As a tool for protecting innovation, patents are an important asset for research-based life sciences companies, and high-stakes, high-cost litigation in multiple jurisdictions is common where “blockbuster” drugs are concerned. The proposed EU Unified Patent Court (UPC) system aims to streamline patent litigation in Europe and to avoid forum shopping between different EU courts. Although some remain sceptical, many in the life sciences industry have welcomed this initiative.
What is the Unified Patent Court?
The Unified Patent Court is a new European patent court, which will involve fundamental changes to the European patent system for participating states. It goes hand-in-hand with a new Unitary Patent (UP), a single patent which will provide protection for a patentee across multiple EU27 states, much as the existing EU trade mark (EUTM) does for trade marks.
Why is it in the news?
There have been a number of constitutional challenges in Germany, which threatened to derail the UPC project. However, the German Federal Constitutional Court recently gave the green light for Germany to ratify the UPC Agreement. This means that the UPC project is expected to proceed. A detailed timetable is being prepared by the International Preparatory Committee.
How does the UPC affect UK patent owners?
The UK will not be participating in the UPC. This means that European patents[i] designating the UK will not be subject to the jurisdiction of the new court. Nor will the UK participate in the UP. However, businesses rarely own patents in one country alone. It is important that all businesses (including UK businesses) owning patents or supplementary protection certificates in participating EU Member States take action to secure their position in Europe. Licensees and parties to research, collaboration and joint venture agreements should also prepare. Currently, 12 EU countries have ratified the new system including France, Italy and the Netherlands, but the list is likely to increase – potentially to include all the EU27. Any patent-owning business with interests in the EU should therefore take note.
What action should be taken?
Patent owners should decide which of their European patents (if any) they wish to opt out of the UPC system. Failure to opt a patent out in time may result in the patent automatically becoming locked into the exclusive jurisdiction of the UPC if an action in respect of that patent is brought in the UPC. This would apply to all the designations of that patent in participating countries (currently 12 countries as explained above). Licensees, collaborators and joint venture partners may also wish to negotiate the right to have a say in the decision whether to opt a patent out or not – if no agreement is made on this point then this will be solely the patentee’s decision.
Deciding whether to opt-out
The proposed UPC will apply both to the new UPs and to European patents in participating countries. The new court provides a one-stop shop for litigating these European patents. Advantages of participating in the new system include that patentees should be able to save the costs of litigating in multiple European jurisdictions and to obtain pan-European injunctions and other pan-European remedies. So staying in the system will potentially put patentees in a very powerful position. However, there is also a major risk, because just one action in the UPC could result in the revocation of the European patent in all participating countries. This, coupled with the fact that this is a new, untested system involving many procedural differences, including in relation to the presentation of evidence, and that there is a fear that some judges will be inexperienced, means that many patentees are wary of being among the first to use the system. So the decision on opt-out is a balancing exercise.
An opt-out does not have to be forever. It can be withdrawn later provided that no action has been brought before the national courts in respect of the patent.
When is the deadline for opting-out?
The timetable for commencement of the new court has not yet been set. How long this will take is likely to depend on the level of commitment of those negotiating the final stages. However, when the timing becomes clearer it is likely that patentees will be given a sunrise period in which to submit opt-outs in time for the commencement of the court. At this point patentees will wish to have made the business decision about which patents to opt out.
[i] A "European patent" is a patent granted by the European Patent Office. A separate European patent will be granted for each country included in the application (the designated country). So, despite the name, these operate largely as national patents in the relevant countries. This contrasts to the proposed "Unitary Patent" which covers all participating EU Member States.