Navigating through the Unitary Patent System and the Unified Patent Court (UPC)
On 1 June 2023, the Unified Patent Court Agreement entered into force, and with it the EU RegulationsRegulation (EU) No 1257/2012 of the European Parliament and of the Council (hereinafter “Regulation 1257/2012”) and Council Regulation (EU) No 1260/2012. establishing the Unitary Patent System. On the same day, the Unified Patent Court (UPC) also started its operations.
Although Poland, like Croatia or Spain, has not joined the UPC Agreement, these developments and the activities of the UPC will certainly have a significant impact on the activities of Polish entities, especially entrepreneurs.
National patent, European patent (EP) or European patent with unitary effect (EPUE)
An applicant may apply for protection for the same invention under a national application filed with the relevant national patent office (e.g. when applying for protection in Poland – with the Polish Patent Office (PPO)) or under the European application with the European Patent Office (EPO). The most common practice for applicants is to first file a national application in “their” country (i.e. the country in which the applicant is established) and then file an application with the EPO within 12 months on a priority basis. The EPO and the relevant national office work in parallel and independently of each other. Both applications can get patent protection or be rejected. There is also the possibility that one authority will grant protection and the other will not.
Protection can be sought before the European Patent Office according to two procedures. The path so far has been to perform validations (translations) in selected countries after being informed of the granting of the European patent. The protection thus obtained is valid in countries chosen by the right holder from among the 39 countries of the European Patent OrganisationAlbania, Austria, Belgium, Bulgaria, Croatia, Cyprus, Czech Republic, Montenegro, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Latvia, Liechtenstein, Lithuania, Luxembourg, North Macedonia, Malta, Monaco, Spain, Netherlands, Norway, Poland, Portugal, Romania, San Marino, Serbia, Slovakia, Slovenia, Sweden, Switzerland, Turkey, United Kingdom. In addition, there is a group of countriesBosnia and Herzegovina, Morocco, Moldova, Tunisia, Cambodia, which under separate agreements recognise European patents on their territory. By fulfilling the relevant conditions, the right holder of the European patent can make its patent also valid in countries of its choice from this group. Validation in countries of the right holder’s choice still remains an option available to right holders. However, as of 1 June 2023, the second possible path to seek protection, in the 17 countriesAustria, Belgium, Bulgaria, Denmark, Estonia, Finland, France, Germany, Italy, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Portugal, Slovenia, Spain, Sweden that have agreed to this, is the European patent with unitary effect, where protection covers 17 countries simultaneously.
Such protection, called unitary protection, is an alternative possible instead of validation in these 17 countries.
The UPC will settle disputes in 17 countries, i.e. Austria, Belgium, Bulgaria, Denmark, Estonia, Finland, France, Germany, Italy, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Portugal, Slovenia, Sweden, with effect for all these countries. The UPC is empowered to handle disputes relating to unitary patents and European patents validated and remaining in force in countries that have ratified the UPC Agreement, unless the right holder has actively acted to exclude its patent from the competence of the UPC by filing a so-called opt-out. Issues of infringement and validity of validated European patents for which an opt-out has been filed will be decided by national authorities. In any case, for the first 9 months from the date of publication of the European patent, oppostition will be possible, filed with and adjudicated before the EPO.
Revocation of the European patent with unitary effect before the UPC will have the effect of revoking it in all of these 17 countries. For other European patents that are not European patents with unitary effect, patent revocations are carried out separately in each country before the national authority of the country where the validation took place.
