The European Unitary Patent System and Unified Patent Court

Technology, Media & Telecoms

The introduction of the Unified Patent System may encourage the activities of Non Practising Entities (NPEs) in Europe. NPEs often buy up patent portfolios and use them to obtain licence fees or litigation awards. Their activity in Europe to date has been hindered by the costs associated with pan-European filings and multi-jurisdictional litigation. The availability of a Unitary Patent enforced across Europe by a single court, coupled with lower filing fees and enforcement costs, is expected to create a favourable environment for NPEs.

TMT companies have expressed concern regarding the bifurcation of proceedings and the grant of permanent injunctions in the UPC. Bifurcation of infringement and invalidity proceedings allows a court to order an injunction prohibiting the importation and sale of goods even though the patent may ultimately be found invalid. Experienced national judges who are helping with the introduction of the UPC, however, are aware of this unwelcome risk and are indicating that this may be addressed by staying the injunction. If injunctions are granted as a matter of course, patentees may use the threat of an injunction to negotiate substantial royalties, especially where the infringing part of a product is only a small part of the product.

In general TMT-sector companies validate and maintain patents in fewer countries than pharmaceutical companies. It is fairly common for them to maintain patents only in the UK, France, and Germany since excluding competitors from these markets is sufficient to gain superiority in Europe. The renewal levels proposed by the EPO (see full article here) are likely to be less attractive in this sector as they are significantly higher than the total for maintaining a patent in these three countries.  Whether the premium for a unitary patent over three countries is attractive to companies may only be ascertained once the final fees are announced and related fees, such as those for opting out of the unitary patent, are known in full.