Upcoming Changes to the European Patent System

By Hema Perumal

This summer will bring changes to the European patent system that will affect existing European patents and will fundamentally change the way in which patents are litigated in Europe. As things currently stand, a new European patent system called the Unitary Patent System and a new court called the Unified Patent Court are expected to become operational in Europe on June 1, 2023. It is important for owners of European patents and those seeking patent protection in Europe to understand these changes which are explained in detail below.

Unitary Patent System

The Unitary Patent System (UPS) provides for a single unitary patent that will cover all European Union (EU) member states that have ratified the UPC Agreement [1]. Once the UPS takes effect, the application process that will be used to obtain unitary patents will be the same as the current European patent system used to obtain European patents. The only difference between the two systems will be in the post-grant procedure.

Specifically, the UPS will provide a more streamlined, cost-effective validation process in which only a single renewal fee is required to validate a unitary patent in all EU member states that have ratified the UPC Agreement (“UPC ratified states”). This is unlike the current European patent system which requires a separate renewal fee for each designated European country to validate an existing European patent individually in that country.

[1] EU member states that have already ratified or are expected to ratify the UPC Agreement: Austria, Belgium, Bulgaria, Denmark, Estonia, Finland, France, Germany, Italy, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Portugal, Slovenia, and Sweden. EU member states that may ratify the UPC Agreement in the future: Cyprus, Czech Republic, Greece, Hungary, Ireland, Romania, and Slovakia.

While existing European patents cannot be designated as unitary patents to take advantage of this more streamlined, cost-effective validation process, this process may be available for future European patents. At Sherman IP, we will advise our clients of applicable deadlines to designate their future European patents as unitary patents when those patents are granted.

With respect to renewal fees, the benefits and drawbacks of the UPS can be summarized as follows:

– If seeking patent protection in all UPC ratified states: The single renewal fee required to validate a unitary patent will be considerably lower than the combined renewal fees for those states.

– If not seeking patent protection in all UPC ratified states: A unitary patent may be more expensive to maintain than national patent rights in a small number of EU member states that are important. It may be more cost-effective to validate a European patent individually in those small number of EU member states than designate the European patent as a unitary patent.

– If seeking patent protection in all UPC ratified states as well as other European countries that are either non-EU countries outside of the UPC or EU countries that have declined to participate in the UPC [2]: A European patent can be designated as a unitary patent and also validated individually in those other European countries. Both the single renewal fee to validate the unitary patent and separate renewal fees for those other European countries are required.

[2] Non-EU countries outside of the UPC: Iceland, Norway, Turkey, Switzerland, Serbia, Albania, Macedonia and the United Kingdom. EU countries that have declined to participate in the UPC: Spain, Poland, Croatia.

Unified Patent Court (UPC)

The UPC will settle disputes relating to both existing European patents and unitary patents when it comes into existence.

The UPC will have exclusive jurisdiction over unitary patents.

The UPC will automatically have jurisdiction over any existing European patent unless the European patent has been proactively opted out of the UPC. Specifically, any existing European patent (and any published European patent application) can opt out of the UPC if an opt out is filed for the patent during the sunrise period. The sunrise period commences three months before the UPS and the UPC come into force. As the UPS and the UPC are expected to come into force on June 1, 2023, the sunrise period is expected to commence on March 1, 2023.

Any opt out filed for an existing European patent during the sunrise period will last for the entire lifetime of the patent. It will also be possible for European patents that originally opted out of the UPC to later opt in to the UPC provided no litigation has been initiated in any designated European country.

If no opt out is filed for an existing European patent, the UPC will share jurisdiction over the patent with the national courts of UPC ratified states.

With respect to enforcement, the benefits and drawbacks of the UPC can be summarized as follows:

	Benefits	Drawbacks
Unitary patent	If there is patent infringement, the patent can be enforced in all UPC ratified states simultaneously through the UPC, thereby removing the need to act through separate national courts. This could make some types of cross-border patent infringement easier to stop.	If the patent is attacked by a third party through the UPC and revoked, patent protection is lost in all UPC ratified states, i.e., run the risk of central revocation of the patent.
Existing European patent opted in to the UPC (i.e., no opt out filed)	The patent can be enforced in separate national courts or in a single infringement action through the UPC. If there is patent infringement, the patent can be enforced in all UPC ratified states simultaneously through the UPC, thereby removing the need to act through separate national courts. This could make some types of cross-border patent infringement easier to stop.	If the patent is attacked by a third party through the UPC and revoked, patent protection is lost in all UPC ratified states, i.e., run the risk of central revocation of the patent.
Existing European patent proactively opted out of the UPC (i.e., an opt out was filed)	Avoids the risk of central revocation of the patent. Opting out also permits a wait and see strategy in which the patent is opted out of the UPC for the time being and may be opted in to the UPC at a later date to pursue a single infringement action through the UPC. The patent may be opted in to the UPC at the later date provided no litigation has been initiated in any designated European country.	If there is patent infringement, may need to act through separate national courts to stop some types of cross-border infringement. Cannot pursue a single infringement action through the UPC unless the patent is opted in to the UPC. The patent may be opted in to the UPC at a later date provided no litigation has been initiated in any designated European country.

At Sherman IP, we have instructed our clients to carefully consider which of their European matters (i.e., existing European patents and published European patent applications) they would like to opt out of the UPC. While there is no one-size-fits all when deciding on whether or not to opt out, we recommend that our clients opt out of the UPC their most valuable European matters during the sunrise period.

Again, it will be possible for any European patent that originally opted out of the UPC to opt in to the UPC at a later date provided no litigation has been initiated in any designated European country – adopting such a wait and see strategy avoids the risk of central revocation and provides the opportunity to later purse a single infringement action if infringement occurs in UPC ratified states.