Second attempt - EU unitary patent and Unified Patent Court are coming

Following the Bundestag’s adoption on November 26, 2020, of the Act Approving the Agreement on the Unified Patent Court (EPGÜ), the Bundesrat has now also approved the legislation. This Act transposes into national law the EU’s requirements for the long-planned new EU unitary patent and the associated harmonized patent court.

Success on the second try

The Bundestag and Bundesrat had already passed this law in 2017, but the Federal Constitutional Court had declared it invalid on procedural grounds. In 2017, the law had been passed unanimously in the Bundestag, but only 35 of the 600 members were present. This procedural defect has now been rectified.

Entry into force following ratification in Germany

Once the law is ratified in Germany, the EPGÜ can enter into force. To date, 15 EU member states had already ratified the convention, but that alone was not enough. For the convention to enter into force, it is necessary for the three member states with the most European patents to ratify it as well. Of these essential states, only Germany remained.

According to the European Commission, the “provisional application period” for the unitary patent is set to begin in 2021. The new system is then expected to be fully operational starting in 2022.

What are the benefits of the new system?

The unitary patent is accompanied by the hope that companies will soon be able to protect their inventions more easily and cost-effectively throughout the EU. The unitary patent establishes a centralized procedure for obtaining a patent that grants uniform and comprehensive territorial protection in the participating Member States. Validation in individual countries is not required. Uniform protection also means that the scope of rights under a unitary patent, its limitations, and the available legal remedies are harmonized across all participating member states. The applicant therefore only needs to comply with a single legal system. Furthermore, the reduced translation requirements will significantly simplify the grant procedure.

The unitary patent also simplifies patent administration. Instead of managing multiple patents, only a single patent needs to be administered—that is, deadlines must be monitored and annual fees paid. Furthermore, transfers of rights, licenses, and other rights no longer need to be registered individually in the national patent registers for each country. Here, too, a single entry in the register is sufficient for EPO unitary patent protection.

German industry, in particular, is expected to benefit from these advantages, as it accounts for approximately 40 percent of the European patents granted by the European Patent Office to European applicants.

The Unitary Patent in Legal Proceedings – Opportunities and Risks

Under the unitary patent system, it should generally be easier and more cost-effective to pursue cross-border patent infringements, since only one infringement proceeding—and, if necessary, one invalidity proceeding—will need to be conducted, rather than a multitude of national court proceedings. This can significantly reduce court and legal fees.

However, in the event of potential patent infringements, the unitary patent also has some drawbacks. For example, cost savings are not guaranteed in every case. In the future, it will no longer be possible to pursue a strategy of conducting a quick and relatively inexpensive pilot trial limited to Germany in the event of an alleged Europe-wide patent infringement and then using the German decision as a basis for settlement across all of Europe. Instead, proceedings must now be conducted with effect throughout the entire EU, which leads to a significant increase in the amount in dispute and thus in the cost risk. Another disadvantage is that the unitary patent can be invalidated through a single invalidity proceeding, even if the infringement involves acts in only one country. The patent holder thus increases their risk or stake by opting for the unitary patent and the unitary patent system.

What should holders of European patent bundles keep in mind?

The entry into force of the UPC Agreement also has implications for holders of traditional European (bundle) patents. In the future, these patents will also fall under the jurisdiction of the Unified Patent Court, unless the holder submits a so-called “opt-in” declaration. The UPC Agreement provides for a transitional period during which the Unified Patent Court and national courts will have concurrent jurisdiction over traditional European (bundle) patents. Anyone wishing to prevent their European (bundled) patent from becoming the subject of an action for invalidity before the Unified Patent Court must submit an opt-out declaration by the end of the transitional period, which begins upon the entry into force of the UPC Agreement.