The innovative products of the biopharmaceutical industry often rely principally on a single European patent to protect an exclusive market position with potential peak sales in the billion-dollar range. Enforcement of such a patent carries a risk of patent revocation in counterclaims for invalidity only country-by-country. The sole risk of pan-EU loss of rights presently lies in the Opposition Division of the EPO.
A Unitary or European patent litigated in the UPC will be subject to possible revocation across all participating Member States or, in the case of the European Patent, all Member States in which the patent was validated. In the absence of an injunction pending appeal of a revocation decision, such pan-EU loss of rights could see competitor/generic market entry irretrievably destroy the innovator market. Given the risk of pan-EU revocation in a venue that may take some time to provide high quality, predictable procedures, it seems unlikely that the biopharma industry will initially choose the UPC for its highest value patent assets.
It will therefore be critical for patentees to prepare well in advance of Unitary Patent and UPC implementation and decide on short- and long-term patent strategies for mitigating risks and optimising benefits from this new system. Points to consider are set out below.
- The Unitary Patent and UPC are additional systems to all the presently available options, which will remain unchanged and available with the sole exception that post-transitional period, all European patents and SPCs will be litigated in the UPC.
- To take advantage of the transitional period it will be necessary to file an “opt-out” (see below) in respect of any European patents (or applications) or SPCs in order for these to be able to be enforced via national courts. Any non opted-out European Patents or SPCs will face the risk of being forced into the UPC by an action for revocation or for a declaration of non-infringement.
- Opting-out: Companies with large European patent portfolios which intend to opt-out would be wise to prepare carefully for the administrative and financial burden of the initial opting-out process. To opt-out, the correct fee must be paid and the patent number must appear on a register to be maintained by the EPO. Accidental failure to opt-out properly may result in a pre-emptive revocation action that will be heard in the UPC with risk of pan-EU loss of rights.
- Hybrid strategy: It will be possible to split the European market into a family of national patents covering the five or six most commercially significant territories and a European patent validated in the other countries. This will allow enforcement in main markets according to the present system and the opportunity to choose to litigate the other countries nationally (via opt-out) or as a whole via UPC (either by not opting-out or opting-back in when confidence in the UPC increases).
- Hybrid portfolio: Whilst patentees may not find the risks associated with the UPC acceptable for their most important patents, the likely cost-benefits and single action pan-EU enforcement may prove attractive in respect of less critical life-cycle patents. Divisionals of less critical subject-matter can also be UPC enforced (via not opting-out), even if the parent patent has been opted-out.
- SPCs: There is no doubt that SPCs will be available based on Unitary Patents. However, there is no plan to introduce a corresponding single SPC covering all Unitary Patent Member States. It is likely that national Intellectual Property Oiffices will be able to issue SPCs based on national, European and Unitary patents.
- SPCs based on European patents can be opted-out, but all SPCs having the same basic patent must have the same opt-out status as each other, even if owned by otherwise unrelated parties. Future SPC licensing agreements will need to address this, but any disputes arising at present will simply need to be settled between the parties.