The Unitary Patent System, composed of the Unitary Patent and the Unified Patent Court, has become a reality and will be operational as of June 1st, 2023.

The Unitary Patent package is designed to offer a unified patent protection and litigation system for all participating EU Member States. Consequently, from this date, an applicant can hold a single European patent with unitary effect – the Unitary Patent (UP) – and will be part of a single litigation system covering a significant part of the European market, governed by the Unified Patent Court (UPC).

The Member States that have ratified the Unified Patent Court Agreement (UPCA) and will participate in the Unitary Patent system include Austria, Belgium, Bulgaria, Denmark, Estonia, Finland, France, Germany, Italy, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Portugal, Slovenia, and Sweden. Cyprus, Czech Republic, Greece, Hungary, Ireland, Romania, and Slovakia have signed but are yet to ratify the UPCA.

Notably, Spain, Poland, and Croatia are not participants in the Agreement.

How to obtain a “Unitary Patent”?

The “European Patent with unitary effect”, or “Unitary Patent” (UP), is a particular patent that covers all participating Member States of the European Union. The Unitary Patent system only modifies post-grant procedures.

Therefore, Unitary Patents will be obtained using the current procedure before the European Patent Office (EPO) and will be enforceable across the participating Member States through a single action brought before the new Unified Patent Court (UPC).

From June 1, 2023, upon the granting of a European patent application, the applicant will have the option to choose between:

(i) Traditional validation system (selecting countries individually) and/or

(ii) Unitary effect (acquired by submitting a request to the EPO no later than one month after the grant date).

It’s critical to note that countries that have not ratified the UPC Agreement by that time, EPC Member States that are not EU members (e.g., the UK, Switzerland, and Norway), and countries that are not party to the Agreement (e.g., Spain), will still require separate validation (traditional validation).

Furthermore, as ratifications are expected to occur successively, the coverage of a unitary patent will be determined by the registration date of the unitary effect, regardless of subsequent ratifications of the UPC Agreement. This means that there will be no expansion of the territorial coverage of unitary patents to Member States ratifying the UPC Agreement post-registration of the unitary effect by the EPO.

Cost of a Unitary Patent

As this involves a post-grant procedure, the filing, prosecution, and maintenance costs (renewal fees during prosecution) will remain consistent.

Post-grant, the renewal fees for the unitary patent are expected to be roughly four times the average single-country renewal rate, according to data from the EPO. As such, for those wishing to enforce their European patents in at least four EU countries, the unitary patent presents a cost-effective option.

Moreover, a compensation of €500 has been established for SMEs, natural persons, non-profit organizations, universities, and public research organizations that have their residence or principal place of business in an EU member state and whose European patent application and request for examination were filed in an EPC contracting state language other than English, French, or German. This aims to mitigate the costs of translation services and complements the fee reductions available at the EPO for filing and examination fees (Rule 6(3) EPC).

Enforcement of Unitary Patent through the Unified Patent Court

The Unified Patent Court (UPC) is set to provide a centralized venue for the litigation of European patents, encompassing the new Unitary Patents, in the participating countries.

The Court of First Instance is composed of local and regional divisions along with a central division. Generally, the central division will handle most validity cases, while infringement cases will primarily be addressed by the local divisions. Under the current UPC Agreement, the Central Division will be situated in Paris, Munich, and Milan.

All European patents, Unitary Patents, Supplementary Protection Certificates (SPCs) issued for products safeguarded by such patents, and European patent applications will fall under the jurisdiction of the Unified Patent Court for the participating EU member states. For granted patents and pending applications, there will be a transitional period of seven years (which can be extended by an additional seven years). During this period, applicants will have the option to “opt-out” from the new system by submitting an opt-out request, thereby allowing National courts to maintain jurisdiction over the IP rights instead of the Unified Patent Court.

The “opt-out” procedure will be of significant importance for those wishing to avoid the UPC in the early stages. This procedure applies to all countries and can be requested if no action is instigated before a national court. However, once any action has been initiated before a national court (“Opt-in”), the “Opt-out” option will no longer be available.

