The Unified Patent Court

What is the Unified Patent Court?

The Unified Patent Court (UPC) is a shared court that is being created by various European Union countries (refered to herein as UPC countries, of which there will initially be 17) to rule on the infringement and validity of EU Unitary Patents. The UPC will have exclusive competence to rule on these aspects of Unitary Patents.

In addition, the UPC will have competence to rule on the infringement and validity of new and pre-existing European patents in respect of UPC countries, although for the first seven years of the UPC, patent proprietors will have the option to opt their existing European patents out of the jurisdiction of the UPC. This transition period may be extended to fourteen years.

We describe Unitary patents in more depth here but in brief they are to be a single indivisable patent right covering at least 17 EU countries which can be obtained by completing the existing European patent application procedure and registering a European patent as a Unitary patent within one month of grant.

What does this mean in practice?

For Unitary Patents, jurisdiction will be clear: the UPC will have sole jurisdiction over Unitary Patents at least for proceedings concerning infringement and revocation.

Therefore, any patent proprietor who registers a newly granted European patent as a Unitary patent, who later wishes to enforce their Unitary patent by filing an infringement action, will need to do so with the UPC. The national courts of the UPC countries will not have jurisdiction. If the UPC rules in their favour they may obtain an injunction, damages or other remedies across all of the UPC countries. If they have also validated their European patent in some non-UPC countries - in addition to registering it as a Unitary patent - then if they want to enforce their rights in those countries, they will have to file an action at the relevant national court(s).

If any third party wants to revoke a Unitary patent on the ground that it is not valid (or to request a 'declaration of non-infringement') they will do so with the Unified Patent Court. Separate revocation actions would be required to challenge the European patent in non-UPC countries where it is in force (if any). That being said, the existing European patent opposition procedure, which allows a relatively cost-effective challenge to the validity of a European patent within 9 months of grant, will continue to exist in parallel to UPC revocation actions.

What about existing European patent applications - and other countries?

The situation is also straightforward outside of the UPC participating countries: for existing and new European patents, in respect of non-UPC countries (e.g. the UK, Spain etc.), apart from the European Patent Office opposition procedure, only the individual national Courts (e.g. the UK courts, the Spanish courts) will have jurisdiction for European patent infringement and validity in their countries.

The situation is more complicated for existing and new European patents which are validated in the UPC countries (e.g. Germany, France etc.). In this case, by default, both the individual national Courts (e.g. the German courts, the French courts) and the UPC will have jurisdiction during a 7 (or 14) year transition period. It will be possible for an action to be commenced in either (if there is no other existing action). Patent proprietors may be happy to have two different choices as to where to launch an infringement action but they may also be concerned that third parties may have two different choices as to where to launch revocation actions - and if they are on the losing side of a successful revocation action in the UPC they will lose patent protection at once in all UPC countries.

However, patent proprietors who have existing or future patents validated in individual UPC countries are provided with an opt out facility. If during the 7 (or 14) year transitional period, they file an opt-out with the UPC, then, for all UPC countries, only the individual national Courts will have jurisdiction. The UPC will thereafter not have jurisdiction. The opt-out can be withdrawn, provided no legal action has been commenced before the UPC, but this procedure can only be carried out once. If the opt-out is withdrawn, it will not be possible to opt-out a second time.

At the end of the 7 (or 14) year transitional period, the national Courts will lose jurisdiction over European patents in the UPC countries and only the UPC will have jurisdiction. The only exception will be for European patents which still have opted out status at the end of that period. They may remain opted out for the remainder of their term.

When the system starts, there will be very few Unitary patents but there will be many legacy European patents, which may be up to 20 years old, which will be immediately brought into the jurisdiction of the UPC (for UPC countries) unless opted out.

What types of action can be filed with the Unified Patent Court?

The main types of action which can be filed with the UPC are as follows:

• Infringement actions
• Revocation actions
• Requests for a declaration of non-infringement
• Actions for compensation for licences of right

What are the parts of the Unified Patent Court?

The UPC comprises a Court of First Instance which is distributed across various EU states and a Court of Appeal, located in Luxembourg.

