Unitary Patent: costs

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The costs of a Unitary Patent and a classic European patent are identical from filing to grant. However, depending on the number of desired countries in which the granted patent is to be maintained, the costs may differ substantially between a Unitary Patent and a bundle of corresponding validated national patents. So the question is, at what point is a Unitary Patent more favorable than a classic European patent?

Renewal fees

In the case of a national patent, it is necessary to pay renewal fees directly to the respective national patent offices, based on the customary national rules. These national renewal fees differ in their amount for the individual countries. In the case of a Unitary Patent, on the other hand, a single renewal fee must be paid to the European Patent Office, which is based on the sum of the annual fees for Germany, France, Great Britain and the Netherlands. If validation is planned in a further country, the annual fees of the Unitary Patent are accordingly more favorable.

The figures below illustrate comparatively the development of the isolated and cumulative renewal fees of a Unitary Patent with a classic European patent validated in all participating 17 UPC member states.

 

Further Costs

In the case of a classic European patent, additional costs for translations into national languages, publication fees and costs for local service providers, which depend on the number of countries in which validation is to take place, are incurred after grant in addition to the renewal fees. These costs are minimized with the Unitary Patent, since a separate validation in the participating member states is not necessary. In addition, under special conditions, there are further savings possibilities in the system in the form of compensation for translation costs and reduced annual fees when a special licensing statement is declared.

As a rule of thumb: the greater the number of countries in which validation of the European patent is sought, the more favorable a Unitary Patent is in comparison.

Author: Patrick Hirschle

 

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Interplay between infringement and revocation proceedings in the Unitary Patent System

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In the Unitary Patent System, the Unified Patent Court (UPC) has jurisdiction over both infringement and revocation actions. However, under certain conditions, an infringement action and a parallel revocation action may be decided by different divisions of the UPC.

In the Unitary Patent System, claims for injunctive relief and damages arising from European patents can be enforced in several EU countries through centralized infringement proceedings before the Unified Patent Court (UPC). As a defense against such infringement actions, the validity of the patent may be challenged.

The validity can be challenged (irrespectively of whether an infringement action is pending) by means of an opposition against the European patent with the European Patent Office (within the opposition period). Apart from this, it is possible to file (even after opposition proceedings before the European Patent Office have been concluded) a national revocation action against a national part of the European patent (during the transitional period of seven years after the Unitary Patent System comes into force), and a revocation action before the UPC against the Unitary Patent or the parts validated in the member states of the Unitary Patent System. In addition, when an infringement action is pending before the UPC, the validity of the Unitary pPatent can be challenged by means of a revocation counteraction.

In the German patent system the bifurcation principle applies, according to which infringement and revocation actions are decided by different courts. By contrast, in most other European patent systems one and the same court can jointly decide on both infringement and validity. In the Unitary Patent System, these two principles are combined: On the one hand, the UPC has jurisdiction over both infringement and revocation actions, while on the other hand, an infringement action and a parallel revocation action may under certain conditions be decided by different divisions of the UPC. Namely, the local or regional division before which the infringement action is pending may, after hearing the parties, decide at its discretion to:

a) proceed with both the infringement action and the revocation counteraction while allocating a technically qualified judge,

b) refer the revocation counteraction for decision to the central division and suspend or proceed with the infringement action, or

c) with the agreement of the parties, refer the entire case for decision to the central division.

Thus, in cases a) and c), infringement and validity are decided by the same division, whereas case b) corresponds in a way to the German bifurcation principle. However, whether in particular the German local divisions, which are expected to receive most infringement actions in Europe, will choose alternative b) and thus relinquish competences assigned to them, may be doubted, but it remains to be seen how the courts will handle this in practice. Furthermore, the patent proprietor will in general not agree to alternative c), because he has already decided to file the infringement action with the respective local or regional division, and the transfer to the central division could delay the case.

