A small revolution is about to happen in European Patent Practice. Professionals in IP have been brought up with the notion that after grant, a European patent is nothing more than a bundle of national patents in a number of European member states. The bundle often only covers three to six countries, and even though you might like to have a patent that covers the whole of Europe, the costs, in practice, are hard to justify. With the European Unitary Patent at the doorstep, patent protection in a larger part of the EU is becoming a more realistic option. Further, a second development is about to happen: the Unified Patent Court (UPC), a new court system which will deal with disputes involving the unitary patent and existing European patents. Together, the unitary patent and the Unified Patent Court represent the most important change in forty years of European patent law. It is expected that the new system will enter into force at the beginning of 2017. If you want to make optimal use of this new system, it is important to gain more in-depth knowledge of the matter now.
With the new unitary patent, the European market will get a new, practical, contemporary patent system for 25 European member states and 430 million inhabitants. This will co-exist alongside the two existing systems which innovators currently can choose from:
- A national patent in each European country which the company considers relevant.
- A European patent, which after having been granted centrally, is really a bundle of national patents.
A Third Option, the Unitary Patent
The third and new option is the unitary patent. The unitary patent will follow the same examination and grant procedure at the European Patent Office (EPO) as a European patent. Once granted, it is up to the patent owner to decide whether he wants a European patent or a unitary one. The unitary patent will be a great deal simpler from an administrative point of view than the existing European patent. The many translations required for registering the patent with the various national patent offices will become unnecessary. As is the case now, any patent drawn up in English will have to be accompanied by a translation of the claims into German and French. For the unitary patent, you only need to submit one complete translation in another language to the European Patent Office (EPO). Further only one annual renewal fee is required instead of the various payments which are made per country at the moment. Incidentally, these fees will be higher than we hoped, but not as high as we feared they might be. This makes the unitary patent a realistic alternative.
Unified Patent Court
In the existing system, disputes concerning patents are heard in each national court of the country in which the (alleged) infringement takes place. This frequently leads to the remarkable situation that a ruling in one country is completely opposite to the ruling on the very same patent issued by a court in another country. The unitary patent will put an end to this fragmentation with the introduction of a new court system: the Unified Patent Court (UPC). The rulings of this new court will have effect in all participating European member states. It is a true revolution.
Geographically greater protection for your technology at a lower cost.
- Less paperwork, so less bureaucracy.
- The opportunity to tackle infringers effectively.
- More choice, as the new system provides a third option.
Disadvantages and risks
- Still relatively expensive, especially when only a limited number of countries are relevant.
- A risk of losing your patent everywhere in a single court case.
- No control on renewal costs by gradually reducing the number of countries for your patent.
- For an infringer, being summoned to appear in a far-away country.
Why would you opt for a Unitary Patent?
A company generally aims to create shareholder value. Right now, a European patent is generally considered to be less valuable than an American one, because of the expenses and difficulties involved in maintaining and enforcing a European patent. It is partly for this reason that the number of patent applications filed in Europe is considerably smaller than in the US: around 274,000 patent applications were filed in Europe in 2014, compared to 578,000 in the US.
Increase in volume
It is believed that the establishment of the UPC will lead to an immediate increase of the value of an average European patent. This may be even truer for unitary patents. It is therefore believed that the number of patent applications filed in Europe will go up. In order to increase the future value of your company, it may already be worthwhile to file more European patent applications. This applies particularly if you have an exit strategy and want to cash in your stake after a while.
Introduction is expected in 2017
Unfortunately, it will still take more than a mere tick of a box for a patent granted by the EPO to have effect throughout Europe. Europe will continue to be a little fragmented, even after the introduction of the unitary patent. This is because the UPC Agreement was only signed by 25 of the 28 EU member states. 26 had initially agreed to join forces, but the Poles backed out. The ratification process can be monitored via the dossier: the Unitary Patent and the UPC at www.epc.nl.
About 17 EU states will make a start
The new system will enter into force once Germany, France and the United Kingdom, plus ten other states have ratified the UPC Agreement. Each country will ratify it in its own way. It is expected that a leading group of about seventeen states will make a start with the unitary patent and the UPC in 2017. These states are the Netherlands, Belgium, Luxembourg, Germany, France, the United Kingdom, Ireland, Austria, Sweden, Denmark, Finland, Latvia, Estonia, Lithuania, Italy, Portugal and Malta. With over 400 million inhabitants, they form a big market. Spain does not participate in the unitary patent.
According to Walter Hart, Jeroen Fluit and Johan Volmer, patent attorneys at EP&C, the new system will be a very important addition to the existing system, and will ultimately become the new standard for patent protection in Europe. It will be a simple and reasonably affordable patent, with clear advantages for a patent owner. Although there is still a great deal of uncertainty about the UPC, it is generally expected that expert judges will be appointed and properly trained for their new roles. It looks as though UPC procedures will become fairly friendly to patent owners.
Independent Specialist Advice
It remains to be seen whether most companies will want to run the risk of winning or losing a patent action for 25 countries all at the same time, by having it heard at the Unified Patent Court. On the other hand, a unitary patent may present a bigger threat to the competition than the classic bundle patent. This could be considered appealing. It will therefore be a decision for each individual company how it chooses to best protect its technology in the future. Independent specialist advice will be more important than ever before.
For more information, please contact Walter Hart at EP&C.