1 February 2012PatentsJacqueline Needle

The UK unites against the Unified Patents Court

In 1978 the European Patent Office (EPO) opened for business. At that time there were proposals to provide a unitary Community patent, and the idea was also advanced of establishing a pan-European Court to deal with validity and infringement throughout Europe.

Thirty-four years later, the EPO has become a victim of its own success: to cope with the ever increasing number of patent applications being filed, it is turning itself into an authority which refuses, rather than grants, patents. The ideas for Community patents and unified courts have rumbled along throughout the years, and every so often various proposals seemed to be gaining support from all interested parties.

But in 2011, the Hungarian and Polish Presidencies, working with the Competitiveness Council of the EU, decided to ride roughshod over the views of experts in the field. The result is that we seem to have a version of the Community patent coming into force, which Italy and Spain will boycott. There are also proposals for a new Unified Patents Court, which UK practitioners cannot support in their present form.

European patents

The European patent is nothing to do with the EU. It was provided by the European Patent Convention (EPC) signed up to by the contracting states; there are currently 38 full members. Therefore, the EPC has more members than the 27 states which currently make up the EU. States in the EPC but outside the EU include Albania, Croatia, Switzerland and Turkey.

Under the system, a single patent application in French, German or English is filed and prosecuted at the EPO. When granted, the resulting patent is, in fact, a number of national patents. In each country where the national patent comes into effect, annual renewal fees become payable to the national patent office.

Furthermore, any disputes about the patent have to be dealt with in either the national patent office or the national courts. These disputes might be about the ownership or inventorship of a patent, for example, about licences and other agreements, or about infringement and validity.

When a European patent application is filed, the applicant specifies the member countries in which it can come into effect. Until recently, the applicant had to pay a fee for every country included and this led to many applications designating only a few of the possible countries.

These days there is a single designation fee to be paid, so all recent applications designate all countries. However, costs arise on grant in every country in which the European patent comes into effect and, therefore, most granted European patents will be eff ective only in a small number of countries.

The Community patent

The initial proposal for a Community Patent Convention (CPC) was developed at the same time as the EPC. It had similar provisions, but required that all of the Community countries be designated.

Furthermore, on grant, it had effect across the Community but countries could, and did, require that a translation of the full text into their official language be prepared and filed. Not surprisingly, industry throughout Europe was not supportive of the idea, in view of the potentially huge translation costs that would arise on grant.

“GIVEN THAT GERMANY ALREADY HOSTS THE EPO, IT WOULD BE FAIR FOR THE CENTRAL DIVISION OF THE UPC TO BE LOCATED IN THE UK.”

In 2011 a proposal for a European unified patent with effect across the whole of the EU was approved by the European Commission (EC).

It differs from the CPC in several ways, including preventing countries requiring a translation of the patent into their own language to be filed on grant. The unitary patent proposal has been presented to the member states on an ‘enhanced cooperation’ basis so that each country can decide whether, or not, to sign up.

Italy and Spain are currently refusing to take part, primarily because there will be no requirement to provide the patent specification in their languages, so currently the unitary patent will take effect in 25 of the 27 EU countries.

The new unitary patent will be administered entirely by the EPO, which will examine the applications in the same way as European applications. However, the EPO will also remain responsible for the unitary patent after grant and will collect renewal fees. Therefore, the system is potentially a revenue-enhancer for the EPO, to the detriment of national patent offices.

Having pushed the unitary patent proposal through, the EC noted that it would be unthinkable for the proposal to be brought to life without there being a court for enforcing and challenging the new unitary patents. So fresh impetus was given to the proposals for a Unified Patent Court.

The location of the Unified Patent Court

A choice has to be made as to the location of the Unified Patent Court (UPC). Over the years the British and German patent professions have been by far the largest in Europe and they are repositories of enormous professional knowledge and skills. The intellectual property (IP) courts of England and Wales have, arguably, the best IP judges throughout the EU, and in the UK we are able to bring cases from inception to trial in a year or less.

Given that Germany already hosts the EPO, it would be fair for the central division of the UPC to be located in the UK. However, as many attorneys think that the proposals are fatally flawed, and as the EC is not minded to take notice of criticism, UK professionals are leading opposition to the proposals in their current form.

