Unitary Patent or European Patent

Once the Unified Patent Court comes into force, a patentee may apply for a European patent with unitary effect for the EU countries participating in the Unitary Patent regime at that time (UP states), instead of a “classic” European Patent.

A Unitary Patent is a single patent that applies across all UP states. In contrast, a classic European patent is treated as a bundle of individual national patents in the relevant countries, that can be assigned, allowed to lapse and invalidated separately.

Unitary Patents can only be litigated in the UPC, whereas European patents can be litigated in either the UPC or the national courts until the end of a transitional period of at least 7 years.

Whether or not it is more advantageous to obtain and litigate a Unitary Patent than rely on classic European patents (and national patents), depends upon a business’s particular patent portfolio and business model.

1 Opting out or staying in

After a transitional period of at least 7 years, the UPC will gain exclusive competence over litigation involving both UPs and classic European patents. However, until one month before the end of this period, it is possible to “opt out” a European patent or application from the UPC system. Doing so allows classic European patents to continue to be litigated before national courts. A patent can be opted back in subsequently, but only if there has been no national litigation in the meantime. Fees are payable for opting both out and in (the current proposal is €80 per patent but we anticipate this will be reduced).

Factors to consider here include: ■ The value of it to the business: Does it protect a key

product? Does it provide licensing revenue? ■ How robust it is expected to be to invalidity attacks; ■ The characteristics of the likely infringers – will the

ability to obtain a pan-European injunction in a single action be valuable?

■ The business’s risk appetite given that the UPC is an untested litigation system; and

■ The cost of opting out (and opting back in).

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Who should make the application

The identity of the applicant fixes the law that applies for assessing infringement and dealing with the Unitary Patent as an object of property. This cannot be changed subsequently. Laws differ, for example, on the rights of joint owners and the effects of transactions.

The law that applies is that of the UP state where the applicant resided or had its principal place of business (or failing that, a place of business) at the date of filing the application. If the entity did not have any place of business within a UP state, German law applies.

For joint applicants one looks, in the order in which the applicants are listed in the European patents register, for the first named applicant that resides or has a principal place of business in a UP state, or, if none do, a place of business.

2 Language choice

Proceedings in the central division of the UPC will be conducted in the language of the patent, which may be English, French or German. The central division is the division that will hear, among other actions:

■ Standalone invalidity actions; ■ The invalidity part of action where the issues of

infringement and validity have been split up (bifurcated); ■ Infringement actions where infringing activities are

carried out only in countries that do not have local or regional divisions; and

■ Applications for a declaration of non-infringement.

The language of the patent is also the main alternative language for proceedings in local/regional divisions and the Court of Appeal.

Whilst translation and interpretation may be available, there are advantages to conducting proceedings in a familiar language so consider in which language you file your patent.

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PREPARING FOR THE UNITARY PATENT AND UNIFIED PATENT COURT – PRACTICAL TIPS

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Joint development arrangements

In addition to the usual considerations around sharing and creating IP, to avoid later disagreements and deadlock it is sensible to consider, among other matters: who decides whether to file a Unitary Patent or European patent and whether to opt out; the order of applicant names; the language of the patent; who decides whether to renew it; and, who is responsible for paying the renewal fees.

These could be seen as mere administrative matters, but take on a greater importance with the introduction of the Unitary Patent.

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Where to commence proceedings

Litigating in the UPC is “higher stakes” as the judgments will apply across all UPC states (rather than country by country).

The UPC consists of a central division and a number of local and regional divisions. Although a single framework applies, it leaves scope for judicial discretion. Hence it is likely that practices on both procedural and substantive matters (such as granting preliminary injunctions or bias towards finding patents infringed/invalid) will diverge until a substantial body of appellate law builds up.

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Pro-active risk management

With the reach of the UPC, a business would be advised to consider how it manages the risk of being sued. In addition to managing exposure through contractual arrangements, there are a number of pro-active defensive measures that a business can take.

When a business anticipates it may be sued for infringement, these measures include:

■ Filing a protective letter setting out facts and arguments challenging the anticipated application for a preliminary injunction or other provisional measures, so the court is aware of the counter- arguments if an application is made without notice;

■ Filing a declaration of non-infringement in the central division more than three months before starting any activities that could be alleged to infringe the relevant patent (otherwise it holder can stay the declaratory action by filing an infringement action in a local/regional division); and

■ To preserve a preferred litigation forum for a European patent: suing in the UPC before it is opted out, or in a national court after it is opted out, to prevent the patentee from opting it out/back in respectively.

8Reviewing contractual agreements

It is prudent to review existing and new agreements to ensure they deal adequately with the issues that arise out of the introduction of the Unitary Patent and UPC, including all those mentioned in this note.

For example, a business’s evaluation of its risk exposure under a contract (such as any indemnities it is giving) and what terms it wishes to include to manage that risk will be affected by the broader reach of the UPC (an injunction will apply across all countries participating in the UPC (UPC states)) and the uncertainty created by the initial lack of case law.

As another example, which party controls litigation, and notification and assistance obligations, become more important given a patent can be enforced and invalidated across the UPC states in a single action. An exclusive licensee can litigate in the UPC states without the permission of the patentee, unless the licence provides otherwise.

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Claire Bennett Partner London T +44 (0)20 7796 6992 claire.bennett@dlapiper.com

For further information please contact:

www.dlapiper.com

In broad terms, the patentee can sue in the place of infringement or where any of the defendants are located. The infringement court effectively controls whether the infringement and validity issues are tried together or separately, and in which court, and whether to stay infringement pending the invalidity decision. Hence the patentee can attempt to influence how the case evolves through its selection of a jurisdiction that has the desired approach.

For classic European patents, one will also be able to choose to litigate in a national court, with their different national practices (see “Opting out”).