EU Unitary Patent and Patent Court

more+
less-

Background

The original proposals in the 1970's for the European Patent Convention (EPC) were intended to proceed in parallel with those for a Community Patent Convention. In the end, these were never implemented as a result of difficulties relating to the languages into which the whole or parts of Community Patents would have to be translated. After several attempts by the member states to resolve these issues had failed, the European Commission proposed an alternative approach to adopt a regulation to create a community-wide patent and a system for litigating such patents. After what seemed to be a promising start, however, these proposals for many years seemed beset by problems that led to the failure to implement a Community Patent Convention.

However, at the European Council meeting of June 28 – 29, 2012, the heads of government of the European Union reached agreement on the last main issue delaying adoption of a “European Patent Package.” On December 17, 2012, the EU issued a regulation for creating a Unitary European Patent to cover all EU member countries except Spain and Italy who have opted out.1 On the same day, a separate regulation was issued relating to the languages to be used.2 On February 19, 2013, most member states of the EU (the exceptions were Spain and Poland) signed a treaty to create a European patent court system that will ultimately have jurisdiction over all patents issued by the European Patent Office (EPO) having effect within the participating countries irrespective of whether such patents are the new unitary patents or patents forming part of the traditional bundle arising from a European patent application.3

Both the regulations and the treaty will come into effect when the treaty has been ratified by thirteen of the signatories, as long as these signatories include Germany, France and the United Kingdom. This is now expected to occur towards the end of 2015.4

In 1975, soon after the European Patent Convention was signed, a further treaty, the Community Patent Convention, was also signed to create a unitary patent for the then European Community as an alternative to the bundle of patents resulting from the European Patent Convention. However, neither the Community Patent Convention, nor later proposals having the same objective have come into effect. There have been two main problems: one being that of the language or languages to be used for the unitary patent; the other being how to provide an efficient system for litigation of European patents. The new package addresses these.

As to the language issue, in 2010, the European Commission proposed that, subject to some transitional provisions and other safeguards, the language requirements should be the same as for the European Patent, namely that the claims should be in English, French and German and the specification in English, French or German. Italy and Spain demurred. The remaining twenty-five EU members then sought and obtained permission to use a procedure for “enhanced cooperation” to implement a patent package excluding Italy and Spain. Italy and Spain have challenged this in court, but it is not expected that the challenge will succeed.

The “parent package” that is now en route to implementation has three components:
1) a proposed EU regulation creating a unitary patent for the 25 cooperating EU countries;
2) a proposed EU regulation on the language to be used for the unitary patent; and
3) a separate treaty establishing a new European patent court system that will ultimately apply not only to the new unitary patent but also to all patents issued by the EPO for countries that are members of the European Union.

The Unitary Patent5

In essence, the EU regulation on a unitary patent will provide that for patents prosecuted through the EPO, in addition to the possibility of designating individual countries for protection, it will, at the applicant’s option, be possible to designate a unitary EU patent covering all of the 25 participating countries. If the unitary patent is elected, maintenance fees will be payable annually to the EPO which will then pass on a portion of the fees collected to the national patent offices. The level at which these fees are to be set is currently under discussion. The latest information from the EPO is that they are likely to be more, but not substantially more than the current cost for renewing in four EPC countries.

The Regulation on Language6

The regulation on translation provides that the language requirements will, as noted above eventually be the same as the requirements of the EPO, with a subsidy for applicants from EU member countries for which English, French or German are not a national language and who file applications in one of their own national languages. It is expected that machine translations

will eventually avoid the need for human translation and the costs associated therewith. For a transitional period, of a maximum 12 years, those European patents that are to have unitary effect and are granted in French or German will need to be translated into English. Those granted in English will need to be translated to another official language of the EU. These translations will be required until high-quality machine translation becomes available to ensure the accessibility of patent information.

The Agreement on a Unified Patent Court

The final instrument is the litigation treaty on which agreement was signed on February 19, 2013, by all EU states except Spain and Poland. This will ultimately become the only means for enforcing any patent granted by the EPO in a participating country. There will, however be a transition period of at least seven years during which applicants will be able to specify that for any patent granted by the EPO which is not a unitary patent they do not wish the new scheme to apply to the patent in question and that litigation on that patent continues to be before the national courts. There is a possibility that the transition period will be extended to 14 years.