Double protection for the same invention is not yet regulated in Poland. Such a situation may arise if national protection is obtained and at the same time in the EPO and validation is carried out in Poland. Such a scenario is possible with an existing European patent and with the European patent with unitary effect. The applicant may choose protection through a unitary patent and at the same time conduct validations in other countries of interest. This is not allowed in most countries of the European Patent Organisation. A previous positive decision to grant patent protection precludes the grant of a second one. This is the case in Germany, among others, where the validation of the European patent excludes protection derived from a national patent. At the same time, in Italy – this year and probably in connection with the entry into force of the unitary patent system, of which Italy is a member – the previous rules on the invalidity of a national patent vis-à-vis the European patent for the same invention have been amended and it is now permissible there to obtain dual protection – i.e. protection from the European patent (with unitary or national effect) and from the Italian national patent. Such a change is likely to ensure that key inventions are protected at national and European level. Among the 17 Member States where dual patent protection is not allowed, the revocation of the EPUE or other action will take place before a single authority – the UPC. In countries where the issue of dual protection is not regulated or such protection is allowed, court cases based on the EPUE will be decided before the UPC, while those based on a national patent will be decided before a national authority.
According to the Regulation 1257/2012 of 17 December 2012 implementing enhanced cooperation in the area of the creation of unitary patent protection, this Regulation should not replace the patent laws of the participating Member States and should give freedom to the applicant to choose the type of protection. The applicant should remain free to choose to apply for: (i) a national patent, (ii) the European patent with unitary effect, (iii) the European patent valid in one or more of the Contracting States to the EPC or (iv) the European patent with unitary effect valid additionally in one or more of the Contracting States to the EPC which are not participating Member States. It follows that the situation of double patenting for a national patent and the European patent with unitary effect depends on the national law of each country. The example of Italy shows that legal changes governing double protection can also occur in other of the 17 states participating in the Unitary Patent System.
It is not possible to simultaneously validate the same European patent in any state participating in the Unitary Patent System and claim the unitary effect of that European patent. By way of example, an applicant cannot validate, for example, in Germany and at the same time file an application for the European patent with unitary effect, as Germany is among the 17 countries of the Unitary Patent System.
In those countries where the issue of double patenting is not regulated, the right holder may face revocation before several authorities. A right holder who obtains the European patent with unitary effect and, at the same time, has another – national – exclusive right, relating to the same invention, will be a party to the proceedings before both the UPC and the national court. The two proceedings will be conducted separately.
UPC competence – 17 EU Member States (currently)
The UPC, at this stage, covers the territories of 17 Member States, which is less than half of the territories falling within the territorial scope of the European patent. In the future, however, the number of countries for which UPC has competence may change.
Structure of the UPC – many divisions, many countries
Structurally, the UPC comprises the Court of First Instance (CFI), the Court of Appeal and the Registry.
The Court of Appeal and the Registry are located in Luxembourg.
The Court of First Instance, on the other hand, is decentralised and consists of a central division and local and regional divisions.
CFI’s central division is based in Paris and has sections in MilanIt was previously assumed that this section would be based in London. and Munich.
The central division and sections have competence over solutions in a class according to the International Patent ClassificationInternational Patent Classification., according to the table below:
|(A) Human necessities (without SPCsSupplementary protection certificate.)
|(B) Performing operations, transporting
|(C) Chemistry; metallurgy (without SPCs)
|(D) Textiles; paper
|(F) Mechanical engineering; lighting; heating; weapons; blasting
|(E) Fixed constructions
|Supplementary protection certificates
In practice, this means that the subject matter of the patent will influence which central division or section of the court will have competence to decide the case. The aim is for the division handling the case to have not only legal competence, but also technical competence in the relevant technical field.
Local divisions, however, have been established in the following cities: Vienna (Austria), Brussels (Belgium), Copenhagen (Denmark), Helsinki (Finland), Paris (France), Düsseldorf (Germany), Hamburg (Germany), Mannheim (Germany), Munich (Germany), Milan (Italy), Hague (Netherlands), Lisbon (Portugal), Ljubljana (Slovenia). Currently, 1 regional division – Nordic-Baltic – has been established, which includes the following cities: Stockholm (headquarters), Riga, Tallinn, Vilnius.
In practice, this means that in most states participating in the Unitary Patent System there is a division of the court, while in countries outside the Unitary Patent System – such as Poland, Spain or Croatia – there are no such divisions.
