THE EUROPEAN UNIFIED PATENT COURT
A single European patent has been an ambition of the EU for over 40 years. In December 2012, the European Parliament and European Council approved the “EU unitary patent package” to establish:
(i) a European patent with unitary effect (see our Blue Sheet on the European Patent with Unitary Effect); and
(ii) a unified European patent court to decide European patent litigation.
The European patent with unitary effect (“EPUE”) will provide a single patent right in 26 of the 28 EU member states (the “participating member states”). The Unified Patent Court provides a centralised European patent litigation forum. As a result, costly multi-jurisdiction litigation can be avoided.
The UPC will open its doors when the UPC Agreement comes into force after ratification by 13 countries (including France, Germany and the UK).
Currently (May 2016), 9 countries, including France, have ratified the UPC Agreement. Although Poland and the Czech Republic have indicated they will not ratify the Agreement before it comes into force, there appears to be enough political momentum from the remaining countries to bring the Agreement into force.
The UK aim to ratify in 2016 and Germany began the ratification process in February 2016.
Logistics are a major factor in determining the timescale for the UPC. Some of the factors include: time to find new court buildings in various European locations, selection and training judges, as well as setting up IT systems. Progress has been made, and the UK government has signed a lease for the London location of the Central Division of the UPC. In addition, a Provisional Application Protocol was signed on 1 October 2015 to allow the early implementation of some aspects of the UPC.
The UPC Preparatory Committee has announced that it aims to “complete its [preparatory] work by June 2016 with a view to the UPC opening at the start of 2017.”
Unsurprisingly, EPUEs will fall under the jurisdiction of the unified patent court system. However, “traditional” European patents (i.e. EPO-derived national patents) and Supplementary Protection Certificates (SPCs) will also fall under the jurisdiction of the UPC.
There is a transitional period when owners of European patents and SPCs can opt-out from jurisdiction of the UPC. If the European patent application was applied for or the European patent or SPC was granted before the end of the first 7 years (with a possible extension to 14 years on review), the patent owner can opt-out. So, the opt-out will be available to all currently filed European patent applications and granted patents.
There will be no official fee for opting out of the jurisdiction of the UPC for “traditional” European patents and applications. This will come as a relief to patent owners, especially those with large European patent portfolios.
Eventually all European patents (traditional and EPUEs) and SPCs will fall under the jurisdiction of the UPC. So, the only way to litigate in the national courts after the transition period will be to obtain individual patents in each country (not via the EPO).
The Unified Court will be formed of a Court of First Instance, composed of a Central Division and local/regional divisions, and a Court of Appeal in Luxembourg. Referrals from the Court of Appeal will be heard by the Court of Justice of the European Union (CJEU), although it is hoped that this will be rare because substantive patent law in Europe is well established.
The Central Division will have a court in each of London, Paris and Munich, dealing with different technology areas: Life Sciences and Chemistry in London; Physics and Materials in Paris; and Mechanical and Engineering in Munich.
In addition to the Central Division, there will be a number of local/regional division courts based in the participating member states. The number of these courts is determined by the number of patent proceedings launched in those countries. Several countries can group together and open a regional court if a low number of patent proceedings are launched in these countries.
The local and regional courts will be formed by 3 legally qualified judges (one from the host nation and two from other participating countries). The Central Division will be formed of 2 legally qualified judges and one technically qualified judge.
Revocation actions and declarations of non-infringement for EPUEs, European patents and SPCs will be brought before the central division of the UPC. Infringement actions will be brought before the local or regional divisions of the UPC.
A counterclaim for revocation can be initiated when an infringement action is brought before the local or regional division. Similarly, a counterclaim for infringement can be initiated in any local or regional division when a revocation action is pending at the central division. In these scenarios, the local or regional division chooses either to:
(i) proceed with both infringement and revocation actions in the local/regional division. A technically qualified judge is appointed to the local/regional division;
(ii) refer the revocation action to the central court, and proceed with or stay the infringement proceedings in the local/regional division; or
(iii) proceed with both infringement and revocation actions at the central division.
Bifurcation of the proceedings occurs in the second scenario. Bifurcation is a concern for some because bifurcation can lead to parallel proceedings relating to the same patent occurring in different courts, in different countries and potentially in different languages. Not only could this raise the cost of litigation, but there is a concern that the different courts can interpret the claims differently. However, bifurcation will occur after the written proceedings stage (discussed in more detail later), and so it is thought that claim construction will be considered before bifurcation.
It is interesting that a counterclaim for revocation can stay infringement proceedings. The draft Rules suggest that a stay of proceedings should happen where there is a “high likelihood the relevant claims of the patent will be held to be invalid”.
It is also of note that a declaration of non-infringement pending before the central division can be stayed if an infringement action between the same parties is requested within three months of initiation of the declaration of non-infringement. It is unclear whether there are implications (e.g. estoppel) on an infringement action filed later than three months from initiation of the declaration of non-infringement.
There will be three procedural stages at the court of first instance:
(i) a written procedure;
(ii) an interim procedure; and
(iii) an oral hearing.
All three stages should be completed in around 12 to 15 months, potentially making the UPC a faster revocation forum than the EPO opposition procedure (especially at appeal stage).
The written procedure will take around 6 months from the date the initial claim is filed at the court. Typically, the Defendant will have 3 months to file a Statement of Defence (and optionally a counterclaim of revocation or infringement) after the initial claim of infringement or revocation is filed with the court. The time limits for a Reply and/or Defence to a counterclaim are shorter, typically just 1 month.
Once the written procedure has finished, one of the three UPC judges will hold an interim conference with the parties to: identify the main issues in dispute; clarify parties’ position on these issues; establish a schedule up to the oral hearing; and set a date for the oral hearing.
At the oral hearing, the presiding judge takes over management of the case. The oral hearing will include oral arguments, hearing and questioning of witnesses and experts, and questions from the panel of judges. Both the interim conference and the oral hearing will be open to the public and recorded.
It is intended that the oral hearing will be scheduled for just one day, although it is possible for large, say pharmaceutical cases, to take two days. This is a remarkably short time for the oral hearing because the UPC proceedings are designed to be front-loaded, with many of the issues raised and discussed before the oral hearing occurs. These proceedings are similar to the EPO proceedings and the specialist UK court (the Intellectual Property Enterprise Court).
The Appeal proceedings will also involve a written procedure, interim procedure and oral hearing. The Appellant will have 2 months from the written decision to Appeal and a further 2 months to substantiate the Appeal by filing their Grounds of Appeal.
The UPC Preparatory Committee launched a public consultation on the level of court fees, and the consultation closed on 31 July 2015. The consultation proposes to set the fixed‑based fee for an infringement action at € 11,000 and the fixed-based fee for a revocation action at € 20,000. The consultation also proposes that an additional value‑based fee is payable on cases with a value of more than € 500,000. The consultation proposes a tiered fee structure, with the value-based fee equating to around 0.5 to 1 % of the value of the case.
The value of the action is judged by the judge-rapporteur taking into account the value as assessed by the parties. The judge-rapporteur will make an order for the value during the interim procedure (after written procedure, but before the oral hearing).
This information is simplified and must not be taken as a definitive statement of the law or practice.