After many decades of work and planning, a significant development concerning European patents that is likely to have a big impact on owners and licensees of life science-related European patents (among others), is the introduction of the new Unitary Patent (UP) and the Unified Patent Court (UPC).

Both the UP and the UPC will apply in much of the EU and will come into operation on the 1st of June 2023. However, action is required in advance of a so-called “sunrise” period ending on 31 May. Although the UK will not be part of this new regime, it will have a material impact on owners and licensees of all European patents. It is therefore vital to get up to speed with what is happening, especially given the value of many life science patents to the businesses and institutions which own or license them. These measures are intended to harmonise the patent landscape across Europe, but in the process will add a new layer of complexity.

The summary below highlights only the main features of both the UP and the UPC and provides general information only. As you would expect, there are many detailed and complex rules which need to (and should) be consulted on a case-by-case basis.

Unitary Patent

The UP will have effect in those European Patent Convention states which are (i) part of the EU, (ii) have joined the “Enhanced Cooperation” process and thereby agreed that the EU Unitary Patent Regulations should apply to them and (iii) have signed and ratified the UPC Agreement.

Not every EU country has signed up but 17 have so far, including Germany, France, and Italy. The way the system will work is that upon the grant of a European patent by the European Patent Office (EPO) the proprietor will be entitled to request the issue of a UP covering all 17 countries.

It can still request “classical” European patents from the UK, Switzerland etc too, but not, for example, a European Patent which designates Germany). This request can only be granted on or after the date when the UP regulation comes into force, but early requests can be made now for patents which are proceeding to grant, and if a grant is imminent, a request can be made to delay grant until after the system comes into force on 1 June in a so-called “sunrise” period.

If such a request is made, the UP will be granted by the EPO and cover those states which have signed up for the new system at the date of registration of that patent. Once granted a UP will treated in its entirety as an indivisible property right.

It should be noted that there are detailed rules governing the specific national laws which will apply to dealings in each granted UP – including licensing and assignment. In general terms, the applicable laws which will apply to dealings in a UP will depend on the location or place of business of the applicant.

The question as to which national law will apply to dealings in a UP need to be considered carefully since national laws vary widely in relation to such matters. In relation to joint applicants, on the grant of a UP it will generally be the national laws of the first named applicant that will apply to any dealings in that UP.

This is a complex area however, and if no applicant (or joint applicant) has a place of business in an EU member state which has signed up for the UP (a US corporation, for example) then German law will apply. It is therefore vital that participants in any collaboration or joint venture which is likely to result in new joint European patent applications anticipate and provide for these new arrangements in their collaboration or joint venture agreement.

With regard to UPs in the context of life sciences, it should be noted that at the moment there is no proposed ‘Unitary’ Supplementary Protection Certificate (SPC), although this has been under discussion for 10 years and a Unitary SPC may well be created in the future. In the meantime, SPCs will continue to be applied for and granted on a country-by-country basis.

Unified Patent Court

The UPC will form a new international court for patent litigation in Europe and cover states that are both members of the EU and which have joined the new UPC regime by signing and ratifying the UPC Agreement. It will be a single court but sitting at first instance with 19 separate central, local, and regional divisions in multiple locations, with a second instance court based in Luxembourg.

It will have wide powers and cover actions for infringement, revocation (including by way of counterclaim) and declarations of non-infringement. It will not cover contractual disputes however, unless they are part of the defence to another action – for example, a defence of licence to an infringement dispute.

The new Unitary Patents will exclusively be litigated in the UPC. But so too will many existing and newly granted European Patents. However, in the case of these existing and future “classical” EPs, the proprietors may ‘opt out’ their patents (for the life of the relevant patent) from the jurisdiction of the new court. In that event, only national patent courts will have jurisdiction, as is the case at present.

If this is not done then from 1 June, when the UPC comes into force, the UPC and national patent courts will both have jurisdiction. This feature of dual jurisdiction is a recipe for jurisdictional disputes and forum shopping – especially since once an action has begun in the UPC, it should not be possible to act in the national courts, and vice versa.

For this reason, and with the possibility of revocation actions being started centrally in the UPC from 1 June, many patentees are actively considering taking advantage of the opt out sunrise period which is already in force (from 1 March). Hence, it would be wise to ensure that any opt outs are lodged before the 1 June start date.

It should be noted that all persons entitled to be registered as proprietors of these EPs must join the opt out process. One significant point here is that this includes, for example, the proprietor of the EP(UK), even though the UK is not a part of the new regime. And of course, different national designations may have different proprietors (e.g., for tax reasons), meaning that the logistics of opting out of an existing EP may be trickier than at first apparent.

Will the UP and UPC benefit businesses?

It is expected that there will be pros and cons in relation to the UPC. On the plus side, proprietors and licensees having the power to bring proceedings will offer the opportunity, with a single patent infringement action in the UPC, to obtain an injunction and/or damages across all countries that are part of the UPC.

On the downside, there is the possibility that one successful invalidity action in the UPC concerning an existing European patent (which is covered by the new regime) will invalidate the patent across all member countries in which it has been granted. This is in contrast to the existing European regime where a patent owner can take its chances in pursuing infringement actions in a number of national courts with the possibility of different outcomes in each jurisdiction, which may remain more attractive, especially for owners of valuable life science patents.

Effect on licences

It is important to note that the UP and the UPC will affect licences of European patents in a number of ways. For example, only the proprietor of European patents (and if co-owned, all proprietors) will be entitled to opt their existing European patents out of the UPC. However, licensees will have no right to do so.

Also, in relation to the UP, when European patent applications are ready to be granted by the EPO a decision has to be made as to whether a new Unitary Patent will be issued or not – another key decision which can only be taken by the patent proprietor and not a licensee.

Existing licence agreements are unlikely to have anticipated the UP/UPC and therefore need to be reviewed and, where necessary, amended – especially where a licensee has strong views on what is required with reference to the new regime to protect their interests.

New patent licences which concern European patents and patent applications should also consider these new arrangements and be drafted accordingly. For example, it may well be the case that a licensee of a potentially valuable European life sciences patent application does not wish a UP to be granted by the EPO. Such a licensee may also wish for any existing licensed European patents not to be subject to UPC jurisdiction and want the proprietor to take the necessary action.

Given the decision-making powers given to patent proprietors only, it is also vitally important for licensees to carry out due diligence to ascertain the true owner of licensed patents – which may or may not be the licensor. This due diligence with regards to proprietorship is also vital for participants in collaborations and joint ventures for the reasons highlighted above.

Summary

These are exciting times for European patents and time will tell whether these new arrangements will ultimately benefit businesses. Certainly, this has been the rationale for the new regime. In particular, will the UPC operate to streamline litigation in Europe and provide cost savings? Also, will a granted UP be a valuable and cost-effective asset?

One thing is clear: it is crucial that all businesses and institutions that are involved with European patents – including those in the life sciences sector – get up to speed with these new arrangements so they are in the best possible position to make sure that the new system works for them in the years to come.

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