The situation is more complicated if an independent revocation action is pending before the central division and the patent proprietor only subsequently files an infringement action before a local or regional division against the plaintiff in the revocation action, so that the revocation and the infringement proceedings are initially separated. In this situation, the plaintiff in the revocation action (defendant in the infringement action) may file a revocation counteraction in addition to its central revocation action. The central revocation proceedings are then in general suspended, and the local or regional division may proceed at its discretion as described above. For example, it may then reconnect the two actions according to options a) or c). However, in exercising its discretion, the local or regional division must take into consideration the status of the central revocation proceedings.

Finally, infringement proceedings before the UPC may also be suspended if there are pending invalidity proceedings before the European Patent Office or a national authority, at least when a decision in the invalidity proceedings may be expected to be given rapidly.

 

Local or regional division decides at ist discretion:Revocation counteractionInfringement action
a)ProceedProceed
b)Refer to central divisionProceed
b)Refer to central divisionSuspend
c) (with agreement of the parties)Refer to central divisionRefer to central division

 

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Introduction: What is the Unitary Patent System?

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The Unitary Patent System comprises, on the one hand, a new European patent with unitary effect in all participating EU Member States, and, on the other hand, a new Unified Patent Court (UPC) which will decide on these unitary patents, but ultimately also on all conventional European patents (with national validations, so-called “bundle patents”). After decades of planning, the system will thus for the first time create a quasi EU-wide patent right.

Patent protection in all participating EU countries

The goal of the unitary patent system is to establish a more uniform approach for granting, defending and, in particular, enforcing European patents in the various EU member states. The already centralized grant and opposition procedures at the European Patent Office (EPO) will remain unchanged for this purpose. The new system will add centralized post-grant infringement and revocation proceedings.

Under the new system, it will be possible to file a request for unitary protection at the EPO for each European patent, instead of validating the patent individually in several countries. The unitary effect will lead to protection in all participating EU countries and thus to a patent covering 24 EU member states (all except Spain, Poland and Croatia). Therefore, only one common annual fee is payable to the EPO to maintain protection in all these countries. The unitary patent will coexist with national patents and traditional bundle patents.

Thus, once the patent has been granted by the European Patent Office, the applicant will have the choice of whether to select the new unitary patent.

Impacts and transition period

However, it is important to note that the new patent system will not only affect newly granted patents. In addition to the new unitary patent, the new Unified Patent Court will also have exclusive jurisdiction over all bundle patents (and also supplementary protection certificates, SPCs). Therefore, all validations of existing bundle patents in countries that have ratified the UPC-Agreement will also be subject to the jurisdiction of the UPC by default.

During a transition period of at least seven years, patent owners can individually opt their patents out of the UPC system – by filing an opt-out request with the UPC. In that case, only national courts will continue to have jurisdiction over these patents. Patent owners can also re-enter under certain conditions after they have opted out by withdrawing the opt-out. During the transition period, it will also be possible for patents that have not been opted out to continue to be litigated in national courts, as an option.

When will the new system become operational?

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According to the current roadmap of the UPC Preparatory Team, the Unified Patent Court should start its work on June 1, 2023.

With the deposit of the instrument of ratification by Austria as the thirteenth member on January 18, 2022, the UPC has already entered into force provisionally according to the “Protocol to the Agreement on a Unified Patent Court concerning Provisional Application” (PPA). Within the framework of this provisional applicability, preparations for the operation of the UPC are currently underway. In particular, the UPC Administrative Committee has already officially confirmed the locations of the Court of First Instance and adopted the Rules of Procedure and the Table of Costs, which entered into force on September 1, 2022. Judges’ disbursement and finalization of the IT infrastructure are also taking place within the framework of provisional applicability.

For the full entry into force of the UPC, the deposit of the (already signed) instrument of ratification by Germany is still missing. As a “gatekeeper”, Germany is to deposit its instrument as soon as the Unified Patent Court declares that the necessary preparations have been completed. The deposit of the instrument is scheduled to take place in mid-February 2023.

