1. Will Jenkins recommend using the EP Unitary patent?

 

Whether we will be recommending the Unitary Patent may ultimately depend on yet-to-be determined fees, and in particular renewal fees (see question 9 below). In any event, we would only recommend the Unitary Patent to clients who are familiar with the patents systems in Europe and who understand the benefits and drawbacks, provided that the Court of Justice of the European Union does not in the meantime declare itself competent to hear appeals from the Unitary Patent Court.

 

On 16 April 2013 the CJEU rejected complains by Spain and Italy on the legality of the Regulation. [1] In the meantime, Spain has filed two further complaints. [2]

 

Neither the Advocate General nor the Court has commented on whether Article 10 (which is unchanged since the 13 April 2011 draft) confers a role for the CJEU in the judicial system, but if that role is to be non-exclusive (as indicated by the Court's ruling), we can be encouraged that the CJEU will not claim jurisdiction. It nevertheless remains possible that the CJEU will declare itself competent to hear patent cases. It is hoped that this will be clarified in the Court's ruling on Spain's complaints, but it is a question that may remain in doubt for some time to come.

 

The CJEU is seen as inexpert, unpredictable and an unnecessary extra layer for litigation. Articles 6-9 of the Draft Regulation (defining the rights conferred by a Unitary Patent) have been removed in order not to bring the definition of those rights into EU law and therefore not give the CJEU any role in determining the scope of protection of Unitary Patents. Only the CJEU can decide whether the revised draft deprives it of competence. If, at some time in the future, it declares itself competent, the Unitary Patent may lose popularity.

 

We will, on the other hand, continue to advise clients of the advantages of the national patent systems and the "standard" European patent.

 

It will also be important to be aware that the new Unified Patent Court will have exclusive jurisdiction over "standard" European patents (in all states other than Spain and Italy) but there will be an option to opt-out from this exclusivity for at least the first seven years.

 

Many clients will prefer these routes and the opt-out option, particularly:

 

small to medium sized enterprises (SMEs);
clients who are content to cover just UK and Germany and prefer the simplicity and informality of prosecution before these national offices; and
clients who wish to avoid central opposition and/or revocation.

 

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[1] Cases C-272/11 and C-295/11. The Court had already ruled once on the issue and its objections were addressed in the agreed texts. Advocate General Bot wrote (11 December 2012) that there is no merit in the complaint that Council Decision 2011/167/EU fails to respect the judicial system of the Union, because Article 10 of the draft regulation of 13 April 2011 addresses the question of jurisdictional protection of unitary patents. The CJEU ruled that rules on IP (falling under Article 118 of the TFEU) are not "competition rules" that would fall under the exclusive competency of the EU (and therefore the CJEU) but are shared and non-exclusive competencies.

 

[2] Cases C-146/13 and C-147/13

 

2. Why will we recommend the Unitary Patent?

 

The Unitary Patent will provide a cost saving at the time of grant. Ongoing costs should, on average, be neutral. Costs are discussed in greater detail below.

 

Enforcement of a Unitary Patent will not necessarily be cheaper. The Draft Agreement on a Unified Patent Court and draft Statute [1] provide for a new court that has exclusive jurisdiction. It will be possible to bring an enforcement action in a local division of the court (e.g. in London or Dusseldorf), but if the defendant brings a counter-claim for invalidity, this will have to be heard by the central division. For life sciences, this will be in London, for mechanical matters it will be in Munich and for electronics, telecoms and everything else, it will be in Paris.

 

Statistics indicate that, where infringement and validity are bifurcated, validity is put at issue in only 25% of cases [2] (in jurisdictions where both issues are heard by the same court, the figure is very much higher). At least one in four cases, and probably many more, can expect to be transferred to the Central Division, with associated extra cost. It is therefore not in the patentee's control to keep the case before the local court and keep the costs down.

 

The stakes are higher. The patent may be invalidated across the entire territory of the Unitary patent (i.e. the whole of the EU except Spain and Italy), but an injunction and damages can be obtained for the entire territory.

 

Opting out of the exclusive jurisdiction of the Unified Patent Court will not stop a counterparty from filing an invalidity action or an action for declaration of non-infringement before the Central Division of the new court. European patents will be vulnerable in this way regardless of whether they are declared as having unitary effect and regardless of whether the patentee opts out. Only national patents will avoid this vulnerability.

