The Unified Patent Court (UPC) has now entered the provisional application, or soft-start, phase following Austria’s decision to deposit its instrument of ratification – as reported by the UPC preparatory committee here. This means parts of the UPC Agreement have come into force ahead of the new court becoming fully operational. The court may be operational by early 2023, but of course more delays are also possible. At the same time as the court becomes operational, the EPO will start granting Unitary Patents.
Here, we look at the key aspects of the new system and, with a particular focus on the life sciences sector, the decisions that patentees will face in the coming months regarding national validation in Europe, filing early requests for Unitary Patents and potential opt-out from the Unified Patent Court.
The Unitary Patent
The Unitary Patent (UP) will be a single patent covering a range of participating Member States of the European Union (EU). UPs are a new kind of patent that will be issued by the European Patent Office (EPO) which will require no national validation and will benefit from greatly reduced translation requirements, sometimes significantly reducing the costs incurred at grant. UPs also offer the potential for further cost-saving due to a single annual renewal fee being payable for the UP, rather than the separate national renewal fees payable after national validation under the current system. Perhaps the most obvious beneficiaries of UPs might be innovators in the life sciences arena, where patent protection across most of Europe is often desirable.
The Unified Patent Court
The UPC will have exclusive jurisdiction over the new UPs, providing a single forum for pan-European infringement and revocation. The UPC’s jurisdiction will also extend to all EPs already granted by the EPO unless an opt-out is filed. An opt-out keeps the EP in the current system, in which litigation must occur state-by-state in the national courts. It seems likely that patentees will need to be ready for the opt-out process sometime in the next three to nine months. Further details on opting-out EPs from the UPC’s jurisdiction are provided at the end of this article.
While 24 states are involved in the UPC project (the EU, omitting Spain, Poland and Croatia), the UPC will likely cover a subset of 17 of these countries from day one, as summarised by our online landscape tool. Nonetheless, the UPC is likely to be an attractive forum e.g. for parties who missed the EPO opposition period or patentees who want a single decision on enforcement across several participating Member States.
When and how will the UPC and UP come into force?
For the UPC to come into force, a number of EU Member States were required to approve an administrative update (the Protocol on the Provisional Application of the UPC Agreement), which was recently completed to enable a soft-start period to start in January 2022. Austria was the last EU Member State to approve the Protocol following ratification by Germany and Slovenia, as previously reported here.
The soft-start period could last as little as eight months and will allow staff and judges to be recruited and the underlying systems to be made ready for the new court. The court may open its doors in early 2023. Once the new court becomes operational, it will start hearing disputes regarding any patent granted by the EPO (unless those patents have been opted out). Only once the court is operational can the EPO start granting UPs.
UPs will be granted by the EPO following the existing procedure for European Patents (EPs). So, we will continue prosecuting patent applications in the same way that we do today. In light of these recent developments, the EPO recently announced a ‘sunrise’ period that will effectively allow Applicants to request a UP several months before they are formally available and to request that grant is delayed until the UP becomes available. Before this ‘sunrise’ period starts, Applicants wishing to take advantage of the UP may wish to take other steps to delay grant, e.g. by rejecting the text intended for grant, to allow them to obtain a UP once the system is up and running.
What factors do innovators currently consider when validating EPs?
Once a European patent has been granted by the EPO, it is necessary to undertake a number of administrative steps in each state of interest, a process known as national validation. Following national validation the EP is split into separate national patents.
Wide validation strategies are costly, and it can be difficult to justify the cost of a wide validation strategy when the ultimate value of the patent is unclear at grant. The cost of national validation in different states across Europe varies based on the requirements that each state has in place, with translation requirements causing validation across a large number of states to be expensive. As well as the cost of national validation itself, innovators must consider the cost of national renewal fees that are payable annually in each state.