As soon as Germany has deposited the instrument of ratification, the UPC will enter into force according to Art. 89 EPCÜ on the first day of the fourth month after deposit. Thus, the 3-month sunrise period will most likely start on March 1, 2023 and the UPC can enter into force on June 1, 2023.

Within the sunrise period, an opt-out can already be declared ahead of time in order to keep patents out of the Unitary Patent System and to prevent a central attack on the patent directly after the UPC enters into force.

  • January 2022

    Preliminary application of UPC starts with 13th ratification (Austria)

  • Beginning until end 2022

    Preparatory work

  • Beginning of 2023

    Deposit of German ratification document (expected mid of February 2023)

  • Sunrise period

    3 months, starting with the first of March 2023

  • 1st of June 2023

    UPC enters into force

    First day of fourth month after deposit

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Competence of the UPC

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In principle, from the entry into force of the agreement, the Unified Patent Court (UPC) will have exclusive competence in civil proceedings relating to European patents, Unitary Patents, supplementary protection certificates for products protected by such patents and European patent applications. The scope of exclusive competence includes, inter alia, actions for actual or threatened infringement and related defenses, actions for a declaration of non-infringement, actions for provisional and protective measures, actions for injunctions, actions for damages, actions for revocation and counterclaims for a declaration of invalidity, and actions against decisions of the European Patent Office relating to administrative tasks.

For actions relating to patents or supplementary protection certificates that do not fall within the exclusive competence of the court, the agreement states that national courts of the contracting member states continue to be competent.

During a transitional period of seven years from the entry into force of the agreement, national courts and the UPC are on an equal footing, and during this phase there is therefore no primacy of the UPC.

In addition, until one month after the end of this transitional period at the latest (which can be extended by a further seven years), patent proprietors have the possibility to exclude the exclusive competence of the UPC by means of a so-called “opt-out declaration”. This declaration can be withdrawn and thus the exclusion of the competence of the UPC can be cancelled. There are no fees for the opt-out declaration and it must be made by all patent proprietors jointly or by their representatives to the UPC’s office uniformly with effect for all states. Although it can be made at any time during the transitional period, it can no longer be made once legal proceedings relating to the patent have been instituted before the UPC. To take account of this circumstance, patent proprietors already have the possibility to make an opt-out declaration for their existing European patents and European patent applications during the so-called “sunrise period” before the entry into force of the agreement and thus before such proceedings can be initiated by a third party. The start of this period will be announced by the authorities and will last approximately three months.

If the patent proprietor makes an opt-out declaration, the European patent in question will no longer fall within the jurisdiction of the UPC and any litigation concerning that patent will continue to be brought before the national courts.

Any Unitary Patent or bundle patent for which the patentee has not made use of the opt-out declaration is subject to the jurisdiction of the UPC and must be heard by it.

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Structure and functionality of the UPC

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The Unified Patent Court (UPC) consists of a Court of First Instance, a Court of Appeal and a Registry.

Court of First Instance

The Court of First Instance comprises a central chamber sitting in Paris and a division sitting in Munich, as well as several local and regional chambers. All the panels of the Court of First Instance are multinational and composed of three judges.

The panels of the central chamber shall be composed of two legally qualified judges who are nationals of different Contracting Member States and one technically qualified judge. Each panel hearing actions against decisions of the European Patent Office relating to administrative tasks shall be composed of three legally qualified judges who are nationals of different Contracting Member States. The parties may agree that their dispute shall be decided by a legally qualified judge sitting as a single judge.

The panels of a regional chamber shall be composed of two legally qualified judges who are nationals of one of the Contracting Member States concerned and one legally qualified judge who is not a national of one of the Contracting Member States concerned. In addition, each panel of a local or regional division may, at the request of a party or on the panel’s own initiative, be assigned an additional technically qualified judge who has appropriate qualifications and experience in the technical field concerned.

