Germany | Publication | Issue November 2022
The subject-matter of infringement proceedings before the Unified Patent Court can be both Unitary Patents as well as traditional bundle patents (EP patents), however the effect of EP patent proceedings is limited to the Contracting Member States of the Unified Patent Court.
As regards EP patents, national courts and the Unified Patent Court will have parallel jurisdiction for a transitional period of seven years initially (which may be extended to 14 years, if necessary). Owners of EP patents may exclude the jurisdiction of the Unified Patent Court by filing an opt-out declaration. This, however, is only possible as long as no action for a declaration of invalidity or non-infringement has been brought before the Unified Patent Court prior to the making of the application for the opt-out declaration. Potential defendants could take advantage of this and proactively attack dangerous patents across Europe before an opt-out declaration is made, to avoid having to enforce their invalidity country by country at a later date and after an optout declaration has been filed. To avoid the risk of a Europewide revocation, patent owners should therefore consider filing an opt-out declaration for particularly valuable patents before the Unified Patent Court commences operations.
If the owner of an EP patent decides to invoke the jurisdiction of the Unified Patent Court after an opt-out declaration has been filed, there is a one-off opportunity to opt-in to restore its jurisdiction.
Proceedings before the Unified Patent Court are to follow a clear procedure. A strict deadline regime will help to avoid delays. First-instance proceedings before the local or regional divisions and the central division, respectively, commence with written statements and exchange of positions, followed by an interim hearing and the final oral procedure. Within one year after the action has been brought, first-instance proceedings must be concluded.
Just as in opposition and complaints procedures at the European Patent Office, the case file of the Unified Patent Court is accessible by the public. The parties may request, with appropriate justification, that certain documents be made confidential. It is up to the court to decide whether the respective documents are classified as confidential and thus not published in the register. In contrast to the largely confidential nature of German infringements proceedings, there is therefore the risk of important documents becoming accessible to the public.
Unlike in German proceedings, the defendant can defend itself by raising a counterclaim for invalidity with regard to the patent in dispute, which – if successful – leads to the complete or partial revocation of the patent in dispute. This strengthens the position of the defendant in contrast to German proceedings, in which infringement and invalidity cases are always conducted before separate courts and a provisionally enforceable judgment can be issued before a decision on the legal status of the patent in dispute has been made.
Unlike an independent action for a declaration of invalidity, which has to be brought before the central division, infringement proceedings in an invalidity counterclaim can take different courses. The local/regional division can call in a technically qualified judge and participate in the decision on the invalidity. Also, the invalidity counterclaim may be segregated and referred to the central division, or the entire proceedings may be referred to the central division.
The costs of proceedings are, in many cases, a significant factor in the choice of venue. Although proceedings before the Unified Patent Court are predictable with regard to court fees, they are not predictable with regard to the cost burden or reimbursement of attorney fees and other costs of proceedings.
The court fees for proceedings before the Unified Patent Court consist of a fixed fee and a fee depending on the amount in dispute. For infringement actions, preliminary injunction proceedings, declarations of non-infringement and invalidity counterclaims, the fixed fee is €11,000, for a separate action for a declaration of invalidity it is €20,000, and for damage assessment proceedings it amounts to €3,000. The fees related to the value in dispute range from €2,500, for an amount in dispute between €500,000 and €750,000, to €325,000, for amounts in dispute of €50m or more. A special feature of the fees for an invalidity counterclaim is that they are limited to a maximum of €20,000.
Attorney fees and other costs of proceedings incurred and, if applicable, recoverable, are determined according to the actual costs incurred, but are capped depending on the individual proceedings. On the one hand, there is a maximum rate depending on the amount in dispute, which, for example, is up to €38,000 for an amount in dispute of up to €250,000, but up to €2m for an amount in dispute of more than €50m; on the other hand, the fees incurred must be reasonable and appropriate. How this is to be interpreted remains to be seen.
Moreover, in order to secure its costs, or recoverable costs, if appropriate, the defendant may demand the provision of adequate security. In contrast to the request for deposition of a security bond (Einrede der fehlenden Prozesskostensicherheit) under German law, this defence is not limited to claimants domiciled outside the EU and must therefore be considered by every potential claimant. Depending on the amount in dispute in the proceedings, the claimant may incur considerable additional costs for providing security.
A frequently mentioned advantage of the unitary patent is its effect on all Contracting Member States and the associated possibility of obtaining a far reaching injunctive relief “in one go”. The fact that it is no longer necessary to enforce the respective national patent before the individual courts increases the threat potential vis-à-vis the alleged infringer.
It should be noted, however, that the right to injunctive relief is expressly subject to the court’s discretionary power. The court “may” order the infringer to cease and desist the established patent infringement, but it is not obliged to do so. It remains to be seen to what extent the judges at the Unified Patent Court will exercise their discretion. With regard to Germany, for example, the proportionality requirement limiting the right to injunctive relief has so far been applied in an extremely restrictive way. In contrast to German patent law, the Agreement explicitly does not provide for corresponding compensation if the application for injunctive relief is rejected at the court’s discretion. Whether these situations will be resolved by applying the provisions on the payment of damages remains to be seen.
The far-reaching effect of the unitary patent also provides patent owners with the possibility of obtaining higher amounts of damages. Due to the larger product turnover in the market of Contracting Member States, a corresponding assessment will generally be higher than in the individual states. In this context, it should be noted that the Brussels I Regulation (Regulation (EU) No. 1215/2012 (…) on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters) provides that, under certain conditions, the patent owner may claim additional compensation for damages incurred outside the European Union.
With regard to the enforcement of decisions of the Unified Patent Court, the rules of procedure provide that the Contracting Member State jurisdiction in which the judgment is to be enforced shall apply.
In certain areas, however, enforcement is still subject to some uncertainties. For example, it is at the discretion of the Unified Patent Court in first-instance proceedings whether to make enforcement of the decision conditional on the provision of security when a judgment has not yet become final. Also, the enforcement of a subsequently annulled decision on the payment of damages to the defendant is at the discretion of the court and not mandatory, as is the case under, among others, German law.
The Unified Patent Court, in combination with the unitary patent, creates an attractive possibility to take effective action against patent infringements. In addition to the territorial scope of the right to injunctive relief and potentially higher amounts of damages, the intended accelerated proceedings is an obvious advantage of the European patent system. However, the disadvantages are greater cost risk, especially in comparison to German proceedings, and the risk of extensive loss of property rights in the event of successful invalidity counterclaims. The separation of infringement and validity proceedings, which is considered favourable for the claimants, is, in principle, not provided for at the Unified Patent Court. The parties should also take into account that the case file will be accessible to the public. Although the Unified Patent Court cannot completely replace the existing national jurisdictions, it offers an important new alternative to patent enforcement strategies.
Publication
The United States Patent and Trademark Office (USPTO) has finalized an increase in patent prosecution fees, scheduled to take effect on January 19, 2025.
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