Following years of heated debates and legislative work related to the creation of the Unified Patent Court, it appears that it will officially begin functioning still in 2022. With the creation of the world’s first international court to adjudicate private law cases, the perception of the European market from the perspective of invention protection strategy will change. What is the main objective of creating a unitary patent protection system in Europe, how will this system affect the competitiveness of the European economy and what should entrepreneurs interested in doing business in selected European markets know about it by now? These questions are answered by Tomasz Gawliczek, PhD, who completed ‘Patent litigation in Europe’ course at Strasbourg University and co-heads JWP’s newly established practice on the Unified Patent Court.
Why should the creation of the Unified Patent Court in Europe spark interest of Asian businesses?
TG: In my opinion, all entrepreneurs interested in doing business in European markets, and especially in the countries that signed the Agreement on a Unified Patent Court, should familiarize themselves with the functioning of the new system of patent protection in Europe. As the system is expected to be launched in the last quarter of this year, there is not much time left to prepare for the change in ‘the rules of the game’. This ‘game’, as far as patent protection of inventions in Europe is concerned, has so far been played out according to different principles, depending on the practice of judicial decisions adopted in individual countries. The European patent with unitary effect changes this perspective completely, becoming the world’s first exclusive right to an invention that will apply simultaneously in the territory of over a dozen EU countries.
What does it mean that the patent protection provided for by the new system is ‘unitary’ in its nature?
The fact that the new system of patent protection is ‘unitary’, this being its defining characteristic, must be viewed from several different perspectives. Firstly, this refers to the very territory the invention is protected in. In this context, it is worth mentioning that European patents granted so far under the provisions of the 1973 European Patent Convention (EPC) can apply simultaneously in many countries, but prior validation before national patent offices is necessary to this end. A European patent with unitary effect will simultaneously apply in the EU countries participating in the new system with no need for any action after it has been granted by the European Patent Office (EPO). In this sense, ‘unitary’ means there is a single (indivisible) exclusive right that applies supranationally.
On the other hand, the ‘unitary’ patent protection provided by the new system must also be viewed from the perspective of its enforcement. This issue is always a natural ‘counterpole’ related to how exclusive rights work. Merely obtaining a patent does not bring tangible benefits if the patent holder does not actively take steps to protect the obtained monopoly in the market.
In my view, this aspect that the new system of patent protection is ‘unitary’ is most revolutionary. The differences that have existed to date in the judicial practice of particular EU countries as far as the enforcement of this protection is concerned have far-reaching consequences. In a situation where a European patent is protected on a country-by-country basis, the legal assessment of whether, for example, a particular product falls within the scope of a patent monopoly may be formulated differently by individual national courts. This is due to their different approaches to interpreting the scope of protection of an invention as determined by the patent claims.
To put it simply, it is now quite conceivable that the same product will be found by a court in one EU country to infringe a European patent, while a court in another member state will rule to the contrary. Thus, there is a state of legal uncertainty that generally is not helpful for the protection of innovations. Hence, in the literature, the strategy of actions by patent holders and potential infringers is sometimes referred to as a ‘patent game’ because the outcome of any such game is unpredictable in its very beginning. That is what is about to change in large part with the launch of the Unified Patent Court.
Does this mean that it will be easier to predict the outcome of a patent dispute?
Yes, it does. Uniformity of judicial decisions is one of those hallmarks of the new system that is mentioned among the greatest anticipated advantages of the Unified Patent Court. Of course, it should be noted that clear lines of interpretation for particular legal issues will be probably formed for several years. This, however, does not change the fact that from the very beginnings of the UPC, the judgments of the court will apply simultaneously in all participating EU countries. Any possible ‘competitive’ decisions will only be made by the national courts of the countries outside the system where a given European patent has been validated under the procedure used to date. I assume, however, that the decisions by the UPC will strongly influence the decision-making directions taken by said national courts, and in time they will become a kind of ‘compass’ in the world of European patent disputes.
What does it mean in practice for entrepreneurs that the UPC decisions will apply in over a dozen EU member states simultaneously?
This should be viewed separately from the perspective of a holder of a European patent with unitary effect and an entrepreneur potentially infringing such a patent. For a patent holder, obtaining a UPC-issued decision of a unified character will mean in practice that they no longer need (as has been the case so far) to initiate several court proceedings over infringement of the same European patent before the national courts of particular EU countries. The single ruling that is simultaneously effective in the EU countries participating in the new system will in practice also speed up subsequent enforcement proceedings, although it should be noted that these will take place separately in each of those countries.
Now, for an entrepreneur marketing a product that infringes a European patent with unitary effect, the legal and business risks will be even greater than before. On the legal side, this is because there will no longer be any possibility of diverging judicial decisions on infringement of a European patent in different EU countries, which so far has been a circumstance in favour of the infringers. On the business side, it should first be emphasised that patents are primarily protected by claims for non-infringement. This is achieved by prohibiting the marketing of the product that is the subject matter of the patent or by prohibiting the use of a method of manufacture that is the subject matter of the patent. In practice, this means ‘closing’ the market for the disputed product. Given that UPC rulings will apply simultaneously in over a dozen EU member states, infringers losing their cases will be in a much more difficult situation than now, when a single ruling applies only to the country where it was issued.
So how can we effectively prepare to operate in the European market that will change with the advent of the UPC?
This question can also be answered from the two separate perspectives already mentioned. If you have a portfolio of European patents, it makes sense to review them and make strategic decisions about their protection. In fact, the Agreement on a Unified Patent Court provides for special legal solutions in this respect for a so-called transitional period, which will last seven years from the date the new system becomes effective. The same strategic decisions should be made by applicants who are now applying for a unitary patent from the EPO.
If, on the other hand, you are an entity that markets its products in Europe, we should first make sure that these products do not infringe European patents that are valid in the respective countries. Previously, it has been the case that in the event of patent disputes (if they did not occur directly in the country of manufacture of the goods), manufacturers have diverted exports of the disputed products to those markets where patent protection did not apply. Patent holders – mainly due to the costs of the validation procedure of the European patent – most often did not decide during the application procedure before the EPO to designate all EU countries as target territories for patent protection of the invention. The European patent with unitary effect could reverse this trend, as the costs of obtaining patent protection across a significant area of the EU will be significantly lower than today.
This means that the changes introduced by the unitary European patent system are indeed ‘revolutionary’.
The road leading to any revolution is usually very winding. It was no different in the case of the UPC. When the European Patent Office was created nearly fifty years ago, everyone felt that the natural second component of that system should be a judicial body that would take responsibility for developing a uniform standard for the enforcement of European patents. The creation of a supranational court is, however, a task that raises many more legal and practical problems due to the very nature of judicial power. This is confirmed by how the newly adopted system of unitary patent protection in the European Union has evolved, where there have been plenty of disagreements over issues such as the transfer to the UPC of powers previously held by national courts or the determination of the official language to be used in court proceedings.
I believe that the unitary patent protection system will ultimately strengthen the protection of technical innovations in the European Union. And especially because the final decision whether or not to seek the unitary effect of a European patent is left to the patent holder. Thus, it can be concluded that the ‘game’ played so far in the patent litigation arena is not at all over now that the UPC has come. The rules of the game change significantly, but as always, the strategy adopted at the very beginning will be crucial for the final victory.