The Unitary Patent & The Unified Patent Court Andrew Clay - - PowerPoint PPT Presentation

37 Offices in 18 Countries

The Unitary Patent & The Unified Patent Court

Andrew Clay Partner Intellectual Property & Technology Practice

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Major Changes Ahead For The European Patent System

• The way the Europeans do patents is very likely to change

significantly within the next couple of years.

• This will have major implications for businesses based on the

exploitation of new technology.

• I am going to explain the basics of the current system and the

changes which are likely to be implemented.

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Where we are now (1)

• The European Union has 27 member countries with a total

population of just over 500m.

• There are two basic routes used to obtain patent protection in

Europe.

• The first route is simply to make a number of separate

applications in different countries (possibly as a result of filing a PCT application). The end result is a bundle of national patents. Where coverage in a large number of countries is required this will be a very expensive route.

• The second route is to file (directly or via a PCT application) a

single application at the European Patent Office in Munich under the European Patent Convention (1973). The European Patent Convention provides a framework for the granting of patents. An application under the EPC can lead to a patent being granted in up to 40 countries – the EU member states plus 13 other countries.

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Where we are now (2)

The EPC application procedure has the following main steps:-

• Formalities examination
• Search report and preliminary opinion on validity
• Early publication (with search report) at 18 months after filing of

the application/or the priority filing if priority was claimed.

• Substantive examination
• Grant
• Possibility of post grant central opposition (9 months)

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Where we are now (3)

What happens post grant is where the problems begin. The EPC application becomes, on grant, potentially a bundle of national patents in the countries designated in the EPC application. To be granted in each such country the patent must be validated in that country, which involves translation in some countries (see following slides), paying publication fees and complying with various formal filing requirements. The overall cost of validation of an average patent for 13 member states is estimated to be about €12,500 and more than €32,000 if validated across all EU member states.

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Where we are now (4)

The London Agreement (Agreement on the Application of Article 65 EPC, OJ, EPO 2001,55) has improved the situation in relation to translation costs. The London Agreement provides that:- 1. Countries with English, French or German as their official language no longer require translation of the patent into their

• fficial language: the claims will be in all three languages –

(Article 14(6) EPC). 2. Member states which do not have English, French or German as their official language must designate one of those three languages as their official language for the purpose of the London Agreement. They may then only require the claims of a European patent to be translated into their actual official language, provided that that European patent is in the official language (English, French or German) that the member state has designated under the agreement.

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Where we are now (5)

All the countries not having English, French or German as their

• fficial language have designated English as their preferred

language for the purposes of the London Agreement. 18 Countries have now ratified the London Agreement. The net effect is that translation costs for European patents have come down significantly, especially in cases where the European patent is in English. However Spain and Italy have indicated that they won’t ratify the London Agreement so that full translation in these countries is still

• required. A real shame as they are the fourth and fifth most popular

countries after the UK, Germany and France. Full translation is also required in Bulgaria, Cyprus, the Czech Republic, Estonia, Greece, Montenegro, Norway, Poland, Portugal, Romania, San Marino, Serbia, Slovakia and Turkey.

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Where we are now (6)

Renewal Fees – Another Major Problem Once a patent has been validated in a particular country then to keep it in force national renewal fees are payable annually. If these are not paid then the patent lapses. The level of fees varies considerably across the EU. The deadlines for payment differ between different countries. In some countries payment of the fees by bank transfer is still not possible. Some countries mandate the appointment of a patent attorney and require communications to be in the local language.

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Where we are now (7)

The Net Effect The net effect of these costs is that the average European patent is

• n average now validated in only 5 countries – Study on the Costs
• f Patenting by Roland Berger Market Research.

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Where we are now (8)

Enforcement – A Further Major Problem Area There is no central litigation system in Europe for patents. A patentee generally has to start separate national infringement actions in each country where there is an infringement problem. This is very expensive and is simply beyond the pockets of most SME’s. Litigation procedures and practices vary considerably across Europe and even across a single country. Inconsistent decisions across different countries for the same patent and the same infringing device occur (e.g. the Improver litigation).

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Where we are now (9)

Overall Picture A fragmented, cumbersome post grant system where obtaining, maintaining and enforcing patents is expensive and time- consuming. In the US a single patent covers a market of 312m people. In China a single patent covers a market of 1.34bn people. In India a single patent covers a market of 1.2bn people. European business is therefore perceived as being at a disadvantage in its key home market. Although…

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The Solution (1)

These problems have long been understood. As long ago as 1959 a working party was set up to come up with a solution: its solution was a unitary European patent (see the Haertel draft of the community patent,1962). By 1975 a community patents convention (CPC) was signed by all the then 9 member states but it was not ratified by enough of them to bring it into force. In 1989 a further attempt to revive the CPC was made but again it failed. Little progress was then made between 1989 and 2009.

