Agreements involving a UP

Agreements involving a Unitary Patent

The Unitary Patent creates new issues to consider in any transfer of rights

A key advantage of the UP is that while it will cover all participating Member States of the EU the property aspects of that patent will be governed by just one national legal system. This means, for example, that rather than assigning 24 national designations of a European patent and needing to comply with 24 different national laws in terms of assignment formalities, a UP could be assigned with one assignment which would be subject to one governing law.

The question is, which governing law will apply? This is addressed in Article 7 of the Unitary Patent Regulation, which designates the national law that applies to a UP as an object of property by reference to the residence or place of business of the applicant as at the filing date. If the applicant does not reside in/have a place of business in a participating Member State, then German law will apply.

Where there are joint applicants, the principal place of business of the joint applicant listed first determines the applicable law. If, however, that’s not in a participating Member State, the principal place of business of the next joint applicant will determine the national law, and so on (defaulting to German law where none of the applicants have a place of business in a participating Member State).

Once set, the applicable law will remain the same regardless of any subsequent dealings in the UP. For example, if a Finnish company acquires UPs from a German company which are subject to German law, any subsequent assignment of those UPs by the Finnish company to a new owner will also need to comply with German law requirements.

From a transactional point of view, knowing which national law applies to a UP is of paramount importance – not only could it affect the owner’s entitlement to a patent, but it could also be significant when it comes to issues such as chain of title (i.e. has the UP been properly assigned?) and co-ownership – it is clearly an issue to flag during due diligence.

For prospective UPs, applicants should consider what ability they may have to ensure that the most advantageous national law will apply to the UP, for example, by deciding which entity should file the application or, in the case of joint applicants, which applicant should be listed first.