The Unitary Patent and Unified Patent Court

Introduction and current timelines

With final preparatory steps underway, including the appointment of judges, it now appears likely that the Unitary Patent and Unified Patent Court (UPC) will be in operation in 2023, with the UPC Preparatory Committee aiming for a start date of 1 June 2023 (see the Implementation Roadmap for more details, though note that the planned start date has recently been pushed back in order to deal with issues relating to access to the Case Management System). In this Guide, we provide an overview of the regime, and key steps that should be considered and potentially taken in advance. For the Unitary Patent/UPC project to commence, 13 Member States (including certain mandatory ratifying Member States) must ratify the UPC Agreement. Germany, the remaining mandatory ratifying Member State, is yet to ratify. The project is currently in the Provisional Application Phase (PAP) during which the final preparatory steps for getting the UPC ready to operate (including judicial recruitment and training) have been taking place.

Once it is satisfied that the relevant preparatory work to the UPC has been completed (or is perhaps imminently complete), Germany is expected to deposit its instrument of ratification with the Secretariat of the European Council. The UPC Agreement will then enter into force, and the UPC will ‘open its doors for business’ on the first day of the fourth month following that deposit.

Whilst the planned start date remains ambitious, progress should be monitored closely. On 19 October 2022, the UPC Preparatory Committee announced that an important step had been completed, with the confirmation of the appointment of 85 judges under the UPC Agreement, comprising 34 legally qualified judges and 51 technically qualified judges.

As explained in more detail below (see Opting out of the UPC), patentees and other interested parties should be considering now the approach they plan to take in relation to existing and future classic European Patents, as well as their patent protection and enforcement strategies in light of the new regime. In particular, current estimates are that the three-month sunrise period for opting out classic European Patents will start on 1 March 2023.

Participating EU Member States

Whilst the Unitary Patent was intended to be a single pan-EU patent, and the UPC was likewise intended to be a ‘one-stop shop’ forum for patent litigation in the EU, not all EU Member States will participate in the regime. Spain, Poland and Croatia will not be participating and some Member States are yet to ratify the UPC Agreement. In addition to Germany, other Member States yet to ratify as at the time of writing (and who may not do so until some time after the Unitary Patent/UPC regime is in operation) are: Cyprus, Czech Republic, Greece, Hungary, Ireland, Romania and Slovakia.

The UPC’s jurisdiction will therefore not extend to these jurisdictions and separate enforcement action will need to be considered in these jurisdictions where relevant. Note also that once a Unitary Patent takes effect, its coverage cannot be extended subsequently if additional EU Member States join the Unitary Patent system.

Post-Brexit, the UK will not be participating in the Unitary Patent/UPC project as it is no longer a Member State of the EU. Whilst it had initially indicated a wish to remain involved in the project, this was later abandoned. The UK, however, remains a member of the European Patent Convention and classic European Patents can continue to designate the UK.

Participating in regime		Not participating in regime
Ratified	Not yet ratified (non-participating until they ratify)
Austria	Germany (will ratify once preparatory steps complete)	Croatia
Belgium	Cyprus	Poland
Bulgaria	Czech Republic	Spain
Denmark	Greece
Estonia	Hungary
Finland	Ireland
France	Romania
Italy	Slovakia
Latvia
Lithuania
Luxembourg
Malta
The Netherlands
Portugal
Slovenia
Sweden

The Unitary Patent

The Unitary Patent will be a single patent issued by the European Patent office (EPO). It will have effect in all EU Member States that ratify the UPC Agreement, which will govern the UPC regime.

A key selling point of the Unitary Patent is its pan-EU effect (or, more accurately, across those Member States that sign up – see Participating EU Member States). The effect of this is that a Unitary Patent can be enforced across participating Member States through a single court action. This will be particularly attractive for patentees who wish to avoid the risk of duplication and inconsistent decision making that is inherent in the current European patent litigation system. However, a Unitary Patent can also be invalidated across the same states in the EU through one central court action, which for many patentees will be a major concern.

The other key benefit of the Unitary Patent is the potential for significant costs savings (both in terms of application and maintenance costs, but also in enforcement). However, in practice whether the Unitary Patent will be cheaper than a classic European Patent designated in relevant states will depend upon the number of Member States where protection is typically sought. Whilst there will clearly be savings for patentees who currently validate their classic European Patents in a large number of countries, the position will be very different, once renewal fees have been taken into account, for those that currently validate in a small number of key territories.

The Unitary Patent will co-exist with existing and future classic European Patents. National patents will also remain available. This will be subject to national rules relating to double patenting.

