Unified Patent Court
The European patent landscape will substantially change in 2023. The introduction of the unitary patent (UP) – a European patent that will provide uniform protection across all participating countries – will substantially reduce the cost of patent protection across Europe. The Unified Patent Court (UPC) will serve as a single venue for proceedings to enforce or invalidate both UPs (for which it will have exclusive jurisdiction) and European patents (EPs). The court’s decisions will have pan-European effect. Seventeen countries will initially take part in the UP system, including Germany, France, Italy and the Netherlands. In future, other EU member states that have signed but not yet ratified the UPC Agreement may join. Following Brexit, the UK is no longer an EU member state and has decided not to participate, along with Spain, Croatia and Poland.
As one of Europe’s leading IP firms, we understand the challenges and opportunities the new system will bring for parties to pan-European patent litigation. We helped conceive the new procedural system and are familiar with the cultural and legal differences that will undoubtedly affect the UPC. Our seasoned patent litigators have many years of cross-border patent litigation experience in all key European jurisdictions.
1 These 17 countries are Austria, Belgium, Bulgaria, Denmark, Estonia, Finland, France, Germany, Italy, Latvia, Lithuania, Luxemburg, Malta, the Netherlands, Portugal, Slovenia, Sweden.
In order to establish the UPC, 13 countries needed to ratify the UPC Agreement, including France, Italy and Germany. Proceedings before the Constitutional Court in Germany were resolved last year in favour of the UPC. As ratification by Germany will automatically trigger the entry into existence of the UPC on the first day of the fourth month thereafter, Germany decided to delay ratification until a time at which the court could be operational. In order to reach that point, however, as mentioned above, 13 countries first had to ratify the Provisional Application Protocol (PAP), allowing the establishment of committees (such as the advisory and administrative committee, responsible for appointing judges). On 19 January 2022, Austria became the thirteenth country to ratify the PAP, which is now in force. Various questions related to IT (the UPC system will, in principle, be paperless), remuneration and other conditions for judges and staff, such as the registrar, still need to be resolved. This is expected to take another six to eight months, after which a so-called sunrise period of three months will start to run during which patent holders can opt their European patents out of UPC jurisdiction, if they wish to do so.
Currently, it is estimated that the court will open its doors in early 2023.
Five things you need to know
about unitary patents and the UPC
1. The Unitary Patent
The unitary patent is not a new type of patent but rather a modification of the existing European patent, traditionally regarded as a „bundle“ of national rights. When the unified patent package enters into force along with the UPC, patent holders will have the option of replacing a significant portion of that bundle with the UP, a single patent valid in all participating member states. The costly and complex requirements related to validating and maintaining national patents will cease to exist. The cost of a UP will be more or less the same as that of validating traditional EPs in four countries. If the patentee does not apply for unitary effect, it will receive a traditional bundle of national rights.
The validity requirements for a UP will be the same as for a traditional European patent and will be governed by substantive patent law of the EPC. The biggest changes are expected to be on the enforcement side, with the creation of the UPC as a transnational venue for patent litigation in Europe. The UPC will have exclusive jurisdiction to hear UP cases.
2. The Unified Patent Court (UPC)
A transnational unitary right requires a court with transnational unitary jurisdiction. The UPC’s jurisdiction, however, will not be limited to the new UP and will extend to all existing and future European patents, provided the patent holder does not opt out and insofar as the European patent has been granted with the same claims in the participating countries. The decisions of the UPC will be binding in all member states designated in the patent, provided they have ratified the UPC Agreement. This means that the UPC will be able to issue pan-European injunctions and revocation decisions that affect all parts of an EP at once. During a transition period (currently set at seven years) following the entry into force of the system, it will be possible to remove traditional European patents from the jurisdiction of the UPC by opting out. In doing so, the risk of one-shot pan-European revocation is avoided, but at the cost of giving up the possibility of efficient pan-European injunctions. It will no longer be possible to opt out if an action (such as a revocation action) is already pending before the UPC. Therefore, for patents already in force, opt-out will need to occur during the sunrise period.
3. Forum shopping possibilities
The UPC will be a transnational institution, with branches in the participating member states. The first instance level will consist of central division courts in Paris and Munich, as well as various local and regional divisions* in other member states. Appeals will be heard by a central court of appeal based in Luxemburg.
The forum at first instance will be determined by the type of action. In particular, it will only be possible to bring pre-emptive actions for revocation or a declaration of non-infringement before a central division, whereas infringement actions may be brought before the local or regional division of the place where the infringer resides or where the infringement takes place.
Once proceedings are pending before a local or regional division, a counterclaim for revocation may be brought before and heard by the same court. Such claims may also be referred by the local or regional division to the central division, in which case the infringement action will be stayed.
The jurisdiction rules favour infringement actions over invalidity claims. Even if a revocation action is pending before a central division court, the patentee may still commence infringement proceedings before a local or regional division. In that case, the local or regional division may decide that it also wants to hear the validity side of the dispute, in which case it will usurp jurisdiction from the central division.
This system provides patentees with various options to select a favourable venue for their case, even if proceedings are commenced by the alleged infringer, which will have considerably fewer options.
