Jack Ellis

Experts suggested that patent litigators based in England could be the counsel of choice for many Unified Patent Court (UPC) plaintiffs at a debate on litigation finance held in London last week.

Panellists at the discussion, held at the offices of litigation finance and insurance broker The Judge, suggested that recent civil litigation costs reforms in the United Kingdom and the increasing sophistication of the country’s litigation funding market could make the services of British practitioners especially attractive to patent owners seeking to assert their rights in the UPC.

Once established, the UPC will cover at least 13 countries, including France, Germany and the United Kingdom; at most it could hold jurisdiction over all 25 signatory states, with the prospect that Poland and Spain – which have opted out of the UPC for the time being – and any future European Union members could come on board at a later stage. “Either way you look at [the UPC jurisdiction], it will at least be comparable to the United States in terms of GDP and population,” said panellist Alan Johnson, partner at Bristows. “Around about 600,000 patents will suddenly be able to be litigated on a pan-European basis. In addition to a wider injunction being available, higher damages will also be possible. Almost as certainly as night follows day, you can see a group of patentees thinking right now about where they can enforce [in the UPC].”

In efforts to improve access to civil justice, the UK legal costs regime has undergone a number of reforms of late prompted by recommendations made in 2009’s Jackson Report. One such change has been the introduction of damages-based agreements (DBAs) – similar to contingency fees in the United States – which will allow lawyers to conduct litigation in return for a proportion of the compensation received by their client. These reforms have also made the UK legal services market more attractive for litigation funding companies, explained speaker Hy Hetherington, CEO of HLP Integration and litigation fund 1624 Capital. “As a funder, we prefer to fund part of the case and for the law firm to have a stake in the upside too,” he said.

It appears that lawyers litigating in the UPC will be expected to abide by the professional rules and regulations of their own country. This means that UK patent litigators are likely to have the same access to litigation finance and conditional fee arrangements that they currently do within their home jurisdiction. Lawyers qualified in other European jurisdictions – including Germany, the continent’s prime patent litigation venue – are far more constrained in terms of taking any kind of financial stake in the outcome of their clients’ cases. “We as English lawyers will be able to operate anywhere [in the UPC] and appear on a basis different to any other lawyers,” said Johnson. “We will be allowed to use our existing ways of working, while our German colleagues, for example, will be restricted by their professional rules.”

Hetherington suggested that the forthcoming pan-European jurisdiction is already an important new area of focus for patent holders elsewhere in the world – including US-based NPEs. “In the US, until recently, if someone got a bunch of European patents as part of a portfolio they bought, they’d put them on a shelf somewhere, because they were buying [the portfolio] for what they could do with the US patents,” he said. “But that landscape is changing. There is a dramatic shift taking place. The EU is going in one direction, and the US is going in the other. The US is becoming more restrictive, and legislation could be passed that will greatly limit the ways in which NPEs can monetise their patents. But I think [the EU] is going to have a huge influx of patent cases that are going to really challenge your legal system.”

There is an opportunity for some UK law firms to take advantage of their access to third-party finance options, their ability to work on a contingency fee basis, their existing European experience and expertise to emulate the success of US counterparts, some of which have built specialist plaintiff-focused practices. However, they could well face some stiff competition from American law firms that are already thinking about the potential for expansion into Europe that the UPC will offer; while they may also risk alienating members of their existing client base, many of whom fear that the unitary patent system will become the new playground of choice for NPEs.