July 2012: European Litigation Update: European Patent System Is in for Fundamental Changes

by Quinn Emanuel Urquhart & Sullivan, LLP

Adopting the European Patent Convention (EPC) and establishing the European Patent Office (EPO) – thereby allowing for a single application for a “European patent” (which is more precisely a bundle of national patents which are independent from each other) – was a major step towards harmonizing patent law in Europe. Yet, the EPC leaves infringement law and proceedings predominantly to its member states. In practice this means that a patent may be infringed in one jurisdiction by for example selling an infringing device whereas it may be held not infringed in another jurisdiction by selling the identical infringing device.

Stakeholders from Europe and abroad have come to terms with the European patent system. Nevertheless, the European patent system is soon to undergo a fundamental change. The European Union (EU) is aiming to adopt a regulation on unitary patent protection as well as an agreement on a unified patent court. In other words, the European unitary patent is just around the corner.

Decision making in the EU can be rather slow and painful. For more than ten years several drafts of agreements and regulations have been circulated, discussed, amended, and finally dropped. At that point the most promising plans on the creation of a European patent court was finally sunk by the Court of Justice for the European Union (CJEU) in March 2011. But then again, decision making in the EU can be rather swift. Since the decision of the CJEU, EU bodies have been deliberating on a proposal for a unitary patent system in Europe. It plans to adopt the latest proposal in mid-2012. This (at least by European standards) extremely fast process has been criticized widely, particularly for its lack of transparency.

Under the proposal, the unitary patent would be an optional adjunct to traditional national and European patents. The unitary patent would have – rather than the traditional national and European (bundle) patents – unitary effect in its member states. The unitary patent would be enforced by a unified patent court system. The unitary patent court would, among other things, include a Court of First Instance and a Court of Appeals. The Court of First Instance would be composed of a central division, as well as local and regional divisions in the contracting states.

Several points remain in controversy. Besides the typical European language issues, the seat of the central division is one of the main issues. Several member states have thrown their hat in the ring, amongst them Germany, the United Kingdom, and France. At present it appears that the central division will be located in Paris with branches in London and Munich. Furthermore, the composition of the courts will be complicated since proportional representation has to be dealt with. Another point of concern is whether or not to include substantive patent law as opposed to merely procedural patent law in the regulation. Critics argue that the judges at the CJEU are not sufficiently qualified to rule on substantive patent law issues. Indeed, for now the pendulum seems to be swinging in favor of deleting the provisions regarding substantive patent law.

Since several public and non-public drafts are circulating at the moment and the decision making process is indeed not very transparent, it is hard to make reliable statements about how the court will be implemented. An update will follow as soon as a decision has been reached by the competent bodies. It will likely take several years until the new European patent system will be established and the first cases will be litigated in front of the unitary patent court.

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.

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Quinn Emanuel Urquhart & Sullivan, LLP

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