The Unitary Patent is Coming to Europe June 1, 2023 – Are you ready?
By Michael Antone, Intellectual Property Attorney and Counsel
After decades of work on the Agreement on a Unified Patent Court (UPCA), the Unitary Patent (UP) and Unified Patent Court (UPC) is coming to many European countries on June 1, 2023. The UP is a unitary patent right covering the participating countries. The UPC is a patent court created to have sole jurisdiction over UPs and also shared jurisdiction with national courts over pre-existing European patents that have been nationalized in individual countries.
The UPCA affects the patent rights of ALL patent owners with patents granted by the European Patent Office (EPO) and patent applicants with pending applications in the EPO.
If you are a current EP patent owner, the time to act is NOW. Under the UPCA, on June 1, 2023, all pre-existing European patents will, by default, become subject to the jurisdiction of the UPC, as well as the individual member country courts where the EP patent is nationalized, unless the patent owner opts out of the UPC.
The purpose of this article is to provide a general overview of the changes introduced by the UPCA and some of the implications to current and potential future EP patent owners and applicants.
Europe is generally regarded as the most expensive region of the world to protect intellectual property due in part to the high density of individual countries in the region. However, Europe is a large economy where intellectual property can have significant value.
In 1977, the European Patent Convention took effect with a primary purpose of streamlining and harmonizing the patent procurement process in Europe. The UPCA is hoped to be the next step in enhancing intellectual property protection and promoting economic development in Europe by streamlining and harmonizing the patent maintenance and enforcement process in Europe.
To that end, European member countries ratifying the UPCA agree to 1) honor an EPO granted patent as a UP without requiring nationalization of the EPO granted patent and payment of maintenance fees in the individual member countries and 2) enforce decisions regarding infringement and validity of the UP by the UPC.
Currently, there are 17 EU member countries that have ratified the UPCA, namely, Austria, Belgium, Bulgaria, Denmark, Estonia, Finland, France, Germany, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Portugal, Slovenia, and Sweden. Another seven (7) European Union (EU) member countries were signatories to the UPCA, but have not yet ratified the UPC, Cyprus, Czech Republic, Greece, Hungary, Ireland, Romania, and Slovakia.
EU members that are not UPCA signatories are Croatia, Poland, and Spain. EU Member States which have not agreed to the UPCA may still accede to it at any time. A notable absence from the UPCA is the United Kingdom, which is a member country of the EPO, but not a member of the EU and not a signatory of the UPCA. More information about the UPCA and the status of member countries can be found at https://www.unified-patent-court.org/en/organisation/upc-member-states.
The impact of the UPCA on EPO patent owners and applicants is different, so we will address each situation separately. However, before discussing the impact of the UPCA, a quick refresher on the pre-UPCA European patent process may be in order. (Note: if you are already familiar with this process, you may want to skip the next 6 paragraphs.)
Since the inception of the EPO, a patent applicant had the option to file a single patent application in the EPO or separate patent applications in the individual EPO member countries. In the individual country option, an applicant files a separate patent application in each country in the language of the country where the applicant seeks patent protection. Each country separately examines the patent application and decides whether to grant a patent on the application. The patent granted by each country can only be enforced or invalidated in the particular country that granted the patent. In addition, patent applicants and patent owners must pay an annual maintenance fee (aka patent annuities) in each of the individual countries to keep their patent application pending and their granted patents from expiring.
The cost of governmental and service provider fees to prepare, file, and prosecute patent applications and patents in each country can often exceed US$10,000 per country. In addition, the payment of annual maintenance fees to each country is typically in the range of few hundred US dollars per year and paid to the country’s patent office in local currency over the 20 year lifetime of a patent. These fees can add up to thousands of dollars per year for any patent owner that wants to maintain patent protection in many countries.
In the EPO option, the patent applicant files one application in the EPO in either English, German, or French and the EPO examines the application. If the EPO finds the claims in the patent application to be allowable, then the EPO grants a EPO patent. However, the EPO patent must then be nationalized at the time of the EPO grant by the patent owner in each EPO member country where the patent owner desires to enforce patent and the patent applicant receives a national patent. If the patent owner does not nationalize the granted EPO patent into a country, then there is no patent protection in that country.
The cost to prepare, file, and prosecute an EPO patent application will often exceed $10,000 and an EPO annuity of approximately $1000 per year is required to maintain a patent application as pending in the EPO. The EPO annuity requirement ends when the EPO application is granted as a patent or abandoned. The nationalization of the EPO patent in the individual member countries can range from several hundred dollars to several thousand dollars per country depending upon the law of each country.