The seat of the local division established at the request of a Contracting Member State shall be designated by the Contracting Member State in whose territory it is established. Each Contracting Member State may have no more than four local chambers. German local chambers shall be established in Dusseldorf, Hamburg, Mannheim and Munich.

A regional chamber shall be established for two or more Contracting Member States at their request. Those Contracting Member States shall designate the seat of the Chamber concerned. The regional chamber may meet at different places.

For actions for revocation, negative declaratory actions and actions against decisions of the European Patent Office relating to administrative tasks the central chamber has the exclusive competence. Infringement actions and requests for interim relief are to be brought before the local or regional chambers.

Court of Appeal

The Court of Appeal shall have its seat in Luxembourg. Each panel of the Court of Appeal sits in a multinational composition of five judges. Of these, three are legally qualified and nationals of different Contracting Member States and two are technically qualified, the latter being assigned to the panel from a pool of judges. In the case of actions against decisions of the European Patent Office relating to administrative tasks, the panel is composed of three legally qualified judges who are nationals of different contracting member states. Each panel of the Court of Appeal shall be chaired by a legally qualified judge.

Registry

A Registry shall be established at the seat of the Court of Appeal, headed by the Registrar, to perform the functions assigned to it by the Statute. The register kept by it shall be public. Annexes to the Registry shall be established in each chamber of the Court of First Instance.

 

 

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Opt-out

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With the entry into force of the Agreement on a Unified Patent Court (UPCA), the Unified Patent Court will have jurisdiction over actions for infringement or invalidity of classical bundle patents and a new Unitary Patent.

However, actions for infringement or for invalidity of a European bundle patent can be brought before the national courts as before during a transitional period of 7 years from the start of the Unified Patent Court Agreement, which can be extended to a further 14 years.

Until one month before the end of this transitional period, the jurisdiction of the Unified Patent Court can be explicitly excluded for European bundle patents granted or filed before the start of the UPC or during the transitional period (so-called “opt-out”). In this case, the European bundle patent will be judicially treated like a classical bundle patent. The exclusion applies for the entire lifetime of the European patent and from the date of entry in the Unified Patent Register.

Thus, owners have the possibility to withdraw a classical bundle patent or a European patent application from the access of the new Unitary Patent System by an opt-out.

In order to declare the exclusion of a classical bundle patent or a European patent application, a corresponding communication must be submitted to the registry of the Unified Patent Court via the so-called “case magagement system”. The communication can even be filed before the Unified Patent Convention enters into force in the so-called “sunrise period”. The sunrise period lasts until May 31, 2023. In this way, a bundle patent or a European patent application can be excluded from the Unitary Patent System even before the start of the Unitary Patent System.

The proprietor can withdraw from the exclusion of general jurisdiction at any time and make the European bundle patent accessible to the new patent system again (so-called “opt-in”).

The condition for an exclusion of a European bundle patent from the Unitary Patent System is that no action has yet been brought before the Unified Patent Court. Against this background, it may be advisable for owners of classical bundle patents to withdraw bundle patents from the new Unitary Patent System already during the sunrise period by an opt-out. If an action is to be brought before the Unified Patent Court at a later date, the owners can withdraw from an opt-out at any time by means of an opt-in.

We will be happy to provide you with customized advice on the strategic options!

 

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Strategic considerations

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The introduction of the Unitary Patent System paves ways for taking many different routes towards a European patent strategy.

Patent law and jursidiction

Multiple different choices can be made with regard to the nature of the patent right and with regard to the jurisdiction.

With regard to the nature of the patent rights, the Unitary Patent (UP) will coexist with national patents and utility models as well as with traditional European bundle patents.

Regarding jurisdiction, traditional European bundle patents can be kept in the jurisdictions of the established national courts by means of the opt-out or can be made accessible to the new Unified Patent Court (UPC). However, UPs will be in the jurisdiction of the UPC and national patents and utility models will remain in the jurisdiction of the national courts.

