Category: Unitary Patent

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Should I stay or should I go? Strategic considerations for the opt-out

Opt-out: How to opt-out a patent?

As the UPC will start its operations in the near future, European patent owners must determine their opt-out strategy. Indeed, deciding whether to opt out a European patent is a decision which requires analysing the scope of competence of the UPC and the scope of enforcement of its decisions, along with litigation costs and case law.

§. The UPC scope of competence

A non-opted out European patent will benefit from the scope of competence of the UPC. In fact, the UPC will be able to hear:

  • Revocation action of non-opted out European patents and Unitary patents.
  • Infringement action of non-opted out European patents and Unitary patents.
  • Action for declaration of non-infringement.
  • Action for compensation for licences.
  • Action against any decisions of the EPO.

§. Scope of enforcement of the UPC decisions:

Patent owners will submit their infringement actions before a unique court, and will be able to ask for the enforcement of the UPC’s decisions in all Member States that have ratified the agreement.

An action before the UPC therefore eliminates the need for duplicate procedures in each EPC country where the patent has been validated. Actions before the UPC would thus be more efficient and time effective, especially when dealing with patent infringement across multiple Member States.

As a result, a single decision of the UPC will have the capacity to revoke non opted-out European patents for the whole territory of the 26 contracting member states. Conversely, an opted out European patent needs to be assessed by 26 national courts to face the same fate.

§. Case law.

The diverse backgrounds of the future appointed judges has raised the question of the coherency of the UPC case law. In fact, the panels of judges will be made of legally and technically qualified judges from different nationalities and legal traditions .

The UPC Agreement provides for such discrepancies to be addressed through the training framework provided for at article 19 of the UPC Agreement. However, it is difficult to assess whether such training will be enough to create a coherent interpretation of patent issues throughout the UPC divisions.

§. Cost: 

In situations where the litigant initiates multiple actions before national courts, costs can add up quickly. Indeed, the litigant has to pay for the court fees of several national courts and the costs of legal representation.

Proceedings before the UPC could thus be cheaper than multiple national proceedings. In fact, although litigants would have to pay the UPC’s fixed and/or value based fees as well as the cost of representation, the action initiated would cover 26 countries.

§. A few examples:

You are the holder of a European patent during the transitional period and you want to end an alleged infringement of your patent:

  • If you have opted-out your patent, you will have to bring your infringement action before the national courts of the countries where your patent is protected and where the alleged infringement has been observed.
  • If you have not opted-out your patent, you will be able to choose between national infringement actions or a unique infringement action before the UPC.

You face a revocation action lodged by a third party against your patent:

  • If you have opted-out your patent, the third party must bring its action before the national courts of the states where the patent has been validated to obtain the revocation of the national part of the European patent.
  • If you have not opted-out your patent, the third party could choose to go before national courts or could chose to lodge its revocation action before the UPC to try to obtain the patent revocation in all the Contracting Member States.

Proceedings before the UPC in first instance shall consist of the following stages:

  • A written procedure.
  • An interim procedure, which may include an interim conference with the parties.
  • An oral procedure which, shall include an oral hearing of the parties unless the Court dispenses with the oral hearing with the agreement of the parties.
  • A procedure for the award of damages, which may include a procedure to lay open books.
  • A procedure for cost decisions.

The proceedings should last around one year before the First Instance Court. This is faster than in most European countries where the average length of an infringement action is around two years.

For example, in the First Instance Court of the UPC, an infringement action will cost €11,000; to which must be added a value-based fee ranging from €0 to €325,000 (depending on the value of the action). A revocation action on the other hand will cost €20,000.

These general guidelines are in no way meant as a substitute to legal advice from an IP lawyer and may not cover all the details of your specific situation.

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How to get Unitary Patent protection?

The Steps to get a unitary patent protection?

This is a two steps procedure:

1/ First apply for a EP patent with the EPO
The filing procedure , examination and grant formalities are similar in any way to those of a regular EP patent.
Any person may file a patent application, in any language, provided that a translation into one of the three official languages of the EPO (french, german or english) is filed within two months of the date of filing. The language of the translation will be the language of the proceedings. The patent is published in the language of the proceedings and the claims are translated into the two other official languages.

2/Then, upon grant of the EP patent: the request for the unitary effect

Unitary patent protection will only be available for EP patent granted on or after the date of entry into force of the UPC Agreement (A. 18(6) of Reg. (EU) N° 1257/2012, and having the same set of claims in respect of all the participating Member States.

The patent proprietor shall apply with the EPO for  the unitary protection within one month from the publication of the mention of grant of the EP patent in the European Patent Bulletin . The request shall be filed in the language of proceedings of the EP patent (A.9(g) of Reg. (EU) 1257/2012).
The unitary effect will be indicated in the Register for unitary patent protection, administered by the EPO.

The EPO is currently developing machine translations of patent specifications into all of the official languages of the Union. Therefore, no further translations of the EP patent will be required from the patent proprietor after the end of the transitional period of 6 years (up to 12 years), except in the event of a dispute.
During the transitional period, if the patent is in english, the specification must be translated into any other official language of the Union; if however the patent is in french or german, it shall be translated into english.

