The Essential Features of the Unitary Patent and Unified Patent Court – An Itemized Overview

It has become increasingly difficult to kept a clear view on what exactly is discussed in the ongoing discourse on the various proposals and drafts for a European Patent with unitary effect (i.e. the Unitary Patent) and a Unified Patent Court.

In order to retain a clear overview on the essential legal and political concepts of those two drafts, I extracted and sketched their main features based on the “Proposal for a Regulation [...] implementing enhanced cooperation in the area of unitary patent protection” dated 23 June 2011 (Document 11328/11) and the “Draft Agreement on a Unified Patent Court and draft Statute” dated 19 October 2011 (Document 15539/11). Please enjoy.

I.   HISTORIC DEVELOPMENT OF THE DISCUSSION

Community Patent

• The idea of a Community Patent (CP) was born in the 1960ies when the European Community (EC) began to evolve (see history of the EU).
• A consensus, however, could not be found, primarily for reasons of
  • costs: Should the CP be translated into each EU language?
  • jurisdiction: Should national courts decide about validity/infringement?

European Patent Convention

• Instead, the European Patent Convention (EPC) was established in 1973 (see history of the EPC).
• The European Patent Office (EPO) was founded as a supra-national and non-EU institution.
• pre-grant: European Patents (EP) are prosecuted and granted by the EPO.
• post-grant: EP Patent resolves into individual national patents governed by national law (validity/infringement).
• Today, 38 states joined the EPC,  among which are
  • all 27 EU members (AT, BE, BG, CY, CZ, DE, DK, EE, ES, FI, FR, GB, GR, HU, IE, IT, LT, LU, LV, MC, NL, PL, PT, RO, SI, SK, CY) and
    
  • 11 non-EU countries (AL, CH, HR, IS, LI, MK, MA, NO, RS, SM, TR)
  • plus 2 extension states (BA, ME)

Community Patent Convention

• 1975: The Community Patent Convention (CPC) was established.
• The CPC never entered into force since it was ratified only by 7 out of (at that time) 9 EU member states.
• New discussion about CPC began in 1996.
• 27 Nov 2003: The adoption of “EC Council Regulation on the Community Patent” failed, mainly because the EU members could not agree on an translation arrangement.

London Agreement

• On 11 Oct 2000: The “London Agreement” was concluded and ready for accession/ratification.
• Agreement is individually open for all EPC member states.
• Was meant as an compromise solution for a pragmatic translations arrangement.
• 01 May 2008: The London Agreement entered into force after ratification of FR.
• Current status:
  • no translation in 7 member stated (FR, DE, GB, CH/LI, LU, MC)
  • only claim translation in 10 member states (DK, FI, HR, HU, IS, LT, LV, NL, SE, SI)
  • full translation required in 21 EPC member states (e.g. IT, ES, AT, BE, …)

Unitary Patent

• 13 Dec 2007:  The Lisbon Treaty (“Constitution of the EU”) was signed.
• Lisbon Treaty demanded for an “enhanced patent system in Europe” (Art. 3(3) TEU, Art. 118 TFEU).
• Proposals for “EU patent”, a language regime, and a “Unified Patent Litigation System” were drafted.
• 10 Dec 2010:  European Commission finds “insurmountable difficulties on the translation arrangement”, because ES and IT block negotiations on language regime (they rejected the laguage regime acc. to Art. 13 EPC).
• 08 Mar 2011:  European Court of Justice found “proposed unified patent litigation system not compatible with the Lisbon Treaty”.
• 10 Mar 2011:  EU Council authorizes “Enhanced Cooperation“
  • agreement among at least 9 EU member states that does not require unanimity.
  • currently supported of 25 out of 27 EU member states support (except IT, ES).
  • Italy and Spain reject the proposal to adopt EPC language regime to EU Patent.
• European Commission presents
  • Proposal for Unitary Patent Protection (13 Apr 2011)
  • Proposal for translation arrangements (13 Apr 2011)
  • Proposal for Unified Patent Litigation System (06 May 2011)
• 23 Jun 2011:  Latest “Proposal for a ‘Unitary Patent’ and translations arrangements“.
• 19 Oct 2011:  Latest “Draft Agreement on a Unified Patent Court“.

II.   UNITARY PATENT PROTECTION

Legal Framework

• “European patent with unitary effect” will be administered by EPO.
• EPC and present prosecution process will not be affected.
• Unitary effect of EP Patent upon request after grant.

Request for Unitary Effect

• Request for unitary effect to be filed within 1 month from publication of the grant of the EP patent:
  • individual validation in the 25 participating EU Member States is abolished.
  • validation in other EU Member States (ES, IT) and non-EU states possible.

Legal Effect of Unitary Patent

• uniform protection throughout all participating Member States (i.e. in the entire EU except for ES, IT).
• limitation, revocation and lapse are simultaneously effective in all participating Member States.
• transfer only for the whole territory, but licensing is possible for a part thereof.
• one common renewal fee to be paid to EPO.
• EU-wide exhaustion (including ES, IT).

Object of Property

• Registering a transfer of rights is not required.
• Unitary Patent as an object of property shall be treated as a national patent of that participating Member State where, at the filing date,
  • the proprietor had his residence or principal place of business or, if this does not apply, a place of business, or
  • if the above does not apply, where the EPO had its headquarters (i.e. Germany).