Whilst it will be possible to obtain a supplementary protection certificate (SPC) based on a Unitary Patent, there will not be, at least for the time being, a ‘unitary SPC’, though this is under current consideration. National applications for SPC protection can be based on the Unitary Patent, in the same way as at present for classic European Patents. However, any such SPCs based on a Unitary Patent will, like the Unitary Patent upon which they are based, be subject to the exclusive jurisdiction of the UPC - i.e., they cannot be opted out of the UPC regime.

When deciding on a patent strategy, relevant factors will include the pan-EU effect of the Unitary Patent (and related cost savings under the new regime). However, until the UPC regime is fully bedded in and its judiciary are perceived to be making sensible decisions, it is likely that many businesses will continue to focus on classic European Patents and even national patents in some cases.

Once the Unitary Patent is in effect then, patentees will have the following options in relation to their portfolio in the EU and in EPC states:

A Unitary Patent (covering all participating EU Member States)
A classic European Patent validated in individual EPC states

A Unitary Patent, together with a classic European patent with separate validations in non-ratifying Member States and non-EU EPC states
National patents in individual states (subject to national rules on double patenting)

How do you apply for a Unitary Patent and how much will it cost?

Apply for a classic European Patent at the EPO which will be examined in the usual way
Submit a request to the EPO within one month of grant for registration of the unitary effect (all co-applicants must agree)
During a transitional period of at least six years, file a full (single) translation of the specification of the patent
Official fees are expected to fall once machine translation services are available
Renewal fees: True Top 4 proposal will lead to renewal fees over 20 years of EUR 35,555 (and total costs over the 20 years of EUR 44,420)
Oppositions at the EPO within nine months of grant
Actions for revocation must be brought before the UPC (at any time) and will have effect across all participating Member States

Woman walking in background (blurry) - Mishcon interior

Early uptake of the Unitary Patent

The EPO has put in place two transitional measures where classic European Patent applications reach the final phase of the grant procedure before the Unitary Patent system enters into force. These are intended to support early uptake of the Unitary Patent. There is more detail on the EPO website.

First, applicants who have received a communication from the EPO of an intention to grant will be able to file an early request for unitary effect before the start of the Unitary Patent system. This step will be available as of 1 January 2023.

Secondly, an applicant who has received a communication from the EPO of intention to grant (but has not yet approved the text intended for grant) can request a delay in issuing the decision to grant a classic European Patent. The mention of the grant will be published in the European Patent Bulletin on or immediately after the start date of the Unitary Patent system. Again, requests for delay will be permissible as of 1 January 2023.

Applicable law relating to a Unitary Patent

One aspect to consider carefully when applying for a Unitary Patent is the applicable law that will be applied to it as an object of property, particularly in the case of co-applicants. The rules relating to applicable law depend upon the nationality of the applicant/s, and not the current owner of the Unitary Patent.

Where there is a single applicant, this will be determined as follows:

The participating Member State where the applicant had their residence or principal place of business on the date of filing; or
Where (a) does not apply, the participating Member State where the applicant had a place of business on the date of filing; or
Where neither (a) nor (b) apply, German law will apply.

Where there are two or more joint applicants, the above tests are applied in the order of their being named on the application. The order of naming for joint applicants on an application for a Unitary Patent is therefore a key consideration.

The UPC will exclusively govern disputes concerning the Unitary Patent (and related SPCs) from day one. However, and importantly, it will also have jurisdiction over existing and future classic European Patents subject to a right to opt out classic European Patents (and related SPCs) from the UPC’s jurisdiction for a transitional period after the UPC Agreement comes into force.

During this seven year transitional period (which may be extended for a further seven years), the UPC will share jurisdiction with relevant national courts over classic European Patents. During the transitional period, holders of existing classic European Patents (and ones granted during the transitional period, together with related SPCs) can opt those patents out of the UPC regime, which will have effect for the life of the patent (see Opting out of the UPC). Significantly, however, they can potentially opt those patents back in again to the UPC.

Once the new regime is in place, relevant national courts will therefore have jurisdiction over:

National patents
Classic European Patents designated in non-EU EPC states
Classic European Patents designated in EU states that do not ratify the UPC Agreement

Classic European Patents where the patentee has ‘opted-out’ of the UPC’s jurisdiction
Classic European Patents during the transitional period, where national courts will share non-exclusive jurisdiction with the UPC

The transitional arrangements for classic European Patents are particularly important as it is likely that many holders of such patents will wish to opt them out of the UPC where possible, and perhaps opt them back in again where it is to their advantage e.g., if they wish to seek pan-EU relief (subject to the rules that apply when litigation has already been commenced in relation to a patent).

