The most significant reform in the European patent system to-date, i.e. the Unitary Patent system, took the final steps towards implementation when Germany successfully completed its ratification process by filing its instrument of ratification on 17 February 2023. This means that the new system, which also includes a new patent court, is ready to enter into operation on 1 June 2023. The implementation is preceded by a Sunrise period that began on 1 March 2023. During this period, holders of existing European patents can apply for their patents to be excluded from the new system in advance.
Unitary Patents and the Unified Patent Court
The new Unitary Patent system will make it possible to gain patent protection in up to 25 EU Member States by filing a single request with the European Patent Office (the EPO). The new system also includes the establishment of a new patent court called the Unified Patent Court (the UPC). The UPC will have exclusive jurisdiction over not only invalidity and infringement actions concerning new Unitary Patents but also classic European patents unless their holders opt out of the UPC.
With this being the case, patents subject to the UPC’s jurisdiction are at risk of being challenged in single central proceedings before the UPC, whose decision will then take effect in all participating Member States. At its inauguration, the UPC’s jurisdiction will cover the 17 participating EU Member States, but it is likely that more will accede to the system over time. According to the EPO’s announcement, patent applicants have already shown interest in the new system during the transitional measures.
The Sunrise period and opt-out applications
Although new Unitary Patents will automatically and irrevocably be subject to the UPC’s jurisdiction, the holders of classic European patents can file an opt-out that will exclude their European patents from the jurisdiction of the UPC.
An opt-out application can already be filed now during the three-month Sunrise period preceding the implementation of the new system, and this option will remain available for European patents throughout the entire seven-year transitional period, which may be extended to 14 years.
However, we recommend filing all opt-out requests as quickly as possible, i.e. during the Sunrise period, to avoid the risk of an invalidity action being brought before the UPC right on the first day of its entry into force because after the Sunrise period, opt-out requests can no longer be submitted if an action has already been brought against the patent in question at the UPC.
Should you opt out of the system?
For some patentees, especially SMEs, the Unitary Patent system and the UPC may prove a cost-effective solution and significantly reduce the administrative burden of portfolio management and patent filings. However, for companies relying on “crown jewel” patents, the risk of a central invalidation may outweigh the benefits of the system.
The appropriate strategy for patentees to prepare for the new system depends on many factors and can vary greatly between one patentee and the next depending on which industry the patentee operates in, the size and strength of the patentee’s patent portfolio, its business strategy, and available resources.
As such, each patentee should carefully assess whether opt-outs are necessary and whether pending and future patent applications should be filed as Unitary Patent applications while taking into account all relevant factors.
How to prepare for the new system?
Now that the Sunrise period is in effect, all patentees should begin preparing for the launch of the Unitary Patent system. Some key considerations include the following:
- Reviewing your patent portfolios and identifying potential co-owners so that you can decide on opt-out strategies together for any co-owned patents.
- Considering the pros and cons of the new system and selecting the appropriate opt-out strategies for your portfolio – different approaches may be prudent for different patent families or business areas.
- Planning your patent strategy for future filings: Unitary Patents, European patents, or national patents?
- Preparing for potential litigation by assessing suitable litigation strategies in advance.
Our experts have extensive experience in advising both Finnish and international clients on patent matters varying from day-to-day operations to the most complex litigation before domestic courts and the CJEU. If you need help preparing for the implementation of the UPC or have any questions about the new system, please do not hesitate to contact the undersigned or your regular Borenius contact.