New EU Patent System
A. NEW EU PATENT SYSTEM
The core of the new patent system is the Unitary Patent. Thereby, Unitary Patent protection in all EU countries will be possible that participate in the new patent system. These are currently 26 countries. But what is the use of Unitary Patent protection if it cannot be uniformly enforced in the entire protected territory? Therefore, the Unified Patent Court was established. Decisions of this Patent Court will apply uniformly in all EU countries, which are involved in the new Patent Court System.
The new EU patent system brings opportunities and risks. Companies operating in Europe should inform themselves about and prepare strategic options in time to avoid unwanted surprises. For more information, please call our contact person for the new EU patent system Dr. Eugen Popp, Dr. Tobias Wuttke, Kay Rupprecht, Tilman Pfrang or Dr. Felix Letzelter. Within the framework of his occupational activities, Dr. Popp was actively involved in forming the new European patent system and is an initiator of the newly created professional organization “European Patent Litigators Association” for the lawyers and patent attorneys admitted to the bar to represent before the new Unified Patent Court (www.eplit.eu).
B. THE NEVER ENDING STORY OF THE UPC MAY BE ABOUT TO END - OR WILL IT?
In truth there is still one major and one minor hurdle to take… The major hurdle is the outstanding ratification of the UPC Agreement (UPCA) by the German authorities, as a mandatory member state for the UPCA to take effect; the minor hurdle is that only a few of the 16 signatory states, which have ratified the UPCA so far, have given their support to the PPA, the Protocol on Provisional Application of the Unified Patent Court Agreement. Although, at least 13 participating states (including Great Britain, France and Germany) of the signatories of the UPCA have to ratify the UPCA, their signature of the Unitary Patent Regulation (“enhanced cooperation”) and the PPA are further necessary for the actual start of the UPC as well.
Despite of a serious delay caused by the Brexit vote and a currently pending constitutional plaint before the German Constitutional Court, the new System may well enter into force begin/mid 2019.
Our suggested “To Do List” for European Patent portfolio holders is:
- Analyse your existing European Patents: which should be Opted-Out?
- Evaluate selective Opt-Out! (Opt-In is always possible, however only once)
- Analyse your pending EP applications: choice of traditional EP or Unitary Patent?
- If your choice is a Unitary Patent in English, choose German as second language to save costs in the long run
- Consider applying for Divisional Patent applications or branch-off national Utility Models
- Check on true ownership of your patents: Opt-Out requires consent from all owners
- Review your licence agreements: if a licensee is entitled to enforce a Unitary Patent, it might be dragged into a revocation action
- Analyse the patent portfolio of your competitors – do they have European Patents that you want to nullify?
Latest news are available HERE.
C. IMPORTANT QUESTIONS AND ANSWERS:
What are the main features of the upcoming EU Patent System?
The upcoming EU Patent System offers applicants a further prosecution option, since they may either continue to validate their granted EP-applications in selected countries (=traditional “EP Patent”) or they may request with the European Patent Office (EPO) that their granted EP-applications are given unitary effect in these 26 EU-Member-States (= new “Unitary Patent”), which participate in the new EU Patent System. A second main feature of the new EU Patent System is the introduction of a new court system. In this respect, the Unified Patent Court will be established with a decentralised Court of First Instance with local, regional and central divisions located in the Member States and a common Court of Appeal in Luxembourg.
Why is the new EU Patent System important?
The upcoming EU Patent System should be on the radar screen of every Patent Owner, since there will be no straightforward transitional regime for the EP Patent Portfolio existing on the date the new EU Patent System enters into effect. Please note that the EU Patent System will be applicable in all EU-Member-States besides Spain and Croatia (however, both countries may still join this system later).
What does this mean?
It means that every EP Patent Portfolio existing on the date the new European Unified Patent System enters into effect will be subjected to the competence of the newly established Unified Patent Court. Thus, a single revocation action against these EP Patents will be available to competitors even though the 9-months time window for oppositions before the EPO has already lapsed. Consequently, there will be a further “central” attack during the entire lifetime of the EP Patent in question, since decisions of the Unified Patent Court will have effect in all territories in which the EP Patent was validated and which have ratified the UPCA.
What is the solution?
During a transitional period of 7 years there is the possibility for Patent Owners to declare an Opt-out for their existing EP Patent Portfolio (or single EP Patents of this portfolio). This Opt-out means that only the national courts remain competent over the enforcement of the EP Patents for which the Opt-out was declared and registered. Without registration the Opt-out is invalid. The Opt-out is also applicable after the transitional period of 7 years expired.
