The new European Unitary Patent system – What you need to know

The proposed European unitary patent and unified patent court represents one of the largest changes to the European patent system in a generation.

It will usher in a new European patent right (the unitary patent) which will have unitary effect across participating member states. A new court system (the unified patent court or UPC) will also be established to handle litigation not only of the new unitary patents, but also of European patents under the current system that are validated nationally in participating member states. The new system brings many potential advantages to patent holders and third parties. However, there is significant uncertainty and also drawbacks and potential risks, which patent owners will need to weigh up when deciding whether to make use of the unitary patent system.

This article will explore some of the factors that organisations in the pharmaceutical sector should be considering in advance of the new system coming into effect.

The Unitary Patent

There are some clear advantages to the unitary patent right. The unitary patent will initially cover a sizable portion of the EU, and it potentially provides excellent value compared to validating nationally under the current system. Additionally, enforcement should be simpler and more cost-effective than before.

On the other hand, there are disadvantages associated with the unitary patent, and many of these are particularly relevant to pharmaceutical companies, for whom IP filing and litigation costs are less important.

The court system will be completely new, so there will be uncertainty around how judges will decide on matters of infringement and validity. For many companies operating in the pharmaceutical space, the uncertainty around enforcement and the risk of central revocation by a new and untested court system will be too high.

When compared to enforcing nationally validated European patents across Europe under the current system, having to enforce a unitary patent at the UPC may be less attractive to many pharmaceutical companies. Enforcing or challenging European patents nationally under the current system requires separate actions in each individual country of interest. This gives greater flexibility, provides greater uncertainty to third parties and means that the parties involved have “fewer eggs” in the same basket. It is not uncommon for courts across Europe to reach different conclusions on validity and infringement, so a negative decision in one European country is not necessarily going to be replicated in another.

For a global pharmaceutical innovator company, continuing to use the current European patent system is likely to be more appealing given the flexibility and familiarity. For important patent rights, validating a European patent individually in EU member states, while more expensive, will present a lower risk than validating as a unitary patent.

Opting out

The UPC will also have jurisdiction over European patents that are validated in participating member states. For the first seven years from when the UPC comes into effect, it will be possible to choose whether to use the UPC or national courts to hear actions for infringement and revocation of such European patents. In this seven-year window it will also be possible to opt out existing and new European patents from the jurisdiction of the UPC. A sunrise period will enable early opting out of European patent rights for up to three months before the new system begins.

Given that the new system may come into effect later this year, it is worth considering whether to opt out patent rights as soon as possible.

Opting out maintains the status quo, and reduces the risk posed by central revocation in a new and untested court system. Then again, opting out removes the potential benefit of a favourable decision on infringement and validity that will apply throughout a large part of Europe.

Given the potential value of some patents in this sector, the uncertainty of how judges will decide matters of infringement and validity, and the added flexibility provided by litigating nationally, opting patents and applications out of the UPC will be very attractive for many organisations. Afterall, it would be a brave decision not to opt out a patent covering a multibillion-dollar drug.

In addition, the decision to opt-out is not necessarily final.  It is still possible to opt back in, as long as national court proceedings have not commenced. As discussed above, making use of national proceedings is likely to be favoured by many pharmaceutical companies, so opting out (at least initially) may well be the best strategy for now.

Closing thought

The unitary patent system promises to be the largest change in European patent law for a generation. The new system could be in force this year, so companies should be considering their unitary patent/UPC strategy now.

About the Author

Zack Mummery, Partner at Reddie & Grose, assists large multinational corporations, SMEs and start-ups operating at the cutting edge of chemistry and pharmaceutical technologies.