The EPO will also administer a compensation scheme for the reimbursement of translation costs for some applicants filing the EP application in one of the official languages of the Union that is not an official language of the EPO. Applicants eligible for the compensation scheme include SMEs, non-profit organisations, universities, individual having their residence or principal place of business within a Member State.

 

Renewals in respect of the years following the year in which the mention of the grant is published in the European Bulletin will have to be paid with the EPO. There will be a 6 months period for late payment of the renewal and corresponding additional fees.
Can software be patented under the new rules? Will the rules governing patent ability for software change?

No. The unitary patent package will not change the rules on granting a patent, but only the geographic extent of the legal protection that a patent affords, once it has been granted.

 

(G) Fees

The fees for the Unitary Patent are yet to be decided. The criteria for setting the fees can be found at Article 12 of the Unitary Patent regulation. The process will need to take into account administration costs, the size of the market and the level of fees paid for current European bundle patents.

According to the European Parliament, today, a European patent issued by EPO providing protection in the 27 EU Member States can cost up to €36,000, including up to €23,000 in translation fees alone. According to the European Commission, the new unitary patent will cost a minimum of €4,725, when the new rules are fully implemented, up to a maximum of €6,425. The costs for translation will range from €680 to €2,380.

 

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How to opt-out a patent / withdraw an opt-out / correct an opt-out?

Opt-out: How to opt-out a patent?

§. Who can lodge the applications to opt-out / withdraw an opt-out / correct an opt-out and how?

  • According to the Rule of Procedure 5 of the Unified Patent Court: the patent proprietor or a person mandated by her are the only persons allowed to opt-out, withdraw and correct an opt-out. In case of multiple patent proprietors, the opt-out must be lodged by or on behalf of all proprietors.

 

  • Opt-out on behalf of the sole patent proprietor:  If the authorised user is a representative before the UPC, as defined in article 48 of the UPC Agreement, a mandate authorising the opt-out is not required. If the user is not such a representative, a mandate from the proprietor – and, if applicable, holder of Supplementary Protection Certificates- must also be lodged. This mandate must specifically authorise the opt-out. The mandate can be delivered to any person or private company. It must include the patent number, the patent holder’s name and her signature. The UPC published a template mandate which can be found below.

 

  • Opt-out on behalf of multiple proprietors:
    • The opt-out may be lodged on behalf of a proprietor by a registered user of the CMS. The user must be authorised to lodge the opt-out by all proprietors. She must declare in the opt-out that each proprietor is entitled to be registered as proprietor pursuant to Rule of Procedure 8.5.
    • If the authorised user is a representative before the UPC, in accordance with article 48 of the UPC Agreement, a mandate authorising the opt-out is not required. If the user is not such a representative a mandate from all proprietors and holders of SPCs must also be lodged specifically authorising the opt-out in question.

The mandate template for lodging an application is available on the UPC Case Management System and can be found below:

§. What if Supplementary Protection Certificates (SPCs) have been granted in respect of the patent being opted-out?

If at the date of the opt-out one or more SPCs have been granted in respect of the patent that is being opted-out, the following details of the SPCs must be included in the opt-out:
the name, postal and, where applicable, electronic addresses of each proprietor and of the holder of any supplementary protection certificate based on the European patent in question ;
details of any supplementary protection certificate granted based on the patent concerned, including the number.
Each holder of an SPC, if different from the proprietor of the patent, must lodge or authorise the opt-out in addition to the proprietor of the patent. Such a patent must be opted out even if expired.
The opt-out will be effective in respect of any further SPC granted after the registration of this opt-out.

§. What are the different procedures?

1. Opt-out procedure:

The opt-out procedure must be completed online by logging into the UPC Case Management System. This is a 9 steps process:

Opt-out process

All opt-out requests will appear on the EPO Register. All European patents opted out will be published on the UPC website.

It is not possible to opt out a European patent with unitary effect. Therefore if the application for opting-out a European patent with unitary effect is granted, the opt-out is deemed to be withdrawn from the date of grant. It is also not possible to opt out any patent/SPC which is the subject of an existing or prior action before the UPC.

 

2. Correction of the opt-out procedure:

Following the lodging of the correction of the opt-out, the correction date will be recorded in the opt-out register. An email will be sent with details of the corrected registration. The correction will be available to the public.

3. Withdrawal of the opt-out:

A patent which has been the subject of a withdrawal may not thereafter be opted out again.

Following the lodging of the withdrawal of the opt-out, the relevant European Patent published application number will be removed from the opt-out register. An email will be sent to the patent proprietor with details of the withdrawal. These details will be available to the public.
4. Correction of the withdrawal of the opt-out:
As it is not possible to correct the patent number in the original withdrawal, a new application to withdraw an opt-out must be lodged with the correct number. A correction of a withdrawal of an opt-out must be lodged in respect of each patent where the withdrawal data was incorrect. Following the lodging of the correction of the opt-out withdrawal the date of correction will be recorded in the opt-out register. An email will be sent to the patent proprietor with details of the corrected registration of the withdrawal. These details will be available to the public.

