How to navigate Europe’s new Unified Patent Court?

Should you opt in or opt out? How will annuities and infringements be handled? What are the costs involved? We’ve put together a summary to help IP professionals manage the complexities of Europe’s new unitary patent system.

On 1 June 2023, the Unified Patent Court (UPC) will come into force in 17 European Union member states that have ratified its agreement. When a European (EP) patent is registered with unitary effect, i.e. as a unitary patent, it automatically and immediately becomes enforceable in all these countries.

The aim of the new system is to make it easier and more affordable for businesses to protect their inventions in the European Union. But the implementation of the new court raises several important issues that IP professionals should consider carefully.

The first and most important point to be aware of is the UPC’s sunrise period, which runs from 1 March 2023 until 31 May 2023.

During this time European patent holders can choose to opt out their patents from the jurisdiction of the UPC, keeping currently granted and pending EP patents only within the jurisdiction of the national courts. Existing EP patents and any pending applications are automatically included in the jurisdiction of the new court, unless opted out.

“The sunrise period is particularly important in the event of any proceedings in front of the UPC, as opting out is no longer possible once UPC proceedings have started,” says Papula-Nevinpat Director and European Patent Attorney, Folke Johansson.

“If you do not opt out any granted and pending European patents, then both the national courts and the UPC have jurisdiction over such patents during a seven-year transition period,” he says. “While opting in to the UPC is possible at any time, opting out can only be done once. After opting in, you cannot opt out again.”

There are no official fees for registering either an opt in or an opt out with the UPC.

How does the court work?

The Unified Patent Court is a true pan-European project.

Its central division is split between Munich and Paris, while regional and local divisions exist in most of the 17 participating member states. Judges are trained in Budapest, the court of appeals is in Luxembourg, and patent arbitration and mediation take place through offices in Lisbon and Ljubljana.

The UPC has exclusive jurisdiction over infringements, damages and revocations for opted in patents. Entitlements, compulsory licenses, national patents and opted out European patents are all outside the jurisdiction and competence of the UPC.

Most UPC local and regional divisions handle litigation in the native language of the country in question, as well as in English.

How are annuities handled?

The European Patent Office (EPO) will charge an annual fee for renewing a unitary patent. The fee will roughly correspond to the average cost of a patent annuity in Europe’s four largest economies.

“If you’re validating your patent in three countries or fewer, then it would likely be cheaper to handle these annuities through the national offices. If four countries or more, then the unitary patent is probably going to be cheaper,” says Johansson.

“If you want to cut annuity costs by dropping patents in certain countries, this is not possible with the unitary patent. When you pay an annuity, it automatically covers all the participating member states. If you fail to pay the annuity, you lose coverage in all the countries,” he says.

Where are infringements filed?

Infringement cases under the UPC are filed in the country where the infringement has taken place, or where the alleged infringer has their residence or place of business. If infringement occurs in many countries, then the claimant can choose in which local division or regional division the suit is filed.

“A typical scenario would be for an infringement claim – as well as a counterclaim for revocation – to be filed with a local or regional division,” says Johansson.

That division then has three options:

1. It can decide to handle both infringement and revocation.
2. It can refer revocation to the central division.
3. By agreement of all the parties, the division can refer both infringement and revocation to the UPC’s central division.

“The goal is for UPC proceedings to conclude within 13 months, which is relatively swift,” he says. “There are rules on recoverable costs, with cost ceilings based on the value of the dispute. For disputes valued up to EUR 250K, you can be reimbursed up to EUR 38K. If the value of the dispute is more than EUR 50 million, then you can be reimbursed up to EUR 2 million.”

Should you opt in or opt out of the UPC?

There is no one-size-fits-all answer to this question. IP holders need to decide on a case-by-case basis after evaluating the pros and cons from several different perspectives.

As stated earlier, the UPC is aiming to handle proceedings within 13 months. This duration should be benchmarked against that of the relevant local court when deciding to opt in or opt out.

“With its experienced patent-law judges and the support they get from technical judges, the UPC is is expected to deliver high-quality decisions,” says Johansson. “The court’s approach – such as accepting auxiliary and conditional requests – sets it apart from some national courts and promises potential benefits for patent holders.”

The UPC charges fixed fees of EUR 11K for infringement and EUR 20K for revocation suits, along with a fee for the value of the action if the value is more than EUR 500K. If the value is over EUR 50 million, then the court fee is capped at EUR 325K.

“Handling parallel enforcement actions in multiple jurisdictions would likely cost more than a single proceeding before the UPC,” says Johansson.

Carefully consider all the pros and cons

In conclusion, the new Unitary Patent System presents a significant change for IP professionals looking to protect their patents in the European Union.

The decision to opt in or opt out of the UPC’s jurisdiction requires a careful evaluation of the benefits and drawbacks from several perspectives, such as the number of participating member states, litigation costs, the duration of proceedings, and the potential risks of revocation.

The UPC offers several advantages, but the decision to opt in should be based on a thorough analysis of the entire patent portfolio and associated claim scope.

Watch also the recording of our IP webinar, Unitary patent system into force on 1 June 2023 – what you need to do now, here.

For any further questions, kindly contact our Folke Johansson, we are here to help you.