Key issues when assessing whether to file for EU patent protection
At present, businesses relying on technical inventions and seeking patent protection in more than one European country can choose between filing patent applications at various national patent offices or filing a single patent application at the European Patent Office (EPO).
The first route requires the filing of separate patent applications in each European country where protection is desired, in the official language of the respective country and by appointing a national patent attorney. This option is thus associated with high costs as soon as a significant number of countries are to be covered.
The second route reduces the initial burden, as it is sufficient to file a single application in one of the official languages of the EPO (ie, English, French or German) to cover all member states of the European Patent Convention (EPC). Today, the EPC has a total of 38 member states (and two so-called extension states where EPC patent protection will be accepted upon the filing of a separate request), and covers a population of more than 500 million. The EPC member states include all 28 EU member states, and additionally Turkey (the sixth-largest economy within Europe), Norway, Switzerland and Liechtenstein, Iceland, Monaco, San Marino, Albania, Serbia and Macedonia (these are the 10 non-EU EPC member states).
Based on costs, it usually makes sense to file a patent application at the EPO in case protection in more than three countries is sought. Accordingly, since it opened in 1978, the EPO has received ever-increasing numbers of patent applications, illustrating that businesses consider the second route to be an attractive path for obtaining patent protection in Europe. In 2013 approximately 266,000 patent applications were filed at the EPO and about 67,000 patents were granted.
However, the uniform character of the EPO route ends with the grant of the EPC patent. In many EPC member states it is necessary to take additional measures to have patent protection granted by the EPO registered there. This involves filing a corresponding request at the national patent office (often requiring an administrative fee), filing a partial or complete translation of the patent as granted and appointing a local attorney – this final stage is known as national validation.
Once national validation is complete, the EPC patent becomes a bundle of independent national parts. For each of these national parts, maintenance fees (annuities) must be paid at the local national patent office. Given that a patent may be maintained for up to 20 years, this is a significant cost.
Further, in case of infringement, the rights holder may have to sue the infringer in each of the countries where infringement takes place (unless a first action results in a Europe-wide settlement).
The cost associated with filing translations was significantly reduced when the so-called London Agreement came into force in 2008. In this, a number of EPC member states – including Germany, France and the United Kingdom – dispensed with the translation requirement, while others accepted English as the language for the patent description and required translations only of the patent claims. However, the national validation procedure and maintenance after grant of EPC patents still result in a high administrative and financial burden on businesses seeking patent protection in Europe (if protection in a significant number of countries outside France, Germany and the United Kingdom is sought).
EU patent package
An end to this burdensome validation looked possible in December 2012 when the European Union established a legal basis for a truly unitary European patent, thereby adding a third route to patent protection in Europe. Two regulations – EU Regulations 1257/2012 and 1260/2012 – set out the framework for the basic characteristics and language requirements of the EU patent. Additionally, an independent multinational agreement – the Agreement on a Unified Patent Court (January 11 2013) – signed by (most) EU member states establishes a new unified court system, the Unified Patent Court (UPC). The whole legal package will become effective once at least 13 EU member states – including France, Germany and the United Kingdom – have ratified the UPC Agreement.
Under the new law, the actual procedure for filing and examining a patent application at the EPO will not change. However, at the end of the procedure (ie, within one month of grant), the patent owner can decide whether to stick with an EPC patent or request a unitary patent to cover all EU member states. The EPO will then register the unitary effect. However, importantly, for all non-EU member states that are covered by the EPC and EU member states that, at the time of registration of the unitary effect, have not signed/ratified the UPC Agreement, the present situation requiring post-grant national validations will not change. The respective national (non-EU) parts of the EPC patent will coexist independently with the EU patent, which may therefore also be called the ‘EU part’ of the EPC patent (see route (iii) in Figure 1). Key issues that a patent-owning business should be aware of under those circumstances are discussed in detail below.