The new court system will have jurisdiction over European patents having unitary effect, supplementary protection certificates, any other European patent that has not yet lapsed when the treaty comes into effect and any European patent application that is pending when the treaty comes into effect.7 However as noted above, for an initial period the owners of the rights in question other than unitary patents will still be able to opt out of the new court system and have litigation relating to that right tried before a national court having jurisdiction over it.

The Court Structure

Under the new patent court structure, there will be a court of first instance and a patent appeals court. Although the appeals court will sit in Luxembourg, it will not be part of the European Court of Justice (ECJ). The court of first instance will have national/regional divisions and, following the June 29, 2012, decision, a three-branch central division. The country/regional divisions will be created on the basis of countries or groups of countries handling at least 50 patent infringement cases per year and will have jurisdiction over patent infringement and the ability to decide counterclaims in infringement actions challenging the validity of the patents in suit.8 Other challenges to validity will have to be brought before the central division. Country/regional divisions will have the option of transferring any issues relating to validity to the central division.

The official seat of the Court and location of the registry will be Paris and the first president of the Court will be French. However, in view of the need for specialized expertise in some areas of technology, two branches will be created, one in London dealing with chemistry,

including pharmaceuticals, inventions classified in IPC classification C, human necessities, and those in classification A, the other branch in Munich will deal with actions relating to mechanical engineering, classification F.

All divisions of the first instance court will sit in panels of three judges and are required to have a multinational composition,9 although a single judge will normally act as the judge rapporteur and deal with procedural issues.

The Substantive Law to be Applied by the Court

The law to be applied by the Court, including the definitions of what is and is not an infringement, is set out in Articles 24 – 30 of the treaty and basically follows what was originally proposed for the Community Patent Convention in 1975, but specifies that these provisions also apply to supplementary protection certificates10 and also includes references to the exceptions set out in EU regulations and directives since then, such as for testing of veterinary and human medical products and farmers’ rights provisions.11

Article 24 provides that the sources of law to be used in the unified court system are: European Union law, the agreement itself, the EPC, other international agreements applicable to patents that are binding on all of the contracting countries and finally national law.

As originally drafted, the language would have permitted references to the ECJ on issues of substantive patent law. However, the European Council recommended deletion of such provisions which had been widely criticized by patent professionals in many countries who feared that the ECJ would have insufficient contact with patent cases to appreciate the nuances of cases that might be brought before it. The European Parliament resisted this proposal and the Commission ultimately drafted a compromise which it is hoped will limit the role of the ECJ without entirely eliminating it.12

Article 25 prohibits direct use of the patented invention.13

A patent shall confer on its proprietor the right to prevent all third parties not having his/her consent from the following:

(a) making, offering, putting on the market or using a product which is the subject-matter of the patent, or importing or storing the product for these purposes;
(b) using a process which is the subject-matter of the patent or, when the third party knows, or should have known, that the use of the process is prohibited without the consent of the proprietor of the patent, from offering the process for use within the territories of the Contracting States in which the patent has effect;
(c) offering, putting on the market, using, or importing or storing for these purposes the product obtained directly by a process which is the subject-matter of the patent.

Article 26 prohibits indirect use of the patented invention.14

A patent shall also confer on its proprietor the right to prevent any third party not having his consent from supplying or offering to supply within the territories of the Contracting Member States in which the patent has effect, any person, other than a party entitled to exploit the patented invention, with means, relating to an essential element of that invention, for putting it into effect therein, when the third party knows, or should have known, that these means are suitable and intended for putting that invention into effect.

However, this article also provides that these prohibitions do not apply when the means are staple commercial products, except when the third party induces the person supplied to commit acts prohibited by Article 25. It is further provided that when the article refers to “persons entitled to exploit the patented invention” this does not include anyone whose entitlement is based on the fact that his or her acts are done privately for a non-commercial purpose.

Article 27 provides for limitations of the effects of a patent by providing that the rights conferred by a patent shall not extend to:15