Advantages of the “Opt-out”

• The possibility to mitigate the risk of a successful central validity attack, particularly for patents related to pharmaceutical products or a new product in the market.
• For commercially significant countries, national jurisdiction is preferable as it will be overseen by country-specific litigation teams and procedures.
• In patent licensing scenarios – only the licensee can request the opt-out.

Disadvantages of “Opt-out”

• The potential for cross-border enforcement. For instance, a single injunction valid across the territorial range of the UPC.
• Increased legal certainty – if there is future harmonized jurisprudence on patent infringement.
• Consistent enforcement of the scope and limitations of the rights conferred by the patent, and of the remedies for infringement.
• Dispute between co-owners regarding the “opt-out”. Consent between co-owners is obligatory.
• The preference for dealing with a single litigation team.

In essence, under the current national route, to validate and uphold the European patent (and relevant SPCs), the holder must take steps to “opt-out” of the European patent from the Unitary Patent system. There are no official fees for this, however, it is anticipated that legal representatives who provide advice and/or act on behalf of the holders may charge for their services.

While the UP is widely viewed as a tool designed to ease access to the patent system – by being less costly, offering more legal certainty, and providing uniform patent protection across all participating member states – for others, it is still unclear whether the current proposals will genuinely deliver benefits to patent holders.

Indeed, within business settings dominated by small and medium-sized enterprises, the new unitary system is regarded as an “economic asset” for maintaining the European patent portfolio. However, in scenarios where litigation is expected, or where companies validate in fewer than four countries, the conventional route is still considered the most suitable option.

Pros and cons of choosing a Unitary Patent

Below is a comparison outlining some of the key advantages and disadvantages of the UP.

            Pros 

• Simplified validation process: A significant benefit of the UP is its elimination of the need for national validation processes. The European Patent Office (EPO) handles all post-grant administration, reducing both costs and administrative burdens.
• Language convenience: The official languages recognized by the EPO are English, French, and German. After a transition period of six years (extendable up to twelve years), translations will no longer be necessary when opting for a Unitary Patent. During the transition period, full translation of the European patent, along with the application for unitary effect, will be required in certain cases:
• If the language of the proceedings before the EPO is French or German, a complete translation of the European patent into English is required.
• If the language of the proceedings before the EPO is English, a complete translation of the European patent into any other official language of a European Union Member State is required.
• However, it is important to note that these translations are purely for informational purposes and bear no legal weight.
• Reduced costs: UP holders will pay a single renewal fee to the EPO, negating the need for a local representative in each member state, thus significantly reducing costs. This will streamline the process, dealing with a single procedure, one currency (€), and one deadline.
• Centralized jurisdiction: The UPC will have exclusive jurisdiction in the contracting member states for European patents with unitary effect. This centralized system will particularly benefit patent holders when a patent needs to be enforced in various European countries, enhancing uniformity.

            Cons

• Language barriers: The language regime may pose issues in invalidity proceedings before the UPC. Local companies might incur costs for their translations to avoid infringements, and if compelled to plead, proceedings will be conducted in English, French, or German, regardless if the company is locally sued for infringement.
• Potential risks: In the UP proceedings before the UPC, patent holders must accept the risk of losing protection in all states concurrently if the Unitary Patent is successfully challenged. Furthermore, third parties can request nullity at any time during the UP’s term.
• Limited flexibility: UPs offer less flexibility concerning renewal and sale/licensing decisions as the UP must be assigned or renewed as a “single entity”. In contrast, European patents form a “bundle of national patents” which can be handled individually.

In conclusion, the decision to adopt the unified route or retain the traditional route, including some unique features of the new system such as the “opt-out” determining whether the UPC will have exclusive jurisdiction over the patent or if it will remain with the national courts, must be made on a case-by-case basis and should be advised accordingly for each scenario.

The total cost of a patent at the end of its term depends on various factors such as the desired territorial scope, markets of interest, litigation doctrine, the technical nature of the inventions, and their European landscape, among others. Therefore, it’s crucial to carefully tailor the appropriate strategy for each case.

If you want more information or need to resolve any questions, please contact us at infomarketing@clarkemodet.com.