A transitional period, the so-called opt-out (waiver of UPC competence) and opt-in (2023-2030 or even longer)
Ultimately, the UPC will be the sole court of competence for both EP European patents and European patents with unitary effect.
In contrast, there will be a transitional period for the first 7 yearsNote: this period may be extended by up to 7 years. of the operation of the UPC. During this period, actions may still be brought before national courts or other competent national bodies for infringement or invalidity of the European patent or actions for infringement or invalidity of a supplementary protection certificate issued for a product protected by the European patent.
In addition, during the transitional period, an EP right holder (including with SPC) as well as an EP applicant have the possibility to opt-out from the exclusive competence of the Court. This possibility does not apply to the EPUE. In practice, this means that, in the absence of the opt-out, either the UPC or the national court/authority will have exclusive competence when the first case is brought before such a court/authority. In contrast, in the case of the opt-out, only national courts/authorities will have competence to assess the patent in question. Withdrawal of such an opt-out will be possible at any time (opt-in). However, in light of the UPC Agreement, it is not entirely clear whether such an opt-out will have effect for the entire duration of the patent and not just for the duration of the transitional period (although the prevailing view seems to be that the effect will be for the entire duration).
In summary, in practice, this means that the default competent court is the UPC, but now and until 2030, an opt-out can be filed, in which case the national court will have competence. The opt-out cannot be filed after a claim has been filed with the UPC (too late). The opt-out can be withdrawn (by submitting the opt-in). The opt-out and the opt-in is filed by the applicant/patent holder – because he/she is the holder of the right, which is the European patent, EP, or European patent with unitary effect, EPUE.
Competence of the UPC – not only European patents with unitary effect
The UPC’s competence is to adjudicate on European patents (EP) or European patents with unitary effect (EPUE), as well as supplementary protection certificates (SPC) based on the said patents, with regard to:
- 1.1. actual or threatened infringements, counterclaims for licences;
- 1.2. provisional and protective measures and injunctions;
- 1.3. declarations of non-infringement;
- 1.4. revocations;
- 1.5. counterclaims for revocation.
In addition, the UPC will hear cases:
- 2.1. for damages or compensation derived from the provisional protection conferred by a published European patent application;
- 2.2. concerning the use of an invention prior to the granting of a EP or EPUE or concerning a right based on prior use of an invention;
- 2.3. for compensation for the EPUE licence under art. 8 of the Regulation 1257/2012;
- 2.4. concerning the decisions of the European Patent Office arising from its administrative tasksAs indicated in art. 9 of the Regulation 1257/2012..
Thus, at first glance, the broad scope of the UPC’s competence is apparent, contrary to the intuition suggesting its competence only over the EPUE.
With the exception of the cases under point 2.4, the parties will be able to agree on the handling of the case at the division of their choice (including central division).
However, it can be assumed that such a situation will be rare and that the competent division will be determined based on the rules expressed in art. 33 of the UPC Agreement.
The rules for determining the division of competence depending on the type of case are (in a nutshell) set out in the table below:
|Type of case
|1.1, 1.2, 1.5*, 2.1, 2.2
|The local division where the infringement has occurred or is threatened to occur or the regional division in which that contracting Member State participates.
The local division where the defendant (one of the defendants) has residence or has its principal place of business.
*If a counterclaim is filed, the division concerned may:
(1) proceed with both the infringement action and the counterclaim for revocation and request the assignment of a technical judge
(2) refer the counterclaim for revocation to the central division for consideration and suspend or proceed with the action for infringement; or
3) with the agreement of the parties, refer the case for decision to the central division.
|The local division to which the territory in which the defendant/one of the defendants has residence or has its principal place of business or the regional division in which that Contracting Member State participates. If outside the territory of the contracting countries, the central division (or competent division where the infringement occurred/was threatened).
|Central division. However, if an action for infringement, between the same parties and concerning the same patent, is brought before a local or regional division, these actions may only be brought before the same local or regional division.
|2.4, as well as cases in which the territory of the country in question does not fall under the local/regional division
Languages of proceedings before the UPC – various possibilities, trend: towards the language of the patent grant (English, German, French)
There will be a number of procedural languages available before the UPC.
