A European Patent—Can’t I Have One of Those Already?

The European Patent Office (EPO) provides a central examination and grant process for patents on behalf of up to 42 European countries. At present, however, for the granted patent to take effect in each country, it must be converted into a set of national patents after grant in a formal validation process. These national patents must then be kept in force by paying separate annuities in each country in which the patentee wishes to maintain protection. The individual patent rights are enforced, licensed, and assigned as national property rights in each country.

So What Will a Unitary Patent Give Me?

The unitary patent (UP) will be a pan-European right covering at least 13 (and potentially up to 25) European countries, with the further possibility of additional countries joining the agreement at a later date. The UP is kept in force by paying a single annual fee, which is equivalent to the sum of the individual annuities currently payable in the United Kingdom, Germany, France, and the Netherlands. Thus, for an annuity payment equivalent to the sum of four current annuities, a UP will provide pan-European protection in at least 13 European countries. Management of the granted UP, including the payment of annuities and the registration of transfers and assignments, will also be greatly simplified, as it will be handled centrally by a single authority.

As a unitary property right, the UP can only be assigned as a single entity and cannot be assigned to different owners for different European countries. However, the UP can be licensed to different licensees for different territories.

The countries covered by a UP will depend on the number of countries that have ratified the agreement on the date on which the patent is validated as a UP, so different unitary patents will have different territorial scope. The territorial scope of a UP will remain constant throughout the lifetime of that patent, so UPs granted at different times will have different territorial scopes covering somewhere between 13 and 25 countries.

A Unitary European Patent Right, That’s Great! What Are the Downsides?

A UP will be subject to the exclusive jurisdiction of the new, and as yet untested, Unified Patent Court (UPC). All actions relating to the UP, in particular relating to infringement or validity of the UP, will be tried by that court. While some patentees will find the prospect of a pan-European infringement action enticing, for many others, this will be outweighed by the risk of pan-European revocation of the patent right during the lifetime of the patent. In contrast with this arrangement, under the current regime the validity of a European patent may only be challenged centrally within nine months of grant.

Patentees should also be aware that the UP will not cover the whole of Europe. Spain, Poland, and Croatia did not sign up to the UPCA, and other countries seem to be in no rush to take the necessary steps to implement the agreement. Furthermore, countries cannot be part of the UP system unless they are EU member states, so countries such as Switzerland and Norway will not be part of the UP system.

Initially, there will be large gaps in territorial scope for UPs granted shortly after the 13 ratifying countries bring the system into force. However, even once the UP is brought into effect in additional countries, it is clear that there will always be some gaps in the protection afforded by a UP. For some patentees, these will need to be filled using national validations of their European patent (termed “classical” European patents) or by applying separately to those national patent offices.

A further consideration arising from the nature of the UP is that the full annuity fee must be paid each year to keep the UP as a whole in force. This annuity fee becomes increasingly more expensive during the term of the patent. Unlike existing classical European patents, there is no option in a UP to reduce annuity payments later in the patent term by renewing the European rights only in selected countries. Further, the UPCA provides no mechanism to enable a patentee to convert the UP into separate national rights. For a patentee that actively manages its European portfolio to reduce annuity costs later in the term, for example by paying annuities only in the United Kingdom and Germany and allowing the patents to lapse in other European countries, the UP will remove this flexibility and increase patent costs as the patent approaches its 20th year.

Can I Continue to Use the Current European Patent Process?

There currently is no proposal to restrict patentees from continuing to use the classical European patent route of validating the European patent in individual, selected countries after grant and maintaining separate patent rights in those countries. Clearly, patents already validated in this way will also remain as separate national rights. Hence, in countries that are part of the UPCA, classical European rights will run in parallel with UPs (and in many cases with national rights available through separate national patent offices). However, a patentee cannot hold both a UP and a classical European patent having the same claims.

What about Enforcement of My European Patents?

While the patent granting and validation process will remain the same for classical European patents, there will be significant changes in how these patents are litigated and enforced. When the agreement comes into effect, these classical European patents, including all European patents that have already been granted, will fall under the jurisdiction of the UPC. For a transitional period of at least seven years, however, a proactive step can be taken to opt out these classical patents from the UPC system.

In the longer term, the only way for a patentee to avoid the jurisdiction of the UPC is to bypass the EPO altogether and revert to filing patent applications via individual national patent offices across Europe. While there will be a few patentees with some key patents where this approach may be worthwhile, this will likely be viewed as an unnecessary and backward step by most patentees.

It is important to note that the UPC does not affect the current EPO opposition procedure, which will continue to run alongside any UPC court actions in the same way that it can run in tandem with national court actions today. It is expected that oppositions will continue to be used widely by many parties who like the relative certainty of the well-known procedures. Furthermore, patentees experienced in European opposition practice will find the approach and practices of the UPC familiar.

As for My Existing European Portfolio, Do I Need to Consider Opting Out?

For European patents already granted, for pending European applications, and for newly granted patents validated as classical European patents, an opt-out system has been put in place to enable patentees to take their patents outside the jurisdiction of the UPC. Patentees need to decide whether to opt out their patents on a case-by-case basis.

The opt-out system will be in place for at least seven years, but once opted out, a patent will remain opted out for its whole lifetime unless the patentee chooses to opt back in to the system. Opted-out patents remain subject to the jurisdiction of the national courts, and enforcement and revocation actions in relation to those patents must be brought in individual national courts.

