Some comments on the Unitary Patent System.

Last Friday the 10th, I had the pleasure to assist to a conference organized by the Magister Lucentinus Alumni Association (AAAML) in collaboration with the Barcelona’s Bar Association (ICAB).

The title was long and complex, as was the subject on issue: “The unitary patent system: challenges or risks for the industry. A tour de table on the impact of the system’s state of play vis-à-vis other IPR’S regional systems”. It drew, however, the attention of many colleagues who wanted to know, from a wide range of reputed speakers, the state of a system, which is that of the unitary patent, full of uncertainties and questions pending to be solved.

Before entering into what was said at the conference, it might be useful to make a short overview of the actual scenario.

On this regard, and after several decades of negotiations and failed initiatives in order to create a European patent with unitary effect, finally in 2012 Member States and the European Parliament agreed on what has been called the “patent package”. The package consists of two Regulations (Reg. 1257/2012 on the Unitary Patent Protections and Reg. 1260/2012 on the translation arrangements) and an International Agreement on the Unified Patent Court signed on June 20, 2013. It has to be pointed out that Spain, Italy and Croatia did not participate in the enhanced cooperation on the unitary patent protection. Italy, however, signed the agreement on the unified patent court whereas Poland has not signed it.

In general terms, the unitary patent system will provide a uniform patent protection in all Member States, subject to a single registration procedure before the European Patent Office (EPO) and subject to the rules of the European Patent Convention, with single fees (still pending to be quantified) and a Unified Patent Court.

The patent package will enter into force once the Agreement on the Unified Patent Court has been ratified by at least 13 members, among them France, Germany and the United Kingdom. Austria, Belgium, Denmark, France and Sweden have already ratified the Agreement. It also has to be noted that two actions against the validity of both Regulations are still pending in front of the European Court of Justice (ECJ).

Taking these premises in mind, I would like to expose some of the ideas and, why not saying it, doubts that arose from the mentioned conference:

  • The Unified Patent Court is not ready yet. In fact, the selection of judges is now taking place. Furthermore, it is foreseen that some of them will need a specific training at the training centre in Budapest, inaugurated in March. However, the unitary patent system is presumably not so far away from entering into force, given the fact that already 5 of the 13 necessary countries have ratified the Agreement on the Unified Patent Court. This, of course, issued the question of what would happen if the system starts with the Unified Patent Court (UPC) still not operational (estimations were given for operation by late 2015). On this regard, it was said that Germany was going to be the last country to ratify the Agreement, thus implicitly, that it would wait to do so until the system is completely in function.
  • The whole system is waiting for the decisions of the ECJ on the actions filed by Spain against the Regulations on the unitary patent protection and on the translations arrangements. There is no fixed date for those decisions but, in any case, it is the cause of big uncertainties, especially if they finally declare said Regulations, or one of them, void. Will this be the end of the Unitary Patent? What will happen with the work/costs already assumed by the Member States, especially if the decisions arrive once the unitary patent system has started to operate?
  • Further to the uncertainties derived from the ECJ’s pending decisions, there are still many other doubts arising, among others, from the costs of the system or the quality of the judges and their jurisprudence. There are, as well, important risks inherent to that system, as for example, the fact that one successful revocation procedure shall invalidate the patent in all Member States or the possibility of forum shopping. All these risks and uncertainties are, in economic terms, costs that companies need to quantify in order to valuate if the unitary patent is of interest to them. Hence, until those uncertainties are not clarified and until the system has not been tested (and it will be interesting to know who is the first to file an action before the UPC) it will not be possible to ascertain if it is or not a success.
  • Even if patent attorneys having the European Patent Litigation Certificate might represent a party before the UPC, as an alternative to lawyers, it was noted that the best possible representation would be that of a lawyer and a patent attorney working together.
  • It was clearly stated that Italian practitioners are against the unitary patent system, moreover with Italy being only part of the Agreement on the Unified Patent Court.
  • More contradictions came from the German practitioner’s position. In fact, big disadvantages of the system concerning Germany were pointed out (loss of importance as patent litigation destination in benefit of the Great Britain, loss of judges that will go the Unified Patent Court, higher costs of litigation, among others), despite being one of the most supportive countries of the unitary patent. Furthermore, although advocating the German patent system and somehow taking it as a necessary example to the unitary one, it was also stated that about 80% of all granted patents are declared completely or partially invalid by the German Federal Patent Court (90% in software/telecommunications patents). Let us hope, then, that the Unified Patent Court does not take Germany as a model, at least on this regard, or nobody will take the risk of using the patent package.
  • As far as concerns Spanish practitioners, it was said that around 50 patent infringement procedures are heard per year before the Spanish Courts, a very similar number to that of other countries, such as Great Britain (53) and the Netherlands (50), much more known and reputed for deciding on these cases. Besides, it was assumed that soon or later Spain will enter in the unitary patent system (if confirmed by the ECJ) and that this late entrance may have, as a consequence, some costs but, as well, some unexpected positive sides.
  • The official Spanish position, as presented by the Spanish Patent and Trademark Office, is to defend the Spanish language and its presence in the unitary patent system. As actually this is not the case (let’s not forget that only English, German and French are the official languages), a proposed alternative was given which is to have English as the only language.
  • Serious doubts on the SME being benefitted from the unitary patent system were pointed out, even if they are supposedly one of the main targets of that system. The problem seems to be that, even if the patenting costs would be much lower to the actual ones, they are still very high for companies that, moreover, normally do not validate their patents in all member states but in the strategic ones.
  • Finally, from the US perspective it was clear that the unitary patent system is an attractive option, as it simplifies the procedure, reduces the forums and thus the risks and, presumably, also the costs, especially if compared with the tremendous costs of patent litigation in that country (from €2.2M to €5.9M).

To conclude: a very interesting conference dealing with probably the most controversial and, yet, thrilling topic -actually and in the years to come- in the IP sector.

Montse García- Moncó Fuente.