1st June 2023 marks the commencement of the Unified Patent Court in Europe. This new forum has the potential to completely alter the way patent holders defend and commercialize their intellectual property (IP) in Europe. It is set to make the process easier and more effective.
In accordance with the UPCA's provisions, the UPC will take effect on the first day of the fourth month following the month in which the final ratification needed by the UPCA is lodged. Before the UPCA may go into effect, it must be ratified by 13 participating Member States, among which must be the "three States in which the highest number of European patents was in force in the year preceding the year in which the Agreement takes place." France, Germany, and Italy are the three nations now that the UK has left the EU. Germany's ratification (on February 17, 2023) was the last requirement to start the countdown to the UPCA's entry into force on June 1, 2023.
Unified Patent Court (UPC)
The Unified Patent Court (UPC) is a proposed specialized court system that would have jurisdiction over patent disputes within the European Union (EU). The main goal of the UPC is to create a unified and efficient patent litigation system for EU member states.
UPC Jurisdiction across EU Member States
The Agreement on a Unified Patent Court (UPCA) has been ratified by 24 EU member states (all EU member states except Spain, Poland, and Croatia).
The UPCA will first be in effect in the 17 states that have ratified it.
The UPCA may be ratified at any time by the seven remaining EU member states that have signed it but have not yet done so. Furthermore, the UPCA is still open to future ratification by EU Member States that have not yet signed it.
Structure of the UPC
The UPC will have a Court of First Instance and a Court of Appeal, with the Court of First Instance being further divided into a Central Division, Local Divisions, and Regional Divisions, and a Court of Appeal.
Court of First Instance
Regional divisions are a type of local division that offers a UPC first instance court for several participating states simultaneously in circumstances where the volume of patent cases in those states each year is insufficient to support their own local divisions.
A municipal, regional, or even central division court may hear infringement cases, but only the central division has the authority to rule on requests for declarations of non-infringement and revocation.
The central division is divided between Paris (the main seat of the central division), Munich, and a third seat (formerly given to London until the UK withdrew from the UPCA); its new location has not yet been determined, although Milan is a front-runner.
According to IPC classifications, each seat of the central division will handle cases based on the patents' respective subject matters:
International Patent Classification of WIPO sections (A) and (C) assigned cases on patents concerning human necessities, pharmaceuticals/chemistry, including genetic engineering, and metallurgy to the "London" central division.
Cases involving mechanical engineering patents in IPC class F will be heard in Munich.
The Paris Central Division will handle appeals for all other patent classes.
Court of Appeal
The Court of Appeal will be based in Luxembourg.
Unitary Patent
The "Unitary Patent," also known as the "European Patent with Unitary Effect," is a single patent that will apply to all participating Member States of the European Union. The current European Patent application process will be used to obtain unitary patents, which will be enforceable across all participating Member States in a single lawsuit brought before the new Unified Patent Court.
Impact of UPC on Patent Grant and Enforcement
The legislation establishing this system of the Unified Patent Court would radically alter how patents are issued and upheld in Europe.
The European Patent Office currently grants patents centrally; however, this results in a collection of national patents that must be enforced independently on a country-by-country basis throughout Europe. Such enforcement may lead to higher litigation expenses, protracted legal proceedings, and inconsistent outcomes.
A Unitary Patent will be enforceable in the Unified Patent Court under the new system, and rulings on its validity and ability to prevent infringement will be binding on all participating Member States. A more effective, predictable, and simplified patent system is anticipated as a result of the Unified Patent Court's handling of Supplementary Protection Certificates.
Opt-out Option and the Sunrise Period
By explicitly asking that their patents be excluded from the new Court's jurisdiction, European patent holders or applicants have the option to "opt out" of the UPC's exclusive jurisdiction. As long as no third party has already brought an action against those patents before the UPC, this will be possible. National courts will continue to have jurisdiction over matters of infringement and validity, as the "opt-out" is used.
This could provide a difficulty because a third party could file a lawsuit against the patent holder before the UPC as soon as the UPC Agreement goes into effect, which would prevent the patent holder from using the "opt-out" provision. In this scenario, the UPC would have the authority to make these decisions, disabling the holder from using the so-called "opt-out". A three-month window has been set aside before the UPC Agreement goes into effect for the patent holder to request the "opt-out" in order to prevent this scenario. On March 1, 2023, the so-called "sunrise period" officially began.
After the UPC Agreement goes into effect, the option to "opt out" will still be available for seven years (with an additional seven-year extension). The "opt-out" must be submitted directly to the UPC; it cannot be submitted to the EPO. The Case Management System of the Unified Patent Court should be used to do this.
Last but not least, it should be kept in mind that the absence of nations like Spain or Croatia from this system at the moment due to their failure to ratify the UPC Agreement does not preclude Spanish or Croatian legal or natural persons from applying for a UP or taking part in related disputes before the UPC Agreement.
Advantages and Disadvantages of the UPC
The central enforcement provided by the UPC is a significant benefit. This benefit must be evaluated against the possibility of central revocation, however.
Using single litigation at the UPC could help avoid parallel national litigation in numerous jurisdictions, which could lead to inconsistent rulings. The potential for cost savings also exists when parallel national lawsuits are avoided. The cost comparison will depend on whether the country (or countries) is of business interest because the cost of litigation differs in each nation.
At the UPC, litigation is supposed to go quickly. This can work to your advantage if getting a quick conclusion is your top goal. Due to the strict timeframes involved, this could also be seen as a disadvantage.
The UPC is a brand-new, unproven court, thus there isn't any precedent to draw from to determine what position the court will probably take on certain legal issues. For a while, fear of the unknown has been one of the fundamental issues surrounding the UPC. However, parties engaged in UPC litigation have the chance to influence the case law that will be used by this new court.
Conclusion
There will be three main ways to secure patent protection in Europe after the Unitary Patent is implemented on 1 June 2023, as well as two ways to pursue litigation. European filing tactics would consequently become increasingly complex.
The applicants will need to start thinking about a number of choices, such as choosing between national validations and unitary patents; using the national patent office directly rather than the European Patent Office; and choosing not to opt for the new legal system if they already have European Patents.
The new system ought to provide less expensive European-wide patent protection. Traditional European Patents may still be a more cost-effective option for some applicants who only need limited regional coverage.
