Are You In or Out? Navigating the New EU Unitary Patent

European Patent Office

For the past 50 years, it has been possible to obtain a patent in most countries in Europe by filing a single patent application in the European Patent Office (EPO). Such a patent application is prosecuted in the EPO and, once granted, can be validated and maintained in up to approximately 40 EPC contracting countries.1 The ability to obtain patents in multiple European countries by filing and prosecuting a single application in the EPO has been a significant advantage for patent owners.

An application granted by the EPO (an “EP patent”) can be opposed by an interested party for a limited time once it is granted.2 However, once an EP patent is validated in a particular country, it can generally only be enforced or challenged in that country by filing a lawsuit or other proceeding therein. Thus, in order to enforce or challenge a European patent in multiple EPC contracting countries, multiple lawsuits or other proceedings are required.3 This is about to change in a big way.

Unitary Patent Court (UPC) to open June 1, 2023

On February 17, 2023, the German government took steps to ratify the Unified Patent Court Agreement (UPCA), which represents the final step for the UPCA to come into effect and the Unitary Patent Court (UPC) to open. This is the most significant change to the European patent system in decades. For example, it will now be possible to enforce and challenge an EP patent that has become subject to the jurisdiction of the UPC (a “Unitary Patent”) in all UPC contracting countries in a single forum.4

Unless the owner of an EP patent opts out of the jurisdiction of the UPC, the patent will automatically be subject to the jurisdiction of the UPC and become a Unitary Patent. The UPC is currently set to open on June 1, 2023.

As to a pending EP application, it will be possible for the applicant to register the corresponding patent (assuming it reaches the grant phase) to have a unitary effect and become a Unitary Patent as long as the EP application was allowed by the EPO on or after January 1, 2023.5 Thus, the UPCA effectively provides a new option for an EP applicant as to the scope of the granted EP patent. The EP applicant can now choose to have the granted patent validated in select EPC contracting countries as before, choose to register the granted patent to have “unitary effect” and become a Unitary Patent, or both. For example, the EP applicant may choose to both register the patent for unitary effect and validate the patent in EPC contracting countries that are not UPC contracting countries. Prosecution of a European patent application in the EPO otherwise remains essentially the same.

It is important to note that unless the owner of an existing EP patent proactively opts out of UPC jurisdiction, the patent will become a Unitary Patent that can be centrally enforced and centrally attacked in a single forum. As long as it is subject to UPC jurisdiction, any EP patent can be litigated in the UPC. A UPC decision will take effect and can be enforced in all UPC contracting countries.

Sounds good, right? Not necessarily. UPC jurisdiction is not for everyone. There are pros and cons. As a result, the upcoming implementation of the UPC creates a dilemma for EP patent owners, namely, whether to opt out of jurisdiction of the UPC.

Potential pros and cons of a Unitary Patent

A Unitary Patent will certainly have advantages. The owner of a Unitary Patent will be able to enforce the patent in all UPC contracting countries in a single forum governed by a single set of laws and regulations. The scope of the patent will be broader than it would be, for example, if it is validated in only a few EPC contracting countries. The substantial cost of validating and maintaining the patent in multiple countries can be avoided.6

On the other hand, allowing an EP patent to become subject to jurisdiction of the UPC will allow a competitor to file a single invalidity or revocation proceeding in a single forum. The scope of prior art that can be considered may be broader. These are potentially significant advantages for competitors of the patent owner who otherwise would be required to bring separate invalidity or revocation proceedings in each validated country. There are other considerations as well.

First, not every European country is covered by a Unitary Patent. The UPC was initiated by the European Union (EU) and only applies to countries that are both EU member states and have ratified the UPCA. Currently, EU countries that have ratified the UPCA include Germany, Belgium, Bulgaria, Denmark, Estonia, France, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Austria, Portugal, Slovenia, Finland, and Sweden. For example, although they may join in the future, Spain, Croatia, the Czech Republic and Poland have not yet ratified the UPCA. European countries that are not part of the EU and, therefore, will not be covered by a Unitary Patent include the United Kingdom (due to “Brexit”), Switzerland, Norway and Turkey.

Also, at this point, we don’t know if the UPC is going to be patent friendly or patent unfriendly — that is, more likely to uphold a patent or more likely to invalidate a patent. We also don’t know how long it will take for the UPC to establish a consistent and reliable body of applicable precedent.

Next steps for EP patent owners

The time for making a decision is near. Ratification of the UPCA by Germany triggers a “sunrise period” for owners of existing EP patents to opt out of the jurisdiction of the UPC. The sunrise period begins on March 1, 2023, and will run from that date until May 31, 2023, the day before the scheduled opening of the UPC. As of the opening of the UPC, the opt-outs will immediately take effect.

As a result, now is the time for EP patent applicants and owners to carefully consider the advantages and disadvantages of the UPC and Unitary Patents and come up with a risk-management strategy that best fits the company’s business objectives. For example, for EP patent owners that anticipate infringement of their EP patents throughout Europe, allowing the EP patents to become subject to the jurisdiction of the UPC may be the right call. However, for others, preventing competitors from gaining the ability to centrally attack their EP Patents, for example, may trump having the ability to file a single enforcement action.

Fortunately, under most circumstances and for the time being, it should still be possible to withdraw an opt-out and have an EP patent become subject to UPC jurisdiction after the sunrise period has expired.7 For this and other reasons, many companies are electing to opt out of UPC jurisdiction at this time.

McAfee & Taft’s Intellectual Property Group attorneys are available to help you determine the best strategy for your company and move forward with the opt-out process, if appropriate.

1 The current EP member countries are Albania, Austria, Belgium, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Monaco, Montenegro, Netherlands, North Macedonia, Norway, Poland, Portugal, Romania, San Marino, Serbia, Slovakia, Slovenia, Spain, Sweden, Switzerland, Turkey, and the United Kingdom.

2 An opposition proceeding must generally be initiated within nine (9) months of the grant of the European patent.

3 Although only certain grounds for revocation apply, the manner in which such grounds are interpreted can vary from country to country. Most other substantive aspects of a validated EP patent (e.g., claim interpretation and what constitutes infringement) are governed by the national laws of the particular countries in which the patent is validated. This can lead to inconsistent results on a country-by-country basis.

4 As explained below, the list of EPC contracting states or countries is broader than the current list of UPC contracting states or countries.

5 That is, any application in which a Rule 71(3) EPC Communication (effectively a notice of allowance) has been issued by the EPO. Additionally, the European patent application must have been filed after March 1st, 2007.

6 Due to required translations and other fees, the cost of validating a granted EP patent can amount to tens of thousands of dollars, depending on the number of countries selected. Also, in order to maintain a validated EP patent, annual annuity payments are required in most countries. A Unitary Patent will have a single renewal fee.

7 An exception to this is if an enforcement or invalidity/revocation proceeding has already been carried out or initiated in a validated country. The ability to withdraw an opt-out and have an EP patent become subject to UPC jurisdiction after the sunrise period has expired should exist for at least a seven year transitional period.