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Big changes ahead for the patent system in Europe

EU rules aim to support more innovation in Europe by better protecting patent holders with the unitary patent and the Unified Patent Court

After many years of discussion and painfully slow negotiations, later in 2016 European Union (EU) member states could finally implement a radical overhaul of the patent system in Europe, introducing a new type of patent and a pan-European court to handle patent disputes.

This package of reforms will affect all patent users. It represents the biggest change to the patent system since the European Patent Convention was introduced in the 1970s, which allowed innovators to obtain patent protection across Europe through a single, centralised procedure run by the Munich-based European Patent Office (EPO).

Although the EPO mechanism has been immensely successful – with more than 250,000 patent applications each year – critics argue that the current system is too inadequate to support innovation in Europe’s single market in the 21st century, and a poor match for the US patent system.

They pointed out the high costs of obtaining and enforcing patents in Europe, and the fact the centralised EPO procedure stops when the patent is granted (with some exceptions). The right granted by the EPO – a “European Patent” – is, in effect, a bundle of national patent rights, individually administered by national patent offices, with disputes on each national component adjudicated by the relevant national court. The inherent duplication of renewal fees and (sometimes) national court proceedings can make patent protection unaffordable for many users.

A single patent for Europe

The latest reforms aim to change all that, with the centralised nature of the patent system being extended beyond grant of the patent. In contrast to the current arrangements, the unitary patent – as it is called – will be a single patent, valid across the territory of the participating EU states. The Unified Patent Court (UPC) will, in a single judicial procedure, issue pan-European decisions on patent infringement and validity disputes.

In many senses, the patent system in Europe will match what has been on offer in the US for years – a single patent for the whole economic bloc, with disputes decided by a single judicial system. Patents in Europe will at last be on an equal footing with those in the US.

David Sant

"One of the prime objectives of the reforms was to cut duplication and reduce costs, and to improve support for innovation"

David Sant, Pearl Cohen

For the system to go live, the agreement requires at least 13 EU member states to ratify it. By the end of January 2016, nine states had already completed ratification, with others expected in the coming months – so the system could be in operation at the beginning of 2017.

For those wary of the changes, old-style European patents will still be available and owners who choose these will be able to opt out of the jurisdiction of the UPC.

The UPC will hear disputes on patent infringement and validity involving both unitary patents and European patents which are not opted-out. It will be a court common to the participating countries, with its judgments having applicability in those countries and being enforced as if it were a decision from the relevant national court. It will be an institution of some considerable legal powers, with the capacity to award damages, issue injunctions or revoke patents on a European level – as well as making orders related to evidence.

Improve support for innovation

What does it all mean for patent users? Well, one of the prime objectives of the reforms was to cut duplication and reduce costs, and to improve support for innovation. Unlike the current system, in which annual fees on each component of the European patent are paid to national patent offices, the responsibility for administering the unitary patent will rest solely with the EPO for the whole 20 years of the patent, if maintained for that long.

Governments deliberately pegged renewal fees of the unitary patent at a level slightly lower than the total of the fees currently paid for a European patent covering four countries, in a move designed to make the unitary patent competitive with the classical European patent and to ensure a healthy uptake.

The unitary patent may strike some users as a very reasonable deal – for the cost of patent protection in four countries under the current regime, the owner of a unitary patent will have patent protection in an areas covering all participating EU states; some 28 countries, if they all ratify. In addition, for those patents worth renewing for more than just a few years, the savings increase during the life of the patent. Even taking account of a new requirement (for a transitional period) to file a translation of the granted patent, the unitary patent’s cost structure will represent a saving for many users.

Second, despite the success of the EPC, there are still important areas of patent law which are treated differently in different states. Computer-implemented inventions and software patents are one such area, with English courts applying quite different tests and criteria to those adopted by the EPO and other jurisdictions, causing legal uncertainty and disparities to be exploited by the sophisticated litigant. The UPC will provide not only a unified procedure – reducing (but not eliminating) the chances of “forum shopping” – it should improve the harmonisation of substantive patent law across Europe. At a time when patents in the area of computer-implemented inventions are becoming more difficult to obtain in the US, harmonisation of this area of patent law in Europe would be welcome.

Global effects

Moreover, it is hoped that the cost of patent litigation will come down, at least in some of the cases. Currently patent disputes are heard before national courts, meaning that if the dispute occurs in more than one jurisdiction, parallel proceedings are needed, with duplication of court fees and attorneys.

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Litigants before the UPC will however require a single legal team and one set of proceedings, eliminating some duplication. The UPC’s proceedings will be largely written, culminating in a one-day trial, with the entire proceedings completed in one year – a considerable improvement for litigants in some slow jurisdictions.

The long-term effects are difficult to predict, but some believe the impact of the reforms may be global. In addition to the cost savings for patent applicants and patent litigations, users will for the first time be able to obtain a patent valid across the EU with a single court to handle any disputes.

Together with recent developments in US patent law, it is possible that patent users from third-party countries may consider shifting patent activity from the US to Europe.

David Sant is a partner at the London office of Pearl Cohen and chair of the European Patent Litigation Group.

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