27 July 2021

Update on the latest developments regarding the UP/UPC

There has recently been a significant decision of the German Federal Constitutional Court on the Unitary Patent/Unified Patent Court (UP/UPC) proposals. This decision removes one of the final hurdles to the implementation of that system. The UP/UPC proposals are designed to harmonise the patent litigation landscape across the European Union (EU), and as a corollary address some of the inefficiencies of the current validation process. Should they come into effect, they may have a profound effect on the patent litigation landscape in Europe. Please do get in touch with one of our attorneys if you would like to discuss any of the points raised below.

Prosecution of patent applications in Europe

The first thing to note is that prosecution to grant of patent applications in Europe remains unchanged. The existing European Patent (EP) system is based on an intergovernmental treaty (the European Patent Convention) which is separate from the EU and covers 38 member states, which include all 27 states of the EU and 11 other countries (including the UK). Through this, grant of European patent applications is handled by the European Patent Office (EPO). This process will be unaffected. Thus, European Patent Attorneys, whether based in the UK or elsewhere, will continue to act before the European Patent Office to obtain granted patents in the existing way. Existing routes to grant at national offices remain unchanged.

When an application is granted by the European Patent Office, the resulting patent is then validated in states of interest resulting in a bundle of national patents. Those national patents are then litigated in the national courts of individual member states. It is these phases of validation and litigation that may be affected by the UP/UPC package.

Proposed UP/UPC system

The proposed Unitary Patent/Unified Patent Court system has two aspects:

  1. The Unitary Patent (UP)

After a European patent is granted, it will be possible to request unitary effect and thereby obtain a unitary patent (UP) for those member states of the European Union (EU) in which the UP/UPC system has effect (at present 15 states have ratified). The aim here is to reduce validation costs and subsequent renewal costs, but in practice a cost saving is only likely to arise in comparison with validating in four or more member states under the current system. It will remain possible to choose to validate conventionally in individual member states, and this of course will continue to be the approach taken for states that do not participate in the new system, such as the UK. Thus, for example, a granted European patent application could be registered as a unitary patent and additionally validated in the UK. Alternatively, the patent could be validated in UK, France and Germany only (a conventional “bundle” of national patents); this would be less costly but would result in less territorial coverage compared to the UP + UK option.

2.     The Unified Patent Court (UPC)

This is the litigation aspect of the system. It is a centralised court system (albeit there will be divisions of the court in various locations) to replace the current independent national courts for participating member states. Ultimately, the aim is that all patent litigation for those states will be handled by the UPC, but initially a hybrid system will exist. Practically, there are two points to note: i) if you obtain a UP at the validation stage, then this can only be litigated at the UPC; ii) for participating member states, conventional national validations will ultimately also be litigated at the UPC by default but there will be a transitional period (7 years at present, although this can be extended) during which actions may also be brought at the national courts and during which a patentee can opt-out individual patents from the jurisdiction of the UPC. The option to opt-out from the jurisdiction of the UPC is designed to address the concerns of patentees nervous to subject their assets to the decisions of an untested body in its infancy, particularly as this could lead to a central revocation of the case across all participating member states. There will be an option to opt back in if the patentee later considered it desirable. It is important to note that this opt-out procedure will apply to existing portfolios of European patents as well as those granted in future. Of course, litigation for those states that do not participate in the new system, both within and outside the EU and including the UK, will continue as at present.

Time frame

The German Federal Constitutional Court decision removes a major roadblock to the implementation of the UPC, but there are a number of steps that still need to occur before the system is up and running. The most optimistic estimates suggest the system may come into force in late 2022, but there remains ample opportunity for further delay beyond this point and indeed ultimately no absolute guarantee even at this late stage that more significant setbacks will not occur.

Final comments

The UP/UPC system will, if and when it comes into effect, form an important part of the litigation landscape in Europe but not the entirety of it. Not only will the system initially only cover a subset of EU member states, which themselves are a subset of states participating in the European patent system at the EPO, but at least in the short term there will be dual systems operating in those states. Patentees will have choices to make as to how far they look to take advantage of or indeed avoid the disadvantages of the new court. While the UK will not participate in the UPC itself, we at Venner Shipley continue to be well placed to advise and assist with your pan-European strategy. We will of course keep you advised as and when there are any further developments, and particularly if a concrete starting date should be established, but in the meantime please let me know if you have any questions. We will of course keep you advised as and when there are any further developments, and particularly if a concrete starting date should be established, but in the meantime please do get in contact with us should you have any questions.