Unitary patents 101

The unitary patent will be a brand-new type of patent, which will have 'unitary effect' throughout the participating European states.

How does it differ from a normal
European patent?

The 'standard' European patent application procedure is essentially split into two stages: grant and validation. During the validation stage, the European patent is split into a bundle of essentially independent patents, one for each of the European states elected by the applicant.

Renewal fees are then due to the patent office
in each elected state in order to keep the patent
in force in that country. Also, the patent is litigated separately in each country, meaning it is possible to be in the strange situation where a patent is valid and in force in one European country, but has been found to be invalid in a neighbouring European country.

The unitary patent will effectively remove
the need for the fragmented validation stage
for signatory states and will instead be a single independent right.

The European Patent Office (EPO) thinks that, together with the new Unified Patent Court (UPC), the unitary patent will 'simplify post-grant administration and litigation procedures and significantly lower the costs for patent owners'.

Do all my European patents have to be unitary patents now?

No, don't worry - the unitary patent will not be replacing the 'standard' European patent we all know and love, but will sit alongside it.

The grant procedure for both patent types will be the same. After grant, the applicant can choose between proceeding to the validation stage as per the current system, requesting that their patent take unitary effect, or going through both processes in order to obtain protection in both unitary patent and non-unitary patent states.

Which one is cheaper?

Costs of the unitary patent up until grant will be identical to the standard European patent, and the removal of the need to validate in multiple countries may represent a cost saving for many applicants.

However, the renewal fee schedule has been the subject of considerable controversy. Renewal fees for the unitary patent will be less than if an applicant were to cover all the signatory countries individually, but, as many applicants do not validate their standard European patents in every country, or even in most countries, this amount is still more than many applicants currently pay.

Another important factor is that a proprietor of a unitary patent will no longer be able to 'drop' states over the years in order to reduce overall renewal fees. If you typically validate widely early on and successively drop states of lesser importance as your renewal fees increase year upon year, it is important to note that this strategy will no longer be available to you.

Should I go for unitary patents or standard European patents?

Well - apologies, we are lawyers - that depends. There are certainly advantages to the new system: a separate validation process for each participating member state will no longer be required; only a single translation of the whole patent specification will be required; and for patentees who want coverage in a large number of states, renewal fees will be cheaper.

However, there are also some downsides. Renewal fees are likely to be more expensive for patentees who want coverage in only a few member states; the unitary patent does not cover 14 European Patent Convention states, meaning validation is still required there; and if unitary effect is requested it will not be possible to escape the clutches - sorry, jurisdiction - of the UPC.

What is the UPC?

The UPC will have exclusive competence over unitary patents and, eventually, over standard European patents designating contracting states. The UPC will handle infringement actions and hear patent revocations homogeneously across all the signatory states.

The UPC will have central divisions situated in Paris, London, and Munich, and local and regional divisions in the contracting states.

Why do we need a new court?

Currently, litigation must be conducted before
the national courts of each state in which your European patent is in force. Therefore, costs
can skyrocket if actions are taken in multiple jurisdictions. Legal certainty can also be prejudiced, as there is a risk that decisions
will differ from jurisdiction to jurisdiction.

The aim of the UPC is to provide a centralised system for patent litigation in Europe which increases legal certainty, removes the need for 'forum shopping', and reduces translation and litigation costs.

Is the UPC a good thing for patent owners?

Put it this way: if you are the owner of a unitary patent which is being infringed, the UPC gives
you the power to seek a single injunction which
is enforceable throughout most of Europe, at a fraction of the cost of pursuing separate actions
in each national court to achieve the same effect. This is a big plus for unitary patent owners.

On the other hand, you may be decidedly uneasy about the prospect of having your patent revoked throughout Europe by a single decision of the UPC. Costs at the UPC are also likely to be higher than for a single national action.

In short, there are pros and cons for patent proprietors, with a big downside being that, as yet, the case law and quality of judgments of the UPC are essentially a big question mark.

If the new system is such a risk, how can
I protect myself?

Easy - use 'opt-out' standard patents and don't pursue unitary patents. The date of entry into force of the Agreement on the Unified Patent Court will mark the beginning of a seven-year transitional period, during which proprietors can opt their standard European patents out of the jurisdiction of the UPC. Unitary patents, however, cannot be opted out.

During this transitional time, an action for infringement or revocation of a standard European patent may still be initiated before the national courts.

Opting out is the recommended option for cautious patent proprietors who would rather wait and see how 'proprietor-friendly' the new court is. Besides, there is also the option to opt-in again at
a later date if, for example, you are contemplating infringement litigation.

However, file your opt-out quickly - if an action is filed at the UPC before your opt-out appears on the EPO's patent register, the action must continue at the UPC. Similarly, an 'opt-in' cannot be requested
if an action is underway before a national court.

Who will the judges be for the new court?

It is hoped that experienced judges from the UK, Germany, and the Netherlands can be persuaded to join technically qualified judges from the EPO in setting up the new judiciary.

However, it is not yet clear what 'pulling power' the new court will have or whether such an appointment would represent an increase in salary.

I'm still confused! What do I do?

In that case, here are five scenarios for you to consider, but don't take this as gospel (or, heaven forbid, legal advice):

1. 'I typically validate my European patents in a large number of member states’: Great – you might like the unitary patent. Your renewal fees will be lower, and the validation procedure will be much simpler.

2. ‘I file a lot of patent applications, need EU-wide protection, and don’t mind the occasional revocation action’: If you don’t mind the risk of immediate EU-wide revocation presented by the UPC, then you will also like the new system. Obtaining EU-wide protection will be much simpler, and you will be able to take strong action against potential infringers.

3. ‘I am a patent troll’: You might also like the new system (unfortunately). Proceedings before the UPC may be ‘bifurcated’ (e.g. proceedings for validity may be heard in the central division, while proceedings for infringement may be heard in a separate regional division). Bifurcated proceedings can give rise to an ‘injunction gap’, whereby a final injunction can be obtained in infringement proceedings before the validity of the patent can be confirmed. It may therefore be possible for a company to face paying damages for infringement of a patent which should never have been granted. If high damages are awarded, this could clearly be a real problem for smaller European companies.

4. ‘I have a few “crown jewel” patents’: Perhaps you should consider opting out your important patents. This way, you do not run the risk of having them revoked across Europe in a single decision from the UPC. This is an option that, for example, big pharmaceutical companies are considering.

5. ‘I am an SME’: Again, consider the opt-out. This will allow you to continue to drop states over time in order to more effectively manage your renewal fee budget. SJ

   Tom Hamer is training to become a patent attorney in Kilburn & Strode's electronics and software department

   @KilburnStrode

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