(a) acts done privately and for non-commercial purposes;
(b) acts done for experimental purposes relating to the subject-matter of the patented invention;
(c) the use of biological material for the purposes of breeding, or discovering and developing other plant varieties;
(d) acts permitted under EU directives setting out codes relating to veterinary medicinal products or medicinal products for human use;16
(e) the extemporaneous preparation for individual cases in a pharmacy of a medicine in accordance with a medical prescription or acts concerning the medicine so prepared;
(f) the use of the patented invention on board vessels of the countries of the International Union for the Protection of Industrial Property (Paris Union) or of the World Trade Organization, other than the Contracting States in which the patent has effect, in the body of the vessel, in the machinery, tackle, gear and other accessories, when such vessels temporarily or accidentally enter the waters of a Contracting Member State in which the patent has effect, provided that the invention is used there exclusively for the needs of the vessel;
(g) the use of the patented invention in the construction or operation of aircraft or land vehicles or other means of transport of countries of the International Union for the Protection of Industrial Property or of the World Trade Organization, other than the Contracting States in which the patent has effect, or of accessories to such aircraft or land vehicles, when these temporarily or accidentally enter the territory of a Contracting State in which the patent has effect;
(h) the acts specified in Article 27 of the Convention on international civil aviation of 7 December 1944, where these acts concern the aircraft of a country party to that Convention other than a Contracting Member State in which that patent has effect;
(i) the use by a farmer of the product of his harvest for propagation or multiplication by him on his own holding, provided that the plant propagating material was sold or otherwise commercialised to the farmer by or with the consent of the patent proprietor for agricultural use;
(j) the use by a farmer of protected livestock for an agricultural purpose, provided that the breeding stock or other animal reproductive material were sold or otherwise commercialised to the farmer by or with the consent of the patent proprietor. Such use includes making the animal or other animal reproductive material available for the purposes of pursuing the farmer’s agricultural activity, but not the sale thereof within the framework of, or for the purpose of, a commercial reproductive activity;
(k) the acts and the use of the obtained information as allowed under the EU’s Directive 2009/24/EC relating to legal protection of computer programs, in particular, by its provisions on decompilation and interoperability; and
(l) the acts allowed under the EU’s directive 98/44EC on protection of biotechnological inventions.

Article 28 provides for a prior user right, but defines this in terms of the rights that the prior user would have had in any country had the patent in question been a patent granted under the national law of that country.

Article 29 provides for exhaustion of the rights conferred by a European patent in the following terms:17

The rights conferred by a European patent shall not extend to a product covered by that patent after that product has been put on the market in the European Union by or with the consent of, the patent proprietor of the patent “unless there are legitimate grounds for the patent proprietor to oppose further commercialisation of the product.”

Litigation Before the Court

Article 32 gives the Unified Court jurisdiction over:

(a) actions for actual or threatened infringements of patents and supplementary protection
certificates and related defences, including counterclaims concerning licences;

(b) actions for declarations of non-infringement of patents and supplementary protection certificates;

(c) actions for provisional and protective measures and injunctions;

(d) actions for revocation of patents and for declaration of invalidity of supplementary protection certificates;

(e) counterclaims for revocation of patents and for declaration of invalidity of supplementary protection certificates;

(f) actions for damages or compensation derived from the provisional protection conferred by a published European patent application;

(g) actions relating to the use of the invention prior to the granting of the patent or to
the right based on prior use of the invention;

(h) actions for compensation for licences on the basis of Article 8 of Regulation (EU) 1257/2012 which permits a patent owner to endorse a unitary patent as being subject to a license of right in return for reduced renewal fees; and

(i) actions concerning decisions of the EPO in carrying out the tasks
referred to in Article 9 of Regulation (EU) No 1257/2012 which governs the EPO’s administration of unitary patents and collection of renewal fees for their maintenance.

Under Article 33, infringement actions, actions for provisional and protective measures and actions for compensation for use of the invention after publication of an application but prior to grant of a patent will be able to be brought in the local or regional division where the infringement occurs or in the local or regional division where the defendant resides. If the defendant does not reside in a country party to the agreement, an action for infringement will be able to be brought in the central division as an alternative to the national/regional division where infringement occurs. Counterclaims for invalidity will be able to be brought in the court where the infringement action is proceeding, but a local or regional division before which such a counterclaim is brought may transfer that counterclaim to the central division, or, with the consent of the parties transfer the entire case to the central division. Actions for declarations of non-infringement or invalidity otherwise than in the context of an infringement action can only be brought in the central division.

Remedies

The Court will have the power to grant permanent injunction prohibiting a continuation of infringement not only against a direct infringer but also “an intermediary whose services are being used by a third party to infringe a patent.” Breach of an injunction may result in “a recurring penalty payment payable to the Court.”18 The powers of the court also include the possibility of making orders not only with respect to infringing products but also “materials and implements principally used in the creation or manufacture of those products.” Possible orders include recall of products from the channels of commerce.19

Damages may be awarded against an “infringer who knowingly or with reasonable grounds to know, engaged in a patent infringing activity.” Three principles with respect to damages are stated: 1) the injured party should to the extent possible be placed in the position it would have been in if no infringement had taken place; 2) the infringer should not benefit from the infringement; but 3) damages shall not be punitive.20

Article 69 provides that unless special circumstances apply:

Reasonable and proportionate legal costs and other expenses incurred by the successful party shall, as a general rule, be borne by the unsuccessful party unless equity requires otherwise up to a ceiling set by the rules of procedure.