The starting point will be the languages of the local or regional division concerned. In contrast, the UPC Agreement provides for the possibility to choose the language in which the patent is granted in certain situations – primarily depending on the location of the parties and the linguistic competence of the adjudicating panel.
In the central division, on the other hand, the language of proceedings is the language in which the patent in question was granted.
Patent infringement and the assumptions of the UPC procedure – quick and effective protection for the right holder
The owner of the EP/EPUE, in proceedings before the UPC, may seek an injunction against a third party not having its consent, in relation to:
- regarding the product patent:
- placing on the market,
- importing or storing the product for those purposes;
- regarding the process patent:
- using a process,
- offering the process,
- In terms of a product obtained directly through the use of a protected method:
- placing on the market,
- using or importing or storing for these purposes;
- indirect use of the invention, understood as supplying (or offering to supply) to any person other than a party entitled to exploit the patented invention, means relating to the so-called “essential element” of that invention, when the third party knows or should have known that such means are suitable and intended for the practical application of that invention (exception: this does not apply to means that are “staple commercial products”; exception to the exception: unless there is a situation of inducement by the third party of the person supplied to engage in specific prohibited acts).
What is striking, therefore, is the broad catalogue of the right holder’s claims, which also explicitly includes indirect infringement. From the point of view of the Polish reader, it is worth noting that the issue of indirect infringement is not regulated in Polish law.
In a very simplified outline, the proceedings before the UPC will proceed as follows:
- written procedure (letter initiating the proceedings and letters covering the presentation of the parties’ positions);
- ancillary procedure (primarily preparation for trial);
- oral procedure (hearing);
- compensation procedure;
- procedure regarding cost provisions.
The aim is for proceedings before the UPC to be swift.
The UPC will also be able to apply a broad catalogue of measures to protect (or assist in protecting) the right holder’s rights even before the decision finding an infringement is issued. For example, the UPC will be able to:
- order the preservation of evidence using provisional measures such as detailed description, sampling, physical seizure of products, relevant materials and implements and related documents;
- order inspection of the premises;
- prohibit, provisionally and where appropriate subject to a recurring penalty payment, continuation of the alleged infringement or allow them subject to the lodging of guarantees to compensate the right holder;
- order the seizure or delivery up of products suspected of infringing a patent;
- order a precautionary seizure of movable and immovable property belonging to the alleged infringer, including blocking of bank accounts and other assets belonging to that person;
- order a party not to remove or dispose of any assets located within its competence regardless of whether they are within the competence of the Court.
In addition, the UPC will be able to order the production of evidence under the control of the opposing party or a third party.
In relevant situations, the UPC will be able to decide on a particular measure even before the start of the proceedings on the merits of the case, thus also immediately after receiving the letter initiating the proceedings and even without hearing the other party.
The judges of the UPC will include not only legally qualified judges, but often also those technically qualified. The UPC is intended to ensure that proceedings are conducted swiftly by experienced and qualified judges who hold expertise and appropriate training for patent litigation – including: judges competent in the specific fields of technology to which the patent relates.
Declaration of non-infringement and protective letters (although not for everyone)
A third party wishing to start using a particular solution, after having contacted the right holder and no response from it within one month, will be able to bring an action for declaration of non-infringement. This is intended to provide protection to a third party who may be accused of patent infringement. Such an action will seek a judgment from the UPC confirming that the solution in question does not infringe the patent/SPC.