Figure 1. Existing and future routes to patent protection in Europe
Although the basic legal package is complete and ratification of the UPC Agreement is well underway, the various administrative, financial and national measures to launch a completely new court system are keeping the relevant authorities busy. It is expected that it will take at least until 2016 before the UPC has commenced operations. By way of comparison, while the EPC became effective in 1973, it took until 1978 for the EPO to open for business.
Another key issue is the territorial scope of protection that a business requires within Europe. EU member states Spain, Italy, Poland and Croatia have not (yet) accepted either or both of the two basic EU regulations and the UPC Agreement. Unless and until these countries change their minds, the unitary EU patent will have a number of significant holes. As with the non-EU EPC member states, the existing national validation requirements will continue to apply in these EU countries, including the filing of translations into their national languages and subsequent payment of separate national annuities.
Also, with regard to the EU member states that participate in the EU patent package, as the new system will start as soon as 13 states have ratified the UPC Agreement (assuming that the UPC is operational at that time), the first generation of EU patents will be limited to those 13 states. The territorial scope of this first generation will not change, even after further EU states ratify the agreement. Thus, businesses that decide to opt for an EU patent should be prepared to take on the administrative tasks associated with its phased territorial growth.
Let us consider some of the consequences of the above situation, based on an example. Assume that a patent-owning business wishes to cover France, Germany, the United Kingdom, Spain, Italy and Turkey – that is, the six largest economies that are presently participating in the EPC. As noted above, France, Germany and the United Kingdom do not require translations into their national languages while Spain, Italy and Turkey do. However, because the latter three are not participating in the EU patent package, the EU patent route will still require three national validations, including translations into the national languages, thereby adding to costs.
In the above scenario, the EU patent route may be associated with even higher costs. Although the EU patent package ultimately aims to dispense completely with any translation requirement (except for translations required in the context of litigation), for a transitional period of at least six and possibly up to 12 years – depending on the quality of automatic translations being developed – a patent owner requesting EU patent protection will be required to provide a full translation. If the language used in the examination proceedings before the EPO is English, a translation into one of the official languages of the EU member states is required. If the language of the examination proceedings is French or German, a translation into English is required.
Returning to the above example, and further assuming that the patent application was filed in German, in addition to the Spanish, Italian and Turkish translations required in the context of the national validations, an English translation would be necessary, thereby adding further to costs.
Another key issue is the costs associated with maintaining a granted patent. Annuities for EU patents must be paid centrally at the EPO, as opposed to the existing system where post-grant annuities are paid at the various national patent offices.
However, the level of the central annuities for the EU patent is still being discussed by a select committee within the EPO, mainly composed of representatives of EU member states participating in the new system. It is expected that the level will be the same as that currently spent for an average EPC patent. Based on statistics, an average EPC patent is validated and maintained in about five countries.
Returning to our example, the EU patent route is unlikely to reduce the costs associated with annuities. Rather, the contrary applies (because the central EU patent annuities, at the expected level of that currently paid for five countries, will be effective only for France, Germany and the United Kingdom (ie, the countries covered by the EU patent), while Spain, Italy and Turkey will require separate national annuities). Only if the number of countries to be covered is higher than that in the above example (ie, more than eight) and includes EU member states that have joined the EU patent package is it likely that annuity costs for the EU patent will be lower than when using the traditional EPC route.
Nature of industry
Another key aspect is the nature of the industry in which your business is operating. For some industries, such as the automotive industry, it may be sufficient to have a product (or part of it) protected in one or just a few countries to dominate the whole European market. In such cases filing for EU patent protection may simply not be necessary and an EPC patent or even national filings may be sufficient. The same rationale may apply if your business is a small or medium-sized enterprise active in a limited area within the European Union.
On the other hand, in the pharmaceutical industry, in which patent protection is regularly sought in a high number of national sub-markets within Europe, the EU patent will ultimately be the more cost-efficient approach.