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The Solution (2)

In December 2009 the EU Competitiveness Council agreed a set

• f principles to implement a more integrated patent system for
• Europe. At its core were two fundamental elements:-

1. The creation of a unitary EU patent 2. The creation of a common patent litigation system with exclusive jurisdiction relating to both EU patents and EPC patents. The competitiveness Council envisaged unanimity amongst all 27 member states. Spain and Italy were never going to agree to any proposals they saw as promoting English, French and German. In any event the Court of Justice of the European Union ruled (Opinion 1/09) that the then proposed Europe wide arrangements were unlawful as they proposed to create a court system outside the EU legal framework.

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The Solution (3)

By December 2010 a number of member states asked the European Commission to work with them to implement a unitary patent limited to only those countries that were prepared to work together. Such a coalition of the willing is possible under what is known as the Enhanced Co-operation Procedure – see Articles 326 – 334 of the Treaty on the Functioning of the European Union. The Council of The European Union then authorised the use of the enhanced cooperation procedure on 10 March 2011 – (2011/167/EU). This had previously been approved by the European parliament. Spain and Italy have started a court action (CJEU) to block the use

• f the Enhanced Cooperation procedure, on the basis of an
• bjection to the proposed language arrangements. That case is still

pending.

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The Solution (4)

Since the use of the enhanced cooperation procedure has been sanctioned progress has been rapid. There are now two draft regulations and a draft international agreement. One of the regulations deals with the Unitary Patent and one with translation issues. The international agreement deals with the setting up of the Unified Patents Court. The rest of this talk will focus on the key aspects of these two regulations and the draft Unified Patents Court agreement and their implementation. I am not dealing with the proposed Court procedures. A word of caution is that, somewhat bizarrely, the current draft of the Unified Patents Court agreement, which was agreed by the Competitiveness Council on 5 December 2011 has never been published so there is some uncertainty about what the final draft will look like.

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Draft Regulation On Creation Of A Unitary Patent (1)

Current draft is Com(2011) 216 final, subject to council amendments.

• Unitary patents will start life as applications made to the EPO.

The application and examination procedure for Unitary and EPC patents will be identical up to grant.

• The difference will kick in post grant. After grant a patent

proprietor can opt for:-

• 1. A bundle of national patents in the usual way OR
• 2. A unitary patent with unitary effect in all 25 Enhanced

Cooperation States OR

• 3. National patents in Non Enhanced Cooperation States plus a

Unitary patent in the Enhanced Cooperation States.

• The EPO will keep a register of cases where patentees have
• pted for unitary patent protection.
• Enhanced Protection States must cancel local equivalents when

a notice of grant of a unitary patent is published.

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Draft Regulation On Creation Of A Unitary Patent (2)

• For patents granted after the date the regulation comes into

force then requesting Unitary Patent effect will be an option, (Article 79(1) EPC).

• It is unclear to me whether it will also be an option in relation to

existing patents but even if it is then unlikely to have much impact as only a very small percentage of existing patents will have been validated in all 25 Enhanced Cooperation States – 2% of all patents is a number that is banded about.

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Draft Regulation On Creation Of A Unitary Patent (3)

Where a Unitary patent has been granted:- (1) There will only be one annual renewal fee. (2) The patent will have to be enforced via the new Unified Patent Court. (3) The patent will have to be dealt with as a whole. (4) The patent as an object of property will be dealt with according to laws of the MS where the owner has residence or principle place

• f business or (if neither in an MS) a place of business. Co-owners

– position is determined by first named in the register. If applying the above still leads to no MS being caught then German law applies.

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Draft Regulation On Creation Of A Unitary Patent (4)

Controversially the draft regulation also:- (i) Defines what infringing acts are (article 6) – equivalent to section 60(1) of the Patents Act 1977. (ii) Defines what amounts to indirect infringement (article 7) – equivalent to section 60(2) of the Patents Act 1977. (iii) Defines what does not amount to infringement (article 8) – equivalent to section 60(5) of the Patents Act 1977. The inclusion and exclusion of these articles is the main current sticking point to the implementation of the whole package, (see following slides). Why is this so controversial? There is also provision for an opt in to a licence of right procedure, (article 11).

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Draft Regulation On Translation Arrangements (1)

Current draft is COM(2011) 215 final. On the vexed question of languages and translations the current proposals envisage for a transitional period the following position:- (i) Where the language of the EPO proceedings is French or German, on grant as a Unified Patent, at least until good quality machine translations are available, a full English translation of the whole specification will be required. (ii) Where the language of the EPO proceedings is English then a translation into either German or French will be required. (iii) Where there is a dispute, the patentee will, at his own expense, have to translate the patent specification into the language of any legal proceedings in which the patent is being litigated. (iv) The EPO is to make available high quality machine translations of Unified Patents into all official languages of the contracting states.

