Despite criticism from the European industry, patent lawyers and judges, the European Parliament has now approved the Unitary Patent (UP) Regulation and associated legislation for a European Patent Court (EPC). Even though it remains for the legislation to be formally ratified, the new patent system is expected to come into effect and heralds fundamental changes to both patent prosecution and litigation in Europe.

Participants  

Participants in the system are the member states of the EU, i.e., the 25 member states, but without Italy and Spain. Both Italy and Spain have challenged the new system before the European Court of Justice (ECJ), but the challenge is given little chance of success. The system does not cover contracting states of the EPC which are not members of the EU, such as Switzerland.

European Patent with Unitary Effect

Patent applicants will be able to request that their European patents have “unitary effect” across 25 EU member states, rather than a bundle of national patents, as it is the case for the present European patent. The European Patent Office will be in charge for that unitary patent and the granting proceedings will basically follow the rules of the EPC as applicable to the present European Patents.

European Patent Court

A new court will be created that will have jurisdiction to decide issues regarding present European patents as well as the new unitary patent. In contrast to the current system of litigating on a country-by-country basis, under the new system a single court will have the authority to grant EU-wide injunctions, damages or other relief. In addition, freedom to operate across the EU can be obtained by a single set of invalidity or non-infringement proceedings.

Structure of the New Court

The European Patent Court will be composed of national and regional divisions across the EU.  It will have its central division in Paris with secondary offices in Munich and London. This centralized division will mainly hear invalidity actions and infringement cases against non-EU defendants.

Co-Existence of National Systems and “Opt-Out” System

Patent applicants will not necessarily need to request the unitary effect for their European patents. To use the national systems the applicants will have to “opt out” of the new litigation system. This will be possible during a transitional period of seven years after of the new system goes into effect. Also, national patents will still be available, as well national patent litigation (for national patents) and also for opted-out European (unitary) patents.

Characteristics of the Proceedings  

The procedural rules at the European Patent Court are expected to be significantly influenced by existing continental laws. The proceedings will largely be in writing. It is expected that hearings will seldom last longer than a single day and that a first instance decisions will be handed down within 14 to 16 months from the filing of the complaint. There will likely be a right of appeal which should typically add an additional 14 to 16 months to the proceedings. Witnesses may be summoned to appear at the hearing, and expert evidence may be provided either by the parties or by an expert appointed by the court. In compliance with the continental legal concepts there will be no discovery as it is known in the United States. Disclosure of specific evidence under the control of another party may, however, be ordered by the court.

Role of European Court of Justice (ECJ)

The ECJ will not be involved as an appellate court. Nevertheless the new patent court may refer questions of EU law to the ECJ, as national courts can do at present, but the ECJ has no new competence over questions of substantive patent law.

Costs

The unitary patent may reduce translation costs, although in many of the key countries these have already been eliminated by the London Agreement. Other key costs such as annual renewal fees have not yet been determined. For patentees engaged in litigation, the litigation system should reduce costs in comparison to the aggregate cost of multijurisdictional litigation.

Concerns

It is likely that many patentees will opt out and continue to use the national systems until there is enough experience with the new unitary patent system to establish its reliability and efficiency. A main fear expressed by the industry is that although the court procedures (amongst the divisions of the European Patent Court) may be the same, existing national practices will remain, including the German tradition of bifurcating infringement and validity and granting pan-EU injunctions more liberally than elsewhere based on infringement alone. Since the divisions of the new court will be spread over the EU, patent enforcement may often require international litigation teams. It is thus also expected that the new system will cause some reorientation of the legal profession in the EU.