Finally, it should be noted that if an alleged infringer has assets in a country subject to UPC jurisdiction, it will be possible to bring proceedings before the UPC against it, even for EPs granted for non-EU countries.
*At present, one regional division is foreseen for Sweden and the Baltic states. Germany will have four local divisions and most other countries one. If a country opts not to have a local division, the cases over which it would normally have jurisdiction will be heard by the central division.
4. Continental-style proceedings
Proceedings before the UPC will mainly be based on continental legal systems. Proceedings will be front-loaded, meaning most of the arguments will be set out in written briefs. Hearings will be relatively short and should not take more than one day. The court can request to hear witness or expert testimony. While such testimony will not play as central a role as in common law countries, it will be given more weight than is presently the case in certain civil law countries such as Germany, France and the Netherlands. It should not take more than 12 to 14 months to obtain a decision in the first instance.
5. Legal representation
All lawyers admitted to the bar in their respective jurisdictions as well as patent attorneys holding a litigation certificate will be admitted to practice before all UPC divisions, including local, regional and central divisions and the court of appeal. When selecting counsel for patent litigation, clients will no longer be restricted by the countries in which the litigation will take place, though knowledge of local custom will remain important. A significant benefit of the new system is that it will allow clients and their counsel to build a single legal team with in-depth knowledge of the product and patent portfolio, to be deployed where and when legal action is required. In that respect, it is important to note that the UPC courts will have a multinational composition. It will be possible to litigate before the local divisions in the applicable local languages as well as English. Before the central divisions, the language of the proceedings will be the language of the patent.
Five things you need to know
about relief & evidence
1. Injunctions and revocation orders with cross-border effect
The most fundamental change for European patent litigation will be the cross-border effect of UPC decisions. It will be possible to obtain an (interlocutory or permanent) injunction valid in all participating European countries. Likewise, once a UPC division establishes the invalidity of a patent, it will be invalidated in all participating European countries. This applies to both the UP and the traditional EP (unless the patent holder exercises its right to opt out).
2. No discovery but plenty of other ways to gather and secure evidence
The UPC’s rules of procedure do not provide for disclosure, as is customary in common law systems. However, there will be other – sometimes far-reaching – means of obtaining and preserving evidence. For instance, a UPC division will have the power to order an ex parte seizure of evidence at the potential defendant’s premises. The court may also order a party to produce specific evidence in its possession.
3. Possibility to obtain a preliminary injunction
UPC divisions will be able to grant a preliminary injunction against an alleged infringer, intended to prevent an imminent infringement or to prohibit, on a provisional basis, the continuation of an alleged infringement in proceedings on the merits. In the latter case, the court may request a guarantee intended to compensate the patentee if infringement is subsequently found in the main proceedings. In preliminary injunction proceedings, the court will have greater discretion to weigh the parties‘ interests than in proceedings on the merits.
4. Expert testimony
It will be possible to hear witnesses, particularly experts, either during a separate hearing before the panel or during the course of oral arguments. Where an expert is heard during the presentation of oral arguments, the presiding judge, the other judges on the panel and the parties themselves will be able to put questions to the expert. However, this will not take the form of the cross-examination known in common law jurisdictions.
5. Damages, other relief & legal expenses
Damages are intended to compensate the injured party. Damages awards will not have a punitive aspect and will thus be limited to the actual harm suffered. To establish the level of damages, the court may order an infringing party to disclose information relating to its distribution channels, sales or customers. The court will also have the authority to order the recall or destruction of infringing products. Reasonable and proportionate legal costs and other expenses incurred by the successful party will be borne by the losing party.
Five things you need to know
about litigation in the Pharma and Biotech sectors
1. Efficient pan-European protection and injunctions
The UPC and the UP will offer efficiency gains in terms of both portfolio management and enforcement. The UP will provide protection across Europe, without the costly requirements of acquiring separate national patents in all member states. There will be significant benefits on the enforcement front as well. In participating member states, the UPC will have international jurisdiction over both UPs and traditional European patents (unless the patent holder opts out, see below). A decision granting an injunction will automatically be applicable in all participating member states, bringing an end to the current practice of parallel litigation in various member states and the associated complexity and costs (see also Relief and evidence).
2. Central clear-the-way proceedings for generics
Due to their pan-European scope, UPC decisions will provide generics manufacturers with an efficient tool to clear the way for the intended launch of a generic pharmaceutical. Rather than having to challenge the patents at issue in all relevant jurisdictions, a generics manufacturer can simply start pre-emptive invalidity proceedings before the central division. Invalidation at this level will open the market in all participating member states. Both UPs and traditional EPs can be challenged. To avoid this vulnerability, patentees should take care to opt out their portfolio of existing and future European patents or a portion thereof. This will not be an option for UPs.
3. Possibility to opt out of the scope of the UPC
For pharmaceutical patentees, the benefits of streamlined enforcement are likely to overshadowed by the risk of central invalidation. Not requesting unitary effect for new EP applications will be insufficient to avoid this risk, as the UPC will have jurisdiction over traditional European patents and will be able to invalidate a bundle of national rights at one go. During the transition period, it will be possible to avoid this risk by opting traditional European patents out of UPC jurisdiction. In the pharmaceutical sector, where a limited number of patents protect a high-value market, an opt-out should be seriously considered.