§. When will the opt-out take effect?

An opt-out lodged before the date of entry into force of the UPC Agreement will be treated as lodged on the date of entry into force.
Following the lodging of the opt-out the relevant European Patent published application number will be recorded in the opt-out register. An email will be sent to the patent proprietor with details of the registration. These details will be available to the public.
All corrections and withdrawals will take effect respectively from the date of correction and date of withdrawal.

§. How much will it cost to opt-out?

The Preparatory Committee confirmed that there will be no fee for the opt-in nor opt-out procedure.

§. The Templates

Template opt-out mandate

Opt-out template

OPt-out template 2

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Supplementary Protection Certificates, European Patents, and Unitary Patents: How is it going to work after the entry into force of the UPC?

Supplementary Protection Certificates ensure the recovery of high investments necessary over a long development period to bring a successful innovative product to the market. SPCs in particular are critical for the agrochemical, pharmaceutical and medical devices industries which rely heavily on industrial protection through patents and SPCs. Existing SPCs complement national or European patents to ensure an extra period – up to five years – of protection for patent holders, to offset the time required to obtain marketing authorisation for their patented products.

The entry into force of the UPC will however bring major changes to SPCs as well as European Patents.  This post therefore looks at the provisions in the UPCA and the Rules of Procedure which deal with SPCs; the impact of these provisions on SPCs, European Patents and Unitary Patents; the issues raised by these changes; and finally the project of a unitary SPC.

I. The provisions concerning the SPC in the Unified Patent Court Agreement (UPCA) and the Rules of Procedure: 

A.  The UPCA:

  • Article 2 (h) “Supplementary protection certificate” means a supplementary protection certificate granted under Regulation (EC) No 469/20091 or under Regulation (EC) No 1610/962“

 

  • Article 3 ” This Agreement shall apply to (b) supplementary protection certificate issued for a product protected by a patent“

 

  • Article 30  “A supplementary protection certificate shall confer the same rights as conferred by the patent and shall be subject to the same limitations and the same obligations“

 

  • Article 32 “The Court shall have exclusive competence in respect of:(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; (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”.

 

  • Article 83 “(1) During a transitional period of seven years after the date of entry into force of this Agreement, an action for infringement or for revocation of a European patent or an action for infringement or for declaration of invalidity of a supplementary protection certificate issued for a product protected by a European patent may still be brought before national courts or other competent national authorities. (2) An action pending before a national court at the end of the transitional period shall not be affected by the expiry of this period. (3) Unless an action has already been brought before the Court, a proprietor of or an applicant for a European patent granted or applied for prior to the end of the transitional period under paragraph 1 and, where applicable, paragraph 5, as well as a holder of a supplementary protection certificate issued for a product protected by a European patent, shall have the possibility to opt out from the exclusive competence of the Court. To this end they shall notify their opt-out to the Registry by the latest one month before expiry of the transitional period. The opt-out shall take effect upon its entry into the register. (4) Unless an action has already been brought before a national court, proprietors of or applicants for European patents or holders of supplementary protection certificates issued for a product protected by a European patent who made use of the opt-out in accordance with paragraph 3 shall be entitled to withdraw their opt-out at any moment. In this event they shall notify the Registry accordingly. The withdrawal of the opt-out shall take effect upon its entry into the register. (5) Five years after the entry into force of this Agreement, the Administrative Committee shall carry out a broad consultation with the users of the patent system and a survey on the number of European patents and supplementary protection certificates issued for products protected by European patents with respect to which actions for infringement or for revocation or declaration of invalidity are still brought before the national courts pursuant to paragraph 1, the reasons for this and the implications thereof. On the basis of this consultation and an opinion of the Court, the Administrative Committee may decide to prolong the transitional period by up to seven years.“

 

B. The Rules of Procedure:

  • Rule 2:” 1. Subject to paragraph 2, in these Rules with the exception of Rule 5 the expression “patent” and “proprietor” shall whenever appropriate include, respectively, a supplementary protection certificate as defined in Article 2(h) of the Agreement and granted in respect of the patent and the holder of such certificate. 2. References in these Rules to the language in which the patent was granted shall mean that language and not the language in which a supplementary protection certificate in respect of the patent was granted.“

 

