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Strategy considerations
Regarding the future European Unitary Patent System, our partners Thomas Schachl, Philipp Neels and Michael Platzoeder address the relevant strategic considerations resulting thereof.
Strategy Considerations Regarding the Future European Unitary Patent System

by Thomas Schachl, Philipp Neels und Michael Platzoeder, Wallinger Ricker Schlotter Tostmann, Munich, Germany


  • Despite more time being required before the new European unitary patent system comes into force, action should be taken now to optimize the strategy and the development of patent and contract portfolios.

  • The UPC system's legal concepts - which, based on German understanding of the law, constitute something new (e.g. the enforceable injunctive relief subject to discretion) - especially require a balancing of the two systems' individual makeup that aligns with the respective patent prosecution objectives. 

  • Current national characteristics will remain preserved in the individual courts' application of the law under the UPC system. Therefore, monitoring the decision-making approach adopted by each individual division of the UPC is advisable.

At the current stage of the - as yet incomplete - preparations, it is widely expected that the new European patent system, which is set to introduce “European patents with unitary effect” (unitary patents) and a Unified Patent Court (UPC), could come into force soon – probably in 2017.

Given the still uncertain beginning and the lack of well-established interpretation of related laws, many users of the existing European patent system for classic “EP patents” are so far rather hesitant or even uninterested. Nevertheless, it makes sense to become acquainted with the details of the new system now, as a proactive strategy can deliver significant benefits and avoid disadvantages. Even before the unitary patent system comes into force, decisions on the nature and scope of patent applications, as well as the further handling of already pending applications or grants, could be crucial.

Preparatory Strategies

The UPC will essentially have jurisdiction over not only all unitary patents, but also all classic EP patents that are live when the unitary patent system comes into force as well as subsequent classic EP patents, EP applications, and expired EP patents. However, for a transitional period of at least seven years, patent proprietors will have the opportunity to exercise the so-called opt-out, i.e. they can decide that for certain EP patents or applications the national court system should continue to apply. An opt-out is only possible, however, if no dispute related to the EP property right in question has been brought before the UPC, which could, in particular, be done by third parties, e.g. nullity proceedings or negative declaratory actions. Similarly, subsequently withdrawing the opt-out (opt-in) is possible only in the absence of any filing of a dispute at national level related to the EP patent in question. For EP patents or applications of particular importance, it can therefore prove critical to be able to choose freely between both systems without being bound by an earlier filing of an action by a third party. For EP patents and already published EP applications already in existence at that time, proprietors may win this “race” due to a special arrangement (the sunrise period): an opt-out filed before a yet-to-be-determined cut-off date will be registered and become effective immediately following the entry into force of the new system, without a third party being able to forestall. Later, however, this special arrangement will no longer be available. As a consequence, opt-outs will only be effective from the point at which they are entered into the register by the Patent Office, and not from the point at which the opt-out request is filed. If an opt-out appears to make sense, proprietors should identify at an early stage the relevant EP patent rights – which also requires a portfolio analysis. In this context one should be aware that an opt-out will incur costs (in line with current plans: EUR 80 per patent).

Since an opt-out may only be implemented by the proprietor, relevant contractual arrangements should also be sought and/or adapted at an early
stage, particularly in cases of co-ownership, joint development co-operations, and licenses. Agreements on forum selection can also be helpful here. Conversely, if a unitary patent is desired for an application pending before the EPO, the grant procedure should be structured time-wise so that the patent is granted after the new system comes into force; if the patent is granted too early, this bars the possibility of attaining a unitary patent. An even later granting of a patent can also be advantageous in terms of attaining patent protection in countries which are only due to ratify the unitary patent agreement after the system has come into force.

