexibility in litigation outcomes through decentralized litigations. In that case, you can choose to avoid the UPC as discussed above.
For your older classic EP patents, whose terms may end before the end of the transitional period (up to twelve to fourteen years), maybe it is not worth the effort to deal with the novel and intricate details of the UPC. In that case, you could opt those classic EP patents out of the UPC for decision B. For your recently allowed EP applications and newer classic EP patents, the ultimate exclusive competence of the UPC after the transitional period may incentivize you to get acquainted with the UPC early. In that case, you could submit a request to have your EP application issue into a UP for decision A and do nothing for decision B.
In addition, your classic EP patents may currently be subject to license agreements. Many countries allow only an exclusive licensee to sue for patent infringement damages absent other contracts, but some countries permit a non-exclusive licensee to participate in the litigation and collect damages. Most of your existing license agreements may have been drafted without allowing the option of litigating an EP patent in the UPC. Consequently, if you cannot have an approval of your licensees to extend the coverage of the existing license agreements to the UPC, you should probably submit an opt-out request for decision B.
It is indeed time to review your global patent portfolio and make relevant decisions for each EP patent asset in response to the upcoming application of the UP/UPC. As stated above, the request for a UP and the request to opt a classic EP patent out of the UPC could be submitted as soon as the sunset period begins. Every client may have a unique scenario, and we will help you make the determinations that are most appropriate for protecting your IP in Europe and across the world.
Acknowledgement: We thank Tom Hamer and Emily Collins at Kilburn & Strode LLP for their continued support.
Disclaimer: This article is purely a public resource of general information that is intended, but not guaranteed, to be correct and complete. It is not intended to be a source of solicitation or legal advice and is for informational purposes only. The information is not intended to create, and receipt does not constitute, an attorney-client relationship. The laws of different jurisdictions may be implicated, and facts and circumstances can vary widely. Therefore, the reader should not rely or act upon any information in this article, but should instead seek legal counsel for individualized legal advice. For more information, please contact a firm attorney through www.hickmanbecker.com.
[ii] See https://www.epo.org/law-practice/unitary/unitary-patent.html#tab-2, for example.
[iii] The four jurisdictions are the U.K., France, Germany, and Netherland.