The Court of First Instance is however separated into Local Divisions, Regional Divisions, and the Central Division. Local Divisions are found in individual EU countries although Germany has four local divisions (Munich, Mannheim, Dusseldorf, and Hamburg). A Regional Division (located in Stockholm and Vilnius) covers Sweden, Estonia, Latvia, and Lithuania. The Central Division was to be split into three parts, divided by technical field. One is in Munich, a second is in Paris. The third part was intended to be in London before the UK withdrew from the European Union and its location has not been finalised at the time of writing.

When an infringement action is filed, the patentee will usually have a choice as to which Division to file the action with. An infringement action can be filed in a Division covering a country where infringement is taking place or is threatened. Briefly, if the defendant is an EU entity, an infringement action can also be filed in a Division covering their state of incorporation (or nationality). If the defendant is a non-EU entity, an infringement action can also be filed in a Division including a place of business of the defendant or, if they do not have one, the Central Division. Applications for declarations of non-infringement and revocation actions are filed before the Central Division.

Although the various Divisions should in theory apply the same law, it is expected that there will be some differences between them in practice, and there may be practical matters, particularly the choice of languages of proceedings available at a particular Division, which will affect the choice of Division. Accordingly, any party thinking of filing an infringement action will need to consider carefully where to file the action and there may be races between parties to start an action in a Division of their choice.

Available Remedies

The Unified Patent Court can award a wide variety of remedies to a party that is successful in litigation and, importantly, these apply across the whole geography covered by the UPC. As well as damages, an account of profits and/or a preliminary or final injunction, the UPC can award interim damages, issue an order to seize goods or remove them from distribution channels, revoke a patent in whole or in part, order the provision of information (e.g. as to the source or quantity of infringing products) and so forth. The losing party will typically be required to pay an award of costs.

Timescales

It is intended that the UPC will provide a relatively quick procedure, for example it is hoped that an infringement proceeding with a counterclaim for revocation will be completed within 18 months. It will be some time before it is clear how quickly actions will complete in practice. Some of the fixed response deadlines could be very challenging. A party who wishes to file an infringement action will need to file a detailed statement of case and request for remedies with the action, requiring them to make detailed preparations before the action is filed. A defendant will then have 3 months from when the action is served to file a defence and possible counterclaim for revocation. Within the first month they may file a preliminary objection to the action if they have grounds to do so. This is a very short timescale in which to instruct lawyers, understand the procedures and costs, analyse a received claim, decide on a strategy, prepare a defence and quite possibly carry out an invalidity patent search and prepare a counterclaim. Once a defence has been filed, the patent proprietor will usually only have a further 2 months to file a further response. These procedures (greatly simplified here) will be challenging for all parties.

What will a UPC action cost?

It is difficult to say at this time what a UPC infringement or revocation action will typically cost. There will be large differences from one case to another depending on the complexities of the matter, the budget of the parties, the amount of damages at stake, and the evidence requirements. At this time we would expect a UPC infringement action to be more expensive than an action before the German Courts (for example) but less expensive than an action before, say, the UK High Court. As the cost will often not be so very high we predict a reasonably high Appeal rate, again somewhere between the relatively low Appeal rate in the UK High Court and the higher Appeal rate in the German Courts. Still, it will be some time before an accurate assessment can be made.

Interaction with European Patent Office procedures

Existing EPO procedures will be unaffected. In particular, the European opposition procedure will remain and we expect it to be reasonably common to see both opposition procedures before the EPO and revocation actions before the UPC in parallel. The opposition procedure is potentially more powerful because a successful opposition partially or wholly revokes a European patent in all EPC states whereas a successful revocation action before the UPC partially or wholly revokes only a Unitary Patent (i.e. protection in the UPC states) or European patent designations in UPC states, as appropriate. However, an opposition may only be filed within 9 months of grant whereas a revocation action before the UPC may be filed at any time during the life of the patent. The existing EPO central limitation procedure will also remain unaffected

Conclusions

Along with the Unitary Patent, the Unified Patent Court will be the biggest change in European patent law for several decades. The Unified Patent Court is likely to be busy with infringement and revocation actions and it is hoped that it will produce relatively fast and high-quality decisions. However, its relevance has been significantly reduced by the departure of the UK from the European Union, and so the UP/UPC system, and we expect there will remain a fair amount of UK-based litigation of existing and new European patents.

If you have any questions about the Unified Patent Court, please do not hesitate to contact us.