Holders of a Unitary Patent, or SPC based on a Unitary Patent, cannot opt out of the UPC at all.

Structure of the UPC

The UPC is made up of a Court of Appeal, Court of First Instance, and Registry. There will also be a Mediation and Arbitration Centre in Ljubljana and Lisbon.

The Court of First Instance will comprise a Central Division as well as Local and Regional Divisions.

The Central Division

The Central Division will have its main seat in Paris, with a section in Munich. Prior to Brexit, a section in the Central Division had also been allocated to London (to deal with, in particular, pharmaceuticals cases). We await re-allocation of this work (pending that re-allocation, it appears it will be shared between Paris and Munich).

The Central Division will hear actions for declarations of non-infringement of patents and SPCs, and for revocation of patents and for declarations of invalidity of SPCs.

It will also hear infringement cases where:

The parties agree
The participating Member State concerned has no Local or Regional Division
The alleged infringement is occurring in the territory of at least three Regional Divisions and the defendant requests that the case be transferred to the Central Division (this depends on there being at least three Regional Divisions in operation, which currently appears unlikely).

Where the claim is against a defendant resident outside the territory of a participating Member State, the claim may be brought before the relevant Local/Regional Division where the alleged infringement occurred, or the Central Division.

Section TBC	Paris Seat	Munich Section
	President’s Office
(A) Human necessities	(B) Performing operations, transporting	(F) Mechanical engineering, lighting, heating, weapons, blasting
(C) Chemistry, metallurgy	(D) Textiles, paper (E) Fixed constructions (G) Physics (H) Electricity

Local and Regional Divisions

Participating Member States may request a Local Division (not all will) and designate where it will be situated, with up to four Local Divisions being possible, depending on how many cases are heard in that State. Two or more states may instead, or in addition, set up a Regional Division.

Local Divisions are expected in at least Austria, Belgium, Denmark, Finland, France, Germany (four Local Divisions), Italy, The Netherlands, Portugal, and Slovenia. One Regional Division has been confirmed: comprising Sweden, Lithuania, Estonia and Latvia (with proceedings conducted in English).

All divisions within the Court of First Instance will have multinational panels of both legally and technically qualified judges, with three judges drawn from at least two different participating Member States (the parties may agree to a single judge). It is hoped this will provide the necessary counterbalance to any concerns of inconsistency of approach between panels in different participating Member States. The UPC Court of Appeal will have a panel of five judges (three of whom are legally qualified and two of whom are technically qualified).

Local / Regional Divisions will hear cases relating to actual/threatened infringement of patents and SPCs and related defences, including counterclaims concerning licences.

A patentee (or exclusive or non-exclusive licensee where appropriate) will have a choice as to where to start infringement proceedings. First, it can bring the claim in the relevant Local / Regional Division where the actual or threatened infringement has occurred or may occur. Given that the alleged infringement may be occurring in a number of EU countries, this gives the patentee the option of bringing proceedings in a state it considers more favourable. Alternatively, it may bring the claim in the Local / Regional Division where the defendant (or, where there are multiple defendants, one of those defendants), has its residence, or principal place of business or place of business. Patentees may consider relevant factors such as speed and judicial experience.

In contrast, a party seeking to clear the way by applying for a declaration of non-infringement or for revocation at the UPC has no such choice – it must start proceedings in the Central Division. Further, the patentee can still seek to gain control of the jurisdiction. For example, an action for a declaration of non-infringement before the Central Division will be stayed if an infringement action effectively between the same parties is begun before a Local / Regional Division within three months, and may be stayed if it is brought after that three month period.

A patent challenger can also oppose the patent at the EPO within 9 months of grant; and during the transitional period it can bring proceedings before a national court in relation to classic European Patents (subject to rules in the Re-Cast Brussels Regulation).

Potential defendants concerned at the prospect of having to defend proceedings in perceived ‘pro-patentee’ participating Member States may need to consider structuring their operations so as to avoid the possibility of those States having jurisdiction.

Bifurcation?

The possibility of bifurcated proceedings - i.e. infringement and validity being heard separately - has been one of the most controversial aspects of the UPC regime. Currently the courts in Germany bifurcate proceedings but other jurisdictions determine infringement and validity together. The concern for defendants is that a patentee will argue its case broadly in order to obtain an injunction, but more narrowly in separate validity proceedings to avoid revocation. Further, under a bifurcated system, a patentee may obtain speedy injunctive relief in respect of a weak patent which is ultimately held invalid. Accordingly, if UPC panels in Member States that currently bifurcate continue to do so, they may become an attractive forum for patentees under the UPC regime.

