The year 2021 has seen further unexpected developments on the way to the implementation of the unitary patent protection system in Europe. Following the ruling made in March 2020 by the German Federal Constitutional Court in Karlsruhe stating that the Unified Patent Court Agreement (UPCA) had been ratified by the Parliament by an insufficient majority of votes (ref. 2 BvR 739/17), it seemed that once again the brakes would be put on the efforts taken to establish the system. It was speculated behind the scenes that the nearly three years of waiting for the ruling in this case could have been related to Brexit, since the final withdrawal of the United Kingdom from the EU structures created problems also from the UPCA perspective. However, from that moment on, things have been happening surprisingly fast.
Today, for the first time in the history of this project, which dates back to the 1970s, its observers have no doubt that the end of the preparatory phase and the start of the work of the Unified Patent Court (UPC) are in sight. And this will entail new opportunities and challenges regarding patent disputes for any innovative industry operating in European markets.
A European patent is not enough?
Currently, EU law does not provide for the possibility to obtain an “EU patent” for an invention valid in all Member States, even though such solutions have already been successfully implemented for trademarks and industrial designs. However, this does not mean that patent law differs significantly from one country to another, since it is governed by international agreements that have set certain standards in this respect. One of the most crucial agreements in question is the European Patent Convention of 1973 (EPC). It was ratified by the Polish Parliament and has constituted a part of the Polish legal framework since 2004.
According to the EPC, European patents are granted for inventions regardless of a technical field, provided that they are new, involve an inventive step and are susceptible of industrial application. These requirements are of a standardised character, which means that they are generally applicable also outside the states which have ratified the Convention. Thus, the problem to be addressed is not to standardize the conditions for granting a patent, but rather the procedure itself. The “European patent” referred to in the EPC is not an EU patent valid throughout the European Union.
The procedure for granting a European patent consists of two stages. Once a patent has been granted by the European Patent Office (EPO), it needs to be “validated” (recognised as valid) before the patent office of each country that has been designated by the patentee as a target protection area. Such a solution generates costs related to activities to be taken both before the EPO and directly in individual designated countries.
What is more, the European patent is eventually protected to the same extent as national patents. It is not uniformly protected throughout the area of its application. As a result, there are cases in which, during litigation, the scope of protection of the same invention may be assessed differently in individual countries due to differences in the ruling practice. Moreover, the revocation of the European patent, e.g., before the Patent Office of the Republic of Poland, does not have the same effect on the territory of other countries in which it has been validated. This is a consequence of a territorial nature of the European patent, which is essentially a bundle of independent national patents. As a result, patent litigation often has a cross-border character and requires involvement in several separate (although identical as to the subject) court and administrative proceedings in various countries.
European patent with unitary effect
The implementation of a unitary patent is intended to be a remedy for the above-mentioned problems with the enforcement of this exclusive right in the territory of the European Union. Importantly, however, the unitary patent system, which may soon become operational, will still not introduce a “European Union patent,” as it will not be automatically applicable in all Member States. This is due to the fact that work in this area – as there was no prospect of unanimity – started in the European Union on the basis of the so-called enhanced cooperation procedure (Article 20 TEU). Under EU law, acts adopted under that procedure are binding only on the participating Member States.
A European patent with unitary effect – as it will be called in accordance with the UPCA and Regulation (EU) No 1257/2012 of the European Parliament and of the Council of 17 December 2012 implementing enhanced cooperation in the area of the creation of unitary patent protection – will have a unitary character. This means that one patent will be valid in all Member States participating in the system (without the need for its validation). The authority responsible for granting it will be EPO, as the application procedure is based on the provisions of the EPC. And the possibility for the EPO to grant a unitary patent is provided for in Article 142 of the Convention. The patentee will therefore be able to decide for himself whether the exclusive right obtained is to be a “classic” European patent, which requires validation in designated countries, or whether he wants to obtain a European patent with unitary effect. In the latter case, however, the validation procedure will continue to apply to the countries that will not participate in the new system.
But obtaining a patent is often half the battle. The exclusive right must then be skilfully used to make the monopoly guaranteed by such a right real. In addition to the European patent with unitary effect, it became necessary to establish a Unified Patent Court to help pursue the infringements of such an exclusive right across borders. To this end, an international agreement in the form of an Agreement on a Unified Patent Court has been drawn up and submitted for ratification to the EU Member States which have joined the enhanced cooperation procedure in this area. Only its entry into force will result in the actual and legal “start” of the entire system.
Will the entry into force of UPCA really be a revolution in the area of patent law? Certainly. First of all, it should be emphasized that the UPC will be the first international civil court in European history to examine the cases of individual entities. This scope of competence distinguishes the UPC from existing international courts, which are public in character.
UPC’s structure and competence
Under the Agreement, the UPC will have a two-instance structure. The Court of First Instance will include a central division and local and regional divisions. Originally, the central division was to be based in Paris, Munich, and London. Following Brexit, for obvious reasons, this last location must be changed. In September 2020, the Italian government suggested that Milan should take London’s place. In turn, local and regional divisions will be established in individual countries participating in this system.
