Economic implications of the UPC for Scandinavia and beyond

With Denmark and Sweden often among the top patent application filers in Europe per capita, a change to the European patent system will have significant ramifications for many companies alongside the legal representatives or consultants working with them in both countries, as well as across Europe. Even though changes in fees and methods of assessing different legal matters are important, the economic implications of the UPC will most likely be experienced at a different magnitude across Scandinavia and beyond.

A single European patent court will create a patent landscape remarkably different from what we are used to today. However, very few of the recent slew of articles that focus on how to prepare for the UPC touch on the wider business implications (eg, damages) that this new reality may involve. Assessing the larger implications of moving from the multiple national courts of today to having one common patent court covering much of Europe is a difficult task; thus, it is crucial to understand the bigger picture, beyond discussion of the more practical aspects.

As it stands today, filing strategies are being revised in anticipation of the effect that a unitary patent will have on IP rights across Scandinavia and Europe. There will likely be much discussion about how IP savvy companies have chosen to adapt to the new reality. Even the most capable practitioners can only cautiously predict what route may be chosen by the UPC. While some clarification may be provided by the early decisions, it is likely that it will take a few years before we know how different questions are approached.

Costs compared to damages is often neglected in the discussions, namely the potential financial compensation for an infringement. At this stage, we simply do not know in detail how damages will be calculated. It is probably safe to suggest that the costs for pan-European patent litigation will fall; if we presume that damages remain at a similar level to where they are today, the ratio between litigation cost and potential damages will be more favourable to patent holders. From a strictly economic standpoint, this could result in an increased demand for patent litigation. In other words, more patent owners could be expected to bring more actions in the new reality.

As the old adage goes, time is money. It is probably a fair assumption to suggest that the time between lodging an action to the issuance of a decision will be shorter than currently. This will primarily be due to the fact that multiple courts across countries, either directly or indirectly, often end up hindering the possibility of a quick result. Thus, even if the costs stay similar to current levels, the reduced time to move through a single court may be sufficient to encourage patent proprietors to make use of the UPC. Even in the event that invoices for patent litigation remain at a similar level after the transition from the multi-courts system to a single court system, the reduced handling time may, in itself, be enough to increase demand for litigation. This would also increase patent infringements being brought before the court.

So, although we cannot say for sure, there are indications that there will be a greater demand for patent litigation in Europe in this new reality. When discussing how to approach and address this new landscape, it is crucial not to get caught up in prosecution details, although these are undeniably important. It is also worth considering the bigger picture as well, alongside preparing for multiple potential outcomes.

This is an Insight article, written by a selected partner as part of IAM's co-published content. Read more on Insight

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