  • Rule 5: “Rule 5 – Lodging of an Application to opt out and withdrawal of an opt-out 1. The proprietor of a European patent (including a European patent that has expired) or the applicant for a published application for a European patent (hereinafter in this Rule 5 an “application”) who wishes to opt out that patent or application from the exclusive competence of the Court in accordance with Article 83(3) of the Agreement shall lodge an Application (hereinafter in this Rule 5 an “Application to opt out”) with the Registry. (a) Where the patent or application is owned by two or more proprietors or applicants, all proprietors or applicants shall lodge the Application to opt out. Where the person lodging an Application to opt out is not recorded as the proprietor or applicant in the registers referred to in Rule 8.5(a) and (b), respectively, the person shall lodge a declaration pursuant to paragraph 3(e). (b) The Application to opt out shall be made in respect of all of the Contracting Member States for which the European patent has been granted or which have been designated in the application. 2. An Application to opt out or an Application to withdraw an opt-out pursuant to paragraph 8 (hereinafter in this Rule 5 an “Application to withdraw”) shall extend to any supplementary protection certificate based on the European patent. (a) Where any such supplementary protection certificate has been granted at the date of lodging the Application to opt out or the Application to withdraw, the holder of the supplementary protection certificate shall, if different from the proprietor of the patent, lodge the Application to opt out or the Application to withdraw together with the proprietor. (b) Where any such supplementary protection certificate is granted subsequent to lodging the Application to opt out, the opt-out shall take effect automatically on grant of said supplementary protection certificate. (c) Paragraphs 7 and 9 shall apply mutatis mutandis. For the purposes of paragraphs 7 and 9, reference to actions (i) in respect of a European patent shall apply to all supplementary protection certificates based on that European patent, and (ii) in respect of a supplementary protection certificate shall apply to the European patent on which such supplementary protection certificate is based and (iii) in respect of a supplementary protection certificate shall apply to all other supplementary protection certificates based on the same European patent. (d) For the avoidance of doubt, it is not possible to opt out supplementary protection certificates, whether granted by the authorities of a Contracting Member State or otherwise, based on a European patent with unitary effect. 3. The Application to opt out shall contain: – 22 – (a) the name of the proprietor or applicant for the European patent or application and of the holder of any supplementary protection certificate based on the European patent in question, and all relevant postal and, where applicable, electronic addresses; (b) where such proprietor, applicant or holder have appointed a representative, the name and postal address and electronic address for service of the representative; (c) details of the patent and/or application including the number; (d) details of any supplementary protection certificate granted based on the patent concerned, including the number; and (e) for the purposes of paragraph 1(a), a Declaration of proprietorship that the person lodging the Application to opt out is the proprietor or applicant pursuant to Rule 8.5 and entitled to lodge the Application to opt out. 4. Rule 8 shall not apply to Applications to opt out and to Applications to withdraw made pursuant to this Rule 5. Where a representative is appointed, such a representative may include professional representatives and legal practitioners as defined in Article 134 EPC in addition to those referred to in Article 48 of the Agreement. 5. The applicant for an opt-out shall pay the fixed fee in accordance with Part 6. The Application to opt out shall not be entered in the register until the fixed fee has been paid. One fixed fee shall be payable in respect of each European patent or application for which an Application to opt out has been filed, including any supplementary protection certificate based on said patent or application. 6. Subject to paragraph 5 the Registrar shall as soon as practicable enter the Application to opt out in the register. Subject to paragraph 7, the opt-out which meets the requirements laid down in this Rule shall be regarded as effective from the date of entry in the register. If the requirements are missing or incorrectly recorded, a correction may be lodged with the Registry. The date of entry of the correction shall be noted in the register. The opt-out shall be effective from the date of correction. 7. In the event that an action has been commenced before the Court in respect of a patent and/or an application contained in an Application to opt out prior to the date of entry of the Application to opt out in the register or prior to the date of correction pursuant to paragraph 6, the Application to opt out shall be ineffective in respect of the patent and/or application in question, irrespective of whether the action is pending or has been concluded. 8. A proprietor of a patent or an application the subject of an opt-out pursuant to this Rule may lodge an Application to withdraw in respect of the patent or application, but not in respect of different Contracting Member States for which the European patent has been granted or which have been designated in the application. The Application to withdraw shall contain the particulars in accordance with paragraph 3 and shall be accompanied by the fixed fee in accordance with Part 6; paragraph 5 shall apply mutatis mutandis. Subject to the receipt of the fixed fee the Registrar shall as soon as practicable enter the Application to withdraw in the register and the withdrawal shall be regarded as effective from the date of entry in the register. Paragraphs 1(a) and 6 shall apply mutatis mutandis. 9. In the event that an action has been commenced before a court of a Contracting Member State in a matter over which the Court also has jurisdiction pursuant to Article 32 of the Agreement in respect of a patent or application contained in an Application to withdraw, prior – 23 – to the entry of the Application to withdraw in the register or any time before the date pursuant to paragraph 6, the Application to withdraw shall be ineffective in respect of the patent or application in question, irrespective of whether the action is pending or has been concluded. 10. Where an application for a European patent subject to an opt-out pursuant to this Rule proceeds to grant as a European patent with unitary effect, the proprietor shall notify the Registry. The opt-out shall be deemed to have been withdrawn in respect of the Contracting Member States covered by the European patent with unitary effect at the date of the registration of the unitary effect and the Registrar shall as soon as practicable enter the withdrawal in the register in respect of such Contracting Member States. No fee shall be payable pursuant to paragraph 8. 11. A patent or application the subject of an Application to withdraw which has been entered on the register may not thereafter be the subject of a further Application to opt out. 12. The Registrar shall as soon as practicable notify the European Patent Office and the national patent office of any Contracting Member States concerned of the entries in the register pursuant to paragraphs 6 and 8. 13. Applications accepted by the Registry before the entry into force of the Agreement shall be treated as entered on the register on the date of entry into force of the Agreement. Relation with Agreement: Article 83(3) and (4) “