There will be various options for strategic patent portfolio management under the new system, such as keeping traditional European patents out of the scope of the UPC and opting them back in when necessary. It will also be possible to build hybrid portfolios consisting of traditional EPs, some of which are subject to UPC jurisdiction and some of which are not.
4. Evidence gathering tools
The rules of procedure of the UPC will be based on procedural practices in various European jurisdictions. Whilst there will be no discovery or disclosure, various other tools to gather and preserve evidence will be available. These will go beyond the options currently available under the national laws of certain jurisdictions and will open possibilities in fields traditionally fraught with evidentiary problems such as, most notably, process claims and biosimilars cases.
5. Supplementary Protection Certificates
Supplementary protection certificates (SPCs) provide an additional term of protection during what is often the most profitable phase in the lifecycle of pharmaceuticals: the final years of maturity. Unfortunately, there is still some uncertainty surrounding SPCs for unitary patents. The European Commission intends to create a unitary protection certificate but the timeline for doing so is still unknown. If there is still uncertainty surrounding this valuable right at the end of the sunrise period, this could be a reason not to opt for a UP.
Five things you need to know
about licensing and co-ownership
1. Opting out
A licensee, whether or not exclusive, has an interest in whether the licensed patent is subject to UPC jurisdiction. The licensee may want to have the patent kept out of the system, to avoid exposure to the risk of centralised invalidation. Alternatively, it may want to prevent an opt-out, in order to be able to benefit from the possibility of a pan-European injunction. Most licensing agreements do not contain a provision that gives the licensee any say in the decision of whether to opt out and may therefore need to be amended in order to include such rights.
2. Enforcement rights
Under the UPC system, exclusive licensees will automatically be authorised to enforce a patent, without the patentee’s consent, unless the license agreement provides otherwise. Non-exclusive licensees, on the other hand, will not be entitled to do so, unless they have expressly been granted this right.
3. Potential gaming to avoid an invalidity counterclaim before the local division
An alleged infringer that is sued by a licensee before a local division will be obliged to bring separate revocation proceedings against the patentee before the central division. This bifurcation rule can be a useful litigation tactic.
4. Applicable law and assignment or licensing of a UP without the co-owner's consent
The nationality of the applicants for a unitary patent will determine the (property) law applicable to the UP. Where there are two applicants, the nationality of the first-named one will take precedence. Since national law in Europe differs on issues such as the ability of one co-owner to assign or license its rights without the consent of the other, it is relevant which co-owner is mentioned first. For example, if the first-named co-owner is German (or neither of the co-owners is European), German law will be applicable. Under German law, each co-owner can assign its rights in the UP without the consent of the others. If the first-named co-owner is English, however, other rules will apply. Similarly, if the first-named co-owner is French, either co-owner will be able to license the UP without the consent of the other. If the first-named co-owner is Dutch, however, this will not be possible.
5. Unanimity of consent to opt out
The decision to opt out from the UPC system will need to be taken by all co-owners of a European patent. If there is no unanimity of consent, it will be possible by default to centrally enforce and attack the patent.
Five reasons to engage our firm for UPC litigation
1. Inside knowledge
Several of our partners were actively involved in conceiving the UPC system and the training of patent judges. Willem Hoyng, for example, sits on the committee that developed the rules of procedure for the new courts and the committee advising the preparatory committee. This close involvement with, and inside knowledge of, the new procedural system gives us a tactical advantage over most other European patent firms. We helped build the new system.
2. Leaders in the field of patent litigation
As one of the very few international IP boutique firms in Europe, we provide consistent top-tier quality in patent litigation. Thanks to our experience handling pan-European litigation, we have developed a network of experienced patent litigators in all jurisdictions in which local or regional UPC divisions will be established.
3. In-depht knowledge of local custom
Traditionally, Germany, the Netherlands, France and Belgium have been the most important patent litigation venues in Europe. All of these countries will host their own UPC divisions, and it is expected that, notwithstanding the UPC’s uniformity, some „local custom“ will remain. Proper understanding of such custom constitutes a competitive edge, if only because the most experienced UPC judges will come from these jurisdictions. Our seasoned patent litigators know the case law and background of these judges and will be able to devise the best litigation strategy for each case.
4. The necessary resources and expertise
Our team consists of 30 dedicated patent litigation partners. Together they cover the entire spectrum of patent disputes. Regardless of the field – pharmaceuticals, biotechnology, chemicals, high-tech or 4G communication systems – our people understand the technology and have over forty years of experience in pan-European patent litigation. They can recommend the best strategies to pursue in a given case. Our firm also has technically trained patent attorneys who support our trial lawyers, where necessary, in order to ensure a cost-efficient litigation team.
5. Highly skilled continental trial lawyers
Our patent litigators are genuine trial lawyers. They know the best litigation strategies and have the requisite skillset to win in the courtroom. They have extensive experience litigating in all leading patent jurisdictions in continental Europe. The UPC system will be primarily based on the continental system, which our lawyers know like the back of their hand.