Pros and cons of unitary patents
With the Unitary Patent System due to start in the near future, it is important for applicants of European patent applications to consider whether to validate their European patents classically or, where possible, with unitary effect across the Unitary Patent System Member States. Here we provide a summary of the main advantages and disadvantages of unitary patents to help you decide whether unitary patents are right for you and how best to use this new option.
What is a unitary patent?
Traditionally, when a European patent is granted by the European Patent Office (EPO), it is validated individually in each EPC contracting state of interest to the applicant/proprietor. Each of those contracting states is then responsible for assessing infringement or validity of the European patent in that state.
The European Union has long sought to establish a single patent covering all EU Member States, and the introduction of the Unitary Patent System is a significant step towards achieving this aim.
Soon, proprietors of newly granted European patents will be given the opportunity to choose to validate their new European patents with unitary effect, as an alternative to validating these European patents in each EU Member State of interest to the proprietor individually. The result will be a so-called unitary patent having effect in all of the EU Member States participating in the Unitary Patent System.
It is therefore important that applicants of European patent applications are aware of the advantages and disadvantages of validating a newly granted European patent with unitary effect, so they can make an informed decision as to whether applying for a unitary patent is right for them.
Lastly in this section, not all EPC contracting states are members of the Unitary Patent System. Depending upon the choice of countries where patent protection is desired, it is likely that a European patent will be validated by a mixture of a unitary patent plus classical validation in countries not members of the new system. More detail is provided below under “Territorial scope”.
How can I get a unitary patent?
To validate a European patent with unitary effect, the proprietor will need to notify the EPO that it wishes to do so within 1 month of the European patent being granted. If the language of proceedings of EPO examination is English, then a translation of the granted patent into one other official EU language must also be filed.
Advantages of unitary patents
Validation costs and translation requirements
One of the most significant advantages of unitary patents is the reduced validation cost. When validating a granted European patent in each EPC contracting state of interest (“classical validation”), validation and translation fees are paid based on each contracting state in which the proprietor wishes to validate the patent. However, the overall cost of validating a European patent with unitary effect is expected to be much cheaper than classical validation, and the only translation requirement is that one translation into any official EU language other than that in which the patent was granted must be filed (with the caveat that this must be English, if the patent was granted in French or German).
Additionally, following an initial transition period, it is likely the requirement for a European patent to be translated when validating the patent with unitary effect will be dropped altogether, as a result of improvements in the accuracy of machine translations over time. This will give a further cost advantage.
For European patents validated classically, renewal fees have to be paid to the national patent offices of each EPC contracting state the patent is validated in. For proprietors who have chosen to validate their patents in several countries, these renewal fees can be high. However, for European patents validated with unitary effect, a single renewal fee, payable to the EPO, is all that will be required to renew the unitary patent. This may substantially reduce the cost of renewing the patent.
The renewal fee payable to the EPO has been calculated so as to be equivalent to renewing the patent in approximately four European countries using classical validation. Therefore, for proprietors validating their patents in more than four EU Member States, unitary patents may achieve a considerable reduction in costs.
However, proprietors who only wish to validate their European patents in four or fewer EU Member States should note that a unitary patent may fail to achieve any significant long-term cost benefits.
Assignments and licences
Traditionally, when a European patent is assigned or licenced to another party, the applicant/proprietor has needed to record this assignment/licence at each of the national patent offices of the EPC contracting states in which the European patent has been validated, should the proprietor wish the official records to be kept up to date.
For European patents validated with unitary effect, such an assignment/licence can be recorded centrally at the EPO, instead, delivering savings in terms of both time and money.
As mentioned above, translations of a European patent may need to be filed depending on the EPC contracting states in which the proprietor wishes to validate its patent.
Errors in any translations filed by the proprietor often go undetected until the proprietor tries to litigate the patent in the national courts of the EPC contracting states in which it has validated the patent, wherein the courts may enforce the patent based on the translation, rather than the patent as granted by the EPO. This means errors in translation can affect the scope of protection conferred by a European patent in the EPC contracting states in which the patent has been validated.