Unless changes are made, many UK professionals will be pressing the UK government not to sign up to the system. This, together with the UK’s frosty relationship with the EU, makes it most unlikely that the UK will be awarded the central division of the UPC.

The role of the CJEU

The unitary patent proposal gives the Court of Justice of the European Union (CJEU) jurisdiction over patent infringement issues. The proposal for the UPC requires it to give binding effect to decisions of the CJEU. Therefore, in practice, all decisions on patent infringement will have to be made by the CJEU.

The CJEU has long dealt with trademark cases for the EU, but without any great credit, and it is known for its delays. The CJEU has no expertise or experience in patent infringement matters and it seems strange to favour it at the expense of very good patent courts in the UK and other EU countries.

Former Lord Justice Sir Robin Jacob., until recently a member of the English Court of Appeal, is well known and well respected in IP circles throughout the EU. He has stated that he knows of no-one in favour of the CJEU having a role in patent litigation.

The scope of the UPC and the transition

The UPC proposal would give it exclusive jurisdiction over matters relating to unitary patents, Supplementary Protection Certificates (SPCs), European patents already granted which are still in force when the proposals come into effect, and all current and future pending European patent applications. There will be a miserly five-year period during which patentees can choose to use national courts, rather than the UPC, for disputes relating to European patents.

Thereafter, unless the patentee has filed an opt-out during the transitional period, he will be forced to use the UPC. Of course, if the national courts wither and die because of the UPC, any such opt-out would become useless.

There is a fundamental objection to the proposal which seeks to force patentees to use an unproven court of unknown expertise, certainly as far as the CJEU is concerned, for European patents which were filed long before these proposals were even mooted.

Bifurcation and languages

The Court of Appeal of the UPC, which is to be awarded to Luxembourg, and local divisions of the court of first instance, can choose the language in which to hear the case. This opens the likelihood that two instances might hear the case in different languages.

The possibility also exists that infringement and validity might also be heard by different courts and in different languages. This is fraught with danger, given that the exact use of precise language is at the heart of a well drafted patent specification.

In Germany, infringement cases and cases involving the validity of a patent are heard in different courts. This makes it very easy for a patentee to get an injunction. It also opens the way for a patentee to argue for a broad interpretation of a claim to ‘catch’ an infringement, and subsequently to argue for a much narrower interpretation of the same claim in order to show the claim to be valid.

“ALREADY, SOME LARGE UK-BASED COMPANIES ARE ROUTINELY FILING BRITISH NATIONAL PATENT APPLICATIONS ALONGSIDE THEIR EUROPEAN APPLICATIONS.”

Under the UPC, such bifurcation will be an option and is, perhaps, likely to remain in use in local divisions in Germany. Injunctions issued by a local division, or the central division, will be extremely valuable as they will be pan-European. They could also inflict enormous harm on businesses.

Thus, a company accused of infringement could be prevented from trading in a disputed product throughout the EU by an allegation that it infringes a patent.

It would have no ability to defend itself on the grounds that the patent is invalid if the court chose bifurcation, and there would be no likelihood of a speedy resolution because the infringement issue would have to be determined, in its own time, by the CJEU.

What happens now?

Various IP professionals in the UK are fighting hard to try to amend the unitary patent and UPC provisions. If they fail, they will seek to persuade the UK government not to sign up to the UPC.

UK businesses are already considering how to mitigate the problems which might arise if the new court is imposed on them. Already, some large UK-based companies are routinely filing British national patent applications alongside their European applications to ensure that they will never need to use the UPC for infringement and other disputes arising in the UK.

This practice arose even before the current, flawed proposals saw the light of day. UK business needs certainty and while the high standard and speed of access of the English courts are known, the standards and speed of the UPC, however formatted, are not.

If the UPC comes into effect as presently suggested, particularly if it is with the UK as a member, UK professionals will need to advise their clients to consider reverting to filing national patent applications instead of European cases in the future. Furthermore, for existing cases, clients will be advised to file opt-outs so that they can avoid the use of the UPC, at least until it has developed the necessary expertise.

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