 

 

II. So how is it going to work?

A.  SPCs granted on top of European Patents:

As with European Patents (EP) themselves, SPCs referencing the European Patent as the basic patent will, under Article 3 of the UPC agreement, be subject to the UPC’s exclusive jurisdiction. Under article 83 UPCA, it will however be possible during the transitional period (currently 7 renewable years) to opt out of the UPC’s exclusive jurisdiction European Patents and their corresponding SPC.

 During the transitional period:

(i) SPCs granted on top of European Patents which are opted-out: 

  • If an EP has been opted out, and an SPC granted subsequently, the SPC is automatically opted out, and this opt out lasts for the whole life of the SPC. 
  • If an SPC has been granted before an application to opt out an EP is filed, the proprietor(s) of both the EP and (if different) the SPC must register the opt out.  In order for an opt out to be valid, all relevant proprietors must, in fact, participate in the opting out process.  In the 18th Draft Rules of Procedure, Rule 8.4 has been amended, and the proprietor is now defined as “the person shown in the Register for unitary patent protection as the proprietor shall be treated as such”.
  • If the EP has expired, and only the SPC remains in force at the time of the opt-out, the SPC proprietors and the expired EP proprietors will both need to register the opt-out.

Consequences of the Opt-out: if an SPC and its underlying EP are opted out, only national litigation in relation to those rights will be possible.

(ii). SPCs granted on top of European Patents which are not opted-out:

Under Article 83(1), if the European patent has not been opted-out, the patent and its corresponding SPC will be prima facie under the exclusive jurisdiction of the UPC. However actions for infringement or revocation may still be brought before national courts.

 

 After the transitional period:

(i) At the end of the transitional regime, the UPC will be the sole court to be competent in case of litigation concerning:

  • All European Patents not opted-out
  • All SPCs granted on top of European Patents not opted-out

(ii) National Jurisdictions will be competent in case of litigation concerning:

  • All European Patents opted-out
  • All SPCs granted on top of European Patents opted-out

 

B. SPCs granted on top of European Patent with unitary effect (or Unitary Patent):

European patents with unitary effect will not have the possibility to be opted-out. They will be under the exclusive jurisdiction of the UPC during and after the transitional period. This will therefore also be true for their corresponding SPCs.

However, despite being based on Unitary Patents, valid in 25 Member states, SPCs will not have the same territorial scope as Unitary Patents. Instead, the same system which exists at present for SPCs based on national or European Patents will apply, and individual national applications will have to be made.
III. Uncertainties: 

 There are quite a few grey areas concerning the interaction between the Unitary Patent, national patents and SPCs, notably:

  • For European Patents (opted-out or not), it is uncertain whether the corresponding SPCs, which are national titles, can benefit from Art. 34 UPCA, which states that the decisions of the Court shall cover the territory of those contracting Member States for which the European patent has effect, and be applied by the patentee in all 25 Member States.

The European Commission, despite declaring that the articulacy between the unitary patent and the current EU rules on SPCs is a “key challenge to get the end game right ” in its “Staff working document” on a “Single market strategy for Europe”, identifies further issues:

  • The Commission first fears that if SPC users wish to benefit from the unitary patent this “will require multiple administrative procedures in multiple jurisdictions, limiting the full benefits of a unitary system.“
  • The Commission also highlights the problem of  the”patent research exemption” and “Bolar exemption” which are applied by Member States differently. This exemption could lead with the entry into force of the Unitary Patent and UPC to forum shopping. In fact “on the one hand, some Member States do not allow the supply of active pharmaceutical ingredients (APIs) to EU-based generic manufacturers for the purpose of seeking marketing authorisation. On the other hand, in a number of Member States, it is not certain whether testing in the EU by originators and biosimilars can benefit from these exemptions for the purpose of seeking marketing authorisation in the EU and in non-EU countries, or for meeting emerging regulatory requirements such as those related to health technology assessment“.

The European Commission thus announced to be working on a project of Unitary SPC, and on the coherence between the upcoming unitary patent and current EU rules on SPC -in the absent of a unitary SPC title.

 

 

IV. Towards a Unitary SPC? 

The European Commission considers that applying the unitary patent system to SPCs would help optimising the legal framework for industry sectors whose products are subject to regulated market authorisations, and which currently “presents several features not fit for purpose in today’s global economy and in the light of new regulatory requirements“.  The European Commission therefore calls for a Unitary SPC to  “enhance the value, transparency and legal certainty of the protection of medicines and plant protection products; and provide a one stop shop for the granting of SPCs in Europe, and give enhanced certainty to European health authorities, to patients and to generic companies on the status of a regulated product’s IP protection.”

