After much inter-jurisdictional wrangling and several administrative false starts, we now have legal certainty that the new Unitary Patent (UP) and Unified Patent Court (UPC) regime will take effect on 1 June 2023. This has been caused by ratification by the German government, but what changes will it bring for the European marketplace and how might SME innovators benefit?
For businesses and their in-house legal teams, there is now much to consider. Decisions about how to manage existing patent portfolios will need to be prioritised. For example, whether and how often they would like to seek unitary patent protection spanning 17 participating Member States.
Dave Croston, partner and patent attorney at European intellectual property firm, Withers & Rogers, said:
“It is natural for in-house lawyers to focus initially on how the new regime will affect their existing or pending rights, but there is a much bigger strategic opportunity to consider in the medium to long term.
“The shape of the European marketplace is set to change following the introduction of the new regime in the participating Member States. This is because they will have improved access to specialist litigation through the UPC system and pan-European sanctions too.
“For small and medium-sized organisations, it will be far easier to justify a decision to enforce patent rights knowing that the court system will have the capacity and skills to deal with the case quickly, and if successful they will be awarded an injunction spanning a large portion of the European marketplace.”
The current fragmented system for the enforcement of patents in Europe means that most businesses choose to protect their innovations only in countries where they perceive there is the greatest risk of infringement or where the consequences for infringement are greatest – for example, the UK, Germany and France. Soon, SME innovators will benefit from a more cost-efficient and streamlined enforcement process overall. It will be possible for them to secure a single patent giving them protection in more European countries, without the need to validate patents on a country-by-country basis.
When it comes to positioning Europe as a preferred location for innovative companies to establish R&D facilities, the new UP and UPC regime could have a particularly positive effect. Dave Croston explained:
“In the past, companies investing large sums in innovation activities have been more likely to locate in places like the US and Japan, where single patent systems covering a large economic bloc already exist and enforcement rights favour the patentee. The new regime will push Europe up the pecking order when it comes to choosing a place to innovate.
“Importantly, innovators choosing to enforce their unitary patents in Europe will benefit from access to a specialist unified court system, where the potential damages or settlement fees for injunctions will be far more attractive than previously.”
When it comes to establishing new case law, it will be important for the recently appointed UPC judges to strike the right balance between the rights of innovators and those of third parties. Dave Croston explains:
“Innovation-led businesses will welcome improved access to litigation rights in respect of their patent portfolios, but the new court system must strike the right balance and avoid making it too easy to injunct. Innovators’ interests must be protected but if injunctions are too easily won, this could open the door to more litigiously-motivated patent trolling activities.”
The German ratification has also given legal certainty that the date so-called ‘opt-outs’ can be filed will be 1 March 2023. Patent owners should decide whether it is best for some existing patents or patent bundles to opt out of the UPC’s jurisdiction. If an action is brought against a patent in the UPC, opting out will no longer be possible. Consequently, if any patents are to be opted out, it will generally be advisable to do so before 1 June 2023.
Another consideration is what to do with any pending patent applications that have been made to the European Patent Office (EPO), but have not yet been granted. Since 1 January 2023, if an applicant receives an ‘intention to grant’, they can ask the EPO to delay their decision to grant until after 1 June 2023, in order to secure unitary patent protection covering the 17 participating Member States.
The early decisions of the UPC will be monitored closely by innovators and IP professionals alike as Europe embarks on a new journey for patents on the continent.
For more information about the UP and UPC regime, visit here.