The Unitary Patent and the Unitary Patent Court – How will it affect the market?

After Austria ratified the Provisional Application Phase Protocol on 18 January 2022, the UPC entered the preparatory phase on 19 January 2022, which and is expected to last for a minimum of eight months. The foundation for the UPC Agreement was agreed upon in 2012 by the EU and the European contracting states, and the system is finally expected to enter into force by the end of 2022 or early 2023. The system comprises a new form of patent protection and a new court to settle patent disputes in the contracting states.

A Unitary Patent can be applied for through EPO, as the current European Patent (EP). Within one month of the grant of an EP patent by EPO, the applicant can file a request for unitary protection. If the granted patent meets the additional requirements, the patent shall be granted with the same set of claims for all contracting states and the applicant will get the same patent protection across all the UPC Agreement contracting states. As EPO shall handle the application and grant procedures in accordance with the European Patent Convention (EPC), the current standards of patent searches and patent examinations will be continued. The UPC Agreement does currently not allow for the grant of unitary protection to supplementary protection certificates (SPCs), but the European Commission has initiated a public hearing as to whether SPCs should be made subject to unitary protection in the future.

The new UP will, as the name implies, have a unitary effect across the contracting states, meaning (i) equal strength and protection for the patent, (ii) that any transfer or limitation action will apply across all contracting states, and (iii) that enforcement of a patent in a court will apply to the patent protection across all contracting states. The previous system of EPs covered up to 38 countries, as opposed to the 25 countries that are parties to the UPC Agreement.

However, the unitary patent system is not without inherent risk for the rightsholder. Firstly, any revocation or invalidity in one contracting state will apply across all contracting states. Consequently, one successful lawsuit from a competitor in one country can invalidate the entire protection if a unitary patent is the only patent protection. Secondly, the introduction of the UP can lead to an increase in the total number of patents in the market, possibly making it harder to navigate without opening yourself up for infringement actions in countries you do not have a strong presence. Lastly, in relation to the previous point, increased surveillance of the market before entering and ongoing monitoring of competitors in the market is recommended. The new and broader jurisdiction which can be the basis for infringements can open new avenues for competitors to take action, resulting in the loss of valuable patent protection in other countries.

The UPC will be a common court for the EU member states that have ratified the UPC agreement. UPC will be a system comprising of a first instance, the Court of First Instance, and a second instance, the Court of Appeal, which will have exclusive competence for settling disputes regarding EPs and UPs in the contracting states. The UPC will be able to decide actions concerning infringement, provisional and protective measures, injunctions, revocations, validity, damages, compensations, and decisions from the EPO. In addition, the UPC will be able to settle infringement and validity disputes relating to SPCs issued nationally, despite EPO not being able to issue SPCs.

Centralizing the enforcement of rights will most likely significantly impact the ease of access to settlements of patent-related disputes. National courts will be able to handle cases concerning EPs that have already been issued for a transitional period if the rightsholders have opted out of settling the case by the UPC. EPs that are already granted may opt out of the UPCs jurisdiction in the seven-year transitional period. This opt-out mechanism also applies to issued SPCs. On the other hand, the UPs will be under the jurisdiction of the UPC from day one.

As suggested by EPO's statistics, we have seen a steady increase in the number of EP applications filed, and the trend is expected to continue. However, the number of granted patents in 2021 has not followed the same upward trend, implying that an effectivization of the system might have a positive effect. The dissimilarity between the number of granted patents and the number of applications can result from several factors, and the introduction of the UP might lead to a more streamlined application process down the line. As for today, the procedures for application and issuing UPs correspond to the current procedures for EPs. Thereby, the effects of the UP will be seen once the patent has been granted. Further, the settlement of disputes in the UPC will simplify the process of enforcing rights such as actions regarding rightsholders' rights and competitors' rights and have a unitary effect across all contracting states.

In conclusion, the introduction of UP and UPC will have positive and negative results for rightsholders. As for the positive effects, UP and UPC will make broad protection for inventions more accessible. Additionally, both transferring and limiting rights will become more accessible, and UP and UPC will result in more effective enforcement of rights. On the other hand, the introduction of UP and UPC will increase both the risk of invalidity and revocation actions having unitary effects and the number of patent rights existing in the market. Thereby, the importance of monitoring the market and competitors will be increased.

The lawyers in Schjødt's specialized Life Sciences Practice Group are ready to assist in questions and matters concerning UP and UPC.