In addition, the possibility of filing a so-called protective letter is provided for, but not by everyone – the circle of entities in this case has been limited to those entitled to initiate proceedings under art. 47 of the UPC Agreement, and only if there is a suspicion that provisional measures may be requested against them. However, this limitation is not entirely clear – art. 47 of the UPC Agreement first mentions the patent owner and the holder of the exclusive licence as being entitled to bring an action, which, from the perspective of protection against provisional measures sought by, for example, the owner of another patent, would require the potential infringer to be both the holder of its own patent or its own exclusive licence. Perhaps, however, the possibility for entities other than the patent owner or exclusive licensee to file protective letters should be seen in para. 6 of art. 47 of the UPC Agreement, which provides that “Any other natural or legal person, or any body entitled to bring actions in accordance with its national law, who is concerned by a patent, may bring actions in accordance with the Rules of Procedure”.
With a strict, narrow understanding of the entities entitled to file a protective letter, it will be possible in practice that a protective letter could not be filed by an entity without a unitary patent who, for example, expects to initiate proceedings before the UPC due to proceedings in other countries. As a general remark, it is worth noting that only the practice of the UPC will bring concrete information in this regard. The necessary interpretation of the provisions of the UPC Agreement will then also take place.
For example, it will be possible to include in the protective letter arguments for the rejection of requests for provisional measures. Thus, the UPC receiving, for example, an action together with requests for preservation of evidence, will have the opportunity to familiarise itself with the arguments of the alleged infringer, which may significantly increase the defendant’s chances for a decision to not apply provisional measures. Such a letter will have to be filed in the language of the patent in question, the infringement of which could potentially be raised. The letter will be subject to a fee of EUR 200 for filing and storage for six months. There is a fee of EUR 100 for extending the storage of the letter. On the other hand, if provisional measures are requested, such a letter is forwarded to the competent panel. Protective letters are not made publicly available.
Settlements before the UPC
The UPC agreement is to promote quick resolution of disputes by the parties themselves through settlement. A settlement will be possible at any time during the proceedings, with confirmation of such settlement by the UPC.
However, it should be noted that such a settlement will not be able to result in the revocation or limitation of a patent.
Polish entities before the UPC – new possibilities to claim protection and the need for increased vigilance regarding the patent clearance of products when operating in EU markets
Although, as mentioned in the introduction, Poland has not joined the UPC Agreement, the UPC is not indifferent to Polish entities. There are primarily 2 situations to consider here:
- Polish holder of the EP or EPUE;
- Polish entity operating in the territories of countries that have ratified the UPC Agreement.
From the perspective of a Polish right holder, the UPC may appear as an efficient forum for claiming protection for its patent/SPC protected solutions. Particularly in the case of strong patents, it can be assumed that the UPC will provide quick and effective protection against infringements. In addition, the UPC could be part of a multi-territory enforcement strategy – for example, it will be possible to assert patent protection before the UPC, which will cover 17 Member States, and in parallel assert protection in proceedings before the courts of countries not covered by the UPC. In this way, the right holder will be able to obtain protection in a significant number of markets, with the cost stability that comes from covering 17 countries in a single proceeding. Although enforcing patent claims before the UPC and, at the same time, before the national courts in the country where the patent was validated may require increased effort and careful coordination on the part of the right holder, it creates new opportunities for the right holder to protect its technical solutions. Bearing in mind that the judges of the UPC will also include judges with a technical background, it must be assumed that the UPC will bring a new quality as to the assessment of the acquisition of a protected combination of technical features (and therefore the assessment of infringement) by the disputed solution. Before the UPC, the right holder has a certain degree of freedom to choose the division of the UPC before which it will bring an action. In addition, the UPC has a wide range of measures to temporarily safeguard the interests of the right holder. Although time will only tell, already at this stage it is to be expected that the UPC will be an affordable (also cost-wise – especially when covering several countries) court for obtaining patent protection.
Not only is unitary protection cheaper to obtain and maintain compared to patent validations in individual countries (even in a few countries, not to mention all 17), it is also far simpler to obtain, as it requires only one application – to the EPO (rather than several or a dozen validation applications in individual countries). Also, maintaining unitary protection from one year to the next (by paying one annual fee – to the EPO) is simpler than paying fees separately in several or more validation countries).
