Approval of radical EU patents package

On 11 December 2012, the European Parliament approved a package of rules relating to an EU-wide patent system. The package includes the creation of a unitary patent and the creation of a unified patent court. All elements were approved by MEPs. This is a significant achievement for these proposals which have been the subject of discussions within the EU for the last 30 years. The unitary patent must now be formally adopted by the EU Council and the European Parliament.

The Unitary Patent

The creation of the unitary patent means that inventors will be able to obtain legal protection in 25 EU Member States (Spain and Italy are currently excluded) through one application to the European Patent Office (EPO) resulting in one ‘central’ patent right.

The Regulation creating the unitary patent is still in draft form, and there have been some contentious points in its development. In particular, Articles 6 to 8 of the regulation had been challenged as they would have given express jurisdiction over patent infringement issues to the CJEU. Many practitioners argued that the CJEU did not have sufficient experience in this field to deal with patent proceedings, and that its involvement would introduce severe procedural delays. These Articles have now been deleted and replaced by a new Article 5, which is intended to emphasise the primacy of European law, without giving the CJEU the right to supervise infringement law generally. However, the drafting of this new article leaves a number of ambiguities as to its effect in practice.

The Unified Patent Court

Disputes regarding unitary patents and, in due course, national EP patents, will be dealt with by the Unified Patent Court (UPC), a specialised court with exclusive jurisdiction. The UPC will be created by an Agreement, the current draft of which was released to the public on 14 November 2012.

The UPC will comprise a central division with a seat in Paris and two sections in London and Munich, along with local and regional divisions in the contracting Member States. The central division will have exclusive jurisdiction in certain matters and each of its seats will have responsibility in a different area of technology.

In order to establish a local division, the Member State in question will need to demonstrate that it has sufficient experience in handling patent cases. The proposals for local and regional divisions are in a state of flux – initial proposals by the Commission for a Western Europe regional division comprising Ireland, the Netherlands and the UK, for example, are now looking very unlikely.

The current proposal is that the UPC will not have exclusive jurisdiction over EP patent proceedings until the regime has been in place for seven years. However, many practitioners argue that this period is too short, and the court will not be sufficiently established or tested at that stage. Patent holders will also need to decide whether to opt out their European patents from exclusive jurisdiction (although, of course, defendants to proceedings cannot opt out of the UPC system).

The European Parliament states that the new system will be cheaper and more effective than the current systems, and that it will remove obstacles for SMEs. However, some commentators have suggested that in fact the new litigation system will be so complex as to be more expensive in many cases, especially for SMEs.

Advocate General Decision

On the same day as the European Parliament vote, Advocate General Bot delivered his opinion on joined cases Kingdom of Spain (C-274/11) and Italian Republic (C-295/11). Italy and Spain have asked the Court of Justice (CJEU) to annul the decision of the Council authorising enhanced cooperation between 25 of the 27 EU Member States (i.e. excluding Italy and Spain) in order to create unitary patent protection. Italy and Spain have argued that the decision was invalid for a number of reasons, including that the Council was not competent to make the decision. The Advocate General has proposed that the CJEU reject the pleas put forward by Italy and Spain and dismiss both actions.

If the CJEU follows this opinion, as is expected, Italy and Spain will need to decide whether to join the new system or be excluded (although the latter would not prevent Spanish or Italian companies from making use of the system).

Outlook

An intergovernmental conference will be held on 18 February 2013, at which the Agreement establishing the UPC is expected to be signed. It will enter into force once the package has been ratified by 13 Member States, including France, Germany and the UK, and the EPO expects that the first unitary patent will be validated in 2014 when the Agreement will also be in force. This seems optimistic, and there is a huge amount of work to be done (not least, the establishment of the necessary IT systems and the appointment of appropriate judges).

In early 2013 CMS will launch a series of publications and workshops for clients with our patent litigation specialists across Western and Eastern Europe. If you would like to express interest now, please contact Willem Hoorneman or Rogier de Vrey, or one of our London colleagues Jeremy Morton or Nick Beckett.