Once the EPO granted patent is nationalized in the member countries, like the individual country option, the patent owner must 1) pay annual fees in each country to keep their national patent from expiring, and 2) enforce the national patent in each member country in which the patent was nationalized.
With either the EPO or individual member country options, patent owners looking to enforce their patents in Europe may face the financially daunting challenge of multi-million-dollar litigations in each member country against accused infringers. Patent owners may further be faced with the frustration of different or fragmented results regarding infringement and validity in the individual member country courts.
The UPCA was developed by the EU to provide another option for EPO patent owners and applicants to maintain and enforce their patents within the EU.
For EPO patent applicants, the UP provides another option to nationalizing, maintaining, and enforcing their patent in each member country. Upon the grant of an EPO patent, the patent owner may elect to proceed with a UP that provides patent protection in each of the member countries for one annual maintenance fee and patent enforcement through the centralized UPC system, rather than nationalizing the EPO patent into each country.
The UP maintenance fee was set to be at the level of 4 individual member country maintenance fees, so the UP maintenance cost will be lower if more than approximately 4 member countries are selected for nationalization. For patent owners seeking patent protection in a large number of countries, the maintenance cost saving of the UP can be substantial. See https://www.epo.org/applying/european/unitary/unitary-patent/cost.html for additional information regarding maintenance fees and savings.
Please note that an EPO patent applicant will still have to nationalize the EPO patent in countries of interest that are not UPC members, most notably the United Kingdom, Switzerland, Poland, and Spain.
If an EPO patent applicant selects the UP option, then as noted above, the UP is enforceable only in the UPC and the UPC decision on infringement and invalidity applies to all UPC member countries.
While the UP and UPC brings efficiency to the enforcement process in UPCA member countries, it does bring risk to EP patent owners due to the lack of settled UPC jurisprudence.
While the individual member country system of enforcement may be expensive and cumbersome, the jurisprudence is well known to participants. As such, a patent owner seeking to enforce a patent may select a court in a member country that is more favorably disposed to the enforcement against an infringer. In addition, a patent owner may seek to enforce a patent in multiple member countries at once to force an alleged infringer to spend a lot of money defending in multiple countries and/or to the bargaining table. However, the benefits of jurisdiction selection and multiple country litigation are also available to an entity that is looking to invalidate a patent.
For EPO patent applicants, the decision to proceed with the UP or the individual country patent must be made at the time of the grant of the EPO patent. While the UP will provide compelling cost and efficiency benefits for many patent owners, it may not be desirable for all patent owners.
For current EP patent owners with unexpired EP patents granted before June 1, 2023, the time to decide how to proceed is NOW.
Under the UPCA, on June 1, 2023, all pre-existing European patents will, by default, be actionable either in the UPC or individual member country courts at the choice of the claimant, i.e. patent owner for infringement and third party for revocation. This can be avoided by the patent owner by filing a so-called opt-out from the UPC which will preserve the current sole jurisdiction of national courts over the European patent. As such, if you are an EPO patent owner now is the time to consider your options and decide whether or not to subject to the UPC in UPCA member countries where you are previously nationalized your EPO patent, since the only way to be sure of avoiding jurisdiction of the UPC over a pre-existing European patent from the start date of June 1, 2023 is to file an opt-out before June 1, 2023, this being possible from March 1, 2023.
A patent owner may not opt-out after an action has been started in the UPC. This means that a pre-existing European patent that has not been opted out can be subject to a nullity/revocation suit at any time at a court chosen by the claimant, namely the claimant makes the choice of forum between the UPC and one or more national courts. Especially for European patents that are nationalized in many countries, the UPC will be an attractive forum for central revocation by third parties, the central procedure having similar attractions for third parties as the current time-limited EPO opposition procedure.
In addition, a patent owner may withdraw their opt-out, thereby opting into the UPC, but then may not opt out again. As with opting out, a patent owner may not withdraw their opt-out if there is a pending action in a member country court.
In order to opt-out your EP granted patent out of the UPC system from the start, you must file an opt-out declaration with the UPC before June 1, 2023. For more information, see https://www.unified-patent-court.org/en/registry/opt-out
For EP patent owners that prefer the benefit of the UPC, no action is required.
If you have any questions about the UPCA or other legal matters, please contact us.