The Unitary Patent – A Connected Europe?
Update 25 February 2013: On 19th February the Unified Patent Court Agreement was formally signed by the 24 participating Member States. This is a formal stage in the process towards the creation and implementation of the Unified (or Unitary) Patent system, although there are still a number of important details that need to be finalised (such as the costs of both the system itself and of the Court) and the process of ratification is likely to take some considerable time.
For over 40 years, there have been discussions and proposals aimed at creating a 'Community Patent' (ie, a patent that has effect throughout the European Union without the need for separate country-specific validation). In 1975 a Community Patent Convention was agreed providing for a single patent with unitary effect (but with enforcement through national courts). It was never ratified.
There are a number of drivers for the single patent - both political (the desire to remove barriers to trade within the Community by not having separate patents) and commercial (reducing costs of prosecution and litigation). Over the last few years, there has been an added impetus within the EU Commission, facilitated by the Lisbon Treaty on the Functioning of the European Union. The result is the 'Unitary Patent' (UP), which is intended to cover 25 of the 27 countries of the EU (not Spain or Italy, who are questioning its juridical basis).
There are three related parts to the Unitary Patent proposal:
Regulation creating the unitary patent protection;
Regulation relating to translation arrangements; and
an International Treaty setting up the new Court and enforcement system.
I will mention each of them in turn but, before that is done, how likely is it that the Unitary Patent will come into effect?
The EU Commission is pushing for adoption as soon as early 2014 but this seems very optimistic, given that the fee structure for applications, renewals and enforcement have yet to be agreed (and the new Court will not be cheap to establish). Judges will need to be identified and trained and the concerns of some governments and many EU companies will need to be allayed.
Much of the momentum on the proposal has come from the EU Commission and now that ratification is in the hands of individual countries' parliaments, it is very likely that the process will get slowed down as consultation takes place with interested parties, especially as national taxpayers will be asked to pay some of the set-up costs.
Ratification needs to be effected by, at least, 13 countries (and these must include UK, France and Germany). Our best guess is that it will be a few years, at the earliest, before the whole system is up and running.
One of the reasons why it is unlikely to be in place by 2014 is that there is a significant groundswell of opposition to it – from both large and small companies in the EU. The large companies fear that the untried Court system (particularly given the ability to separate out infringement from validity, with the latter decided later) will lead to the grant of too many pan-European injunctions, especially to 'patent trolls' who could effectively choose their favoured Court in the new system. Large companies are also fearful of the risk of having a key patent revoked for 25 countries as a result of a bad decision in an untried system, although there is a 7 year transitional period during which patentees can 'opt out' of the Court system.
Small companies are worried about the costs of the system (particularly application fees and Court costs) and the risks of being sued in a 'foreign' country in a language they do not understand.
Whilst the problems are not insuperable, there is still some way to go in finalising all the relevant agreements and Court procedures and there will no doubt be much lobbying and negotiation in the meantime. However, as the system has many inherent positives (such as similar (hopefully) prosecution fees for more countries and cheaper pan-European litigation) as well as a strong political will behind it, it may well eventually come into force. Whether it will be used much or whether patentees will revert to national filings, at least until the whole system has proved itself (which could take many years), we shall have to wait and see.
Returning to the unitary patent itself, the intention is that a patentee can opt for a UP designation of a European Patent (EP) and the procedure for grant and opposition will be unchanaged (ie, the European Patent Office will examine and grant them). The new procedure is intended to apply to pending EPs as well as ones filed after it comes into force and so some currently pending EPs could 'benefit' from it in due course. Patentees do not have to opt for a UP and can keep their 'bundle of EPs' or they can have a UP and national EPs for non-participating EPC countries (eg, Spain, Italy, Switzerland and Turkey). For the UP there will be a single renewal fee, but the amount is not yet known, although a number of options have been proposed, nor is how attractive that will be to patentees who usually only validate in 3 or 4 key EU countries.
The translation arrangements build on the current EPO procedure and retain the system that the claims need to be translated only into French, English and German. There will then also be a need to translate the whole specification into English (if the original application was in French or German initially) or into another official language if it was in English initially. These translations are intended to be 'for information purposes' only and this translation proposal will have up to a 12 year life-span (before which it will no doubt be reviewed). In cases of infringement proceedings, a translation has to be made into the language of the alleged infringer and into the language of the proceedings of the Court. There will no doubt be fierce arguments in litigation as to the correctness of the various translations.
The Court system is probably the most important and, as a result, the most controversial proposal. The EU has always had separate national Courts with their own rules and procedures (even in respect of other unitary rights such as the Community Trade Mark). The new system is still not completely finalised (February 2013 is the proposed date for finalisation) nor are the rules of Court procedure agreed yet, although they are likely to be a compromise between the English and some Continental systems (with limited discovery and some cross-examination of witnesses, but with a substantial amount done in writing in advance rather than orally at trial).
There will be various 'divisions' of the Court. The Central Division will be mainly based in Paris but with centres of specialisation in London (chemical, pharmaceutical and medical devices) and Munich (mechanical engineering). There will also be Local and Regional Divisions in various countries around the EU and these are likely to be the main forum dealing with infringement by EU-based defendants. The Central Division is likely to be more concerned with issues of validity (revocation actions but also declarations of non-infringement must be begun there) although it will also hear infringement actions against non-EU defendants. Local/Regional Divisions will primarily (but not exclusively) hear infringement cases against defendants domiciled in their jurisdiction. One of the more controversial proposals is that it will be possible for Courts to 'bifurcate' infringement (retained by the Local Division) and validity (going to the Central Division). The fear is that this will result in some Local Divisions mainly dealing only with the (simpler) issues on infringement and consequently becoming too pro-patentee, with injunctions being granted in ignorance of the patent's validity or the correct construction of a patent's claims without having taken into account the prior art.
The intention is that the Court will also have non-exclusive jurisdiction over 'normal' EPs as well (unless the patentee opts out) and that eventually this will become exclusive jurisdiction (but not for at least 7 years, and possibly up to 14 years). It must be likely that many patentees will initially 'opt out' of the system until they see how it develops as the risks are too high for those whose businesses depend on proper patent protection. No doubt different patentees will take different approaches, with some opting for national patents instead. Once all the proposals have been fully detailed (including costs of all aspects of the new system), we will be in a position to give better advice but for the time being the motto must be 'proceed with caution'.