Progress for the realisation of the Unified Patent Court

The Unified Patent Court (UPC) is a proposed common patent court open for EU member states hearing cases regarding infringement and revocation of European patents (including the new Unitary Patent). If carried through, the Unitary Patent and the UPC represents significant changes to European patent law. In essence, it will create a single approach to patent protection and litigation across the participating EU member states.

As a non-member state, the UPC Agreement will not apply to Norway. However, the potential new uniform patent system could still be important for the considerable number of Norwegian businesses seeking patent protection in EU member states.

Previous challenges resolved

The launch of the unitary patent system is conditional on the ratification of the UPC Agreement by at least 13 EU Member States, of which France, UK and Germany were mandatory (as the three Member States with the highest number of European patents in the year preceding signature). As further described in our previous article about the UPC, this last condition has caused hurdles for the establishment of the UPC.

Firstly, due to Brexit, the UK withdrew from participating in the UPC. The UK was one of three mandatory member states to ratify the agreement. To solve this problem, Italy will replace the UK as one of the three mandatory states.

Secondly, in Germany, the German Federal Constitutional Court (Bundesverfassungsgericht) concluded in July 2020 that the German national legislation to confer sovereign powers on the Unified Patent Court was void on the ground that the German Parliament did not vote with the required majority for the transfer of sovereign rights. To solve this problem, the German Parliament again approved the necessary national legislation in November 2020, achieving the required majority. In turn, two additional constitutional complaints were filed, which were dismissed by the Court. Finally, in August 2021, the national legislation enabling Germany to ratify the UPC Agreement and the Protocol entered into force.

Recent developments bring the UPC closer to realisation

Following the necessary national legislation entering into force, Germany ratified the Protocol in September. This development was an important step to bring the Unified Patent Court one step closer to its launch. In addition, in October 2021, Slovenia ratified both the UPC Agreement and the Protocol. Due to these two recent ratifications, when we entered 2022, only one last ratification was necessary to reach the required 13 EU Member states in order for the UPC to enter the final phase of its set-up.

On the 18^th of January 2022, Austria ratified the Protocol and became the 13^th member state. Accordingly, the sufficient members states have now ratified the Protocol to commence.

A list of all members states who has ratified the UPC Agreement and the Protocol is available at the European Council's website.

Next steps before the UPC system enters into force

Following Austria's ratification, the General Secretariat of the Council of the European Union declared that the Protocol entered into force on the 19^th of January 2022. This marks the start of the next preparatory phase (the "provisional application phase"); the provisional application period. During the provisional application period, operational preparations will take place, such as adopting the secondary legislation (including Rules of Procedure of the UPC), the final configuration and testing of the electronic case management system and the recruitment of judges and administrative staff. The Preparatory Committee of the UPC estimates that these preparations will take about eight months.

When the necessary preparations are complete, the final ratification of the UPC Agreement will be deposited by Germany. The UPC Agreement will enter into force on the first day of the fourth month after the deposit, and the Court will open.

Effects of the UPC for businesses

Considering that it is building towards a launch of the UPC, patentees and their competitors are now assessing their preferred approaches towards Unitary Patents and the UPC going forward. Every patentee wanting to retain control over the use of their inventions will need to consider the implications of the Unitary Patent and the UPC for their business.

In particular, this means addressing the choice of jurisdiction for classic European patents. During a transitional period of seven years after the launch of the UPC, disputes concerning classical European patents may be litigated either before the UPC or the national courts of the member states of the UPC Agreement. After the transitional period, all classical European patents and Unitary Patents designated for UPC member states become subject to the exclusive competence of the UPC. However, proprietors will be able to opt-out European patent applications, European patents and supplementary protection certificates prior to the expiration of the transitional period.

Opt-out scheme for classic European patents

The system of opt-out means that the owner of classic European patents, patent applications and supplementary protection certificates will be able to opt these out from the jurisdiction of the UPC, prior to the expiration of the transitional period. The consequence of such an opt-out is that the patent or application will be subject only to the jurisdiction of the competent national courts. An opt-out can later be withdrawn by the proprietor and the patents in question will thereby be opted back into the jurisdiction of the UPC. There will be some exceptions to this "opt back", including if national proceedings have already commenced.

The UPC will have sole jurisdictions over Unitary Patents and patent applications, which consequently cannot be opted out.

Following this, businesses will be met with the choice of whether or not to opt-out. A number of factors could be considered in this regard, such as the potential benefits and disadvantages of enforcement and revocation in all participating EU member states, legal certainty in national court systems, the need to get familiar with the UPC system, the size of the patent portfolio and budget for monitoring and maintenance. Given the opt back-option, we would expect to see some businesses strategically opting out.