The UPP - Unitary Patent Package – One Patent, One Cost; One System; 26 Countries.

by Aurelia Chaise

One of the key issues in innovation in Europe has been the segmentation of the IPR system whereby patent protection across the EU member states was a legal and financial minefield. This gave a huge advantage to the larger multinationals and disadvantaged smaller enterprises and academic researchers. Only recently has the trend started to pool potential Intellectual Property Rights (IPR) in listed companies using public raised funds to manage IPR, such examples are  IVO (Imperial Innovation) and ALM (Allied Minds) in the UK stock market, but even these are highly selective for the topics they will bring under their umbrella..

The European Patent Office (EPO) has developed and negotiated, and the European Commission is active in, the implementation of a unified patent package. When it comes into operation in 2017, it will establish a European patent with unitary effect (the ‘unitary patent’) and a new patent court. The “unitary patent” (UP) is a legal title that will provide uniform protection across 26 EU countries on a one-stop-shop basis, providing huge cost advantages and reducing administrative burdens. The package will also set up a Unified Patent Court (UPC) that will offer a single, specialised patent jurisdiction.

Unitary patent protection will make it possible for inventors (individuals, companies or institutions) to protect their invention in 26 EU countries by submitting a single patent application to the EPO. After the patent is granted, there will be no need to validate it in each country, unlike the current system.

Unitary patent protection will make the existing European system simpler and less expensive for inventors. It will end complex validation requirements and drastically limit expensive translation requirements in participating countries. Consequently, it is expected to stimulate research, development and investment in innovation, especially using private sector funds where IPR is more urgently requested.

Unitary patent protection will also protect inventions better than the current system. Due to the prohibitive costs involved in the national validation of European patents, many inventors currently only patent their inventions in a handful of countries. This makes inventions less valuable as the lack of protection in other countries allows them to be copied more easily.

Today, there is a very centralised and uniform patent granting procedure, but the uniform character of the EPO route ends with the grant of the European patent. Granted European patents must then be validated individually in each country in which they are to take effect. This can be a complex and often also very costly process for users, who as a consequence typically prefer to validate their European patents only in a certain number of countries leaving out others. Moreover, due to the lack of a unified litigation system, patent proprietors and users of patented technology can be exposed to parallel litigation relating to the same patent and involving the same parties in the national courts of different Member States, which operate under different legal frameworks and at different speeds, costs and quality. This can mean that rich companies or individuals can choose where to challenge in order to suit their claim and maximise the differentials in implementing legislation.

The Unitary Patent (UP) will put an end to this. The UP is a classical European patent to which upon request by the patent holder unitary effect will be given for the territory of the 26 participating Member States. With a UP, inventors can not only obtain a territorially broader and uniform protection in the 26 participating Member States instead of protection only in a few Member States, but it will also enable them to eliminate the sometimes complex and costly national validation and translation requirements before the national patent offices and thereby significantly reducing the administrative complexity and associated costs. It is the EPO that will act as a one-stop shop for obtaining the Unitary Patent through a simple and straightforward registration procedure, without any administrative fee. Moreover, the UP will replace the currently fragmented system of renewal fee payments by a very simple system in which one common renewal fee is to be paid to the EPO, under a single legal regime.

The overall direct costs for a UP, valid in 26 countries, will be lower than for an average European patent validated in four countries. For example, the renewal fees for a Unitary Patent maintained for ten years, which is so far the average lifetime of a classical European patent, will be less than EUR 5,000.

The UP and the UPC will substantially improve the current situation for SMEs. As I already emphasised, the Unitary Patent will generally reduce the costs of obtaining broad patent protection and this inherently benefits smaller applicants with limited resources, such as SMEs and University IPR departments. There are also specific cost reductions. For example, SMEs and other smaller entities, which are proprietors of a Unitary Patent granted on a European patent application filed in an official language of the EU other than English, French or German will be entitled to a lump-sum compensation for translation costs amounting to EUR 500.

There is a need to police this system of course. If it comes to litigation, the UPC will enable undertakings to litigate at European level, be it as plaintiff or defendant, at a more affordable cost. Small enterprises and micro-entities will be entitled to a reduced rate of only 60% of the court fees, and if the amount of payable court fees threatens the economic existence of an undertaking, the UPC may partially or even wholly reimburse the fees. In order to further limit the litigation risk, the UPC has also discretion to limit the level of recoverable costs for the winning party. Beyond the pure cost advantage, the UPC will also improve framework conditions and predictability for organisations involved in patent litigation. These benefits add up to a major package for academic IPR offices who aim to protect their researchers output and ensure the future vitality of their organisation.

In conclusion, the UPC makes it feasible for a research entity to take out and maintain economically for 10-20 years a patent protection covering 26 countries. Its rapid adoption now by the signatory countries is essential; but the potential withdrawal of the UK would be a blow to years of negotiations but not stop the roll out of the scheme. The UPC means protection is feasible and affordable to all but the smallest European entity.

Edited by Mike Rogers; Hon Member MCAA. All interpretations of the UPP information supplied by the EPO is not their responsibility