The European Commission’s project is supported notably by the European Crop Protection Association (ECPA), European Federation of Pharmaceutical Industries and Associations (EFPIA) and the International Federation of Animal Health (IFAH). These three organisations published in 2015 a letter in support of a Unitary SPC being granted on the basis of European Patent with unitary effect which they see as “a logical continuation of the Member States’ decision and agreement to create a European Patent with unitary effect“. In this letter the ECPA, EFPIA and the IFAH point out that it will be necessary to designate a body responsible for granting the Unitary SPC for the 25 Member States participating to the enhanced cooperation mechanism.

The Unitary SPC might however be a project for which a political compromise is quickly reached, following the positive valuation for the UPC of a gain of 0.25 % GDP in EU -“which represents the possible net productivity impact resulting from the reduction of validation and maintenance fees in the Member States for patents granted by the European Patent Office”- and a reduction of up to 80% in the cost in administrative costs.

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Could there be a Unitary Supplementary Protection Certificate?

Supplementary Protection Certificate

A Unitary Supplementary Protection Certificate to complement the Unitary Patent?

A few countries have recently geared up for the ratification of the UPC Agreement. Although the date of its entry into force is yet unknown it is hoped that the Unified Patent Court will start its operation before the UK leaves the EU. This means that the Unitary Patent may also become available before March 2019. Indeed, EU Regulations No 1257/2012 and No 1260/2012 entered into force on 20 January 2013 will apply from the date of entry into force of the UPC Agreement. However, the issue of the Unitary Supplementary Protection Certificate still has to be resolved.

In 2015, the EU Commission announced that as part of the Single Market Strategy,  an initiative of the European Commission’s plan to unlock the full potential of the Single Market,  the Commission would ‘consult, consider and propose further measures, as appropriate, to improve the patent system in Europe, notably for pharmaceutical and other industries whose products are subject to regulated market authorisations’. The Strategy thus aimed at exploring a recalibration of certain aspects of patent and supplementary protection certificate protection. According to the EU Commission, this could comprise the following three elements: (1) the creation of a European Supplementary Protection Certificate title, (2) an update of the scope of EU patent research exemptions, and (3) the introduction of an SPC manufacturing waiver.

The promised consultation process finally took place between 12 October 2017 to 4 January 2018 and a total of 231 replies were provided. Its outcomes are summarised in the “Summary of the replies to the public consultation on Supplementary Protection Certificates and patent research exemption for sectors whose products are subject to regulated market authorisations”

It transpires from it that a “very large majority of the respondents across all categories favour the creation of a unitary Supplementary Protection Certificate”, extending unitary patents when such patent rights expire.

Regarding the benefits of a unitary Supplementary Protection Certificate the participants declared the following:

“ (I)t could boost the value of investments, that it would reduce red tape relating to registration and to litigation, that it would provide uniform protection across the Union as well as legal certainty, that it would reduce maintenance costs, that it would offer a specialised court, and that it would make licensing easier. A large majority of generics/biosimilars (‘G/B’) manufacturers, including SMEs, share these views.

One Member State considered that it would also simplify and enhance the efficiency of the SPC application process.

Opinions diverge regarding the practicalities for implementing such a new title. While some respondents favour the grant of that title by a virtual office composed of national experts working on behalf of an EU agency, others prefer either to entrust the EPO with this task, or to set up a new EU agency to do so.

Amongst SMEs manufacturing G/Bs, half of them favour the grant of unitary SPCs by a new EU agency, while the other half favour the EPO for this purpose.”

Concerning the languages to be used for a unitary Supplementary Protection Certificate:

“(A) clear majority favoured the EPO language regime (English, French, German), which is the regime that is applicable to the EU unitary patent. However, SMEs manufacturing generics and biosimilars prefer the five language regime of the EUIPO (English, French, German, Italian and Spanish), whilst one of these favours the EPO regime.

Respondents also mostly considered that national marketing authorisations should be able to be used (in addition to EU marketing authorisations) as a basis for getting a unitary SPC, even though the latter would then not be enforceable in those Member States where no marketing authorisation would have been granted (through mutual recognition or decentralisation procedure).“

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What are the consequences of an opt-out?

Opt-out: How to opt-out a patent?

§. Once an opt-out has been notified to the UPC registry and registered:

  •  If it was granted for a European patent application, the opt-out will automatically apply to the European patent in question.
  • The opt-out will be valid in all Contracting Member States where this patent produces legal effects. There is no need to notify the opt-out separately for the relevant Contracting Member States.
  • The opt-out will last for the whole life of the patent. It will not be limited to the length of the transitional period.
  • The proprietor can withdraw the opt-out at any time and decide to opt back in. This opt-in will then be definitive: the patent proprietor will not be able to opt out its European patent again.

 

It must be noted that opting out will not be possible if an action is already pending before the UPC.

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What does it mean to Opt-out a European patent from the jurisdiction of the UPC?

Opt-out: How to opt-out a patent?

