EU Unitary Patent: what now for IP owners?

Following the long-awaited vote to split the Unified Patent Court (UPC) across three European cities, lawyers say there are still “fundamental flaws” with the unitary patent package.

Ending 40 years of debate over its location, the European Council voted on June 29, 2012 for Paris to host the court’s central division. London and Munich will oversee ‘thematic clusters’, which will specialise in chemistry and pharmaceuticals, and mechanical engineering, respectively.

But only three days later, the European parliament postponed its vote on the package after objecting to the deletion of Articles 6 to 8 in the draft regulation. The rapporteurs claimed that deleting the articles, which would allow judges to refer legal questions on patent infringement to the Court of Justice of the EU (CJEU), would “emasculate” the proposals.

A unitary patent is intended to make it easier and cheaper for IP owners to obtain protection across the EU. Under the new system, the UPC will resolve disputes across Europe. The central division will hear cases on patents’ validity and non-infringement, while the clusters will oversee cases on infringement.

The wrangling over the court’s location was seen as a major obstacle to forming the unitary patent system, in a process labelled a “dog’s dinner” by Simon Cohen, partner at law firm Taylor Wessing LLP in London.

But after clearing the hurdle of the court, the parliament refused to vote on the package, objecting to the deletion of Articles 6 to 8. The articles have been a bone of contention between the parliament and Council, and practitioners are opposed to them because the CJEU is not set up to deal with technical appeals from patent cases, Cohen said. “It has never dealt with substantive patent law and it has no specialist judges,” he said.

Keith Hodkinson, partner at law firm Marks & Clerk LLP in London, said the articles, if approved, would be a “fundamental flaw” of the system. But he said it is “not at all clear” that the Council can insist they be deleted, or that the EU Commission, the executive branch of the EU, will agree to their deletion.

Chris Mercer, president of the Chartered Institute of Patent Attorneys, added that he was unclear how different approaches to bifurcation—the splitting of infringement and invalidity issues into separate proceedings—would be resolved. Courts in the UK take a different approach from those in Germany, which hear cases on infringement and validity separately.

Partners at law firm McDermott, Will & Emery said this was still a “controversial” issue. “Bifurcation creates uncertainty, which some claim will encourage a wave of actions to be brought in Europe by nonpractising entities. Certainly the complexities of the system will be a playground for strategists,” they said.

According to Cohen the different approaches in the UK and Germany could be reconciled, but achieving this would not be easy. “A compromise could be to allow judges to adopt a discretionary approach, but it’s not easy to see a way through that,” he said.

Hodkinson said he would have preferred clarity on these “fundamental, practical issues” before the UK government had committed to the system. “So despite talk of final agreement, there are a number of pressing questions yet to be answered: this process could continue for some time,” he said.

Pointing towards the further wrangling between the parliament and Council, Cohen said it was “anyone’s guess” when the first patent will be enforced. While EU officials have earmarked 2014 as the starting date for granting patents, Cohen said this was “highly unlikely” owing to the many unresolved issues.

A spokesman for the Council said the parliament will have the final vote on the unitary patent package. The Council and parliament must discuss and agree on the disputed text of the package before a vote can take place—expected to be later this summer. If politicians vote against the package they could vote on it a second time following further discussions, the spokesman said. A third rejection would require the EU Commission to propose something new.

Cohen added that London, where his law firm is based and which is set to play an important role under the UPC, will benefit from the changes afoot. “We hope that pharmaceutical companies will instruct London-based law firms to support them. London is well placed to deal with patent disputes— we have good lawyers, judges and a good system overall.”