 

Many practitioners ask whether an EU-wide injunction or EU-wide damages are necessary. Under the present system, it is rare for the same case to be heard in more than one Court in Europe. In most cases, a ruling by one Court (e.g. London or Dusseldorf) is sufficient to cause parties to settle across Europe. This is true whether the result is for or against infringement and for or against validity. There are, of course exceptions, and the exceptions inevitably give rise to differences in outcomes and resultant headlines.

 

The present system has its drawbacks. In particular, different cases can be running in parallel in different countries and even in parallel with opposition proceedings at the EPO. This latter duplication will not be eliminated - opposition before the EPO will continue, and it will be for the new court to consider whether to stay proceedings or to proceed in parallel. There is plenty of case law that considers the relative merits.

 

In cases where the validity of a Unitary Patent has been challenged and upheld, such a patent will be a much more powerful tool than any patent currently available in Europe.

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[1] 16222/12 PI 146 COUR 74

 

[2] To Bifurcate or not to Bifurcate: That is the Question Prof The Rt. Hon Sir Robin Jacob, CIPA June 2012.

 

3. Will the European patent environment change?

 

The first patents with unitary effect may be granted in late 2014 or early 2015. [1] The anticipated cost savings means that a high rate of take-up can be expected. Unitary patents and "standard" European patents will co-exist with national patents. Courts will be established and judges appointed in preparation for possible litigation, but it will take time for the numbers of cases coming before the courts to grow and for important points of law to be put to the test and settled. An example of one such point over which there are perceived differences at present is the meaning of Article 2 "Equivalents" of the Protocol on the Interpretation of Article 69, and whether it provides for a doctrine of equivalents.

 

A significant question that can only be answered in the fullness of time is whether the new court is perceived to be pro-patentee or tough on matters such as inventive step and over-broad claiming.

 

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[1] The UKIPO says primary legislation will be needed and this will not be put before parliament before mid-2014 at the earliest. The earliest the system can begin is 4 months after ratification.

 

4. Will it change enforcement?

 

One of the perceived problems with the present patents system in Europe is "forum shopping" in which a party to a dispute can start a legal action in the country which is likely to be more favourable to that party. For example, Mannheim is favoured by patentees for its "rocket-docket". Dusseldorf is also favoured. Venues preferred by those seeking a declaratory judgement include London, while Belgium and Italy are so slow as to potentially torpedo any action by a patentee, provided there is there is good reason to start an action in those states.

 

Under a Unitary patent, opportunities for forum shopping are intended to be limited. Actions can be brought before the local division in the state where the actual or threatened infringement has occurred or where the defendant is resident of has its principal place of business. This in turn dictates the language of the proceedings, unless agreement is reached to use the language of the patent as the language of the proceedings.[1]

 

In the case of a defendant with no place of business in the EU, the action can be brought before the central division. Declaratory judgement actions and invalidity actions must be brought before the Central Division. The language before the central division is the language (English, French or German) in which the patent was granted.

 

Where there is an appeal, it will be in the same language as the proceedings at first instance.

 

In practice, the options for where an action can be initiated may be similar, but procedures between the different divisions are expected to be more uniform, so the reasons for exercising that choice in favour of a particular state will be driven less by the court procedure. Indeed, different backlogs may develop and favoured forums may emerge in time.

 

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[1] Draft agreement on a Unified Patent Court, Article 29.

 

5. Awards of costs

 

The losing party will be required to pay reasonable and proportionate costs of the successful party, up to a ceiling yet to be determined and with certain exceptions.[1] One can envisage circumstances in which the successful party may claim translation costs from the losing party. It may emerge that the costs ceiling is too low to make this a concern in assessing the risk of bringing an action in a certain state.

 

The setting up of the various courts and the initial seven years of operation will be financed by the contracting member states. Thereafter it is intended to be self-financing out of court fees and "other revenues" but if additional contributions from contracting member states are required, these will be in proportion to revenues those states receive in renewal fees for European Patent.[2] In other words, access to justice is intended to be affordable. Fees can be expected to be higher for larger entities or higher value cases.

 

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[1] Ibid, Article 42

 

[2] Id., Articles 18 & 19.

