EU Unitary Patent And Court Are Here. Or Are They?

As several countries prepare to sign an international agreement establishing an EU unified patent court, debate still rages over whether the concept of the court, and of a single EU patent, is actually feasible. Some say a unified patent in the near term is a “dead letter,” while one patent lawyer believes that while some technical issues remain, the system will spring into life in the not-too-distant future.

[Update:] Twenty-four members of the European Union today signed the unified patent court agreement in Brussels, including Italy. For more, see IPW, European Policy, 19 February 2013.

The Council of the European Union announced on 14 February that a signing ceremony for the international agreement for an EU unified patent court will take place in Brussels on 19 February. In order for the unitary patent to come force, 13 countries, including the UK, France and Germany – the three member states in which the highest number of European patents took effect last year – must ratify it, a European Commission source said. Those three are set to sign and the EC is confident that they will then ratify the agreement, the source said. The package also includes two regulations, one on unitary patent protection, the other on translation arrangements.

According to an 11 December 2012 FAQ on the patent reform package, the signing launches the national ratification process and the preparatory work for setting up the unified patent court. The European Patent Office (EPO) will begin work on the procedures for the unitary patent.

If the court agreement isn’t ratified by all 25 member states participating in the “enhanced cooperation” under which the system was agreed to (Italy and Spain so far have opted not to join), the pact will only be effective in those nations that have ratified it, the EC said. In addition, the unitary effect of a European patent will only extend to those countries which have approved the court agreement, it said.

“Dead Letter”?

At a 4-5 February Midwinter Patent Experts Conference in Naples, Florida (US), Professor Heinz Goddar argued that a unified patent won’t happen in the short term because German ratification has been deferred until after the next national general election, set for September. The new government will then have to take up the work on the whole patent package again, so won’t begin ratification before the end of 2014 or possibly not until 2015, Goddar told Intellectual Property Watch. That process will take at least a year, so couldn’t be done until late 2015/early 2016, he said. That means hat since ratification is needed from at least the UK, France and Germany, the whole package won’t become effective until 2016/2017 or later, he said.

But Hogan Lovells (Düsseldorf) patent attorney Clemens Plassmann disputed those predictions, saying in an interview that they’re unjustified. “This is going to fly,” and there’s no reason to believe that the ratification process will kill it, he said in an interview. Ratification could happen as soon as next year, with even Italy and Spain joining, he said. The German government has indicated that it will sign and ratify the agreement this year, either before or after the election. Chancellor Angela Merkel is anxious to showcase her track record of achievements, and the other political parties largely share her government’s view of the need for the EU patent regime, he said.

Who Needs an EU Patent?

“There is serious doubt as to whether there will be any major use” of the new system, Foley & Lardner LLP Partner Harold Wegner said in a 16 January email. Very few patent seekers will need protection in all 25 countries, and those who do will be “skittish about putting all their EU patent eggs in the unified patent basket with a winner take all single court proceeding for the entire territory by an as yet unnamed judiciary,” he said.

If Germany, the UK and France, which have the largest number of patents in force, controlled the evolution of the new regime, “one might have a fair degree on confidence that applicants would use the new procedures to a certain extent,” Wegner wrote. But once those nations and 10 more have ratified the agreement, the ground rules will be determined to a great extent by an overwhelming majority of counties with minimal patenting activity, he said.

Judging by the talk on the market and companies that depend on enforcement of intellectual property rights, it is mainly a few large pharmaceutical companies that are reluctant to put patents at stake EU-wide, Plassmann said. Some players are taking a wait-and-see approach, he said.

Another critical question is the overall financial sustainability of the new system, EPO Principal Director, Patent Law and Multilateral Affairs Margot Fröhlinger said in a January 2013 slide presentation. The EPO will have new tasks and a revised compensation scheme. The level of annual patent fees must be set, because the new regulations only set broad criteria, she said.

Questions also linger about when and under what circumstances the ECJ will have jurisdiction in unitary patent cases, said Plassmann. Some say the regulations will continue to allow the EU high court to take up substantive issues, while others claim it will be shut out, he said.

And there are still technical hurdles to overcome, Plassmann said. Patent court judges will have to deal with language issues, new rules of procedure and a system that is a hybrid of various jurisdictions’ laws, he said. There could be a convergence of the UK and Continental judicial systems, he said.

Court Challenges

Another wrinkle is that Spain and Italy are seeking annulment of the other 25 governments’ decision to authorise “enhanced cooperation” as the legal basis for the unified patent package, and that similar challenges are likely to be brought in the court regarding the regulations on unitary patent protection and translation arrangements, the EPO said.

ECJ Advocate General Yves Bot addressed all the issues surrounding enhanced cooperation in an 11 December 2012 advisory opinion, Plassmann said. Moreover, ECJ judges made it clear during oral argument that they believe that if the majority of EU countries think enhanced cooperation is the right way to go, they should be able to pursue that path, he said. (The court generally follows its advisors’ opinions but is not bound by them). It’s not clear what Spain’s new grounds for appeal will be, he said.

A fair way to view the new system is as an additional option for patent-seekers, Plassmann said. They will be able to choose a national patent, a European patent without the unitary effect, a European patent with unitary effect, and so forth, he said. Some may opt not to apply for a single EU patent, at least preliminarily, but they will be monitoring development, he said. Some big pharmaceutical companies may never come around to it, but small and medium-size businesses could benefit from the unitary patent for their innovative products, he said. Overall, the new system offers interesting options for everyone, Plassmann added.