As noted above, the procedural rules for the new court are still in the process of being drafted. There have, however, already been more than enough applications for positions as judges on the court for it to be staffed adequately.

End Notes:

1REGULATION (EU) No 1257/2012 OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 17 December 2012 . This can be found at:

http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2012:361:0001:0008:EN:PDF

2COUNCIL REGULATION (EU) No 1260/2012 . This can be found at:

http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2012:361:0089:0092:EN:PDF

3AGREEMENT ON A UNIFIED PATENT COURT. This can be found at:

http://documents.epo.org/projects/babylon/eponet.nsf/0/A1080B83447CB9DDC1257B36005AAAB8/$File/upc_agreement_en.pdf

4This is later than had originally been hoped. Delays have arisen because of the need to amend Regulation (EU) 1215/2012 on recognition and enforcement of judgments to complement the patent package, discussions over the appropriate level for renewal fees for the unitary patent and discussions over the rules of procedure for the new court which have run to sixteen drafts in an effort to make the operation of the court as efficient and attractive as possible.

5Regulation (EU) 1257/2012.

6Regulation (EU) 1260/2012.

7Agreement on a Unified Patent Court Article 3.

8There are proposals for regional divisions: one for the Scandinavian and Baltic countries, possibly with its seat in Malmo, one for Bulgaria, Cyprus, Greece, Romania and Slovenia and possibly one for Central European countries.

9Agreement on a Unified Patent Court Article 8.

10Agreement on a Unified Patent Court Article 30.

11See Directives 2001/82/EC, 2001/83/EC, 2009/24/EC, 98/44/EC and Council Regulation 2100/94 (EC),

12Article 1 of the Agreement states, “The Unified Patent Court shall be a court common to the Contracting Member States and thus subject to the same obligations under Union law as any national court of the Contracting Member States;” Article 20 states, “The Court shall apply Union law in its entirety and shall respect its primacy;” and Article 21 states that decisions of the ECJ are binding on the Unitary Patent Court and that it should cooperate with the ECJ “to ensure a correct application and uniform interpretation of Union law.”

13The language of this provision is followed in almost identical wording in Article 7 of the Commission’s August 2000 proposal for a regulation to implement a Community Patent. See also French Intellectual Property Code L-613-3; German Patent Law Article 9; and U.K. Patents Act Section 60(1).

14The language of this provision is followed in similar wording in Article 8 of the Commission’s August 2000 proposal for a regulation to implement a Community Patent. See also French Intellectual Property Code L-613-4; German Patent Law Article 10; and U.K. Patents Act Section 60(2) and 60(3).

15The language of this provision is followed in similar wording in Article 9 of the Commission’s August 2000 proposal for a regulation to implement a Community Patent. See also French Intellectual Property Code L-613-5 (however, French law also gives some additional rights to prior inventors, see L613-7); German Patent Law Article 11; and U.K. Patents Act Section 60(5).

16Directives 2001/82/EC and 2001/83/EC which, as amended by Directives 2004/27 and 2004/28 provide for Bolar-type exemptions for generation of data required to demonstrate the bioequivalence of the generic with the reference medicine by bioavailability studies.

17The language of this provision is followed in similar wording in Article 10 of the Commission’s August 2000 proposal for a regulation to implement a Community Patent. See French Intellectual Property Code L-613-7 and U.K. Patents Act Section 60(4).

18Unified Patent Court Agreement Article 63.

19Unified Patent Court Agreement Article 64.

20Unified Patent Court Agreement Article 68.

[View source.]

 

 

Topics:  EU, Patent Infringement, Patent Litigation, Patents

Published In: Civil Procedure Updates, Civil Remedies Updates, Intellectual Property Updates, International Trade Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Ladas & Parry LLP | Attorney Advertising

Don't miss a thing! Build a custom news brief:

Read fresh new writing on compliance, cybersecurity, Dodd-Frank, whistleblowers, social media, hiring & firing, patent reform, the NLRB, Obamacare, the SEC…

…or whatever matters the most to you. Follow authors, firms, and topics on JD Supra.

Create your news brief now - it's free and easy »