Here comes the Unitary Patent!
16
Dec
2021
New options for validation in the life sciences sector - what does this mean for conventional national validation?

It is looking more and more likely that the Unitary Patent (UP) will become available in 2022, now that Austria has completed its legislative process to bring the new patent system into force. While the preparatory committee has yet to announce a definitive timetable, their current estimate is for the provisional application phase to start in January 2022, followed by the new system properly starting in mid-2022. So, even with some delays, it seems realistic to expect the UP to arrive by the end of next year. Perhaps the most obvious beneficiaries of the UP might be innovators in the life sciences arena, but how will the new system work and what will happen to the current national validation system?

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 European patent (EP) is split into separate national patents. There are a number of factors that innovators consider when deciding where to validate EPs. Here we take a look at some of these factors, with a particular focus on patents in the life sciences sector, and consider how this decision-making process might change with the arrival of UPs.

 

What factors do innovators currently consider when validating EPs?

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. At Carpmaels, we have a specialist national validation team that provides considerable cost savings for innovators thanks to our size in the national validation market, but nonetheless a wide validation program can still run into the tens of thousands of dollars.

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.

So, overall, there are several factors that push innovators towards validating patents widely though we often provide product-specific advice to life sciences companies who need to make a strategic decision regarding where to validate by balancing cost against the long term benefits of a wide validation strategy.

 

How might this change with the arrival of UPs?

With UPs likely becoming available in 2022 when the new system is fully up and running, the strategy of innovators at grant is expected to change. UPs are a new kind of patent that will be issued by the EPO and will require no national validation and will benefit from greatly reduced translation requirements, 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. 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, innovators will need to bear in mind that the coverage of UPs is not the same as classic EPs, so some 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 therefore provide coverage in EU states only, and then only the states that have ratified the relevant agreement. For example, UPs will not cover Spain, Poland or Croatia (because they have not signed up to the agreement) or the UK, Switzerland, Turkey or Norway (because they are not part of the EU). Similarly, states that have not ratified the agreement when UPs first become available, despite having signed up in principle, will not be covered by the first UPs.

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. So, UPs offer some exciting new options, but will often need to be strategically coupled with conventional national validation to get the coverage innovators need.

 

Changes to litigation practices need to be considered too

Another consideration that innovators will need to weigh up when deciding whether to obtain a UP is the fact that UPs can be litigated only in a new court, the Unified Patent Court (UPC), which will open its doors at the same time that UPs become available. The UPC will allow for central enforcement across all of the states covered by the UP. This 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. More details of the new court can be found on our UP & UPC website here.

So, it will be important for innovators to balance the potential cost benefits and the advantage of central enforcement with the potential risk of central revocation when deciding whether to choose to obtain a UP. In many cases, an analysis of the strength of a patent’s validity as well as its enforceability, in addition to the usual considerations of cost and required geographical scope, will be required before a decision can be taken. Innovators might choose to obtain separate national patents using the current national validation system for certain EP patents that cover a product to ensure that any revocation actions would need to be brought by generics companies in separate national courts across Europe, while also obtaining UPs for other patents covering the same product in order to reduce costs and open up the possibility of central enforcement. Such a strategy will of course require careful consideration of the double patenting risks in addition to all the other pros and cons discussed already.

 

Summary

National validation decisions can be complicated and can ultimately result in a great deal of expense for life sciences companies wanting to protect against early generic entry and price reductions. 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. If you would like to discuss your strategy for UPs, or if you have any questions about national validation decisions, UPs or the UPC, please speak to your usual contact at C&R who will be able to draw on our collective experiences of patent prosecution, EPO opposition and pan-European litigation to find the right answer for you. We will be in touch again as we learn more about the arrival of Europe’s new patent system.