The UP can be combined with national patents or utility models, which allows to have the same technology be handled by different jurisdictions for the same states.

The UP can also be combined with traditional European patents, such as UP for the participating EU member states and traditional European patents for the non-participating EU member states and for non-EU EPC member states.

Instead of UPs, national and traditional European bundle patents remain available also for the participating EU member states.

On top of that, European divisional applications can be treated differently compared to their parent application, which allows for additional strategic options in terms of which patent right to choose and which jurisdiction to select for the same technology.

General information on the choice of patent law

To shine some light on which patent right to choose, please note the following general information. However, the exact choice depends on the particular case and should be made only after obtaining personal legal advice.

National patents and utility models enable to have the technology treated within the established national courts also beyond the end of the transitional period after which all European patents would fall in the jurisdiction of the UPC, unless opted-out beforehand during the transitional period. The securing of access to the national courts be established via the national rights in parallel with European or Unitary Patents by way of claiming priority, parallel national phase entries or parallel national filings.

For EPC states not participating in the new Unitary Patent System, the traditional European bundle patent would still be the choice in parallel with national patent rights. The traditional European bundle patent is also the choice for the participating EU member states when the patent strategy is to be kept as in the past, namely validate in several EPC states and manage national parts of the European bundle patent individually. This may be the choice for important patents, for which products and/or license agreements are available. This choice is also cheaper than the Unitary Patent when only up to 3 or 4 EPC states are to be validated and also makes sense when future dropping of individual national parts of a European patent is of interest. European bundle patents can be opted-out to avoid a combination of the disadvantages of the respective systems: Even though validation in several states has been performed, allowing for a central attack at the UPC and loss in all validation states at the same time by not opting out. Strong European bundle patents can be made subject to the UPC to contribute to jurisprudence of the UPC, while keeping the risk of a central revocation low.

The Unitary Patent has the potential to save costs, because the costs associated with payment of renewal fees and validation for multiple validation states can be avoided. However, the UP will only bring cost savings if one would otherwise validate the European patent in four or more EPC states. The more states one normally validates and the longer the lifetime, the larger the cost saving are with the UP. However, no dropping of validation states is possible for the UP, so that the costs savings also come with a loss in some of the strategic options. The UP might provide cost savings in case litigation cases in several different countries are expected. However, the UP has the risk of a central attack and loss of the UP in all states at once.

Thus, national patents and utility models may be combined with European or Unitary Patents, whereas the exact choice of the two types of European patent rights depends on various factors. We will be happy to advise you on finding the “right fit” to you.

 

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Costs and reimbursement in the new UPC system

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The parties to a proceeding must pay court fees for the proceeding. These shall be paid in advance unless otherwise specified in the Rules of Procedure. If a party has not paid the prescribed court fees, it may be excluded from further participation in the proceedings. The court fees for proceedings before the Unified Patent Court (UPC) consist of a fixed fee and a fee based on the value in dispute.

Court fees

For infringement actions and for actions for declaration of non-infringement, the fixed fee is EUR 11,000 and the fee depending on the value in dispute is between EUR 2,500 for a value in dispute of EUR 500,000 to EUR 750,000 and the maximum of EUR 325,000 for a value in dispute of EUR 50,000,000. The fixed fee for applications for interim measures and for nullity counterclaims is also EUR 11,000 each and the fixed fee for nullity actions is EUR 20,000. The upper limit for the fee dependent on the value in dispute for nullity counterclaims is EUR 20,000. The fixed fee for appeals is usually EUR 11,000.

