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UPC: Progress update and hot topics for 2015

Having recently attended the public hearing on the 17th draft of the Rules of Prodecure (in his capacity as Chair of the Laws Committee of LES (Britain & Ireland), Richard Willougby provides an update on the main current Unified Patent Court (UPC) issues.

Will the UPC start by end of 2015?

An end of 2015 UPC start date is based on possible ratification timing of the UPC Agreement, in particular by the UK and Germany. However, this fails to take into account the practicalities involved – of which there are many. Even if there are sufficient ratifications by the end of 2015 (which is not certain), the Preparatory Committee has said it won't be ready before the end of 2015 and even that is optimistic. Recently Expert Group member Willem Hoyng suggested he believed the UPC would be ready for business by the beginning of 2017. In our view, this is much more realistic. There is still much to do in all the workstreams of IT, legal, human resources, facilities and finance.

Spanish challenge

On 18 November 2014 Advocate General Bot delivered his opinion on the Spanish challenge to the two Unitary Patent Regulations (one establishing unitary protection and the other dealing with the language regime). Spain had refused to agree these regulations hence they were passed into EU law using so-called 'enhanced co-operation'. The Advocate General considers the regulations to be validly adopted, providing effectively for unitary effect and uniform protection within participating member states. Further, the Advocate General recognizes that while the selection of French, English and German for the language regime is potentially discriminatory against those who do not understand those languages, it is justifiable on the grounds of proportionality, practicality and costs. He further urged the contracting member states to ratify the Court Agreement as part of their obligations to act in good faith.

26 November Rules of Procedure hearing

The 17th draft contains few revisions to the 16th version, and the hearing focused on those issues (a final draft of the rules is expected early in 2015). Most of the discussion was taken up discussing the procedure for the opt-out, the details of which remain undecided. For example, while there is uniform desire for an effective sunrise provision, and general agreement that the EPO should receive applications for opt-outs before commencement, currently the EPO will not collect opt-out fees (and there will be a fee). This is a problem because the opt-out won't be effective until the fee is paid. So, instead of a rush of applications on commencement day, we will have a rush of fee payments that may jam the system.

Languages remain in discussion, particularly how to work the alternative language regime. Under the agreement, the language of proceedings can be either a nominated official language of the relevant member state hosting the case, or possibly one of the EPO languages. Some confusion exists as to whether the latter are alternative or additional languages (confusion which was not really clarified at the hearing). Whatever the case, some states (Germany in the main) want the 'alternative' language regime to be flexible, such that parts of the proceeding will be in the national language. For example, they would like to be able to hold the hearing in English but provide the judgment in German. This idea may adds complexity but as a transitional regime it has some merit.

What wasn't discussed was the tricky issue of fees. For example, the rules continue to provide for value-based fees for counterclaims – an area of real contention in the consultation. This strikes many as being unfair on defendants to infringement claims as often the best defence is invalidity (whether directly or by way of a squeeze). Paying a large fee to defend oneself seems inequitable to many people. It's even worse when that fee is based not only on the value of the patent across all participating member states (as opposed to the likely much smaller area in which infringement is alleged) but also, as the rules now provide, on the value of the entire dispute (ie, including the value of the infringement claim in addition). It looks as if this will form part of the forthcoming consultation on court fees (due to start 2015) and if you are concerned, be sure to take part. There are diametrically opposing views among some member states on this issue but ultimately it is for users to make their views known. These fees could be very large if care is not taken to ensure otherwise.

UPC representation

A revised draft of the rules relating to the new litigation certificate (and alternative qualifications) for patent attorney representatives before the UPC is to be published in 2015. Under Article 48(2), European patent attorneys who have either the new certificate or "an equivalent qualification" can represent parties before the UPC. This is in addition or as an alternative to 'lawyers' who qualify under Article 48(1). An issue that has arisen in the draft Rules of Procedure relates to the definition of 'lawyer' for the purposes of Article 48(1), since in Sweden some attorneys are entitled to conduct patent litigation as if they are lawyers. They are not however 'lawyers' within the meaning of European legislation. Other countries have similar (though not identical) qualifications which may, or may not, be covered by the language of Article 48(1) or indeed the 'equivalent qualifications' route in Article 48(2). This needs clarification. This was discussed in Trier and some further amendment may be made. Whatever the outcome, parties will have considerable choice of representation before the UPC. For most cases it is likely that the skills of patent attorneys and solicitors (or other EU 'lawyers') together will provide the most effective and efficient representation before the UPC.

Ireland to host a local division

On 14 November, the Irish Government announced its intention to establish a local division. This will have one local judge and two chosen from the pool of judges (we do not believe there are 50 or more patent cases in the Republic of Ireland each year). We now forsee local divisions in the UK, Ireland, Germany, France, Belgium, the Netherlands, Denmark, Finland, Italy, Austria and possibly Portugal. Sweden, Latvia, Lithuania and Estonia will participate in a regional division. Malta and Luxembourg will leave matters to the central division. This leaves Hungary, Czech Republic, Slovakia, Slovenia, Bulgaria, Romania, Greece and Cyprus undecided – there had been rumours of two further regional divisions but we have had no firm news on this yet.