Unified Patent Court gets in shape

After a long legal limbo, mainly caused by several constitutional complaints in Germany, the way for the Unified Patent Court (UPC) is paved. As Austria has lately deposited its instrument of ratification of the protocol for the provisional application of the UPC Agreement (UPCA) with the European Council, the Preparatory Committee can now start work.¹

The UPC is expected to launch at the end of 2022. By then, the Preparatory Committee will have to deal with five major work streams, namely: (i) legal framework, (ii) financial aspects, (iii) information technology, (iv) facilities and (v) human resources & training. The public will mostly be interested in the selection of the estimated 95 legal and technical UPC judges, as well the election of the UPC president and the new procedural rules for the UPC.

The UPC will operate in the first instance via several local divisions based in the Member States or regional divisions of a plurality of Member States concentrated in one country. The number of local divisions of a Member State depends on the amount of patent cases conducted in the respective State in the past. Germany, as the most frequented country for patent disputes in Europe, will host four local divisions (Dusseldorf, Munich, Mannheim, Hamburg), whereas other Member States will have only one local division. Member States with only a few patent cases per year will share a regional division. There will also be three central divisions as part of the first instance.

Alongside a central division in Munich (i.a. automotive engineering), the UPC main central division will be based in Paris (i.a. electronics). Due to Brexit, London will no longer be considered to host the third central division (i.a. biotech) and discussions are still ongoing concerning which city will succeed. The appeal instance for the UPC (Court of Appeal) will be based in Luxembourg. The UPC will have to call the European Court of Justice in terms of issues relating to interpretation of EU law.

According to a survey conducted with European patent experts², the most preferred judges are from Germany and France. The German Federal Supreme Court judge Klaus Grabinski is the favorite choice for heading the Court of Appeal. The French judge Paul Maier was mostly chosen for presiding the UPC main central division.

The constitution of the UPC thereby goes hand in hand with the implementation of a new Unitary Patent System. The European Patent Office is competent for examination and grant of the respective applications for a Unitary Patent. After grant, the Unitary Patent has unitary effect in all Member States. The Unitary Patent thereby distinguishes from the current system, where European Patents that diverge into national portions after grant need to be enforced country by country.

Once the UPCA enters into force, for the first seven years, new as well as already granted European Patents will become subject to both UPC and national jurisdiction. However, in this period, the respective patentees can decide whether their European Patent shall be subject to sole national jurisdiction (opt-out). Applications for use of the opt-out choice are possible even before the UPCA enters into force (sunrise period). As long as no case is pending before a national court, it is possible to revise the opt-out decision and get back to national and UPC jurisdiction (opt-in).

The main advantages put forward in terms of the UPC are the effective and cost-sensitive proceedings. This is due to the unitary effect of the Unitary Patent and the ability of the UPC to grant EU-wide injunctions. Furthermore, infringement and validity proceedings can be cumulated in one proceeding. Multiple infringement and validity actions in various jurisdictions could therefore be avoided and legal certainty will be provided EU-widely.

However, some uncertainties concerning the Unitary Patent and the UPC remain. With regard to validity, the unitary effect poses a major risk for revocation or limitation of a Unitary Patent by a local/regional or main division. Applicants, i.e. in the pharma sector, will carefully evaluate whether they dispose their blockbuster patents to the risk that any UPC first instance in the EU could revoke such high-valuable patents with EU-wide effect. Regarding small- and medium sized enterprises, it is questionable whether it will be worthwhile for them to apply for a Unitary Patent in case they solely want to cover specific key jurisdictions. It is also questionable if an infringement action before the UPC is cheaper and faster than proceedings in Germany with their speedy first instance decisions and foreseeable statutory court and attorney costs. It is also not mandatory that the UPC will handle infringement and validity actions together due to the possibility to separate the proceedings and refer the validity action to the central division. Additionally, due to Brexit, the Unitary Patent System lost one important and experienced patent jurisdiction in the EU.