8 Feb 2022 | UPC

Getting your patent portfolio ready for the UPC – What you need to know in a nutshell

After a long journey and many setbacks, it now appears very likely that the European Unitary Patent system will come into effect – and it will do so sooner rather than later, probably in mid to end 2022 or the beginning of 2023. Here we provide an overview of and some recommendations on how to prepare your European patent portfolio for the new system, in particular in view of the opting out options.

What is the Unitary Patent system?

The Unitary Patent system comprises a new European patent with unitary effect in all participating EU member states, and a new Unified Patent Court (UPC) to rule on these Unitary Patents, but ultimately also on all (conventional) European bundle patents granted by the European Patent Office. After decades of discussions and planning, the system will therefore provide, for the first time in history, a quasi-EU wide patent right. 

The purpose of the Unitary Patent system is to establish a simplified and centralized approach to the obtaining, enforcing, and defending of European patents in multiple EU countries. The traditional, centralized grant procedure and post-grant opposition procedures at the European Patent Office (EPO) will not change. However, the new system establishes centralized, post-grant infringement and revocation procedures through the Unified Patent Court (UPC). Instead of validation in multiple countries individually, in the new system it will be possible to file a request for unitary protection for each European patent with the EPO. The unitary effect establishes protection in the participating EU countries – a single patent covering 25 EU member states (all except Spain and Croatia). This means that only one common renewal fee is to be paid to the EPO to maintain protection in all those countries. The Unitary Patent will coexist with national patents and conventional European patents, and the different types of rights have their respective advantages and disadvantages.

Current status of the Unitary Patent system   

The system requires ratification in 13 member states to come into effect, among them France, Germany and Italy. Currently, there have been 16 ratifications, including from France and Italy. The parliamentary process in Germany was successfully completed in summer 2021 and the only missing step is the formal implementation by the German government. The UK, formerly a strong supporter of the Unitary Patent system, has left the EU and has filed a withdrawal of ratification. The UK will thus not participate in the Unitary Patent system. 

The Protocol on Provisional Application came into force on Jan. 19, 2022, and allows the preparations of the court system and the IT infrastructure as well as the selection of the judges to be finalized.

What you need to know now   

Even though the exact timetable is yet unclear, with the Unitary Patent coming into effect probably in less than a year from now, we think this is a good time to get your patent portfolio ready. This includes decisions on your existing (granted) European patents, pending European applications that proceed to grant after the system has started, as well as contracts and agreements involving them.

How does one obtain a Unitary Patent?

Unitary protection can be achieved by request of the patent proprietor(s), post-grant in the participating EU member states. The request must be filed within one month of the grant of a European patent and is free of charge. During a transitional period of a maximum of 12 years, if the application is in English, a complete translation of the specification into one other EU language needs to be provided. If the application is in German or French, a translation into English is required. The Unitary Patent will cover the territory of all signatory states at the time of filing the request (see attachment), and it is possible to have both the Unitary Patent and in parallel validations of the remaining conventional European patent bundle for states outside the system, such as for non-EU states or non-participating EU member states. But it is not possible to have a Unitary Patent and, on top, validate in the same proceedings a European bundle patent in one of the UPC member states, such as Germany. 

What about Supplementary Protection Certificates (SPCs)?

In the fields of pharmaceuticals and plant protection agents, any product needs to go through extensive market authorization procedures, which may result in an effective loss of patent term. In the EU, so-called SPCs are IP rights that grant an additional patent term of up to 5.5 years after expiry of the basic patent, as a compensation for the loss. An SPC which is granted based on a European patent will also be subject to the new UPC system. Since there is no SPC with unitary effect, SPCs will continue to be granted on a national basis, even for European patents with unitary effect. Any post-grant procedures relating to SPCs, including infringement and revocation procedures, will, however, be within the exclusive competence of the UPC – just as the European patents for which such an SPC is granted. 

Are my existing European patents or SPCs affected?

Yes. It is important to know that the new patent system does not only affect newly granted patents. The new Unitary Patent Court will also have exclusive competence for all existing European patents and SPCs. Hence, all validations of existing European patents and SPCs in countries that have ratified the UPC Agreement will, by default, become subject to the jurisdiction of the UPC. However, during a transitional period, patent owners can remove their patents individually from the UPC system – the so called “opt-out” request. Therefore, for a transitional period, patent owners can decide for their patents on a case-by-case basis to either use the new system or to request that their European patents are removed from the new system by “opting out”. Patent owners, under certain conditions, can also opt-in again, after having opted out, by withdrawing the opt-out.

What is the time limit for opting out?

During a transitional period of seven years from the start of the UPC system (which could be extended by another seven years), patent owners can continue to request that their existing European patents and European patent applications are opted out, under certain conditions. While the opt-out can be declared at any time during the transitional period, as soon as any court proceedings relating to the patent are initiated before the UPC, the opt-out is no longer possible. This is of particular importance for centralized UPC revocation proceedings. Therefore, during a limited time period before the Agreement comes into force (the “sunrise period”, see below), patent owners have the option of pre-filing an opt-out request for their existing European patents and European patent applications before such proceedings can be initiated by a third party. This can serve to avoid a central attack on your European patent.

What is the "sunrise period"?

The “sunrise period” is a time period starting before the Agreement is actually in force. It gives patent owners the opportunity, should they wish to take it, to pre-file an opt-out request so that the opt-out is effective at the time when the Agreement enters into force. The sunrise period will start when at least 13 signatory states (including Germany, France and Italy) have: (i) signed the Protocol; and (ii) informed the Depositary that they have received their parliament’s approval to ratify the Agreement or have ratified the Agreement on the UPC. Currently, the sunrise period is expected to begin in mid to late 2022, but may also be delayed by a few months. The start of the sunrise period will be announced by the authorities and will last about three months.

