Ratification by Germany and Slovenia revives prospects for EU unitary patent

The EU is a step closer to establishing a unitary patent, after Germany and Slovenia ratified the Unified Patent Court (UPC) agreement this week.

The EU now needs only one more country to ratify the agreement before it can go ahead with setting the rules for recruiting judges for the new court. However, experts warn the legislation, which has been winding its way through the system for more than four decades and was voted through in December 2012, will need to be revised before it can be put in practice.

“As we stand, we are very, very close to the launch of the whole system,” said Maroš Šefčovič, EU commissioner for interinstitutional relations and foresight, at a meeting organised by the Slovenian presidency of the EU Council on Wednesday.

The UPC is meant to provide a one stop shop for patent protection and enforcement in the EU, reducing the cost of protecting intellectual property rights and helping boost competitiveness.

On Monday, the German federal government ratified the agreement, after Germany’s constitutional court dismissed two requests to rule against ratification. Shortly after, Slovenia followed suit.

“For German industry, which holds around 40% of all European patents filed from Europe, better protection of its inventions in the European internal market is of particular importance,” said Christine Lambrecht, federal minister of justice.

Slovenia’s minister of economic development and technology Zdravko Počivalšek hopes the remaining member states will join in ratifying UPC, so that “our long term efforts to make this court function will finally bear fruit.”

The European Commission said many organisational details still need to be ironed out, including the method of selecting and appointing judges and deciding on rules of procedure. The Commission has urged member states which are yet to ratify UPC to agree to the provisional start of the court and to allow the hiring of judges to start.

“Today, we invited the member states to keep the momentum achieved, complete the internal procedures and quickly proceed with the remaining steps,” said Šefčovič

With a fair wind, UPC will come into force in the second half of 2022. “With the right political will, we expect that we could start the provisional application period of the UPC agreement in time for the Czech presidency [of the EU Council] in late 2022,” Šefčovič said.

Patent applications for the new unitary patent will be handled by the European Patent Office (EPO), which will also be in charge of operating the patent register, containing information on patent licenses and transfers.

EPO says unitary patent protection would boost technology transfer and foreign direct investments in high tech industries by increasing legal certainty, reducing administrative burdens and cutting costs for applicants. “These will all contribute to the promotion of innovation and technology transfer and bring muchneeded capital investment in R&D,” said EPO chief spokesman Luis Berenguer Giménez.

The oft-quoted (though now rather elderly) European Commission figures say that the cost of having a patent recognised in every EU country today is €36,000, of which €23,000 is accounted for by translations. EPO has previously said it expects the total administrative cost of filing and maintaining an average unitary patent, including patent office, translation and legal fees, to come down by roughly 70%.

Uncertainties ahead

While news of the German and Slovenian ratification lifted the mood in Brussels, hurdles remain.

“There is a big discussion in the legal community right now whether the UPC agreement needs to be subject to a new diplomatic conference,” said Duncan Matthews, a professor of intellectual property law at Queen Mary University of London.

After Brexit, the UK withdrew its ratification of the unitary patent agreement, which means the branch of the court dealing with chemicals, pharmaceuticals and life sciences, which was due to be based in London, must now be relocated elsewhere. The other two courts will be in Paris and Munich.

It could be that work on life sciences will be split between Paris, as the headquarters of UPC, and Munich which is currently lined up to oversee engineering patents. However, Italy is lobbying for Milan to replace the London seat.

“The UK exit should in no way delay or obstruct the implementation of the unitary patent or the establishment of that unified patent court,” said Šefčovič.

Clashing jurisdictions

The EPO was set up in 1977, four years after the establishment of the European Patent Convention (EPC), an alliance of 38 countries working together to replace the system of granting national patents. All countries assumed a single application at the EPO would be cheaper than registering an invention in each European country.

“That turned out not to be the case,” said Matthews. For example, most small companies want legal protection only in their country. In addition, some patent holders do not want to run the risk of becoming unable to apply for a national patent if EPO rejects a European patent application.

The unitary patent is somewhat different from the European patent. Once EPO accepts an application for a European patent, it asks the holder in which of the 38 EPC countries they would like to pay the fee. At the moment, life sciences companies usually pay additional fees to have their patents covered in all countries.

Regardless of the technology involved, holders of a unitary patent will have to pay only one fee. Also, unitary protection only becomes effective on the request of the patent owner, once the patent has been granted.

The new court would create a one stop shop for patent litigation, which means that companies would no longer have pay for legal fees in every country where a patent was infringed.

Another problem is that not all 38 EPC countries are part of UPC, which has been accepted by 25 EU member states. The UPC will have mandatory jurisdiction over both unitary patents and standard European patents in contracting member states. However, a new political debate needs to be made on whether the UPC should be applicable to all EPC countries, Matthews said.

Once UPC is up and running, new patents filed at EPO would come under the jurisdiction of the new court. But companies can opt out for existing patents and keep them subject to national courts.

Matthews said some companies might go back to just filing national patents until the composition of the multinational UPC becomes clearer and applicants can get a better idea of how the new judges will decide on potential litigations.

Despite the difficulties ahead, EPO is confident the new system will work well. “We have already put all internal systems in functioning mode and are ready to deliver the first unitary patent as soon as the new system becomes legally effective,” Giménez said.