The debate is over!

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The rules are set, but the players are moving. Ropes & Gray reviews the unitary patent and the Unified Patent Court.

The European Union (EU) convincingly demonstrated the power of the European marketplace when it established the unitary patent and the Unified Patent Court (UPC). By putting the force of the European market behind European patent rights, Europe reminded global industry that the EU offers a market bigger than that of the United States and more than twice the size of China’s. Moreover, by addressing both the patent granting process and the patent litigation process, the EU will provide global industry with an economically significant patent right and a reliable and trustworthy court system – a development global companies with important technologies and innovations will quickly notice.

Currently, the EU expects the UPC to enter into force early in 2014, following ratification by thirteen EU states, including the three EU states that have the largest number of patents in force. At present, those three EU states are Germany, France, and the UK. However, recent political developments raise the possibility of the UK withdrawing from the EU in the coming years. If the UK does not ratify the UPC agreement and the UK withdraws from the EU, then the EU state with the third most number of European patents in force must ratify the UPC agreement for it to come into effect. Additionally, it would be unlikely that the seat of the UPC will have a section in London, and a new location will need to be selected by the Administrative Committee of the UPC. In either case, the EU seems ready to bring in to being a patent right with unitary effect across the European Union.

Background

On 11 December 2012, members of the European Parliament voted to approve the “EU patent package,” consisting of a regulation creating a European patent with unitary effect (or unitary patent), a regulation establishing an applicable language regime, and an international agreement among Member States setting up a single and specialized patent jurisdiction (the Unified Patent Court)2. The two regulations are implemented under enhanced cooperation by 25 Member States, with Italy and Spain currently declining to participate due to disagreement over language arrangements. The UPC is scheduled to enter into force early in 2014, following ratification by 13 EU states, including, right now, Germany, France, and the UK. If there are no delays in the process, and that seems unlikely, the first European patent with unitary effect could be granted in April 2014.

The new unitary patent system is designed to reduce current structural inefficiencies in European patent litigation and aims to significantly reduce costs associated with validation and litigation, eliminate duplicate litigation in multiple countries, and increase legal certainty in patent protection. Being cheaper and simpler to enforce will make European patents stronger, more certain, and thus more valuable in business development. On the global level, a European unitary patent can be combined with a US patent and a Chinese patent to cover more than 55% of the world’s market. From the perspective of US companies, European patent portfolios will need to be managed more strategically, with careful assessments of infringement and freedom-to-operate risks.

Primary differences

Differences between the unitary patent and the “classical” European patent lie in the post-grant phase. Currently, European patents are examined and issued centrally by the European Patent Office (EPO), according to the dictates of the European Patent Convention. A classical European patent functions as a bundle of national patents: it must be separately translated, validated, and maintained in each state in which the patentee seeks protection, with enforcement of European patent rights essentially occurring on a country-by-country basis. By comparison, the new unitary patent, once granted, will provide protection in all EU Member States. Under the new regime, the UPC will have exclusive jurisdiction over the settlement of infringement and invalidity disputes of an EU unitary patent, allowing a single judgment to be enforceable in all participating Member States. Similar to the effect of establishing the US Court of Appeals for the Federal Circuit, the exclusive jurisdiction of the UPC establishes a legal body that can harmonize legal precedence among different jurisdictions.

The unitary patent

The new unitary patent will provide uniform protection within the 25 participating Member States, rendering nation-by-nation validation unnecessary. Applicants will be required to provide a translation of the application in English, French, or German, the official languages of the EPO. During an initial transitional period of 12 years, unitary patents granted in French or German will need to be translated into English, and those granted in English will need to be translated into another European language, until high-quality machine translations become available.

Although actual costs have not been published, early press reports from the EU suggest that within the 12-year transitional period, the cost of obtaining a unitary patent is predicted to be about €6,5003, including the cost associated with additional translations. Once high quality machine translations become available, the cost is predicted to drop to around €5,000. By comparison, obtaining a European patent that would be valid in all 27 EU Member States today can cost up to €36,000.

Of course, it is difficult to predict fees, particularly as far out as 12 years. Nonetheless, the UPC is designed to reduce fees substantially from current levels, which are about five to 10 times higher than those levied by the US Patent and Trademark Office or the Chinese Patent Office. Additionally, the unitary patent provides for discounted fees for small and medium entities, enabling qualifying entities to pay half fees. Offered by the United States and Canada for years, a reduced fee program was clearly implemented by the EPO to encourage universities and small venture-backed companies to secure rights to their inventions.

The unitary patent will be centrally administered by the EPO and will require a single annual renewal fee, eliminating the need for….click here to subscribe and read the whole article

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Charles Larsen is an IP partner with Ropes & Gray. His practice focuses on intellectual property strategies and transactions in the U.S. and Europe, particularly in the medical technologies industry. He can be reached at charles.larsen@ropesgray.com

Edward Kelly is a partner with Ropes & Gray. His practice focuses on complex patent matters, including diligence, reexamination, opposition and portfolio management. He has extensive experience before the U.S. and European Patent Offices. He can be reached at edward.kelly@ropesgray.com

Anita Varma is an IP partner with Ropes & Gray. She has over 20 years of experience, specializing in biotechnology and pharmaceutical patent law. She is qualified to practice before the USPTO and EPO. She can be reached at anita.varma@ropesgray.com

The assistance of Chris Carroll, counsel with Ropes & Gray, is gratefully acknowledged.