Enforcement and validity proceedings – litigation
Another key issue is effective enforcement. The UPC system means that EU patents can be enforced in a single court action with effect for the whole EU territory (or rather, those EU states that were part of the system at the time of registration of the EU patent).
However, there is a downside to uniform enforcement – namely, in a situation where an infringer attacks a patent’s validity. Under the present system, there is the possibility to file, within nine months of grant, a central opposition at the EPO. However, if this possibility is missed or if an opposition does not succeed, any further challenge to validity must be pursued in separate national proceedings in the various countries in which the EPC patent has been validated and maintained. Under the new UPC system, it will at any time be possible to attack the validity of an EU patent in a single centralised procedure.
However, even if a patent-owning business decides against an EU patent, the new European patent package will have a strong impact on enforcement and validity issues. This is because the UPC Agreement contains a provision that the UPC will also have competence for classic EPC patents. The rationale behind this is to ensure that the UPC gets a decent number of cases right from the start. Thus, although existing as a bundle of separate national parts as explained above, these patents are likewise subject to the same risk as EU patents.
However, during a transitional period of at least seven years (and possibly up to 14 years), there is the possibility to ‘opt out’ of the UPC’s competence, thereby avoiding the risk of a central validity attack by an infringer (but also missing out on the chance of central enforcement against the infringer). The opt-out procedure will most likely be accompanied by an administrative fee – estimated at between €100 and €1,000 per patent. The patent owner may withdraw the opt-out at any time during the life of the patent, unless the patent has already been the subject of national court proceedings.
Strength and importance of patent
In the context of potential litigation, another key issue is the strength of the patent (ie, the degree of likelihood that it will survive an attack on its validity). Usually, the course of the examination proceedings at the EPO or in other regions, such as the United States and Asia, as well as additional prior art searches carried out by the patent owner will give an indication as to the strength.
The importance of the patent for the business is another key issue. Does it form the basis for the whole operation or a key product of the business? Or is it protecting just one of a multitude of products marketed by the business?
Based on the interplay between the latter two issues, and considering the cost and territory-related key factors discussed above, the decision criteria illustrated below can be given with regard to the decision to opt out.
Strength and importance of patent
Strong and unimportant
• No opt-out
• Request EU patent for large territory coverage
• Consider selling/licensing/dropping the patent
Strong and important
• No opt-out
• Request EU patent for large territory coverage
• Consider supplemental measures such as divisional applications and national IP rights such as utility models as ‘back-up’
Weak and unimportant
• Probably better opt out
• No EU patent
• Consider dropping the patent country to country
Weak and important
• Opt out
• No EU patent
The question of whether to file for EU patent protection should be extended to whether to file for EU patent protection and to stay in or opt out of the UPC’s competence for classic EPC patents. The answer very much depends on the characteristics of the business pursuing patent protection. Although in the long run, the EU patent and UPC court system are likely to be the only option for patent protection within the European Union, decision should be made on a case-by-case basis – at least for the extensive transitional periods associated with the introduction of the new system. Thus, at least for the medium term, patent protection in Europe looks set to become even more complex, making careful management of a business’s patent portfolio more important than ever.
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Martin Nohlen works in the chemistry group in Uexküll & Stolberg’s Hamburg office. He is active in all areas of patent law in chemistry, in particular polymers, fine chemicals, oil and fuel additive technology, pharmaceuticals and cosmetics. Dr Nohlen has a focus on conducting examination and opposition proceedings, including appeal proceedings before the European Patent Office, and furnishing legal opinions on the validity and infringement of patents.
He joined Uexküll & Stolberg as a trainee in 1997 after receiving a PhD (summa cum laude) in physical chemistry from the University of Bonn. During his PhD Dr Nohlen conducted research at the Cavendish Laboratory at Cambridge University. After joining Uexküll & Stolberg he gained overseas experience working with the patent department of a major oil company in Houston and a law firm in Chicago.