When the transitional period is over, all patents granted by the EPO will be subject to the jurisdiction of the UPC. Therefore, patent applications being filed at the EPO today may well be granted after the end of the transitional period and will fall under the jurisdiction of the UPC.

There is an opt-out fee, which under the current proposals will be set at €80 per patent family or application. A patent family includes all national validations of that patent, but not divisional applications derived from a parent patent.

It will also be possible to opt a patent back in to the jurisdiction of the UPC, for example if the patentee wishes to take action under the patent at the UPC. However, once opted back in, the patent cannot be opted out again.

Opt-Out Strategies

There is no particular disadvantage to opting a patent out of the UPC, but patentees will likely take a range of approaches. Many applicants, particularly in fields of technology where litigation is common, will want to wait until the new court is established and assess how it operates before entrusting their patent assets to its jurisdiction. These patentees are likely to register an opt-out against most, if not all, of their patent portfolio. Other patentees are expected to take a more tailored approach, opting out key patent assets, but leaving the bulk of their portfolio within the UPC system. However a third group of patentees, particularly those with significant European portfolios in technology areas where litigation is not common, may well decide to embrace the new system from the outset and allow their European patents to remain opted in.

Many of these UP pioneers will take the view that pan-European revocation is already an option in the first nine months of the term of a European patent, through the European opposition procedure, and the risk of a pan-European action under the UPC is akin to an extension of this opposition period. If oppositions are rare in a patentee’s technical area, then little is lost by embracing the inevitable early and allowing patents to remain opted in within the UPC system.

When Will the First Unitary Patent Be Granted?

There is much work still to be done before the UPCA can come into force, in particular in relation to establishing the UPC. However, progress is being made on practical aspects including the selection and preparation of court venues, the commissioning of a new computer system for the court, and the recruitment and training of judges.

Much of the legal framework is also now in place to enable the UP system to operate, and eight countries have ratified the agreement.

Which Patentees Will Embrace Unitary Patents?

The UP system will be very attractive for some patentees, particularly where:

• The patentee has a large portfolio of European patents of roughly equal value where no single patent is a “keystone” patent.
• Protection is currently pursued in four or more European countries.
• The patentee is not working in a litigious field.
• Europe is treated as a “single market” within the business strategy of the patentee.
• The European portfolio is not actively managed to reduce renewal costs toward the end of the patent term.

Which Patentees Will Avoid Unitary Patents?

The UP system will not work for other patentees, particularly:

• For patents key to the business, or for patentees working in very litigious fields, the risk of central revocation will likely outweigh the advantages of the UP.
• For patentees who currently validate in only two or three European countries, a UP will be more expensive; although for some, the extra territorial scope provided by the UP may outweigh the additional cost.

Additional Prosecution Tips for U.S.-Based Patentees

In view of the UP system, consider the following prosecution strategies to help best position and maximize value in your European patent portfolio:

All patents are not created equal! Closely evaluate your portfolio and use the best approach (UP vs. classical European patent) for each asset based on its business/strategic value. The best strategic approach for one patent may not be the same for a different asset in your patent portfolio.

Consider different claim sets/claim scope for different patents in the same family and adjust your filing strategy accordingly. For example, file a UP application with a narrower claim scope set to help protect against validity challenges that would affect coverage across all of Europe, while filing one or more classical European patent application(s) with broader/different claims in key jurisdictions where additional protection is desired. Careful management of the portfolio in view of double patenting considerations is recommended.

Consider filing national patent applications (e.g., in the United Kingdom, Germany, and/or other key jurisdictions) in parallel to your UP applications. As noted above, you may also want to consider different claim scope between the UP and national applications.

Keep key patent families alive during this transition period. No one is 100 percent sure how everything will work out with the UP system, so keeping important patent families alive will provide flexibility and strategic options once the system comes into force and additional details are worked out.

Case Studies

The following case studies provide examples of how the UP system may affect European patent portfolio strategy for two typical U.S. companies.

Case Study #1

A U.S. startup medical device company has a small portfolio of European patents and applications. Each patent asset is directed to a particular product being marketed and sold throughout Europe. To date, however, the company has only been interested in obtaining patent protection in the United Kingdom and Germany.

For such a company, the UP is not likely to be a reasonable option. The UP will be more expensive given the company’s current validation strategy (which only includes two jurisdictions). Further, the company will not likely want to subject any of its product-specific patents to the risk of central revocation via the UPC. The higher the risk of litigation within the company’s technical field, the stronger the push will be away from using the UP system.

Case Study #2

A large U.S. telecommunications company has a large European portfolio of patents and applications. Because the company conducts business throughout Europe, each patent asset is validated in at least three countries (United Kingdom, Germany, and France). Further, a number of the company’s patent assets are validated in more than five countries. The company makes decisions about annuity payments for each patent asset on a Europe-wide basis.

For this company, the UP is likely to be an attractive option (at least for selected patent assets). The UP system will be less expensive than the company’s current validation strategy for many of its assets. Given the company’s multinational European strategy, the UPC may also be a strategic option for enforcement of its key assets across Europe in a single proceeding.

Conclusion

The UP will likely form the core of future European patent portfolios for most patentees. It’s now just a question of when, and not if, patentees incorporate the UP into their European strategy. Given the upcoming massive changes to the European patent system, patent professionals everywhere should be considering the strategic decisions that need to be taken in the very near future and planning accordingly.