Pros and cons of the Unitary Patent referred to SMEs and big corporations: all the differences between the classic Patent and the future one

One of the hurdles to the start of the Unitary Patent Court (UPC) and therefore of the Unitary Patent (UP) has been overcome not by modifying but by re-interpreting article 3 of the Protocol for Provisional Application (PPA) of the Unified Patent Court Agreement. This article explicitly mentions UK together with France and Germany among the 13 Signatory States necessary for the PPA to enter into force but obviously UK is out of action following Brexit. For the PPA to take effect quickly, article 3 of the PPA has therefore been interpreted referring to article 89 of the Unified Patent Court Agreement (UPCA) which comprises a more general requirement according to which the referral to “UK” of article 3 of PPA has to be interpreted to mean “Italy”.

In view of this interpretation, Austrian ratification filed on January 18, 2022 triggered the start of the PPA and therefore of all the preparatory works necessary for the UPC to become a reality.

To be fair, at least one second hurdle needs to be overcome for the UPC to actually take effect. Article 7 of the UPCA explicitly mentions London as one of the sections of the central division of the UPCA but there seems to be a strong will to overcome this obstacle as well, as can be seen from the words on this matter with regard to the French Presidency of the Council of the European Union: “During the French Presidency of the Council of the European Union, France will remain committed to this undertaking, along with its fellow Member States that have signed on to the project and are also fully invested in the UPC’s success.”

Therefore, after almost 50 years of waiting, it seems that the project of a unitary court and a unitary patent are close to completion.

The aim of the UPC is to provide quicker and more efficient judicial procedures with high-quality decisions. To do this, it will have competence on disputes relating to Unitary Patents and the so called “classic” European patents. For a transitional period of 7 years (and for a possible 7 more years) the competence for “classic” European patents will be “shared” with national courts. However, a patent proprietor of a “classic” European patent can opt-out  from the UPC’s competence. For Unitary Patents it is not possible to opt-out the UPC’s competence or to start a dispute before a national court. National patents are out of the competence of the UPC. The UPC’s decision will have effect throughout those Member States that have already ratified the UPCA both for validity and infringement.

The aim of the UP is to provide a patent with unitary effect across all participating Member States of the EU. It will be granted by the European Patent Office as first choice at the end of the examination procedure. The “classic” validation system will remain, not only as an alternative choice with respect to the UP but also for those contracting states not within the UP (states that have not yet ratified the UPCA or EU states that are not within the EU).

The advantages and disadvantages of the new system will certainly be more clearly outlined when the system is operational and it will be possible to effectively evaluate the practical application of the procedures of the UP and the UPC and, above all, the quality of the decisions issued by legal and technical judges of international extraction.

While waiting to see the first results, some decisions must necessarily be anticipated with regard to the competence on the “classic” European patents and also European patent applications that will be granted in the future. In making such decisions it may be helpful to consider the following.

The UP may reduce costs for patentees willing to obtain an exclusive patent right in a large number of states. However, for a transitional period some translation will be still necessary.

The single renewal fee to which the UP is subject is certainly attractive both in terms of procedure and cost with reference to a “classic” European patent validated in more than four states. But a single renewal fee implies that future abandonment decisions cannot be made state by state.

Moreover the UP shall be subject to the competence of the UPCA which charges a fee for each action to be proposed. The actual costs of the procedure before the court must be carefully evaluated because while it is true that the UPCA allows a single judgment in all states, it is equally true that not all owners need to have this extended judgment.

The UPC will initially be an unknown factor also with regard to decisions: how much will these be influenced by the previous, inevitably local, experience of the judges?

Finally, some contracting states of the EPC will always remain outside the system because they are not EU members: this means different translations, different jurisdictions and the possibility of different decisions.

These aspects and others that will emerge from the first years of the UP – UPC will have to be taken into consideration not only now, in order to decide between opt-out or not or to decide between UP or “classic” European patent,  but also in the future to decide between starting a procedure before the European Patent Office (whose patents will in any case be subject to the competence of the UPCA at the end of the transitional period) and a national procedure (whose patents will always be outside the competence of the UPCA).

February 2022