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The European Commission’s take on the UPC’s impact on SMEs:

Brexit and the German constitutional challenge

The European Commission published in the last quarter of 2015 a “Staff working document”  analysing Europe’s single market strategy and ways to encourage modernisation and innovation within the EU.  The consolidation of Europe’s intellectual property framework, is -as expected- a pillar of the Commission’s strategy.  The Staff working document,  in Section 3.3.1, looks specifically at the effects of the UPC on the consolidation of Europe’s IP structure, and in particular on SMEs.

The impact of the UPC on the latter has been a hot topic since the start of the Unitary Patent Package and especially since the draft cost guidelines were published (see our post here). In fact, it has been feared that high litigation costs would be detrimental to SMEs, leaving them struggling to enforce their IP rights or defend themselves. The European Commission establishes in this document that if only 17% of all patent technology can be attributed to SMEs, “the cost exposure for IP rights and particularly patent litigation is significant, hits SMEs disproportionately hard and acts as a serious deterrent for SMEs to engage in patenting in the first place“. Under the Unified Patent Court, SMEs may indeed have to pay, the winner’s court fees of up to EUR 220, 000 euros, the winner’s legal costs of up to EUR 3 millions, plus damages.

In order to counter the negative effects of the UPC on SMEs the Commission therefore highlights a few measures:

  • The Commission considers that the development and launch of a European Commercial IP legal costs insurance could negate the risk of legal fee exposure and “lead to more investment by banks and other financial institutions into innovative start-ups and SMEs” thanks to the security of insurance and the possibility to increase the value of IP assets. The commission believes that this litigation insurance market could develop at European level as the scale would be considerably bigger than national level where it failed to grow . This would be launched when the unitary patent comes into effect.
  • COSME funds (European programme for small and medium entreprises), designed to encourage innovative European SMEs will be used to assist the latter in applying for European IP titles including the Unitary Patent.
  • The Horizon 2020  SME instrument will be used to “encourage European ‘disruptive’ innovators to protect their investments with unitary patents so that they exploit them commercially at EU level, rather than at national level where they may not be commercially viable“.

A more accurate analysis of the impact of the UPC on SMEs and response to the challenges that this will raise, will however only be possible once the definite cost guidelines are published scheduled for the coming months.

Furthermore, under Section 3.3.2 of the “Staff working document” the European Commission also voices its concerns regarding the following issues, although not specific to SMEs are essential in securing legal certainty for all UPC users:

  • “The coherence between the upcoming unitary patent and current EU rules on SPC – in the absent of a unitary SPC title – will be important. SPCs are instrumental for industry sectors whose products are subject to regulated market authorizations;
  • The consequences of the rejection of a request for unitary effect, and the revocation of a unitary patent due to defeating national prior art 203 and the possible acceptable conditions to convert such a putative unitary patent into a bundle of national patents;
  • The principle of non-double protection deriving from unitary patent and national patents, except in very limited circumstances; and
  • The possible issues stemming from the obligation to designate all participating Member States for the purpose of obtaining a unitary patent.“

These concerns raised by the Commission seem to be especially important in the light of the new target of 0.25% in EU GDP evaluated by the Commission, which captures 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, subsequently, the increase in the number of non-national patent rights enforced.

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On your marks, get set, go! Candidates Judges will be able to apply for the UPC before the end of March 2016.

UPC Judges recruitment 2019

A recent interview of Sir Robin Jacob, Chairman of the UPC Advisory Committee, gives indications as to the procedure and timeline that the UPC will follow to select and appoint judges. This selection should start within two months, with the publication at the end of February/beginning of March 2016 of an announcement and online application.

In 2013 an initial call for expression was published and received over 1300 responses, a much higher number than expected. This was not a formal job application but “an initial assessment prior to the formal application process” which allowed the UPC Advisory Committee to identify 354 eligible legally qualified judges  and 341 eligible technically qualified judges. Out of these candidate Judges,  183 required training and about 20 of them were sent to Budapest last year to learn about  basic patent law. Candidates who applied to this first call of expression and new candidates are now invited to submit their application to the new formal recruitment process.

The new online application process  should allow the Advisory Committee’s Human Resources and Training group to identify very quickly the legal, technical and languages expertise of the candidate judges and therefore facilitate the selection process. It is expected that about fifty legally and fifty technically qualified judges will be selected. The number of appointed judges will initially be kept small to match the expected workload.  A pool of appointable candidates will nonetheless be on hand to allow the UPC to respond if needed to high numbers of cases.

The fact that most judges will be working part-time for the UPC raises however two issues. First under the UPCA, national judges are allowed to work part-time at the UPC but lawyers can only do so with special permission. This, as highlighted by Sir Robin Jacob, can be a problem for countries such as the UK which have a specific tradition of using lawyers as judges on a part-time basis. Moreover, some countries do not permit their judges to be part-time, and this will necessitate an amendment of national laws.

 

 

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UPC Judges training and appointments- What are the next steps in 2016?

