Unified Patent Court

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. Patent holders now have the option of replacing a significant portion of that bundle with the UP, a single patent valid in all participating member states. A patent holder can choose for a UP (for the 18 participating countries) in the first month after publication of the grant in the European Patent Bulletin for the participating 18 countries, provided that these European patents for all countries have the same claims. The costly and complex requirements related to validating and maintaining national patents do not apply to UPs. The cost of a UP is more or less equal to validating traditional EPs in four countries. If the patentee does not apply for unitary effect, it receives a traditional bundle of national rights.

The validity requirements for UP’s are the same as for traditional European patents and are governed by substantive patent law of the European Patent Convention (EPC). The biggest changes are on the enforcement side, with the creation of the UPC as a transnational venue for patent litigation in Europe. 

A transnational unitary right requires a court with transnational unitary jurisdiction. The UPC’s jurisdiction, however, is not limited to the new UP and extends to all existing and future European patents, except for patents that have been opted-out. The decisions of the UPC are binding in all member states designated in the patent that have ratified the UPC Agreement. This means that the UPC can issue pan-European injunctions and revocation decisions that affect all parts of an EP at once. During the transition period (currently set at seven years, i.e. until 31 May 2030), it it is possible to exclude traditional European patents from the jurisdiction of the UPC by opting out of its jurisdiction. This avoids the risk of a one-shot pan-European revocation, but at the cost of giving up the possibility of efficient pan-European injunctions. It is not possible to opt-out once an action (such as a revocation action) has been launched before the UPC. An opt-out can later be withdrawn if enforcement before the UPC is desired at some stage. However, such is no longer possible once the patent has been the subject of litigation in a national court of the participating countries.

The UPC is a transnational institution, with branches in the participating member states. The first instance level consists of central division courts in Paris, Milan and Munich, as well as various local and regional divisions* in other member states. Appeals are heard by a central court of appeal based in Luxemburg.

The Local and Regional Divisions have a multinational composition of three Legally Qualified Judges and often a Technical Qualified Judge (always in case of a counterclaim for revocation). The Central Division has two Legally Qualified Judges and one Technical Qualified Judge. 

A Court of Appeal panel consists of three Legally Qualified Judges and two Technically Qualified Judges. 

The forum at first instance is determined by the type of action. In particular, pre-emptive actions for revocation or a declaration of non-infringement can only be brought 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. An infringement action against an infringer not residing in a UPC country can also be brought before the Central Division. 

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 can be stayed or continues.

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 or decide to counterclaim for infringement in the revocation case. In that case, the local or regional division may decide that it also wants to hear the validity side of the dispute
If an action for a declaration of non-infringement has been commenced in the Central Division, that action shall be stayed if the patentee brings an infringement action before a Local or Regional Division within three months after the commencement of the proceedings.

This system provides patentees with various options to select a favourable venue for their case, even if proceedings are commenced by the alleged infringer, who has considerably fewer options.

Finally, it should be noted that in certain cases the UPC also has accepted jurisdiction for EP’s granted for non-EU countries.

*At present, one regional division is established for Sweden and the Baltic states. Germany has four local divisions and most other countries one. If a country decides not to have a local division (Luxembourg, Malta, Bulgaria and Romania), the cases over which it would normally have jurisdiction are heard by the central division.

Proceedings before the UPC are mainly based on continental legal systems. Proceedings are front-loaded, the facts and arguments are set out in written briefs. Hearings are relatively short and in principle do not take more than one day. The court can be requested to hear witness or expert testimony. While such testimony does not play as central a role as in common law countries, it is given more weight than is presently the case in certain civil law countries such as Germany, France or the Netherlands. It normally does not take more than 12 to 14 months to obtain a decision in the first instance.

All lawyers admitted to the bar in an EU country as well as European patent attorneys holding a litigation certificate are admitted to practice before all UPC divisions, including local, regional and central divisions and the court of appeal. In selecting counsel for patent litigation, clients are no longer restricted by the countries in which the litigation will take place. Knowledge of local custom does remain important even though the Division and the Court of Appeal have a multinational composition and apply the same Rules of Procedure. A significant benefit of the new system is that it allows 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. 

It is possible to litigate before the local divisions in the applicable local languages. In all local divisions it is also possible to litigate in English. In the Nordic-Baltic regional division English is the language of procedure. Before the central divisions, the language of the proceedings is the language of the patent.

If a case is filed in another language than the language of the patent, a defendant has the possibility to request the President of the Court of First Instance to change the language of the proceedings to the language of the patent.