The seat of the Court of Appeal is to be located in Luxembourg. It will be in the proximity of the Court of Justice of the European Union (CJEU), which is definitely not a coincidence. The role of the CJEU in the unitary patent system is significant for one fundamental reason. The Unified Patent Court will apply EU law in its practice, including the aforementioned Regulation No 1257/2012, whose interpretation is within the CJEU’s competence.
What types of cases will the UPC handle? Above all, its role is to take decisions regarding complaints in cases related to actual or potential infringements of European patents with unitary effect. In this respect, it will also decide about interim measures and orders, whose role in patent disputes should not be underestimated. Local UPC divisions will be authorized to deal with cases related to infringements, yet their decisions will be enforceable in each Member State participating in the system. As a result, a single judicial decision will eliminate the need for parallel litigations regarding the same patent before courts of several countries.
In addition, the UPC will, among other things, deal with the cases concerning the revocation of European patents with unitary effect, which will be decided by its central division. In this context, it is pointed out that the unitary effect of a patent may also work to the detriment of patentees, as they may lose their monopoly on the whole of the territory covered by patent protection of such type. For this reason, it is not yet obvious that European patent holders will always apply to the EPO for unitary effect. In many cases, this will result from an adopted strategy of protecting the invention, as well as from the jurisprudence which will take shape over time on the basis of UPCA regulations.
Breakthrough years 2020-2021
In order to understand why the last months have been crucial from the perspective of the entire project of unitary patent protection, it is necessary to refer to the provision of Article 89 of the UPCA. It provides for two requirements to be met for the system to start. Namely, the Agreement must be ratified by the thirteen Member States that have previously signed it, including the three states with the highest number of European patents having effect in the year preceding the year in which the Agreement was signed. In this case, these are: France, Italy (formerly the United Kingdom) and Germany.
Following the aforementioned ruling of the German Federal Constitutional Court of March 2020, the then Minister of Justice, Christine Lambrecht, commented on the issue of the UPC, announcing that the German Federal Government would carefully examine this ruling and take further efforts to complete the ratification procedure. It is worth emphasizing that the obstacle in this case turned out to be an exclusively procedural problem (the requirement of a parliamentary majority), and not a conflict of UPCA provisions with the German basic law.
In December 2020, further constitutional complaints were filed with the Karlsruhe Tribunal. A month earlier, the German parliament had re-adopted UPCA, this time with a correct majority of more than two-thirds of votes (88% of the votes in the Bundestag had been in favour of the ratification). This time, however, the events had taken place much faster than years earlier. At the beginning of July 2021, applications for temporary relief in the cases against the ratification of UPCA (ref. 2 BvR 2216/20 and 2 BvR 2217/20) were rejected since, according to the Federal Constitutional Court, the complainants had failed to sufficiently substantiate a potential violation of their fundamental rights. It is therefore unlikely that these complaints will be considered at all as to their substance. Under such circumstances, on 13 August 2021 President Frank-Walter Steinmeier signed UPCA and thus completed the process of ratification of the Agreement in Germany.
The moment that Germany joined the unitary patent protection system was key to its implementation. This had already been done by Belgium, Bulgaria, Denmark, Estonia, Finland, France, the Netherlands, Luxembourg, Sweden, and Italy. However, two other countries still needed to ratify the Agreement for the requirement of Article 89 of UPCA to be met. The first good news came in at the end of September 2021, when Slovenia announced the completion of the ratification procedure. On 2 December 2021, in turn, the UPCA ratification process was completed in Austria. Now the preparatory phase can begin for the UPC to open its doors already in 2022.
Will Poland join the UPCA?
Poland has joined the EU procedure of enhanced cooperation in the area of creating the unitary patent protection system, but has not signed the UPCA. This means that we will remain outside this system, and European patents will be in force in our country only after their validation before the Patent Office of the Republic of Poland. Disputes about the validity of exclusive rights and disputes concerning their infringement will remain within the authority of competent national authorities (Polish Patent Office, intellectual property courts).
From the perspective of Polish entrepreneurs, the entry into force of UPCA means that they need to be even more careful when offering products to the markets of the countries participating in the unitary patent protection system. In the event of a foreign dispute regarding the infringement of a European patent with unitary effect, the costs of legal proceedings may be significantly higher than before. Following an unfavourable decision made to resolve a dispute, the entrepreneur’s activity may simultaneously be blocked on many markets in which it provides its products. As a result, the role of patent research will increase, as such patent research allows not only for assessing state of the art, but also for evaluating the risks associated with the infringement of other entities’ patents.
Will Poland join the unitary patent protection system? It is difficult to answer this question today. Perhaps, like the other countries that have not yet signed the Agreement (Spain, Croatia), we will look at the functioning of UPC and ultimately decide on accession to co-create this system. And all members of the European Union will always be welcome to do so.
The article was published on December 13, 2021, in Dziennik Gazeta Prawna, firma i prawo.