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Draft Regulation On Translation Arrangements (2)

(iv) Certain categories of applicants for patents (SME’s, individuals and not for profit bodies) will be able to file patent applications in their own language, even if it is not English, German or French and the costs of the translation into an EPO official language are to be subject to a capped reimbursement from official filing fees. As noted above, Italy and Spain lodged a complaint with the Court

• f Justice of the European Union on 7 June 2011 seeking a

declaration that the proposed language/translation agreements unfairly prejudice them. That challenge has yet to be heard by the Court of Justice.

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The Unified Court – Main Features (1)

• Last published draft of the agreement was Council publication

16741/11 of 11 November 2011. However that is not the draft which was agreed in principle (apart from location of the Central Division of the Court) by the Competiveness Council in December 2011. That agreed draft was based on a compromise draft prepared by the Presidency of the European Council and is Council document No. 18239/11.

• Council document No. 18239/11 has never been published,

despite requests by several member states (see Council document 6051/12). Apparently even the IPO had not seen a copy of it as late as June 2012…

• Thus all we have to go on is 16741/11 plus the Council

conclusions document of the meeting that took place on 28/29 June 2012.

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The Unified Court – Main Features (2)

• There is a court of first instance and a court of appeal.
• The court of first instance has a central division (which has

special powers and thus the location of which has been greatly debated) and also local and regional divisions.

• A local division can be set up in a contracting state. States which

are busy (more than 100 cases a year, three year average) can have more than one local division.

• Two or more member states can set up a regional division.
• The central division will be located in Paris but additional

“sections” of the central division will be located in London (chemistry including pharmaceuticals, classification C, human necessities, classification A) and Munich (mechanical engineering, classification F).

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The Unified Court – Main Features (3)

• All court of first instance (local, regional or central) shall have 3

judges and be of a multinational composition.

• For a local division in a member state where there are less than

50 cases a year (3 year average) there shall be one legally qualified local judge and two legally qualified foreign judges.

• For a local division in a member state where there are more than

50 cases a year (3 year average), there shall be two legally qualified local judges and one legally qualified foreign judge.

• For a regional division, there shall be two legally qualified judges

from the region and one foreign legally qualified judge.

• There is provision for a fourth technically qualified and

experienced judge if a litigant requests it.

• The central division will generally have two legally qualified

judges from different countries and one technically qualified judge.

• Actions dealing with the actions of the EPO in relation to the

unitary patent will have three legally qualified judges from 3 MS.

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The Unified Court – Main Features (4)

Court of Appeal

• The Court of Appeal has five judges, three legally qualified and

from different MS and two technically qualified.

• The chair (as with courts of first instance) shall be a legally

qualified judge. Registry

• There will also be a registry for both the courts of first instance

and the court of appeal to keep track of cases.

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The Unified Court – Main Features (5)

Which Courts Can Hear What

• Infringement actions shall be brought in the court of the MS

where the actual or threatened infringement has or may occur or the regional division in which that MS participates.

• Actions for infringement and for provisional measures

(injunctions etc), for damages and seeking remedies as a prior user and relating to the compensation for licences of right shall be brought in the court of the MS where the defendant (or at least one of them) is resident or has its principal place of business and if none of the above then the MS where the D (or at least one of them) has a place of business or the regional court in which that MS participates.

• If the above rules would lead to the choice of an MS where there

is no local or regional division then the case has to be brought in the central division.

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The Unified Court – Main Features (6)

Which Courts Can Hear What

• If an action for infringement and for provisional measures

(injunctions etc), for damages and seeking remedies as a prior user and relating to the compensation for licences of right is pending before a division of the court of first instance, no further action of that type between the same parties on the same patent can be started in any other court of first instance.

• Where a counterclaim is made in an infringement action then the

court of first instance can either (i) deal with both with the assistance of a fourth technically qualified judge or (ii) bifurcate and refer the counterclaim to the central division and suspend or proceed with the infringement proceedings or (iii) if the parties agree refer the whole case to the central division.

• Actions for a declaration of non-infringement and for revocation

have to be brought in the central division unless there is an infringement claim pending between the same parties in which case such claims have to be brought in the court of first instance where that action is proceeding.