The most fundamental change for European patent litigation is the effect of UPC decisions. It is now possible to obtain one (interlocutory or permanent) injunction valid in all UPC countries (for which the EP has been validated and is in force). Likewise, once a UPC division establishes the invalidity of a patent, it is invalidated in all UPC countries. This applies to both the UP and the traditional EP (and any SPC based on it).

The UPC’s rules of procedure do not provide for disclosure, as is customary in common law systems. However, there are other – sometimes far-reaching – means of obtaining and preserving evidence. For instance, a UPC division has the power to order an ex parte seizure of evidence and an order for inspection at the potential defendant’s premises. During the litigation the court may also order a party to produce specific evidence in its possession.

UPC divisions can grant (ex parte) preliminary injunctions against alleged infringers, intended to prevent an imminent infringement or to prohibit, on a provisional basis the continuation of an alleged infringement. The court may request a guarantee intended to compensate the alleged infringer if infringement is subsequently not established in the main proceedings which is compulsory in ex parte cases. In preliminary injunction proceedings, the court has greater discretion to weigh the parties’ interests than in proceedings on the merits.

It is 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 may put questions to the expert. However, this does not take the form of the cross-examination known in common law jurisdictions.

Damages are intended to compensate the injured party. Damages awards do not have a punitive aspect and are thus limited to the actual harm suffered. To enable assessment of damages, the court may order an infringing party to disclose information relating to its distribution channels, sales or customers. The court also has the authority to order the recall or destruction of infringing products. Reasonable and proportionate legal costs and other expenses incurred by the successful party are to be borne by the losing party.

The UPC and the UP offer efficiency gains in terms of both portfolio management and enforcement. The UP provides protection across Europe, without the costly requirements of acquiring separate national patents in all member states. There are significant benefits on the enforcement front as well. In participating member states, the UPC has international jurisdiction over both UPs and traditional European patents (except for patents that have been opted-out, see below). Injunctions automatically apply in all participating member states, bringing an end to the current practice of parallel litigation in various member states and the associated complexity, costs and risk of diverging decisions (see also relief & evidence). 

Due to their pan-European scope, UPC decisions provide generics manufacturers with an efficient tool to clear the way for the intended launch of a generic pharmaceutical. Rather than having to challenge patents in all relevant jurisdictions, a generics manufacturer can simply start pre-emptive invalidity proceedings before the Central Division. Invalidation at this level opens the market in all participating member states. Both UPs and traditional EPs can be challenged. To avoid this, patentees could take care to opt out their portfolio of existing and future European patents (and SPC’s) or a portion thereof. This is not an option for UPs.

Patentees that do not want to expose their patents and/or SPC’s can choose to opt-out. However, by opting out the patentee gives up the possibility of efficient enforcement. It is recommended that if one decides to opt out, this should be done as soon as possible, to avoid a central attack on the validity. Indeed, once an action has been launched before the UPC with respect to a given patent, that patent can no longer be opted out. A patentee can decide to withdraw the opt-out at any stage, provided no litigation is or has been pending before a national court. It is thus rather easy for a potential infringer to avoid an opt-in, by filing a lawsuit in one participating country.

The rules of procedure of the UPC are based on procedural practices in various European jurisdictions. Whilst there is no discovery or disclosure, various other tools to gather and preserve evidence are available. These are all based on the EU Enforcement Directive and go sometimes in their practical effect further than currently available under the national laws of certain jurisdictions and open up possibilities in fields traditionally troubled with evidentiary problems such as, most notably, process claims and biosimilars cases.

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. A new regulation creating a Unitary SPC is discussed at EU level, but the timeline for its adoption and entry into force is still unknown. However, it is accepted that in the meantime national SPC’s can be obtained on the basis of an Unitary Patent.

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.

Under the UPC system, exclusive licensees are automatically authorised to enforce a patent, without the patentee’s consent, unless the license agreement provides otherwise. Non-exclusive licensees, on the other hand, are not entitled to do so, unless they have expressly been granted this right.

Although an exclusive licensee may be able to sue an infringer without the patentee being a co-plaintiff the alleged infringer if he wants to raise an invalidity defence will have to start an invalidity suit in the central division. That lawsuit could (but not must) then be moved by the patentee to the Local Division where the infringement action of the licensee is pending and can be joined according to rule 340 of the rules of procedure.

The nationality of the applicants for a unitary patent will determine the 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.

The decision to opt out from the UPC system will need to be taken by all co-owners of a European patent and/or the SPC. If there is no unanimity of consent, it will be possible by default to centrally enforce and attack the patent. Moreover, the opt out has to be done for all countries for which the European Patent has been granted, also countries which are not UPC countries.