The Unitary Patent and UPC demystified (sponsored article)

Justin Simpson: At its heart, the Unitary Patent (UP) was established as a way to simplify and reduce the cost of patent filing in Europe. It's an agreement between European Union member countries that establishes a single patent right across these countries that can be enforced by a court, known as the Unified Patent Court (UPC). Depending on the subject matter, the central court ruling on the matter will be based either in London, Paris or Munich, but its decisions will be enforceable in all EU countries who have signed up to the deal.

Justin Simpson: Typically, through a European patent application via the European Patent Office. That route allows one to obtain a granted patent, but it will only be enforceable in individual European countries once it has been validated in those countries. So it's really a centralised prosecution path, but validation and enforcement happen in individual countries.

Justin Simpson: A European patent isn't a single right, but a bundle of individual country rights. When you're validating in a lot of countries it can be expensive and time-consuming. Likewise any patent disputes must be litigated in each nation individually and each country isn't bound by decisions in other national courts.

Justin Simpson: There have been discussions surrounding it for decades. In 1973 when the legal basis of the European patent system was created with the European Patent Convention (EPC), member states began inquiring about the creation of a Europe-wide patent (much like the worldwide patent most applicants wrongly assume exists). In December 2012, a formal agreement was reached. Now, ratification is needed by 13 of 26 countries currently participating – including the UK, France & Germany. So far, 11 states have ratified, including France so it's nearly ready to go, although significant hurdles have yet to be overcome that I'll touch upon later.

Justin Simpson: As I briefly discussed earlier, the Unitary Patent is actually a parallel system to the current European patent. The UP was set up so you can choose to validate the old way, in individual European countries, or via the UP which would have effect in a bundle of EU countries. Patent applicants will have the choice between using the UP or individual European validation, once they've gone through prosecution at the EPO.

Justin Simpson: For applicants who want protection in a large number of European countries, the objective of the UP is to make validating and enforcing patents in Europe easier and less expensive. With UPs, you'll save on translations and paying for validations in individual countries. Also, in cases of infringement, you won't have to handle the dispute in dozens of individual national courts. It centralizes enforcement into one governing authority – the UPC. However, for applicants that are happy with protection in only a handful of European countries, the UP won't really help them.

Justin Simpson: When the UK referendum happened and British voters elected to leave the European Union, the future of the long-awaited UPC Agreement immediately became uncertain. It is important to remember that the UP is an agreement among European Union member states and as London is one of the three locations for the Unified Patent Court, it's a tricky situation. In November 2016 many were shocked when the UK government announced that it would proceed with preparations to ratify. However, it still remains unclear if the UK can stay in the system once the country leaves the EU. Recently, the EPO President, Benoît Battistelli, noted he is confident the EU can find a way to keep the UK in the Agreement if there is a way to accept the supremacy of EU law. It is difficult to know what will happen in two years' time, and a lot of different opinions on the most likely outcome. Watch this space!

Justin Simpson: A year ago, the expectation was a spring 2017 launch. However, this has since been pushed and optimists are looking at the end of 2017. This date now looks increasingly compromised by the recent decision to hold a General Election in the UK in June. There is speculation now that it will come into effect in the spring of 2018. For that to happen, a few things need to be achieved. First and most importantly, the UK and Germany have to complete the ratification process. Things can change daily relating to this agreement, it's important to continue to be on the lookout for updates and announcements, specifically relating to the United Kingdom's level of involvement.

Justin Simpson: No. Currently, 26 of the 28 member countries are signed up to participate – including the United Kingdom. As of today, Spain and Croatia have still chosen not to participate in the agreement. Remember too, that the European Patent Convention covers 44 countries, so the UP doesn't (and won't ever) cover all of those non-EU countries. Applicants need to pay close attention to which countries on their list are covered or not and seek professional advice if they are unsure.

Justin Simpson: Industries such as pharma which tend to file in the largest number of countries would stand to benefit with a reduction of their translation and filing costs. However, they have their doubts too. The hesitation we are hearing is whether to put all their eggs into one basket. A negative result in a UPC court is a negative result in up to 26 countries. They won't have the opportunity to forum shop, getting a positive result in a pharma-friendly jurisdiction which they can use as a negotiating tool elsewhere. It's a complex issue, which each applicant needs to consider from their own strategic viewpoint.

Justin Simpson: As the UP was created to coexist with existing filing systems, I don't foresee it immediately taking the place of European validation. My best bet is that companies will use the UP for some patent applications and traditional validation for others. I also foresee a slow start, where companies wait to read the results of the first few UPC cases. A company's IP is often its most important asset, and it's something CEOs are reluctant to experiment with. In time, the UP may become popular at the big end of town if concerns about the UPC and the role of the UK are allayed, but the big end of town will take time to embrace such a change.

Justin Simpson: There are two main negatives: One is that you are entrusting your patent rights to a single court covering 26 countries. If you lose that case, all rights throughout Europe are lost. The second is that if you only want to protect your patent in a limited number of countries, it's actually cheaper to use traditional validation. This is true of many companies who probably won't find the UP that useful. So the cost savings are most significant for the broadest filers and are either moderate or negative for narrow filers but again companies have to determine whether any savings outweigh the uncertainty surrounding the role of the UK and the UPC.

Justin Simpson: The UP system, especially in its infancy, will be rather complex and it will be hard to keep track of all the changes. Specialist foreign filing providers such as RWS spend all of their time on this topic, so we’re a great resource to tap into. We’ve recently built a one-click cost calculator which is connected to our filing platform, inovia. This tool helps applicants and law firms understand the costs of the UP versus non-UP routes so they can make informed decisions. We are excited about the launch of our calculator and are looking forward to assisting applicants and law firms during this evolution of European patent law.

Justin Simpson
		Justin is an Australian patent attorney who is the founder of inovia (now known as RWS Inovia). Prior to founding Inovia, Justin worked as a software-specialist patent attorney for a number of leading Australian attorney firms and companies. He holds degrees in law and computer science from Sydney University and brings a global perspective to issues related to foreign patent filing.