The Unitary Patent and Unified Patents Court – first steps to a decision

Rowan Freeland

Simmons &amp, Simmons LLP

Rowan Freeland of Simmons &amp, Simmons LLP discusses the impending European Unitary Patent and Unified Patents Court.

The European Unitary Patent and Unified Patents Court (UPC) are likely to be with us within two or three years (depending on how quickly the Treaty is ratified) and pharmaceutical companies need to start addressing their approach to the new system.

There are three options:

1.    Embrace the Unitary Patent and litigate in the UPC

2.    Continue to obtain “bundle” European Patents, opt out of the UPC, and wait and see how it develops

3.    Opt out completely by obtaining national patents across Europe.

What factors will affect your choice?

Unitary Patent and UPC – Pros and Cons

The big advantages of the Unitary Patent and the UPC are:

1.    Lower cost: the translation costs when a “bundle” patent is granted are avoided (almost completely) which is a significant saving, and

 Figure-1

Figure 1: Lower cost – the main advantage of the Unitary Patent.

2.    Simpler enforcement: a single action in the UPC avoids the need for multiple proceedings in different languages with different procedures and different timescales (and, sometimes, different results) across Europe. The overall costs should be significantly lower (although the Court fees, which are likely to be substantial, have not yet been set).

3.    Flexibility: the UPC Rules give a great deal of flexibility, which should permit a “quick and dirty” approach for small simple cases, and “full dress” document production and cross-examination of experts in complex major cases.

 Figure-2

Figure 2: The UPC: all your eggs in one basket.

The main disadvantage is that one action can have only one result. It is good to win, but if you lose, you may find yourself wondering whether it wouldn’t have been better to have had more throws of the dice in multiple national proceedings.

 Figure-3

Figure 3: The advantage of multiple national enforcement actions.

The other disadvantage is that the system was produced by politicians seeking the Holy Grail of the first supra-national court for disputes between private parties, and in the rush to agree the Treaty, the lobbying of practitioners trying to achieve a sensibly workable system was dismissed as special pleading.

&nbsp,

“…a single action in the UPC avoids the need for multiple proceedings in different languages with different procedures and different timescales (and, sometimes, different results) across Europe.”

&nbsp,

So we have a system which most practitioners think is flawed, and we will see whether the judges of the UPC have the good sense to find ways to work around these flaws.

Furthermore, in order to provide a flexible system, the Procedural Rules give a great deal of discretion to the individual Courts, and in a number of key areas – Bifurcation, Interim Injunctions, Evidence, for example – we will have to see how those discretions are exercised in practice.

Bifurcation

A Local Division of the UPC handling an infringement case may send a counterclaim for revocation off for decision by the Central Division. There is a lot of debate about how extensively this power will be exercised. But it is a powerful weapon in the hands of a patentee, who can use it to obtain an injunction in the infringement case before the court has ruled on validity, if as expected validity cases will take longer than infringement cases.

 Figure-4

Figure 4: Bifurcation: a good thing?

The downside is that the court can suspend the infringement case if the case for invalidity looks really strong, which will lead to greater delay.

“Provisional Measures” (Preliminary Injunctions)

Getting an injunction against infringers, particularly generics, is crucially important for pharmaceutical patentees. The two key questions are: how strong a case do you need, and what factors in addition to the merits will the Court take into account?

&nbsp,

“Getting an injunction against infringers, particularly generics, is crucially important for pharmaceutical patentees.”

&nbsp,

The Rules provide that the case on the merits must be made out with a “sufficient degree of certainty” – a phrase whose meaning is far from certain, and will probably enable the court to take a flexible (read: unpredictable) approach.

The Court also has to “weigh up the interests of the parties”, and again we will need to see how this will work in practice. We expect that some degree of urgency will be required.

An important question is how the Court will assess “urgency” if you tolerate an infringement in an unimportant market but then seek provisional measures when the infringer subsequently launches in a key market.

Evidence

In patent cases in England, there can be almost too much evidence, which, before the advent of the Patents County Court, could suffocate smaller cases. In Germany and other civil law systems, however, parties’ ability to probe the other side’s assertions (by seeing their documents and questioning their witnesses) is more restricted, and court-appointed experts tend to be preferred to party experts.

The UPC rules permit a (modified) “English” approach to major cases and a more streamlined, “German” approach for smaller cases.

The danger is that national traditions will survive into the new system and we will have an English approach in England and a German approach in Germany.

Forum Shopping

In order to succeed, the UPC must attract users (for the 7-year transitional period, owners of “bundle” European Patents can sue in the national courts and avoid the UPC), and this means it is likely to be pro-patentee.

Different Local Divisions are likely to adopt different approaches to the exercise of the wide discretions given to them by the Procedural Rules, either to attract custom or because that’s how they have always done things.

&nbsp,

“An important question is how the Court will assess “urgency” if you tolerate an infringement in an unimportant market but then seek provisional measures when the infringer subsequently launches in a key market.”

&nbsp,

The Court of Appeal will try to impose consistency, but may be frustrated if the Local Divisions withhold permission to appeal their procedural decisions (the right of the Court of Appeal itself to grant permission to appeal procedural decisions was one of the suggestions by practitioners that the politicians ignored).

 Figure-5

Figure 5: The mouse wondered whether the cat had opted out.

Opting Out

If a patent is opted out, its validity cannot be attacked in the UPC, but the patentee can then opt in and sue in the UPC when it chooses. This gives flexibility and is probably the preferred course as the system settles in.

However, if an infringer starts revocation proceedings in national courts, you won’t be able to opt those national designations of the European “bundle” patent (and you may not be able to opt back in at all), pinning you to the complications and frustrations of multiple national proceedings.

 Figure-6

Figure 6: She realised that she could not now opt back in.

And before you decide to opt out all your patents, remember that the early procedural groundwork will be laid by companies which do not opt out – and probably the majority of early cases will be in the telecoms and electronics sectors. Their procedural and business concerns are very different from those of pharmaceutical companies, and the ground rules will be set with these in mind. You need to consider whether the pharmaceutical industry’s voice should be heard in the early stages.

&nbsp,

pharmaphorum-youtube

About the author:

Rowan Freeland is an English solicitor and a partner at Simmons &amp, Simmons LLP, the international law firm. He is based in Munich and London. He specialises in patent litigation, in particular major cases for originator pharmaceutical companies. He is Secretary of the UK Intellectual Property Lawyers’ Association, and has led its working party, which has been lobbying on the proposals for the Unified Patents Court for over five years. He is also an active participant in the UK Intellectual Property Office’s Consultation Group on the UPC.

What factors will affect your choice?