What is the impact of opting out or staying in the new system?

Any European patent under the jurisdiction of the UPC, meaning any Unitary Patent and any not opted-out bundle patent, must be litigated at the UPC. The patent can be enforced in a plurality of European countries through a single procedure before the UPC. However, with central enforcement, there comes the risk of a central attack, i.e. a central revocation action brought against the patent. This also applies to existing conventionally validated European patents that have not been opted-out.

By opting out of the system, the respective European patent will not be under the jurisdiction of the UPC, and any litigation concerning the patent will proceed on a national level, as today. Opting out is possible as long as the European patent has not been used in litigation under the UPC, be it by actively filing an infringement action, or passively through a revocation action or an action for declaration of non-infringement being filed against the patent. This is why the decision about the opt-out should preferably be made during the sunrise period.

How can a European Patent or SPC be opted out?

Opting out can be effected by completing an online request via the UPC Registry. There is no official fee to be paid. 

It is important that opting out is requested by all (true) proprietors together, bearing in mind that the true proprietor may be different from the registered owner and that a patent may have different proprietors in different designated states. It will not be necessary to update the register, but it is important to coordinate with all co-proprietors and obtain the approval of possible licensees. The European patent can only be opted out as a whole, with effect for all designated states.

How to decide whether to opt-out or not

There are different strategies, with the two “extreme” approaches of opting out all European patents, European patent applications and SPCs in a patent portfolio or opting out none.

Not opting out gives patent owners the possibility of immediately using the new system, i.e., asserting their patents at the UPC and obtaining European-wide injunctions and related relief. However, this also makes patents vulnerable to a central attack.

Opting out all European patents, European patent applications and SPCs provides patent owners with the certainty that they can continue to use the European litigation systems, on a national level, as they do today and with which they are familiar. As long as no actions are pending on a national level for a particular European patent, patent owners are free to opt in again when they decide that they want to assert their patents on a European level.

It is also possible to decide on an opt-out/stay-in strategy on a patent-by-patent basis, even for divisional applications in the same patent family, to test the system.

For developing a tailored strategy, some considerations may be:

  • If a patent is more on the defensive side but likely will never be actively enforced, it might not be worth the effort of going through the opting-out process.
  • Patents that may be useful for litigation on a Europe-wide basis should stay in.
  • If a patent owner wants to enforce a patent in a country where it is usually difficult to assert patents, staying in the system and using the UPC may be advantageous. 
  • Strong patents may be more valuable if they stay in the UPC system due to low probability of revocation. 
  • Weak patents should be opted out to avoid a revocation through a central attack.
  • Key patents or licensed patents that should be safeguarded from a central attack, might similarly be opted out. This particularly applies to SPCs.
  • Patents in a portfolio relating to the same technology can also be distributed between the new European-wide and the “old” national litigation system, taking advantage of both systems.
  • It may be worthwhile to diversify your options further by filing a divisional application at the EPO, so to allow for both a Unitary patent and a conventional European bundle patent with overlapping claim scopes. Similarly, you may want to think about double protection by also filing national patents in core European countries, such as Germany.
  • Licensees, in particular exclusive licensees, should be consulted about opting out or staying in, and licensing contracts may need to be updated to reflect the new options.
  • If you have shared ownership of European patents or SPCs, contact the other owners early to decide on a coordinated strategy with respect to opting-out.
  • Be aware that the register is public! Your opt-out choices may give your competitors clues as to what your crown jewel patents are.

Should I claim unitary protection?

For European applications that proceed to grant after the system becomes operational, additional considerations must be taken into account. There will be a choice of proceeding with the conventional bundle patent (with or without opt-out) or selecting a Unitary Patent with unitary effect throughout the participating EU member states. The considerations are similar to those outlined above, with some additional factors:

  • Costs: The annuity fees for the Unitary Patent amount to the accumulated annuity fees in Germany, the United Kingdom, France, and the Netherlands. Hence, you will get protection in all member states for the price of four. This can be very attractive if you usually validate in a large number of member states, but may result in extra costs if you are really only interested in fewer than four countries.
  • Translations: During a transitional period (of 6 to 12 years), a translation of the entire patent into one other EU language is required, which may add substantial costs for long patent specifications, unless you usually validate in countries that still require translations.
  • Flexibility: A Unitary Patent cannot be surrendered or sold for only some of the member states. The existing bundle patent is more flexible in this regard. 

For those applicants that are eager to apply for unitary protection and that receive an Intention to Grant (R. 71(3) EPC) after the sunrise period has begun, upon request the EPO will delay the grant decision until after the start of the Unitary Patent System.

There is no straightforward answer to the question of whether to opt-out or stay-in, or whether to apply for unitary protection, but the above may provide some basic guidance. We are happy to help you find a strategy specifically tailored to your patent portfolio.

Is there anything that you can already do now?

Most importantly: Think about your options and devise a strategy on whether and how to make use of the opt-out, and on whether and for which patents to apply for unitary protection. Again, we are happy to assist.

For new or pending PCT applications: Consider entering parallel DE or other national phase to have additional options for national courts for important inventions. For instance, DE national patents can lie dormant for up to 7 years before examination needs to be requested and so can provide strategic options during the first years of the UPC system.

New/pending EP applications: Opt-out during the “sunrise period” to see how the new system develops (opt-out can be withdrawn or the patent can still be validated as a UP)

Wherever possible, consider branching-off a German utility model to have an additional option for national courts and/or file EP divisional applications for a different strategy (e.g. one application within the jurisdiction of the UPC, one outside the UPC).

We will be pleased to answer your questions about the European Unitary Patent system at upc@boehmert.de!