When deciding where to validate, innovators often consider both the likely markets for their inventions and the implications of their validation strategy on future enforcement. A primary driver for the validation strategy can be a prediction of major markets, particularly when validation decisions need to be made early in a product’s life cycle. Looking ahead to loss of exclusivity, it is also worth keeping in mind that generics companies have set up manufacturing and/or batch release sites in states that have traditionally not been regularly validated. While at the time of validation a particular state might not be expected to be an important market, gaps in protection can allow early entry of generics. As generics manufacturing can, in theory, take place in any state, some innovators consider it to be worthwhile validating patents widely across all EPC states, particularly when infringement is a real concern, to prevent a gap in protection that could be exploited.
How might this change with the arrival of UPs?
With UPs becoming available when the new system is fully up and running, the strategy of innovators at grant is expected to change. For life sciences companies that have had concerns in the past regarding the justification of wide validation of a patent and the resulting annual renewal fees, the UP may prove to be a useful cost-saving tool, making the decision to obtain broad geographical protection easier from a cost perspective. Our online cost estimator allows you to visualise the possible cost savings that could be achieved by choosing a UP over the current system of obtaining separate national patents.
However, conventional national validation will still often be required in the new system. EPs can be validated in any of the 38 contracting states of the EPC (including all EU states plus 11 additional states). UPs are based on EU legislation and so, as explained above, provide coverage in participating EU states only, and then only the states that have ratified the relevant agreement.
The scope of a UP will be fixed at the date of grant, so when new states ratify the agreement the scope of a granted UP will not expand (but the new state will be covered by UPs granted after ratification). It will still be possible to obtain national patents in the usual way in states not covered by the UP, so there is no need for any coverage to be lost by choosing to obtain a UP. Our online landscape tool shows this complex mix of different states and will show how the system changes as more countries sign up.
Filing early requests for UPs
There are two EPO systems through which Applicants can file early requests for UPs before they become formally available. Both systems will become available on the date that Germany deposits its instrument of ratification of the UPC Agreement, which is expected at some point in 2022. It will be possible to make use of the two systems for any application where the EPO has issued a communication under Rule 71(3) EPC (a intention to grant communication). The two systems allow for:
- Requests for a delay in issuing the decision to grant in cases that would ordinarily grant before the start of the UP system. These cases will then grant immediately after the start of the UP system, allowing for a UP to be requested. The request for delay must be filed before, or on the same day as, the approval of the text intended to grant.
- Early requests for unitary effect which allow Applicants to file UP requests before grant. Where these requests are made, the request will be granted after the start of the UP system (and after grant of the relevant EP).
Cases with Rule 71(3) EPC communications issued today could become UPs either by using the EPO system(s) after Germany deposits its instrument of ratification or, where a response to the Rule 71(3) EPC communication is due before Germany deposits its instrument of ratification, by rejecting the text intended to grant in order to delay grant.
Another consideration that innovators will need to weigh up when deciding whether to obtain a UP is the fact that UPs can be litigated in the UPC only. Central enforcement across all the states covered by the UP could be a significant advantage, particularly for innovators in the life sciences field who wish to enforce their patents in multiple states across Europe. Rather than having to bring multiple actions in separate national courts, all of which apply the law slightly differently, a single enforcement action can be brought at the UPC. However, with the possibility of central enforcement comes the risk of central revocation. Additionally, it is difficult to know how the untested UPC will operate in practice until it opens its doors, and the challenges of litigating in an untested court will be another element of risk that will need to be considered.
During the “sunrise” period, patentees can also opt their existing granted EPO patents out of the court’s jurisdiction. Preparing for the opt-out process should be the focus for all patentees given the importance of filing any opt-outs before the UPC opens its doors.
With the new court and new patent both arriving in a matter of months, it is now time for everyone to start preparing for this new system in earnest.
The UP may offer help in the form of reduced costs to obtain wide geographical protection, something that might be particularly useful for early-stage biotech and pharma companies with products that are in the early stages of development. This advantage comes with the further benefit of central enforcement, but at the risk of central revocation at the UPC. Patentees who do not want existing granted EPO patents to fall under the jurisdiction of the UPC should get ready to opt them out before the new court gets up and running. Further updates and information on the development of the UPC system are available here.