§. What is an “Opt-out”?

The opt-out is the procedure by which proprietors or applicants for a European patent can withdraw their patents from the exclusive competence of the Unified Patent Court.

Only European patents granted or applied for before the end of the transitional period can be opted out. It will thus not be possible to opt-out European patents with unitary effect or Unitary patents.

§. What happens once the patent is opted out?

Once granted the opt-out will take effect in all participating Member States, and the opted out patent will be removed entirely from the jurisdiction of the UPC.

A European patent opted out will thus be under the exclusive competence of national courts. This means that national courts will be the sole jurisdiction before which -for example- actions for infringement or for revocation of the national part of a European patent can be brought.

However, during a 7 year transitional period after the entry into force of the UPC Agreement, the UPC will share jurisdiction with national courts over actions for infringement or revocation of a European patent. Hence, any holder of or applicant for a European patent will be able to initiate actions before national courts. This will be possible regardless of whether the European patent or application concerned has been the subject of an opt-out.

During this period, the UPC will indeed also have exclusive jurisdiction over Unitary patents.

§. When will the opt-out be allowed?

European patent owners will be allowed to opt-out from the start of the sunrise period up to the last month before the end of the transitional period. In other words it will be available from 3 months before the UPC Agreement entry into force to at least 6 years and 11 months after the entry into force of the UPC Agreement.

§. What are the provisional application phase and the sunrise period?

The Provisional Application Phase is scheduled to last for 6 months. The last 3 months, also known as the sunrise period, will specifically allow European patent proprietors to start opting out. The beginning of the Provisional Application Phase is not yet known but could start during the Autumn 2017.

§. What is the transitional period?

The transitional period is a renewable 7 year-period. During this time the UPC will share jurisdiction with national courts over actions for infringement or for revocation of a European patent.

If the UPC Administrative Committee does not extend the transitional period for a further seven years, the UPC will then have perpetual exclusive jurisdiction over Unitary patents and European patents. Opted out European patents will not come back in the UPC exclusive competence once the transitional period is over.

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Update on the Opt-out Process and the Case Management System: a Letter from the UPC Chairman

UK ratifies the UPC Agreement

The UPC Chairman answers the questions of the British IP Federation about the opt-out proceedings.

On June 13th, the British IP Federation, which represents the view of UK industry in IP policy and practice, wrote an open letter to the Chairman of the Preparatory Committee of the Unified Patent Court (UPC) Mr Alexander Ramsay asking him to clarify the opt-out process during the sunrise period (3 months before the entry into force of the UPC Agreement).

Six days ago, the IP Federation published on its website the reply from the chairman. In his response, Mr Ramsay addressed the following points:

  1. The Chairman clarified the meaning of rule 12 of the Draft Rules on the European Patent Litigation Certificate. This rule does not prevent a European Patent Attorney (EPA) with an existing alternative qualification to register during the sunrise period as a UPC Representative.
  1. The IP Federation had concerns that the massive influx of registrations as UPC representatives at the start of the sunrise period could create delay. But, the chairman stated that arrangements had been made to manage the expected large number of applications.
  1. All users, including staff members, will have to register on the Case Management System (CMS) if they want to make applications to opt out. There will be a two-stage authentication procedure to register, first as a user, then as a UPC representative on the CMS. The details of this procedure will be published in the near future on the UPC Website.
  1. The formalities staff will be able to prepare the opt-out applications for EPAs or representatives to file. However, the formalities staff will have to use their own user ID if they want to register the opt-out on behalf of the EPA or representative. Any user that lodges the application will be responsible for its content and must provide her user identity. Besides, a mandate will be required for any user that is not a qualifying EPA or a UPC representative.
  1. The proprietor of a patent will not need a mandate to opt it out. If the proprietor is a company, any member of the staff who is not a UPC representative will need to file a mandate. This is why the Preparatory Committee is considering the creation of a general mandate to authorize multiple opt-out applications by a particular user over a period.
  1. Application Programming Interfaces (APIs) are provided by the UPC IT team in the developer section of the UPC website to enable companies to integrate the CMS to their IT systems. Also, a user-friendly guidance through the APIs and a list of third-party companies specialized in services for integration with the CMS will be published on the UPC website as soon as possible.

The Chairman did not specify any date for the start of the sunrise period.

Changes coming to the Case Management System.

On a side note, on July 5th the UPC IT team released an update to the CMS. The goal is to fine-tune different processes on the site like the opt-out application process or the procedure of patent selection. A new API was also made public on the UPC website.

A few days later, the UPC IT Working Group Coordinator Dario Pizzolante announced in a statement that a new version of the CMS specifically designed for the opt-out procedure during the sunrise period will be released in August. He also added that in the future the changes made to the CMS will not be released continuously but instead in larger updates. The IT team is currently working on the adaptation of the CMS to the rules of procedure and on the authentication mechanism. Besides, the team has been receiving feedbacks from multiple workshops since the creation of the temporary website.