 

6. When do we have to say whether we want or don't want the EP Unitary patent?

 

A request for unitary effect can be submitted up to one month after grant of the European patent.[1]

 

We will need to prepare a translation of the entire patent into one other language of the participating member states (i.e. not Spanish or Italian).

 

[2] This text will have no legal value and is for information purposes only, but it cannot be a machine translation.[3] We have located low-cost translators.

 

We should discuss what language should be chosen and how much effort should be put into ensuring the quality of this translation. For example, we may recommend:

 

French, being a language that is inexpensive for translation and closest to English in grammar and structure that translation errors are minimized; or
Greek, also being inexpensive for translation and being so different and so inconsequential that errors will be entirely overlooked.

If we have your instructions at the same time as responding to the Rule 71(3) communication, this should give us sufficient time to prepare the necessary French translation. Even if the patent is particularly long, we anticipate this will give sufficient time unless you have particular instructions regarding the quality of the translation.

 

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[1] Draft Regulation COM (2011) 215/3, Article 12

 

[2] This is a transitional provision that will lapse after 12 years. Draft Regulation COM (2011) 216/3, Article 6

 

[3] Article 6 paragraph 1a added by the European Parliament on 11 December 2012.

 

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7. Is there something else that we need to do earlier in the process?

 

If you would like to register for unitary patent protection those applications for which the Rule 71(3) communication expires before the Unitary Patent provisions come into effect, we can put in place a process to delay grant so that grant occurs at the earliest one month before the relevant date. This would allow us to register these cases on the relevant date.

 

If the relevant date is, for example, 1 January 2015, we can anticipate that the new provisions may apply to cases for which the Rule 71(3) communication issues from about May 2014. We could consider using further processing on a routine basis from about October 2013 to delay applications so that their dates of grant are pushed back to January 2015, but we would not recommend doing so, as there may still be significant doubt throughout 2013 over the timetable to ratification and implementation. Other delaying tactics can be considered if necessary nearer the time.

 

 

8. How will costs be changed country-by-country?

 

 

	Unitary Patent?	London Agreement	Cost Saving
United Kingdom	Yes	Yes	Minimal
Germany	Yes	Yes	Minimal
Italy			None
France	Yes	Yes	Minimal
Spain			None
Netherlands	Yes	Yes	Moderate
Greece	Yes		Significant
Portugal	Yes		Significant
Belgium	Yes		Significant
Poland	Yes		Significant
Sweden	Yes	Yes	Moderate
Austria	Yes		Significant
Switzerland			None*
Denmark	Yes	Yes	Moderate
Romania	Yes		None
Finland	Yes	Yes	Moderate
Ireland	Yes		Minimal
Norway			None
Hungary	Yes	Yes	Moderate
Luxembourg	Yes		Minimal

 

Minimal = registration fee only/address for service (about £165 - £550)

 

Moderate = claims (typically £1000-£1600)

 

Significant = full translation (typically £2500 - £3200)
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*For Switzerland, it can no longer be expected that a French or German translation can be re-used from Belgium or Austria, but an Italian translation can be used if available.

 

9. Are there any additional costs or cost savings?

 

A complete translation of the patent into one other language needs to be prepared. This is for information only and has no legal effect. It need not be of any particular quality but should not be a direct machine translation. For a quality translation, £2500-3500 would be typical, but we anticipate being able to source translations at a very much improved rate.

 

There will be a single renewal fee for the Unitary patent. We do not yet know what the renewal fees will be. They are to be set at a level equivalent to the average geographical coverage of current European patents.[1] Whether this represents an extra expense or a saving for a given applicant depends on whether that applicant at present validates in more or fewer countries than the average for all applicants.

 

According to the impact assessment of the Unitary Patent, the average number of validations is five.[2] If set at the correct level, the revenue the EPO receives from renewal fees should neither increase nor decrease.

 

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[1] Draft Regulation COM (2011) 215/3, Article 15

 

[2] COM(2010) 350 final "High validation costs and complexity result in a European patent being validated on average in 5 EU Member States. The average number of validations has decreased over the last 15 years while the number of Contracting States of the European Patent Convention (EPC) has risen from 17 to 37. The validation rate is very high in the 3 largest EU Member States. In 2003, of all patents granted by the EPO, 95% were validated in Germany; 80% in France, and 75% in the United Kingdom. By contrast, less than 40% of European patents are validated in other Member States.