Annuities

• The height of the renewal fee is not yet fixed.
• Shall be similar to what an average EP patent would create in the participating Member States, at the time when the fee is first fixed.
• EPO will receive 50% of the annuities, as for an EP Patent.
• The distribution key among the participating Member States for the remaining 50% is not yet fixed.

Substantive Rights

• Right to prevent direct use.
• Right to prevent indirect use.
• Limitations of the effects of the Unitary Patent (e.g. private use, exhaustion, etc.)

Transitional Rules

• Applicable to all EP patents granted on or after the Regulation enters into force.
• The Regulation will only enter into force together with a unitary patent litigation system (see below Section IV).
• Special translation arrangement for no longer than 12 years (see below Section III).

III.   TRANSLATION ARRANGEMENT

Translations upon Grant

• EP patent is published in one the filing/prosecution language, i.e. on of of DE, EN or FR.
• Translations of the claims into the remaining two languages must be filed for publication of the EP patent upon grant.
• Machine translations in all official languages of the European Union will be provided as soon as possible.
• Claim as granted in the filing/publication language is the sole legally binding version.
• Machine translations serve for information purpose only.
• Applicants having their residence or place of business in a EPC member state can file the application in a language of that member state and then have to submit a full translation into DE, EN or FR.
• These costs shall be reimbursed by the EPO when a request for unitary effect is filed.

Translations upon Infringement/Invalidity Actions

• At the request and choice of an alleged infringer, the proprietor has to provide a full translation into the language of the Member State in which:
  • the infringement took place or
  • the alleged infringer is domiciled.
• At the request of the competent court, the proprietor has to provide a full translation into the language of the proceedings.
• The translation costs shall be borne by the proprietor.
• The court may consider that the accused infringer was not aware of the infringement before receipt of translation.

Transitional Rules

• For no longer than 12 years, the request for unitary effect shall be submitted together with
  • a translation into English, where the patent was granted in German or French;
  • a translation into any one other language of the participating Member States, where the patent was granted in English.
• This transitional period shall terminate as soon as high quality machine translations into all languages of the European Union are available.

IV.  UNIFIED PATENT COURT

General Framework

• European Court of Justice rejected earlier draft on a Unified Patent Litigation System because:
  • direct cooperation between national courts and Court of Justice was not guaranteed (lack of uniform interpretation of EU law).
  • lack of provisions for an adversely affected party to claim damages against the respective Member State.
• These provisions are now included in a new proposal on a Unified Patent Court.
• Each EU Member State can accede the system.
• System enters into force at a given date or when ratified by a certain number of EU Member States, including the 3 largest EP patent filers.
• Unified Patent Court system comprises a Court of First Instance and a Court of Appeal.
• Unified Patent Court will have exclusive jurisdiction on EP patents and on EP patents with unitary effect.
• Decisions will have effect in the territory of all Contracting Member States for which the EP patent is individually effective or has unitary effect.

Structure of the Court of First Instance

• has local/regional divisions and one central division.
• Member States with more than 100 cases per year may establish up to 3 local divisions.
• A group of Member States may establish a common regional division.
• Member States without national/regional division are allocated to the central division.
• Any panel shall have a multinational composition.

Competences of The Court

• Parties may agree on a division of their choice.
• Central Division: Actions for revocation and declaration of non-infringement.
• Local/Regional Divisions:
  • Actions for infringement, provisional injunctions, etc.
  • may refer a counterclaim for revocation to the central division.
  • may refer the entire case to the central division, with consent of the parties.

Stucture of the Divisions of Court of First Instance

• Local/regional divisions have 3 legal judges and may call in one technical judge from judges pool.
• Central division has 2 legal judges and calls in one technical judge from judges pool.
• Parties may agree on a single judge panel.

Structure of the Court of Appeal

• Any panel shall have a multinational composition.
• Each panel has 3 legal and 2 technical judges.

Language of the Proceedings

• Language of the proceedings is the language of the Member State hosting the relevant division.
• Language at central division is the language in which the EP patent was granted.
• Parties may nevertheless agree on language in which the EP patent was granted.
• If the relevant division does not approve this choice, the parties may request referral of the case to the central division.
• The language before Court of Appeal shall be the language before Court of First Instance.

Miscellaneous

• Proceedings will include interim hearing and oral procedure.
• Affidavits allowed as means of evidence.
• Court may at any time appoint court experts.
• Grounds of revocation limited to Art. 138(1) EPC.
• Loosing party bears legal costs and expenses of winning party, unless equity requires otherwise.
• Introducing new facts and new evidence before Court of Appeal will be very restrictive.
• Dissenting judges may express their dissenting opinion separately from the Court decision.
• Enforcement of the decision is governed by law of the Member State where enforcement takes place.
• Patent mediation/arbitration centre is established.
• Within the first 5 years, proceedings may still be initiated before the national courts.

V.   PROS AND CONS

Advantages

• After grant of the EP Patent, no translation costs will be incurred.
• A transfer of right as a whole is simple.
• A registration of the transfer is not even required.
• Only one single renewal fee will ahve to be paid upon renewal.
• Diverging decisions not any more possible, since each decision is effective for all participating Member States.
• The loosing party bears the full costs.

Disadvantages

• Transfer of the right only possible for the whole territory.
• The single renewal fee will be relatively expensive.
• Quality of Unified Patent Court is uncertain.
• Increased translation costs for up to 12 years (see section III.)