On June 1st 2023, the unitary patent (UP) was introduced and the Unified Patent Court (UPC) opened its doors. The UP is a European patent that will provide uniform protection across all participating countries and will substantially reduce cost of patent protection across Europe. The UPC will serve as a single venue for proceedings to enforce or invalidate UPs (for which it has exclusive jurisdiction) and European patents (EPs). The UPC’s decisions will have pan-European effect. Seventeen countries take part in the UP system, including Germany, France, Belgium and the Netherlands. In the future, further EU member states 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.
The 17 participating countries are Austria, Belgium, Bulgaria, Denmark, Estonia, Finland, France, Germany, Italy, Latvia, Lithuania, Luxemburg, Malta, the Netherlands, Portugal, Slovenia and Sweden.
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. 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. The choice for a UP (for the 17 participating countries) can be made within three months after the grant of the European patent for the participating 17 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 will cease to exist. The cost of a UP will be more or less equal to 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 UP’s are the same as for traditional European patents and will be governed by substantive patent law of the European Patent Convention (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, is not limited to the new UP and will extend to all existing and future European patents, except for patents that have been opted-out. The decisions of the UPC will be binding in all member states designated in the patent that 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 exclude traditional European patents from the jurisdiction of the UPC by opting out. 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 will no longer be possible to opt-out if an action (such as a revocation action) is already pending or has been pending before the UPC. Therefore, for patents already in force, opt-out will best be done sooner than later. However, one should realise that, after an opt-out, an opt-in is only possible if the patent (or SPC) has not been the subject of litigation in a national court of the participating countries.
3. Forum shopping possibilities
The UPC is a transnational institution, with branches in the participating member states. The first instance level consists of central division courts in Paris 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 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 take over 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 in certain cases the UPC will also have jurisdiction for EP’s granted for non-EU countries.
*The central division will comprise an additional section in Milan as from 26 June 2024.
**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, 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 be requested 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 European patent attorneys holding a litigation certificate can be 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. 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 will be possible to litigate before the local divisions in the applicable local languages. In most local divisions it will be possible to litigate in English. In the regional division English will be the language of procedure. 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 is the cross-border effect of UPC decisions. It is now possible to obtain one (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 (and the SPC based on it)
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 can grant a preliminary injunctions against alleged infringers, 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 has greater discretion to weigh the parties’ interests than in proceedings on the merits.
4. Expert testimony
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 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 enable assessment 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 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 will be 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 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 patents 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, patentees could take care to opt out their portfolio of existing and future European patents (and SPC’s) or a portion thereof. This will not be an option for UPs.
3. Possibility to opt out of the scope of the UPC
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 to be expected that the UPC will assess validity comparable to the Boards of Appeal of the EPO and therefore probably less strict than certain national jurisdictions. 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. After such attack or any other litigation in the UPC with respect to a patent, the patent can no longer be opted out. After an opt-out, the patentee can decide to opt in, but only if no litigation is or has been pending in 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.
4. Evidence gathering tools
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 go beyond the options 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.
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 published on April 28th 2023 a proposal for a new Regulation creating a unitary protection certificate but the timeline for its adoption and entry into force is still unknown. The uncertainty surrounding this valuable right at the end of the sunrise period 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 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.
3. Participation of the patent owner in proceedings
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.
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 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 all EP's
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.
Five reasons to engage our firm for UPC litigation
1. Inside knowledge
We helped build the new system. Several of our partners were actively involved in conceiving the UPC system and the training of patent judges. Willem Hoyng, for example, was part of 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.
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-depth 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 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 telecommunication 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.
More inside thoughts about the UP/UPC
On April 22nd, our partner Willem Hoyng held his valedictory address at the University of Tilburg under the title: “The Unified Patent Court (UPC) opens its doors! Some observations.”
You find the contents of this address here.