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The Unified Court – Main Features (7)

Language The language of the proceedings of the Court of First Instance will be the official language or one of the official languages of the member state hosting the relevant local or regional division but there is scope for the contracting member states to designate one

• r more of the official languages of the European Patent Office as

the language of their proceedings. The parties may also agree on the use of the language in which the patent was granted as the language to be used by the Court, subject to the approval of the panel of judges hearing the case. Territorial Effect The territorial effect of decisions of the Court is extensive: for Unified Patents it will cover all contracting states and for EPC patents it will cover the all the countries in which such a patent has taken effect.

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The Unified Court – Main Features (8)

CJEU Supervision The draft agreement also provides for the introduction of the same provisions relating to infringement (article 14f), indirect infringement (article 14g) and limitations (article 14h) as does the draft regulation and again all of these will be subject to review by the CJEU, (article 14b and article 267 of the TFEU). But see below… Law The court shall apply the law:-

• Of the agreement
• EU law including the two implementing regulations
• The EPC
• Other international agreements applicable to patents and binding

all member states (e.g. the Paris Convention)

• National law.

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The Unified Court – Main Features (9)

Other Main Points

• There is going to be a mediation and arbitration centre but

mediation or arbitration cannot lead to a patent being declared invalid.

• Appeals will not have suspensive effect unless they are appeals

in relation to a decision relating to the revocation of a patent.

• Appeal decisions as in UK will generally overturn the decision at

first instance but there is procedure for a referral back in exceptional cases.

• The winner’s reasonable and proportionate legal costs and other

expenses will be recoverable from the loser unless that would be inequitable.

• For financial compensation there is a five year limitation period

from date claiming party became or had grounds to become aware of the facts justifying the proceedings.

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The Unified Court – Main Features (10)

Which Patents Will Be Affected?

• Unitary patents – obviously.
• Existing European patents but proceedings for the infringement

and revocation of such patents can still be initiated in national courts for up to seven years after the Unified Patents Agreement comes into force and will continue in such courts notwithstanding the expiry of the seven years. That jurisdiction is non-exclusive – the Unified Patents Court can still be used for infringement and revocation actions.

• For existing European patents a declaration for proceedings of

non-infringement will have to be brought in the Unified Court. The Opt Out (Council document 17317/11)

• Unless proceedings have already been begun in the Unified

Court, holders of existing European patents can opt out from the exclusive jurisdiction of the Unified Court for seven years.

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The Unified Court – Main Features (11)

The Opt Out (Council document 17317/11)

• The opt out period may be prolonged for a further 7 years

following a consultation exercise undertaken 5 years after entry into force of the Agreement.

• The opt out is not much use if you are a defendant…

The possibilities for forum and court shopping seem extensive.

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The Unified Court – Current State Of Play

The Council decision of 28/29 June concerning the location of the court was meant to lead to the adoption in 2012 of the two regulations and the signing of the court agreement. BUT the Council also suggested that articles 6 to 8 of the regulation implementing the Unitary Patent be deleted. That latter move did not go down well with the European

• parliament. Its rapporteur (the person charged with overseeing the

Unitary Patents initiative) said the proposed deletion was unlawful. The European parliament therefore decided, in early July, not to vote on the package of measures to implement the new regime. The issue is now due to be discussed again between the EP’s Legal Affairs Committee and the Parliament’s legal service in September 2012.

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The Unified Court – What I think will happen next

• The point of no return has likely been reached. Articles 6 - 8 will

stay in the regulation.

• The package, with articles 6 – 8 in, will be approved by the EP in

late autumn 2012/spring 2013, possibly with enhanced opt out provisions to meet the concerns of those who oppose the inclusion of articles 6 – 8 into the regulation.

• The council of ministers will then formally adopt the two

regulations in late 2012/early 2013 and they will come into force at a date to be specified (likely a date in 2015/2016).

• A diplomatic conference will then take place to sign the Unified

Patent Court Agreement possibly in the summer of 2013. This will then be ratified by national parliaments in the remainder of 2013/early 2014.Once 9 MS (including the 3 with the most EU patents in force) have ratified the court agreement then it will come into effect after a yet to be defined period, which is expected to be 2 years.

• Therefore at some point in 2015/2016 the two regulations and

the agreement will likely come into effect.

• The first unitary patent is likely to come into force in 2016.

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The new Regime – Some Thoughts

• Patentees will need to monitor the opt out provisions carefully.
• There is the possibility that the endless delays that have plagued

trade mark litigation may plague patent litigation if articles 6,7 and 8 are included in the Unitary Patent Regulation.

• Bifurcation could be a nightmare for both patentees and

defendants.

• There is a serious question mark as to where all the new patent

judges are going to come from.

• Will the costs really be less for SME’s?
• Exclusivity for Unitary patents ?
• Non-exclusivity for EPC patents?

The patent litigation framework for Europe for perhaps decades to come is now being determined. Only time will tell if the currently proposed framework is a step in the right direction or not.