Attorney fees

As in Germany, in proceedings before the UPC the costs of the legal dispute and other costs incurred by the prevailing party are generally reimbursed by the losing party. However, reimbursement only takes place up to a fixed upper limit if the costs are reasonable and appropriate and if there are no grounds of equity to the contrary. The upper limit of the costs to be reimbursed by the losing party in one instance is EUR 38,000 for a value in dispute of EUR 250,000 and EUR 2,000,000 for a value in dispute of more than EUR 50,000,000. In the event that a party is only partially successful or in the event of exceptional circumstances, the court may order that the costs be allocated on an equitable basis or that the parties bear their own costs. If a party has caused unnecessary costs to another party or to the court, it shall bear such costs itself.

Security deposits

In addition, at the request of the defendant, the court may order the plaintiff to provide reasonable security for the costs of the litigation and the defendant’s other costs.

 

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German patents in the light of the UPC

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In addition to the European patent with unitary effect (Unitary Patent), which also develops protection in Germany, the existence of a national German property right remains, which will presumably play an even more important, flanking role in the future.

Partial elimination of the double protection prohibition

According to the previous regulation of the IntPatÜG concerning the European bundle patent, if the subject matter of a German patent is an invention for which a European bundle patent with the same priority has been granted to the same inventor or his legal successor with effect for the Federal Republic of Germany, then the German patent, to the extent that it protects the same invention as the European bundle patent, no longer has any effect from a certain point in time after the grant of the bundle patent (double protection prohibition).

According to the new regulation of the IntPatÜG of 2021, the double protection prohibition only applies to those European bundle patents for which an exclusion from the Unified Patent System has been validly declared (so-called “opt-out”), since the Unitary Patent does not itself provide for double protection in relation to national patents. However, if the declaration of exclusion is withdrawn (so-called “opt-in”), the double protection prohibition remains in force and the German national property right remains ineffective in the overlap of the scope of protection.

As a result, for all Unitary Patents and all European bundle patents for which no explicit exclusion from the new Unitary Patent System has been declared, a national German patent granted after the start of the new system can also have effect in the overlap of the scope of protection alongside the European patent.

This opens up strategic advantages for owners.

Strategic advantages

At present, the new Unitary Patent System for nullity actions and for infringement actions is associated with a great deal of uncertainty. For example, it is difficult to estimate the expected case law and the conduct of proceedings in the new system. In contrast, there is a proven national German system consisting of the Federal Patent Court and the District Courts, which have developed a solid and predictable case law over many years. For plaintiffs, this means an increased level of security. In addition, Germany has the largest market within Europe and the participating states of the Unitary Patent System.

Owners of a German national patent and a European patent can thus choose the system for an action and, especially at the beginning of the new Unitary Patent System, can fall back on a proven action system which covers the most economically relevant area of Europe.

In addition, a German national patent provides a valuable fall-back position in the event that the Unitary Patent is not upheld. If the worst comes to the worst, a German national patent thus offers the possibility for a German court to judge patentability (differently) than the UPC for the market in Germany on the basis of previous proven case law.

Advantages of parallel German application

In addition, the German patent system has two other special features.

First, a German patent application can be filed in parallel with a European patent application from an international patent application (PCT).

Furthermore, after filing a German patent application, a request for examination can be deferred for a maximum of 7 years after the filing date.

Thus, there is the possibility to let a German patent application rest at comparatively low office fees and to pursue a Unitary Patent in parallel. In case of failure of the European patent application or loss of the Unitary Patent or new findings justifying an amended scope of protection, an examination request for the German patent application could then be filed at a later date, thus continuing to cover a substantial part of Europe to a relevant extent.

Looking into the future, it should be added that after the discontinuation of the option of opting-out after a transitional period of currently 7 years, it is intended that all European patents with or without unitary effect for the participating EU states will fall under the exclusive jurisdiction of the UPC and thus, at the latest, a German property right application will then be the only way to bring the invention under the proven jurisdiction of the German courts.

Thus, in view of the new Unitary Patent System, the German national patent is already gaining a strategic importance that should not be underestimated when deciding where to file an application, and applicants should be aware of this.

We will be happy to provide you with customized advice on the strategic options.

 

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