Meanwhile, a protocol to the UPC Agreement has been signed by representatives of member states. This protocol allows for early registration of opt-out demands (during a provisional application phase).
Anything else to consider?
Yes, the EP Patent Portfolios of competitors should be analysed whether they contain EP Patents which stand in the way. If no Opt-out for these EP Patents is declared and registered before a revocation action is started with the newly established Unified Patent Court, this EP Patent can no longer be opted-out. Thus, the new system offers chances and not only brings risks.
When does the new system enter into effect?
Not before early 2019, whereby the precise date depends in particular on a decision of the Federal Constitutional Court of Germany regarding the pending constitutional plaint as well as the subsequent ratification process in Germany. We will send out notifications to our clients and associates in advance, so that the necessary preparation steps can be taken in due course.
What about costs?
The costs until grant of the patent will not differ from "classical" European patents. The cost arising immediately after grant (translations, validations) will presumably be substantially reduced compared with "classical" European Patents. In particular, at the present stage, validation fees are not intended.
Translation costs: In terms of “classical” EP Patents, the claims have to be translated into the other two official languages of the EPO, e.g. German and French besides English as procedural language; moreover, during an (extendable) transitional period of 7 years, the patentee of an Unitary Patent shall provide a translation into any official language of the EU (if the procedural language is English, otherwise a translation into English must be provided). Hence, the translation cost for the Unitary Patent should be substantially reduced compared with "classical" patents, which may additionally necessitate further translations according to the respective national validation requirements.
Annuities: According to Regulation (EU) No. 1257/2012, the annuities shall be "similar to the level of the national renewal fees for an average European [= classical] patent taking effect in the participating Member States". The "Select Committee" of the Administrative Council of the European Patent Organisation endorses the True Top 4 proposal tabled by the EPO on renewal fees applicable to the Unitary Patent. The True Top 4 proposal for the fee covering the territory of the participating 26 EU Member States participating in the Unitary Patent corresponds to the total sum of the renewal fees currently paid for the four most frequently validated countries at the time the decision was made (Germany, France, UK and the Netherlands). In essence, the annuities of the Unitary Patent will equate 4 national fees, which is substantially below the sum of 26 national fees if a "classical" European Patent is validated in all participating states.
Court fees/cost recoverage: Meanwhile, the Preparatory Committee has launched a proposal of the fee structure for the Unified Patent Court. According to the proposal, it may be assumed that the level will be not significantly higher than the level for the costs of litigation of a "classical" European patent in one single member state of the EU, e.g. Germany or UK (in any event, significantly lower than the costs for litigation in the 25 Member-States participating in the Unitary Patent Court, together). For one category of proceedings (e.g. infringement action or action for declaration of non-infringement), the Preparatory Committee proposes a mixture of fixed fees and value-based fees (for example, the fee for an infringement action will be €11,000 if the value of action is below €500,000; €36,000 if the value is between €3,000,000 and €4,000,000; and €231,000 if the value is more than €30,000,000). For another category (e.g. revocation action or application for provisional measures), there will be a fixed fee only (revocation action €20,000; application for provisional measure €11,000). At first glance, the fixed fee of €20,000 for a revocation action appears to be rather high, in particular when compared with the opposition fee of the EPO. However, considering the intended quick procedure before the UPC and the possibility to recover (at least a part of) the costs of the proceedings, a revocation action may be an interesting alternative to filing an opposition.
As to recoverable costs of representation per instance and party, the Preparatory Committee proposes a scale of ceilings depending on the value of action (e.g. for a value of action up to and including €250,000, the ceiling will be €50,000; for a value of more than €2,000,000 up to and including €4,000,000, the ceiling will be €400,000; and for a value of more than €50,000,000, the ceiling will be €3,000,000).
No Opt-out fee: Please note that the previous proposal for an opt-out/in fee of €80 has been withdrawn. This should facilitate a flexible and well-tailored management of patent portfolios. This means the "core"-patents could be identified for which an Opt-out is indispensable. On the other hand, if the validity of the "core"-patent is evident, no Opt-out is necessary, since a central attack with a revocation action will not be successful. For the remainder of the EP Patent Portfolio, a case-by-case decision is necessary.
If you have any further questions regarding the upcoming EU Patent System, please do not hesitate to contact us: mail@ mb.de