If a defendant to an infringement action in the UPC counterclaims for revocation, the Local / Regional Division may decide to:

Proceed with both the infringement action and the revocation counterclaim (with a technically qualified judge);
Refer the counterclaim for revocation to the Central Division and suspend (if there is a ‘high likelihood’ that the relevant claims of the patent are invalid) or proceed with the infringement action; or
If the parties agree, refer the case as a whole to the Central Division.

Further, if an action for revocation is pending before the Central Division, an action for infringement between the same parties and relating to the same patent may be brought before a Local / Regional Division, or before the Central Division. The Local / Regional Division will then have the discretion whether to proceed with the infringement action or suspend it.

Concerns about the effects of bifurcation may be mitigated to some extent by other provisions in the UPC Agreement and in the Rules of Procedure. First, as panels will be multi-national, it is possible that panels in states that have traditionally bifurcated will, in fact, decide to hear infringement and validity together. Further, bifurcation may not always be attractive, as it brings with it the prospect that validity may be dealt with in a different Member State, and in a different language. It is also hoped that the Court of Appeal will instil consistency between Divisions on this question. In practice, bifurcation may, in fact, be fairly rare.

The UPC Rules of Procedure provide that, where an infringement claim is not stayed, the Judge-Rapporteur of the Central Division ‘shall accelerate’ the revocation proceedings before the Central Division. Further, they ‘shall endeavour’ to set a date for the oral hearing of the revocation action at the Central Division before the date set for the oral hearing of the infringement action. It remains to be seen how straightforward this will be in practice.

Applicable law

The UPC will base its decisions on:

EU law, including the Unitary Patent Regulation and the Translations Regulation;
The UPC Agreement;
The EPC;
Other international agreements applicable to patents which are binding on all participating Member States; and
National law (which may include non-participating States).

Whilst issues of patent validity will be determined by reference to the European Patent Convention, the UPC Agreement contains provisions relating to infringement and limitations to infringement. The UPC may refer questions to the Court of Justice of the European Union on issues of Union law. Questions relating to ownership issues etc will be determined by reference to the relevant national law.

Procedure and costs

The Rules of Procedure (which have recently been finalised) will govern how UPC proceedings are conducted, comprising written, interim and oral stages.

The rules provide for a decision on validity and/or infringement within one year. This is achieved by a fixed and compressed timetable during the written stage of proceedings. The written stage will likely require some ‘front-loading’ for patentees as their pleadings must set out their proposed claim interpretation.

The procedural framework is a mixture of both common law and civil law traditions. In particular, an extensive range of evidential tools are available including: hearing the parties, requests for information, production of documents, hearing witnesses, expert opinions, inspections, experiments and affidavits. However, there is no general disclosure obligation, and cross-examination of witnesses and experts will be limited. A particularly interesting aspect is the availability of orders preserving evidence (saisie) which may be available against an alleged infringer even before an action is launched, and potentially on a without notice basis.

In addition to bifurcation and the resulting ‘injunction gap’, many are concerned about how different panels may approach the award of final injunctions. Whilst an injunction is a discretionary remedy, the UPC Preparatory Committee has suggested that only in “very exceptional circumstances” will the Court decide not to order an injunction.

A patentee may also seek a provisional injunction which, given the potential geographical scope, will have significant consequences. The grant of a provisional injunction is also discretionary and judges are given very limited guidance in the Rules. It is inevitable that, even once the Court of Appeal begins to issue clarificatory decisions, there will be variations of approach between different panels in the exercise of their discretion, based on existing practices before national courts.

A party that is concerned that provisional remedies may be sought against it may lodge centrally at the UPC Registry a protective letter in which it can set out its arguments on infringement and /or validity. The aim is to ensure that these arguments are before the panel on any subsequent application. If a provisional injunction is granted, the UPC may order security for any injury caused as a result, which may be a significant amount given the potentially broad geographical scope of the injunction (however it appears that security will not be granted in favour of third parties).

Court fees will comprise a fixed fee, together with a value-based fee above a pre-defined ceiling, based on the German fees model.

In relation to costs recovery, the Rules set out a scale based on the value of the dispute.

