Should you be concerned about the UPC?

Steven Murray and Kimberley Bayliss, Chartered UK and European Patent Attorney from Keltie discuss the UPC and what it means for UK businesses.

Three years ago this month, the UK Government announced that, despite substantial input to the court’s rules and the training of judges by UK patent judges, the UK would withdraw from the Unified Patent Court (UPC) Agreements because “participating in a court that applies EU law and is bound by the CJEU would be inconsistent with the Government’s aims of becoming an independent self-governing nation.”

Debating the logic and rationale of that decision is beyond the scope of this article, but the scope of the UPC, which opened for business last month, means that UK businesses cannot ignore its existence and would do well to be alive to the impact it will have.

What is the UPC

The UPC is a new international court for patent litigation across Europe. It is accessible to those who are both members of the European Patent Convention and signatories of the UPC Agreement. It is a single court with procedures and rules (based on a combination of different European practices) and will have jurisdiction over patent infringement actions, revocation actions and declarations of non-infringement.  It will be able to grant injunctions with applicability in all member states and award damages, where the patent is a European patent with unitary effect (a unitary patent, ‘UP’) or a conventional European patent.

It will not have jurisdiction over UK granted patents or be able to settle contractual disputes relating to patent licences or ownership.

However, UK businesses trading in Europe or those with patents in both UK and Europe will still need to understand the UPC and its processes.

Opt-out?

The first decision that UK businesses with European patents will need to consider is whether they want their patents to fall under the UPC’s jurisdiction at all.  Under the current system, when a European patent application is granted, the patent holder converts it into national patents in the European countries in which they want protection. On grant of a European patent, patent holders will now be able to choose whether to have a UP, or to take a bundle of national patent rights, according to the current system. For at least the first seven years of the UPC, if you have chosen the traditionally validated route, you also have the choice of opting-out your national patents from the UPC.

Benefits of UPs are potentially numerous to rights holders. On a practical level, they represent simplification of the patent portfolio management process, as well as reduced renewal fees (currently coverage in 17 states for the price of four), and reduced translation requirements. For patent holders who currently validate their EP applications in four-five states, the UP therefore represents a significant increase in territorial scope at a significant cost reduction.

More interestingly though for UK businesses, is that competitors’ UPs may be attacked centrally through revocation proceedings, in a single action. Similarly, UP rights holders will be able to bring infringement actions against infringers of their UPs in a single action and the resulting judgements will apply across all states signed up to the UPC.

The flip side of this of course is that the same applies in reverse – UP rights holders may have their own UPs attacked centrally, and anyone infringing a UP may find themselves liable for actions performed in any and all of the UPC signatory states as a result of a single court proceeding. The UPC certainly has a very “all-or-nothing” quality to it.

Patent holders should also be aware that various key jurisdictions will not be covered by UPs, including Spain and the UK. Therefore, even if UPs are taken, these may need to be complemented with national patent applications. Another thing to consider is where infringing acts are likely to take place and ensuring that the combined territorial coverage (UPs and national) covers these territories. For example, for manufacturing businesses, once infringing goods enter the single-market it can be difficult to prevent further dissemination, so patent protection in bordering nations can be helpful.

How much does it cost?

The fees payable to the UPC depend on the action being taken.  The below table sets out the main types of actions and the fixed fee payable on initiating that claim:

Further fees will be payable to the representative appointed to take the action.

For infringement actions and declarations of non-infringement, a value-based fee will also be payable on actions valued between €500,000 to €50 million. This additional fee ranges from €2,500 to €325,000 depending on the value of the action.

How long with it take?

It is hoped that if the litigation process is required in full, it will be completed within 14 months, which is rapid by court process standards.  This is measured from the issuing of a statement of claim up and until the damages procedure is initiated.  Between these points, the UPC follows a similar written procedure to that of the UK courts in that there is a period where the claim can be challenged.  Within three months a defence needs to be filed (which might include a counter claim for revocation, requiring a defence to the counterclaim. After a nine month window for the written submissions to conclude, there is a further three month window for any interim applications, but the process is designed to lead to an oral hearing within 12 months and the decision, together with reasons for the decision being handed down two months thereafter.

What’s next?

The first cases are only now coming through and appear to be focused on pharmaceutical patents.  These are shortly to be followed by patent owners in the automotive manufacturing sector.  It will be some time before the full impact of these decisions will be felt, but businesses need to be alive to what is coming over the horizon and are therefore should keep a watchful eye of the UPC.

This article is authored by Steven Murray, Partner and Kimberley Bayliss, Chartered UK and European Patent Attorney from Keltie.