However, unitary patents will instead be enforced based on the patent as granted by the EPO, rather than based on a translation thereof. This means proprietors can be certain that unitary patents will have an identical scope of protection across all of the EU Member States participating in the Unitary Patent System. The translation filed with the request for unitary effect is not thought to have any effect on the scope of protection of the unitary patent.
Disadvantages of unitary patents
Risk of central attack
Perhaps the most significant disadvantage of validating a European patent with unitary effect is the risk of having the unitary patent revoked across all of the EU Member States participating in the Unitary Patent System simultaneously.
As explained in more detail in our related article about the Unified Patent Court, European patents are traditionally litigated in the national courts of the EPC contracting states individually. The decisions taken by those courts, including any findings of invalidity and subsequent decisions to revoke the patent, only apply in the EPC contracting state in which that court has jurisdiction. However, unitary patents will instead be litigated by the UPC, and any findings of invalidity by that court may result in the unitary patent being revoked in all of the EU Member States participating in the Unitary Patent System simultaneously.
It is common practice for proprietors of European patents to drop patents in EPC contracting states of low commercial interest to them as the renewal fees increase towards the end of the patent term.
However, there will be no such possibility of dropping a unitary patent in some of the Member States of the Unitary Patent System and not others. Instead, the proprietor will have to decide whether to renew the unitary patent, or not (i.e. abandon the unitary patent altogether).
However, it is worth noting that the proprietor may be entitled to pay lower renewal fees than it would otherwise be required to pay if it is willing to offer Licences of Right on its unitary patent to other parties.
Conventionally, if a national court of an EPC contracting state in which a European patent had been validated became aware of an earlier published national patent application in that state which prejudices the novelty of the European patent, then that national court could revoke the European patent insofar as it applied to that EPC contracting state. The European patent would continue to validly apply in the other EPC contracting states in which it had been validated.
However, there will be no such possibility for unitary patents, which will either be valid across the EU Member States participating in the Unitary Patent System, or not valid in any of these Member States at all.
Accordingly, a European patent validated with unitary effect is vulnerable to a finding of invalidity based on an earlier, conflicting national right in any one of the Member States of the Unitary Patent System. This may result in the unitary patent being revoked in its entirety, even if there are earlier, conflicting national rights, in, for example, only one of the Member States.
Despite being an EU initiative, unitary patents will only take effect in 17 of the EU Member States when the Unitary Patent System first comes into effect. These EU Member States are Austria, Belgium, Bulgaria, Denmark, Estonia, Finland, France, Germany, Italy, Latvia, Lithuania, Luxembourg, Malta, The Netherlands, Portugal, Slovenia, and Sweden.
Other EU Member States may choose to join the Unitary Patent System in the future, and it is expected that as many as 24 of the current EU Member States intend to take part. However, the territorial scope of a unitary patent will not be amended so as to have effect in any EU Member States that join the system after the European patent was validated.
Additionally, Spain, Poland, and Croatia have all indicated they do not intend to join the Unitary Patent System, so proprietors with commercial interests in these three EU Member States may still need to validate their European patents in these countries separately.
Similarly, unitary patents will not take effect in non-EU contracting states of the EPC, such as the UK and Switzerland. It will therefore only be possible to validate a granted European patent in these countries using classical validation.
The diagram below provides an overview of the expected state of the European patent system when the Unitary Patent System first comes into effect. In this diagram, countries are grouped according to whether they are (i) contracting states of the EPC only, (ii) contracting states of the EPC and Member States of the EU with no current intention to join the Unitary Patent System, (iii) contracting states of the EPC and Member States of the EU in enhanced co-operation with each other that will not be part of the Unitary Patent System when this first comes into effect but intend to join at a later date, or (iv) contracting states of the EPC and Member States of the EU in enhanced co-operation with each other that will be part of the Unitary Patent System when this first comes into effect.