Scale of Ceilings for Recoverable Costs

Value of proceeding	Ceiling for recoverable costs
Up to and including €250,000	Up to €38,000
Up to and including €500,000	Up to €56,000
Up to and including €1,000,000	Up to €112,000
Up to and including €2,000,000	Up to €200,000
Up to and including €4,000,000	Up to €400,000
Up to and including €8,000,000	Up to €600,000
Up to and including €16,000,000	Up to €800,000
Up to and including €30,000,000	Up to €1,200,000
Up to and including €50,000,000	Up to €1,500,000
More than €50,000,000	Up to €2,000,000

Language of UPC proceedings

Proceedings at the Central Division will be in the language in which the patent was granted. The language of proceedings before any Local or Regional Division will be an official European Union language which is the official language - or one of them - of the participating Member State hosting that Division (or the official language(s) designated by states sharing a Regional Division). However, a participating Member State may in addition or instead designate one or more of the official languages of the EPO - ie English, French or German. The parties may also agree to adopt the language in which the patent was granted (if the panel approves; if it does not approve, the parties may request transfer to the Central Division). Similarly, the panel may decide to adopt the language in which the patent was granted, with the parties’ agreement. Where a Local or Regional Division offers a choice of languages, a claimant may choose the language of proceedings - subject to exceptions including the ‘small operator clause’ which will ensure certain defendants are sued only in their ‘home’ language.

Owners of classic European Patents (and SPCs based on those patents) will want to give careful consideration to opting out of the UPC’s jurisdiction during the transitional period, so that issues of validity/infringement can only be dealt with by the relevant national court/s.

There will be a three month sunrise period to opt-out classic European Patents, which will commence when Germany deposits its instrument of ratification. Current estimates are that the sunrise period could commence on 1 March 2023 which means that businesses should be giving consideration to the question of opting out now. If a classic European Patent is not opted out of the UPC during this sunrise period, it will be at risk of a validity challenge in the UPC which could see it being invalidated across all participating Member States.

There is no fee to opt patents out of the UPC (though there will be administrative costs for doing so). Many businesses will wish to submit blanket opt-outs across their portfolio, but others may take a more nuanced approach, depending upon their assessment of individual patents. Key considerations will include the strength of the relevant patents, the potential benefit of pan-EU injunctions/financial remedies in a single court action vs. the risk of pan-EU revocation, cost, and considerations relating to levels of trust in the new, untested (and therefore uncertain) regime. The decision to opt out will involve a consideration of the following issues:

Who can file the opt-out? The opt-out must be filed by the owner of the relevant classic European Patent. Co-owners (and separate owners of different designations of the patent) must all agree to opting out a patent. Where there are unrelated separate owners of different designations, it is likely to be preferable to opt out the patent to ensure that they can continue to manage their enforcement activities separately.

An exclusive licensee cannot file an opt-out, but its interests should be taken into account when deciding whether or not to do so (there may be provisions in the licence agreement which impact upon the patentee’s ability to opt out without reference to the licensee).

When can the opt-out be filed? The opt-out can be filed at any time during the transitional period (and during the sunrise period referred to above) but it must be registered, at the latest, one month before the transitional period expires. After the end of the transitional period, it will not be possible to opt out a classic European Patent and it will be subject to the exclusive jurisdiction of the UPC from that point.

How long does the opt-out last for? The opt-out will have effect for the rest of the life of the patent. What makes the opt-out even more attractive for patentees is that it need not have permanent effect. Having opted their classic European Patent out of the UPC, they can decide to opt it back in again. This means that a patentee may opt a classic European Patent out of the UPC to avoid the risk of a pan-EU revocation, but opt it back in again if it later wishes to enforce the patent on a pan-EU basis.

However, once litigation has been commenced in respect of a classic European Patent, this will ‘fix’ jurisdiction going forward. Proceedings brought by an exclusive licensee would also ‘fix’ jurisdiction in this way. Similarly, the actions of the patent owner in opting out a patent will impact on the exclusive licensee’s ability to commence litigation in its potentially preferred jurisdiction.

This means that, where an action has already been brought before the UPC (whether pending or concluded) in respect of a classic European Patent, that patent cannot be opted out of the UPC, i.e., an action before the UPC is an absolute bar to opting out. Further, where an action has been brought before a national court (whether pending or concluded) in respect of a classic European Patent, it will not be possible to withdraw an opt-out in relation to that patent.

Once an opt-out has been withdrawn, it will not be possible to opt that patent back out again.

What due diligence is required at this stage? In addition to conducting an assessment of their patent portfolio, patent holders should take steps to check that ownership records are accurate, and to consider whether co-proprietors need to provide consent, as well as the impact on exclusive licensees.

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