Reform Coming to EU Patent Law

Patent law reform efforts are nothing new in the European Union, with two previous efforts, in the seventies and at the turn of the century, coming to naught. But experts say the latest initiative may actually bear fruit.

“The last two attempts didn’t get even remotely as close as we are now with the present one,” says Dr. Markus Gampp, a patent litigator based in DLA Piper’s Munich office. “The political and economic will is there, the foundation is there, the preparation is quite far advanced and a lot of effort has gone into making this a reality.”

The new system would introduce a European Patent having unitary effect, and a Unified Patent Court with divisions located throughout the EU.

“While the current patent granted by the European Patent Office is called a European Patent, it does not create a single uniform IP right providing protection across the EU,” Gampp says.

Indeed, current EPO patents need to be validated separately in each jurisdiction, and enforcement requires action in each relevant jurisdiction.

“What the current patent amounts to is nothing more than a bundle of national patents,” Gampp says. “The system is not only costly and burdensome for the parties, but also bears the inherent risk of conflicting decisions.”

By contrast, the new unitary patent, which will be based on the existing Unitary Patent, will allow enforcement across the EU based on a single application to any division of the UPC. A patent holder can achieve unitary effect by applying for the unitary patent during the application for or subsequent to the grant of a European Patent. The EPO will continue as the examining and granting body, as well as overseeing opposition proceedings.

The UPC will have jurisdiction not only over the new Unitary Patent, but also over existing European Patents and pending patent applications. Member states will have the option of setting up local divisions of the Court of First Instance or joining regional divisions. The central division will be based in Paris, London and Munich with an appeal court in Luxembourg.

Generally speaking, the UPC will have exclusive jurisdiction over infringement and validity proceedings. But there are two exceptions: firstly, during a seven-year transitional phase, the UPC and the national courts will have concurrent jurisdiction; and secondly, holders of European Patents may opt out of the UPCs jurisdiction, either for individual patents or entire portfolios. While opting out can prevent an EU-wide declaration of invalidity by the UPC, it also precludes obtaining a single EU injunction in infringement proceedings.

“This puts the burden on European and global companies with important European Patents in their portfolios to evaluate whether opting out provides strategic advantages,” Gampp says.

The end of 2015 is the current official start-up date for the new system.

“But that date has been extended twice in the past, and most people believe it will be pushed out at least one more time,” Gampp says. “Realistically, I think it will be sometime in 2016 before it happens.”

If it happens: as is almost always the case with EU political projects, still-festering obstacles could invite last-minute failure.

At press time, 24 of 28 EU member states were fully participating in the system. Spain and Croatia do not, while Poland and Italy participate partially. Spain filed two complaints against various aspects of the system with the European Court of Justice. The first was dismissed and the second decision is pending.

“But the Attorney-General recently recommended in its opinion to the Court that the second complaint be dismissed, and I expect the court to follow that advice when it gives judgment, likely in early spring of 2015,” Gampp says.

Thirteen participating member states, including Germany, France and the UK, must ratify the Agreement on a Unified Patent court before it can come into force. Six have already done so. But the UK may be the sticking point.

“The UK government is not keen on any further unification of any kind in Europe,” Gampp notes. “In fact, the country is supposed to have a referendum on EU membership in 2017.”

Still, a draft of procedural rules is now in its 17th version and consideration is being given to a unitary IT system, court fees and the selection and training of judges.

Gampp expects considerable legal uncertainty in the first few years of the system.

“It will take some time until reliable precedents have been established,” he says.

But Gampp also expects this to have a tremendous impact. “From both a legal and an economic perspective, this is the biggest game-changer in European patent law in history for all stakeholders.”

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