Germany has been highlighted as it will be part of the Unitary Patent System when this first comes into effect, although it has notably not yet formally ratified the UPC Agreement. In fact, it is German ratification that will trigger the sunrise period, which will lead to the UPC Agreement entering into force.
Poland has also been highlighted as this country is involved in enhanced co-operation with many of the other EU Member States, but does not intend to join the Unitary Patent System, unlike its counterparts.
As an example, if a proprietor of a European patent wishes to validate its patent in the UK, France, Germany, and Spain, there would be two options available. Firstly, the proprietor could validate the patent in these four countries classically. Secondly, the proprietor could validate the patent classically in the UK and Spain, whilst obtaining a unitary patent to cover France, Germany and the other 15 Member States of the Unitary Patent System.
As a second example, if a proprietor of a European patent wishes to validate its patent in the UK, France, Germany, the Netherlands, and Ireland, there would be two options available. Firstly, the proprietor could validate the patent in these five countries classically. Secondly, the proprietor could validate the patent classically in the UK and Ireland, whilst obtaining a unitary patent to cover France, Germany, the Netherlands, and the other 14 Member States of the Unitary Patent System. However, if Ireland were to ratify the UPC Agreement (which it is expected to do in the future) before this European patent was granted, then the unitary patent would cover Ireland, as well, and thus the patent could be validated classically in the UK, and with unitary effect to cover France, Germany, the Netherlands, Ireland and the other Member States of the Unitary Patent System.
Lack of clarity concerning SPCs
It is currently unclear whether a proprietor will be able to obtain a Supplementary Protection Certificate (SPC) on a unitary patent.
SPCs are rights granted by national patent offices to extend the term of a patent to account for time taken for products made in accordance with the invention to obtain regulatory approval. SPCs are particularly important in the pharmaceutical industry, for example.
The European Commission is thought to be investigating the possibility of creating a form of unitary SPC, but this is still a work in progress and it is therefore unclear how SPCs can be obtained in EU Member States participating in the Unitary Patent System when a European patent is validated with unitary effect.
No possibility of opt out
Under certain circumstances, existing European patents and patent applications can be opted out of the jurisdiction of the UPC, at least during a transitional period of at least 7 years. However, the UPC will have sole jurisdiction for cases concerning unitary patents, and there will be no possibility of opting such patents out of the jurisdiction of this new court.
This means there will be no option to litigate unitary patents in the national courts of the Member States of the Unitary Patent System. Instead, unitary patents will have to be litigated in the as yet untested UPC.
Assignments and licences
European patents classically validated in each EPC contracting state of interest to the proprietor can be assigned or licenced in one such contracting state independently of the other EPC contracting states in which the European patent has been validated.
However, it will not be possible for a proprietor to assign a unitary patent in some of the Member States of the Unitary Patent System and not others. Instead, the proprietor will only be able to assign the unitary patent as a whole.
Nevertheless, the proprietor will remain able to licence the unitary patent in some of these Member States independently of the others.
Unitary patents as property rights
The national laws of the Member States of the Unitary Patent System will be applied to the unitary patent insofar as these relate to treatment of the unitary patent as a property right. The nationality or place of business of the first named applicant/proprietor will determine which Member State’s national law is to be applied.
This creates an additional consideration when naming the applicants of a European patent application, given that the order in which the applicants are named does not affect the rights in European patents validated classically.
It should also be noted that, if the applicant/proprietor is not resident in any of the Member States of the Unitary Patent System and does not have a principal place of business in any of these countries either, then German law will be applied as the relevant national law for the treatment of the unitary patent as a property right.
There are lots of advantages and disadvantages associated with validating a European patent with unitary effect, and it will be extremely important for applicants of European patent applications to consider whether unitary patents are right for them.
With the start of the Unitary Patent System believed to be just around the corner, Schlich is happy to discuss the possibility of obtaining unitary patents with you to help you make the right choice for your European patent portfolio.