UPC Judges recruitment 2019

As posted here the training for 18 “Extra Training Judges”and Technically Qualified Judges started in 2015. The next steps for the nomination in 2016 of UPC Judges were discussed at the EPLAW Congress in Brussels on 7th and 8th December 2015. It appears that:

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Alexander Ramsay, the Chair of the Preparatory Committee, on the UPC latest developments:

Alexander Ramsay, the newly elected Chair of the Preparatory Committee and Deputy Director at the Division for Intellectual Property and Transport Law Ministry of Justice in Sweden,  talks about the latest developments of the Unitary Patent package in an interview published on 15/12. Here is a summary of the activity of the Preparatory Committee and the last steps that must be taken before the entry into force of the UPCA:

Introduction date of the Unitary Patent Package:

The Preparatory Committee is trying to conclude its preparatory work by mid-2016. This will then be followed by “a period of provisional application of at least 6 months where after the UPC Agreement can enter into force and the Court become operational. However to start provisional application 13 Member States, including France, Germany and the United Kingdom, will need to ratify or at least get parliamentary approval to ratify the Agreement.”

Latest development of the UPC: 

  • The Rules of Procedure were agreed, but will need to be amended when the Committee agrees on court fees and the ceilings of the recoverable costs.
  • The Committee conducted a consultation on the court fees and the ceilings of the recoverable costs and is now considering the outcome and working on an adjusted proposal. 
  • Development of IT is on track. IT system will start to be “tested, fine-tuned and adjusted” in the beginning of 2016.

Costs and Fees: 

  • The Preparatory Committee “is likely to be able to conclude its work in December 2015 on the level of the renewal fees, the distribution of income from the renewal fees and the implementing rules“.

Protocol on the provisional application of the UPCA: 

  • The provisional agreement on the UPCA will allow for the organisation and all the formal organs of the Court to be formally established.
  • This will allow for all decisions to be taken “in the good order prescribed by the Agreement, e.g. employ judges, form a Presidium and elect the two Presidents”.
  • It will also allow the judges to prepare and test run all the systems  before the entry into force of the Agreement.
  • Finally,  it will also be possible to file opt-outs at the Registry. The opt-outs will therefore be effective from the first day of the entry into force of the Agreement.

 

The overview of the 13th meeting of the Preparatory  Committee can be seen here.

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The secondary legislative framework necessary for the implementation of the UPC adopted by the Select Committee

The Select Committee adopted on 15/12/15  a series of agreements necessary  for the implementation of the Unitary Patent package:

  • The Rules relating to Unitary Patent Protection,
  • The Rules relating to Fees for Unitary Patent Protection,
  • The Rules relating to the distribution of fees amongst the participating Member States,  
  • The Budgetary and Financial Rules.

The Committee has therefore now put into place a comprehensive and complete secondary legal framework for the unitary patent, which will allow for the implementation of the Unitary Patent package.

As the EPO President Benoît Battistelli declared, the legal far: “This is a hugely significant occasion for the European patent system. With the adoption of these rules today, the preparations for the unitary patent are complete. We are now legally, technically and operationally ready to deliver the unitary patent. The only remaining step is the opening of the Unified Patent Court and the finalisation of the ratification process at national level. We hope this will happen in 2016 and we are convinced that it will boost innovation in Europe and will be beneficial for the European economy, especially for European SMEs.”

As a reminder: The Unitary Patent system and the Unified patent Court will only come to life once thirteen states, including France Germany and the UK, have ratified the Unified Patent Court Agreement. So far eight states, including France, have ratified. See our posts on ratification here.

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Distribution key of the renewal fee income adopted by the EPO:

On 17th November the European Patent Organisation adopted the distribution key for the repartition of the 50% share of the participating Member States in the renewal fee income among them.

In fact while the EPO retains 50% of the renewal fee income, its Select Committee had to decide how the apportionment of the 50% share of the Unitary patent renewal fees would be apportioned amongst the participating EU Member States.

According to Bristows “it has been agreed that for an initial period of operation the 50% of the fees (minus an administrative charge) will be distributed according to a formula that takes account of the GDP and the number of applications filed from each participating Member State.“

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Updates on the Protocol on Provisional Application of the Unified Patent Court Agreement:

protocol to the agreement on unified patent court on provisional application

The Protocol on Provisional Application of the Unified Patent Court signed on 01/10/15  has had a few updates since its our first post:

  • Hungary signed the Protocol on 07/10/15 after  its representative was prevented from signing the Protocol on 01/10/15, as the necessary Hungarian legal requirements had not been completed on time.
  • The Netherlands made a declaration stating that it will be bound by the provisional agreement from the day it will ratify the Unified Patent Court Agreement.
  • The United Kingdom made a reservation to the Unified Patent Court Agreement stating that it “shall not provisionally apply Article 4 of the Agreement on a Unified Patent Court”.

The Protocol will allow  “final decisions on the practical set up of the Court” to enter into application such as the “recruitment of judges and testing of IT systems“,  to permit a smoother set up of the court. The provisional application phase will also be used to allow for early registration of opt-out demands.

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“Unitary patent protection: what’s next?” Conference in Vilnius:

The State Patent Bureau of the Republic of Lithuania organises a conference on the topic “Unitary patent protection: what’s next?” which will take place on 19 November, 2015 in Vilnius, Lithuania.

According to the European IPR Helpdesk, the main focus of the conference will be  “to review and evaluate current approaches and developments in relation to unitary patent and the UPC, such as: renewal fees and their distribution, court fees and other litigation expenses, overview of EPO Select and Preparatory committees’ activities and other latest developments“.

 

Participation is free of charge, but the number of participants is limited. Conference registration required by e-mail: registracija@vpb.gov.lt.