In terms of costs, a patent with unitary effect is, as mentioned, a significantly cheaper solution compared to traditional patent validations in 17 countries. Indicative estimates made by the authors of this article indicate that – once the European patent has been granted – obtaining unitary effect means, in practice, a cost of approximately EUR 1,500, while maintaining it for up to 20 years from the filing date – a cost of approximately EUR 40,000, including the official fees payable, as well as the cost of monitoring the timing and payment of these fees. In comparison, the cost of validating the European patent in the 17 states participating in the Unitary Patent System is approximately EUR 20,000, and the cost of maintaining protection for up to 20 years from the filing date is more than EUR 200,000 (including official fees for monitoring the timing and payment of these fees). Indeed: since June, we have seen a lot of interest among our clients in obtaining unitary protection. This is particularly the case for SME beneficiaries, for whom the low cost of such protection is a very important argument. This cost is further reduced by the possibility to file, together with the unitary effect application, a translation of the patent into Polish (even though Poland is not a member of the Unitary Patent System countries) and to use the same translation to validate the patent in Poland. In addition, the right holder, which is an SME from Poland, receives an amount of EUR 500 from the EPO as compensation for the translation costs of the patent.
In turn, Polish entities operating in the territories of countries that have ratified the UPC Agreement must take into account the risks associated with proceedings brought before the UPC, as well as the available ways to minimise/avoid them. In any case, so called FTO (freedom to operate) studies should be carried out prior to the introduction of a product into the EU markets in order to pre-establish the risks associated with potential infringements of intellectual property rights (including patents and SPC). When such risks arise, a product-specific strategy should be prepared that takes into account (by way of example) the possibilities of a non-infringement action, the need to file a protective letter, or the prospects of a central revocation of the European patent before the UPC. Failure to prepare such a strategy can, unfortunately, have drastic consequences for the provisional measures of a fast-acting UPC.
Representation before the UPC
In the course of the initiated proceedings, the parties are represented, according to art. 48 of the UPC Agreement, by professional attorneys. The representative may be a lawyer who is entitled to act before a court of a contracting Member State (so, for example, before a German court) or the European patent attorney who is entitled to act before the European Patent Office and to solve patent disputes. The European patent attorney acquires his/her qualification for patent litigation by obtaining the European Patent Litigation Certificate, completing legal studies in accordance with the relevant training standards in a Member State of the European Union and, within one year of the entry into force of the UPC Agreement, also by submitting a diploma from one of the relevant coursesAs indicated in the Rules on the European Patent Litigation Certificate and Other Appropriate Qualifications. Eligible attorneys can obtain support from patent attorneys who are not entitled to representation before the Unified Patent Court. Such individuals may also speak at the trial.
It is important to note that the power of representation before the Unified Patent Court is not limited to European patent attorneys from states participating in the Unitary Patent System. European patent attorneys from e.g. Poland or the UK may be included in the list of authorised representatives before the UPC and are thus entitled to represent the parties before the UPC.
A party is not obliged to be represented by an attorney in several situations. These exceptions are: appeals against the EPO decision on the registration of the European patent with unitary effect, the filing of an opt-out application, the filing of a request for legal aid and the payment of official fees.
From the perspective of Polish entrepreneurs, it will also be no less important to determine the optimal strategy for enforcing the EP or EPUE rights or defending against claims incurred against them before the UPC – involving a law firm experienced in conducting and coordinating cross-border patent litigation or an attorney’s office with European patent attorneys authorised to represent them before the Unified Patent Court.
In summary, the UPC represents both new opportunities to efficiently enforce the protection granted by the European patent and the need to pay particular attention to the exclusive rights enjoyed by others operating in the markets of countries that have ratified the UPC Agreement. Currently, there are 17 EU countries, mentioned earlier, but it is assumed that more countries will decide to join the Unified Patent Court Agreement in the future.