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A new tender for the recalibration of SPCs

Last week, the EU Commission published a new call for tender for a legal study on the EU system of Supplementary Protection Certificates (SPCs), after the previous tender attracted a very limited number of bids.

This study will be used by the Commission for an overall evaluation of the SPC system in the EU and will inform the decision on whether to come forward with a new SPC title at European level or revise the existing SPC legislation.

A number of issues have in fact been raised regarding SPCs and their compatibility with the unitary patent and the unified patent court (see below for our existing posts on this issue). The pharmaceutical industry has for example highlighted the fact that while the unitary patent will be delivered for all the contracting member states by the EPO, SPCs will be granted in each Member State in which the basic patent was granted and the MA obtained, after filing at the national industrial property office. The SPC and its corresponding unitary patent will thus not have the same territorial scope. Similarly, the opt-out might be logistically complicated as all the proprietors of both the EP and  the SPC must register the opt-out for it to be valid.

The contracted study shall thus evaluate the legal efficiency of the current SPC framework “in meeting its stated objectives given the development of directly affected and related product markets” and whether a new European SPC title is required to meet the requirements of current and expected innovative market developments in the EU.

The results of this study are expected at the beginning of 2017.

If you are interested in this call, you can find here the complete tender documents.

You can find here our post detailing the changes that the unitary patent will bring with regard to SCPs, and our introduction to the topic here.

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How to conjugate “to opt out” and more news on the topic:

Supplementary Protection Certificate

Yesterday (06/06/16) the Union pour la Juridiction Unifiée organised in Paris an event on the Opt-out. The day was divided between a morning session with panels sharing their position on the Opt-out  and clarifying procedural and technical questions while a mock trial examining the validity of an opt-out was organised in the afternoon.

The panel discussions were an opportunity for some useful vocabulary reminders by Pierre Véron, who pointed out the necessity to get used to the UPC vocabulary such as:

  •  staying-in (for European patents without unitary effect but not opted-out) rather than opting-in (as this would refer to a specific action from the patent proprietor to opt-in),
  • to withdraw an opt-out
  • To opt out
  • An opt-out (for those of us who are not English native speaker, the nuance is in the hyphen…)

Beyond issues of lexicology a few important points were clarified by the participants on the different aspects of the opt-out:

  • On the issue of representatives, all participants were reminded that there is no need to be a “professional” representative, such as a patent attorney or lawyer, to process the opt-out. A person instructed by the company itself, such as an employee of the company can opt-out a patent.

 

  • The issue of the impact of late ratifications on the geographical scope of the opt-out was also raised. In fact if a patent is opted out at a time where only 16 member states have ratified the UPCA, what happens when a new country ratifies the Agreement? Does the opt-out automatically applies for this country too? No answer could be given today, but the next (and last) batch of rules of procedure should clarify this matter.

 

  • It was also reiterated that if the true owner of the patent is not registered in the registers of all participating member states, he/she must lodge a declaration that they are the true owner.

 

  • The IT team confirmed that the option to opt out in bulk (for more than one patent) will be allowed by the Case Management System. It will be possible to manually identify an unlimited number of patents to opt out in the CMS, or to use an “Application Programming Interface” that will allow a selection of patents from a database outside the CMS that will then be exported to the CMS  to be opted out. This last option will allow very large numbers of patents to be opted out easily and within a short amount of time.

 

  • Finally, the IT team is working on an additional security level that would prevent (or reduce) unauthorized opt-outs (arising from mistakes or  maliciously opted out). They are considering different options such as a login linked to some form of ID, the download of a letter of intention/proof of representation/copy of practice certificate/power of attorney, a letter of confirmation sent to the physical address of the patent holder or a fixed line call-back system that would automatically call the patent holder to confirm the opt-out. Some of these options are however costly, while others involve lengthy steps before receiving the confirmation of the opt out. The IT team  recommended anyway a close monitoring of patent portfolios in registers.

 

Lastly, panelists from Bosch, Sanofi, and Ericsson presented their approach to the opt-out: All three highlighted the fact that they would not proceed to a  general opt-out. Sanofi explained that they are in the process of selecting which patent they will opt-out by taking into consideration factors such as the patents’ potential for litigation (is it a patent that attracts litigation or not?), the uncertainty as to the application of the Bolar exemption, the problems that might arise from the possible inexperience of judges, but also the necessity to contribute to the elaboration of the case law and to be attuned to what their competitors are doing in this area. Ericsson reported that their strategy was in progress and would take into account their need for flexibility in the choice of courts, the injunction possibilities (for example: will injunctions be available before the UPC for SEPs?), the centralized effect of the UPC versus the national court lock-in effect with the opt-out, and finally the legal uncertainty that comes with the new system. Bosch on the other hand explained that they will be reviewing their patent portfolio throughout the UPC transitional period  (7 years from the entry into force of the UPCA and renewable once) and will decide on a case by case basis whether to opt out their patents. Bosch made clear that their decision would be based on criteria that would be directly relevant to the patent, such as  the technology protected by the patent or the scale of the investment, rather than on a legal reasoning.