Strategic Aspects with Regard to the UPC Procedure

Legal disputes conducted before the UPC bear many similarities to those governed by German procedural laws. But it should not be expected that the UPC’s application of the law will be identical across all of its divisions. Numerous rules confer discretionary powers upon judges and it can be expected that any discretion-based judgments will be based on the specific traditions of the legal system from which the respective judges originate. These legal systems have influenced the way judges perceive and evaluate case characteristics, and will in all likelihood continue to exert an impact on the application of the law in the future. This is likely to occur mainly in UPC divisions that predominantly feature judges who share the same nationality, so mostly in local divisions that deal with an average of more than 50 cases per year. An example of an area where divergent case law can be expected would be preliminary injunctions, in which rulings by courts are allowed either with or without the opposing party being heard. Existing legal traditions diverge on this point, because in some European countries such judgments where the opposing party has not been heard have up to now not been permissible. Also the French legal concept of “saisie contrefaçon”, which permits the preservation of evidence even where there is reduced probability of infringement, exists, in principal, in the procedural laws for the UPC but could be administered differently by judges lacking the background of this French legal tradition.

Another key aspect is the claim for injunctive relief and the enforcement of such an order. Courts in continental Europe and the UK rule differently from one another regarding whether, in cases where patent infringement is established, a claim for injunctive relief can be refused on account of disproportionality. Only the English common law system states that under existing law the order of an injunction is an equitable remedy: the granting as such and its scope are at the discretion of the court – but not so in continental European case law. In the UPC system, the court may order an injunction. The wording allows the injunction to be accordingly presented as a discretionary decision, so that here too there is room for different influences within the case law. Different handling by individual UPC divisions appears to be possible with regard to claims for damages, too. In addition to numerous aspects related to calculating damages, the new system also regards non-pecuniary loss as a factor to be taken into account, unlike under German law. In line with this, it would seem at least possible that divisions of the EPC will reach higher claims for damages than have been applied until now in national courts.

Finally, the reimbursement of costs in proceedings before the UPC shall be based on the actual costs pertaining to the parties involved. From a German perspective, betterment is expected for the successful party. On the other hand, the risk of costs for each party will increase since the amount in dispute has to be set higher than in the case of a national lawsuit in view of the regional effect of the ruling. Therefore the limitation on maximum amounts depending on the amount in dispute may only partly cover this risk.

As the number of appeal decisions rises, the application of the law will harmonize but certain differences are likely to remain. In view of the fact that German patent litigation chambers already approach certain legal and process issues differently (e.g. application of the doctrine of equivalents or the requirements regarding validity in preliminary injunction proceedings), this type of variance in terms of rulings by the UPC would not be uncommon and would be permissible in process terms. Thus “forum shopping” for both plaintiff and defendant (e.g. choice of court for nullity actions or negative declaratory decisions) will continue to be of importance.

From a strategic perspective, it will be important to monitor not only how UPC case law develops overall, but also to track how the law is administered by the individual divisions. In this context, it could be helpful that certain local divisions employ the same judges on a constant basis rather than operating a system based on case-by-case selection from the pool of judges. If the composition of the divisions is known to a plaintiff, this can enable more specific conclusions to be drawn in terms of how the law is applied.

Overall, it can be assumed that the UPC will essentially be plaintiff-friendly because courts of jurisdiction are competing with each other for litigation. If, for example, the number of cases handled by a local division of the UPC falls below 50 per year, this may lead to a discussion as to whether this division is still required. Although it is not yet known whether courts exercise the option to refer individual counter-claims to any invalidity challenges to the central court, this competition could have a bearing on such referral decisions as it could probably lead to shorter court proceedings, which is often an important consideration for plaintiffs.

Thomas Schachl is an attorney-at-law and certified IPspecialist (Fachanwalt für gewerblichen Rechtsschutz). He is a partner, specializes in national and international patent infringement proceedings, and consults on IP transactions as well as the legal aspects of inventions made by employees.

Philipp Neels is an attorney-at-law, partner and specializes in patent infringement proceedings. His expertise includes, in particular, strategic advice and the coordination of international disputes.

Michael Platzoeder is a patent attorney and partner. His specialist areas include the strategic development of patent portfolios and patent litigation, in particular for electronics, ITC technologies, software and physical systems.

Wallinger Ricker Schlotter Tostmann advises on all areas of intellectual property law and particularly specializes in patent prosecution and patent litigation proceedings at various offices and courts.