Pharma products, patents & problems – the Unified Patent Court: plan your patent strategy

As we see the patent system in Europe undergo its biggest overhaul in decades, we explore the new Unified Patent Court Agreement and how it will impact on your patent strategy.

Patent strategy

In the pharmaceutical industry, patents are priority. If you are investing millions of pounds in the research and development of a product, you want to know not only that the product will be protected from competitors, but that you see the commercialisation of that product and a healthy profit on your investment. Patents offer this to innovators by giving the patent owner a form of monopoly on that product for up to twenty years.

Unification of patent protection in Europe

It would seem obvious that a unified patent system, with one unitary patent enforceable across Europe, with a corresponding court system, is beneficial to a pharmaceutical organisation’s patent strategy and portfolio. If only it was so simple. As with most good ideas (especially patents), the devil is in the detail. As soon as a unified patent system was proposed, the questions started flying. How would such a system be implemented? What are the consequences for organisations across Europe? Would anyone actually use it? Will our current patents be effected?

UPC agreement

In February 2013, all EU member states except Spain and Poland signed the Unified Patent Court Agreement (UPC Agreement). The UPC Agreement creates the Unitary Patent (a single patent that will be granted centrally by the European Patent Office and be effective in the majority of EU member states) and the Unified Patent Court (UPC) where all unitary patents will be litigated centrally. The UPC will also hear all cases relating to the validity and/or infringement of existing and future European patents where it has exclusive jurisdiction, unless the European patent holder choses to “opt-out” of the new scheme or there are transitional issues.

“The aim of the UPC Agreement is to increase innovation and competitiveness in the EU…”

The aim of the UPC Agreement is to increase innovation and competitiveness in the EU, with a particular focus on small and mid-sized organisations. By having a centralised system, it is hoped that the cost and complexity of patent applications and litigation in Europe will be reduced. Having a single unitary patent right and court system is aimed at making Europe a more attractive place for investment in new technologies.

What is a unitary patent?

The current system provides two options for patent protection – a national patent or a European patent. Although the European patent sounds promising, in reality it consists of a bundle of national patents and, at present, is a far cry from being a European patent right. As a result, maintaining a broad scope of protection can be expensive, fragmented and cumbersome due to enforcement in national courts and translation issues. Whilst the UPC Agreement does not seek to replace these patent options, it will instead offer one more – the unitary patent. The unitary patent is designed to have less onerous translation requirement’s and will be enforceable (and be challengeable) in one court – the UPC.

What does the UPC mean for unitary patents and existing and future European patents?

The current system only allows a European patent to be challenged centrally for a limited nine-month window post grant. After this, the patent is classed as a bundle of national patents and each national patent must be challenged in its respective national court. Any pharmaceutical company that has issued or challenged a patent knows that the system is an expensive minefield, often only navigated with the help of a knowledgeable patent attorney.

The UPC is still under construction; however, the overall idea is that it will be a system whereby unitary and European patent holders can enforce their patent rights in one court system, but be granted pan-European relief. An example is that an application for an injunction could be sought in the UPC, but if awarded could apply in multiple countries where the UPC has exclusive jurisdiction. The flip side of this is that an applicant could challenge a unitary or European patent in the UPC for revocation across multiple EU member states.

Existing and future European patents (subject to opt-out and transitional provisions) therefore stand to be at the same risk and benefit of central revocation and enforcement as unitary patents.

“…the overall idea is that it will be a system whereby unitary and European patent holders can enforce their patent rights in one court system, but be granted pan-European relief.”

Industry concerns about the UPC

The concerns about the UPC and how it will work are widely reported and criticised in the media. In fact, only recently the UPC Preparatory Committee announced an extension on the deadline for creation of the UPC.

The most prevalent concerns of industry regarding the UPC are:

1. Bifurcation – The UPC Agreement allows the questions of validity and infringement of a patent to be decided by different courts of the UPC for the same case. The concern is that this will allow an infringement decision to be made and injunction granted before the question of validity has been decided. This could tempt some to abuse the system and result in increased litigation costs and restrict, rather than assist, innovation.

2. Preliminary Injunctions – The UPC Agreement allows multiple jurisdiction injunctions. This is a powerful weapon. The concern here is that rigid application of the injunction rule could be used to threaten manufacturers and result in costly royalty payments to undeserving organisations and increase the risk of claims being issued for this purpose. A comparison can be made with patent litigation in the US where claims to extract settlements by asserting low-quality patents reportedly cost US business $29 billion in 2011.

3. Under Construction – The timescale for creation of the UPC, and when unitary patents will be granted, remains uncertain. A target date of late 2015 has been set by the UPC Preparatory Committee, but there is scepticism that this will actually be achieved. There are many questions yet to be decided, including: when the UPC Agreement will actually be put into force by EU member states (the UK is currently set to start this process through the Intellectual Property Bill); when the guidance and UPC Rules of Procedure will be finalised; what the final position will be on unitary Supplemental Protection Certificates; and what level of court fees users of the UPC will face.

“Despite the concerns from industry and legal professionals, and an on-going challenge from Spain in the European Court of Justice, the UPC looks set to go ahead.”

Prepare your patent strategy – now

Despite the concerns from industry and legal professionals, and an on-going challenge from Spain in the European Court of Justice, the UPC looks set to go ahead. Even though the deadline for implementation is being slowly pushed back, the EU Commission appears determined to see this one through. It is widely accepted that the guidance for implementation and procedures of the UPC need work, but overall the European Commission hopes that a common patent system will benefit, rather than hinder, innovation and investment in Europe.

Failure to prepare, is preparing to fail. Pharma businesses need to: be proactive and not sit and consider if and when the UPC may knock at their door; prepare their long-term patent strategy; review their patent portfolio; take advice if necessary; see what their options are; and most important, not act hastily. Pharma businesses should not be tempted to automatically select the choice to opt-out of the new scheme for their European patents as this might not be the most beneficial path for them. If a pharma business is confident in an existing patent, why not seek the benefits of pan-European enforcement options that the UPC could provide?

Patent strategy is a crucial part of a pharmaceutical organisation’s business model – make the UPC part of that plan.

 

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About the author:

Laura Barrell is a Solicitor and Member of Life Sciences and Healthcare at Matthew Arnold & Baldwin LLP.

Paul Gershlick is Partner and Head of the Pharmaceuticals and Life Sciences team at Matthew Arnold & Baldwin LLP; he can be contacted using the details below:-

T: +44 (0)1923 208816

F: +44 (0)1923 215004

E: Paul.Gershlick@mablaw.com

http://www.mablaw.com/category/sectors/life-sciences-and-healthcare/

Have your say: When do you think the Unified Patent Court Agreement will be put into force by EU member states?