The advent of the Unitary Patent
What are the costs, advantages and the likely impact of Brexit?
14 December 2018
The unitary patent has been a long time in development. Following the publication of a new procedural guide by the EPO and as we inch closer to the passing of the necessary legislation to implement it, we consider the current status of the unitary patent, the effect of the proposed cost advantages of the unitary patent system and whether Brexit will affect the viability of the unitary patent for patent proprietors.
Current legislative status
The legal agreement underpinning the unitary patent is due to enter into force on the first day of the fourth month after the thirteenth instrument of ratification has been lodged (as long as the most patent intensive member states are included, i.e. France, Germany, UK).
To date, 12 Member States have deposited their instruments of ratification, with the UK and German ratification still pending. However, the German constitutional court received a complaint in June 2017 that the unitary patent court agreement (UPCA) was not compatible with German constitutional law, resulting in the court directing the German President not to move to ratify the agreement. The UK's ratification has also been delayed, due to the recent UK general election and the subsequent summer recess period. The UPCA is therefore unlikely to come into force before Spring 2018 at the earliest. Spain, Croatia and Poland have indicated that they will not ratify the UPCA at this stage, although they may do so in the future. The current regime governing the grant of European patents (as a bundle of national rights acquired by using the European Patent Office's (EPO) centralised application procedure before seeking validation of the patent application in each European member state for which patent protection is sought) will be unaffected by the entry into force of the UPC.
Impact of Brexit
Whilst: (i) the UK has indicated in its policy statements that it is proceeding with preparations to ratify the UPCA, despite the June 2016 vote to leave the EU; and (ii) the UPCA states that the UK is one of the member states whose ratification is required before the agreement can come into force, there is uncertainty as to whether the UK's decision to leave the EU will prevent the UK taking part in the UPC. The UPCA and associated EU regulations make it clear that the system is only available for member states of the EU (as supported by CJEU opinion 1/09 of March 2011). However, legal opinions given by Richard Gordon QC and Tom Pascoe (as well as by German lawyers) suggest that it is legally possible for the UK to participate in the UPC post-Brexit. This could be achieved by:
- making minimal amendments to the UPCA;
- potentially extending the ambit of the unitary patent and/or the Brussels Regulation; or
- putting in place a specific EU-UK agreement permitting the UK to be part of the UPC.
Without the UK's participation, the UPC may be seen as less appealing for many European, US and Asian companies. It may also make enforcement of patent rights more expensive, if a proprietor has to opt for a European patent designating certain countries in addition to a unitary patent.
One of the key attractions of the proposed unitary patent is the removal of the need for complex and costly national validation procedures in each EU member state for which patent protection is sought. These procedures typically vary by country, leading to high direct and indirect costs, including translation costs, validation fees (i.e. fees due in some member states for publication of the translations) and associated representation costs, such as the attorney fees charged for the administration of the patent (i.e. payment of national renewal fees). These costs can be considerable and will depend on the number of countries where the patent proprietor wishes to validate the European patent.
The EPO's own cost comparison chart indicates that initial grant costs of a unitary patent will be nearly seven times less than the grant of a traditional European 'bundle' patent covering 25 EU member states, being 4,725 euros as opposed to 32,119 euros for the traditional European patent designating all 25 member states.
The EPO has also just issued a new procedural guide on how to obtain, maintain and manage a unitary patent. This also sets out the renewal fee structure for a unitary patent, which will require the payment of a single renewal fee, in one currency and under a single legal regime. The EPO estimates that, as between a 'classic' European patent applied for and maintained in Germany, France, the UK and Italy and a unitary patent covering the UPC member states, a proprietor will save approximately 5% in renewal fees in the first 12 years of a patent's life, rising to an 8% saving over a 15 year patent life span. The rate for renewals for a unitary patent for the first ten years of a patent's life (the average lifespan of a patent) amounts to less than 5,000 euros. A further 15% reduction in renewal fees is available to proprietors who file a licence of right at the EPO. Further costs savings arise in relation to the management of the unitary patent as transfers, licences and other rights no longer need to be registered on a country by country basis in each national register. This reduces complexity and administrative costs and fees associated with making such filings. SMEs, not-for-profit organisations, universities and public research organisations are entitled to apply for compensation for their translation costs. This is currently set at 500 euros, payable when the relevant unitary patent is registered.