Unified Patent Court – winners and losers? 

June, 2022 - John MacKenzie

The Unified Patent Court (the “UPC”), which will have jurisdiction over most European patents, is due to commence operations at some point between the final quarter of 2022 and early 2023. It has been a long time coming and is part of the ‘Unitary Patent Package’. The aim of this package is to establish unitary patent protection within Europe, and to make it cheaper and easier for patentees to obtain and enforce patents. All innovators will need to be aware of the upcoming changes.


What is the Unitary Patent Package?

The Unitary Patent Package comprises two elements which are intended to strengthen the existing centralised European patent regime. The first element is the creation of a new patent right titled the ‘Unitary Patent’ which is established under EU Regulation 1257/2012. This right can be enforced across all EU Member states, with the exception of Spain, Croatia, and Poland, which have opted not to participate in the regime. 


The Unitary Patent is intended to sit alongside the creation of the UPC, which is an international Court created by the Agreement on a Unified Patent Court (the “UPC Agreement”) which can be found here. The Court will have jurisdiction over all European patents that are designated to states which have ratified the UPC agreement, as well as over unitary patents, and will consider matters relating to both infringement and validity. The decisions of the UPC will apply in all member states that have ratified the UPC agreement.


Why was it created?

The UPC aims to resolve the shortcomings of the current European patent system which requires national courts to make decisions on the infringement and validity of European patents. The current approach creates difficulties for patentees seeking to enforce their European patent in several countries as well for those who seek to challenge European patents. This is because they must, usually, raise proceedings in each country within which they seek protection. This often leads to concurrent litigation in multiple countries, which can be expensive and increases the risk that courts will reach diverging decisions, leading to uncertainty. 


The introduction of the UPC will bring an end to the need for patentees to engage in litigation across numerous countries, because its decision will apply across all states that are party to the UPC Agreement. It is hoped that this should also harmonise patent law across the EU, and make patent litigation cheaper and more accessible. Additionally, the UPC will be comprised of experienced and specialist decision makers with the view that the Court will produce expeditious, respectable and high quality decisions. 


Those who are seeking to enforce patents will benefit from the UPC’s ability to make Europe-wide decisions and awards including injunctions. Meanwhile, those who are seeking to challenge the validity of a patent will only be required to raise one central revocation action. However, the effects of this may not be felt immediately as there will be a seven-year transitional period during which proceedings which relate to European patents may still be brought in national courts. 


Where does the UPC apply?

The UPC Agreement has been signed by all the member states of the EU except for Spain, Croatia and Poland. At the moment the UPC agreement is not open to non-EU member states. The UPC Agreement was originally ratified by the UK, however the UK withdrew its ratification in July 2020. 


A full list of the countries that have ratified the UPC can be found here.


Advantage of being a signatory

The principal advantage for signatories to the UPC Agreement is that, provided the UPC is effective in practice, it should strengthen their patent protection system and demonstrate that their country is committed to the protection of intellectual property (IP) rights. This is crucial to encouraging innovation, where IP law is a key consideration. 


One of the issues that is perpetuated by the current European patent regime is that the variations between national court systems make it particularly difficult for small and medium-sized enterprises (SMEs) to either enforce their patents or to defend themselves against validity challenges. If an enterprise cannot adequately protect its inventions, the process of inventing becomes financially unsustainable. Such stifling of innovation could have a negative impact on a countries economic growth. The introduction of the UPC should resolve this issue as the UPC will make it easier and cheaper for patent owners, particularly those who are SMEs, to enforce and defend their patents.


Why is the UK not a signatory?

The UK ceased to be a signatory of the UPC agreement in July 2020. The UK’s IP Minister explained in a written parliamentary statement that the UK’s withdrawal from the UPC Agreement was consistent with the UK’s decision to withdraw from the European Union. The UK Government sought to become an independent self-governing nation and it was thought that participating in a court that applies EU law and was bound by the Court of Justice of the European Union was not in line with this goal. 


Consequences of the UK not being a signatory

The UK has a strong patent protection system. Although the UK will not benefit from the development of harmonised patent law and the increased legal certainty that the UPC promises to bring, it is unlikely that the UK’s withdrawal will have a material effect on patent protection or innovation within the country in the short term. 


The biggest consequence of the UK’s withdrawal will be felt by the users of the patent protection system. Patent holders will not be able to rely on unitary patents or the UPC to protect their inventions within the UK. The only way to protect an invention within the UK will be to rely on the national patent system and UK Courts. This creates an additional cost for those looking to enforce or challenge a patent within both the EU and the UK. 


The UK’s withdrawal may also have a negative impact on the future success of the UPC. The UK is at the moment an important jurisdiction for patent litigation. It is possible that the UK’s decision to withdraw could make the unitary patent system less attractive to users due to the absence of an important market such as the UK.  


Likelihood of the UK becoming a signatory

The UK is not currently a signatory to the UPC Agreement because this does not align with the current government’s post-Brexit agenda. The likelihood of the UK becoming a signatory to this Agreement is largely dependent on political factors. While the current government appears committed to the idea of the UK distancing itself from EU governance, this could change. At the moment there are no plans for the UK to ratify the UPC Agreement.


 



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