Two big developments last week mean that Europe's unitary patent system may be up and running next year

There were two big pieces of news concerning the European unitary patent and the unified patent court (UPC) last week – one potential, the other actual. On Wednesday the IP Kat blog had a major scoop when it revealed that the UK IP Office had released the following brief statement about the UK’s ratification of the UPC Agreement:

The Government is committed to this project and wants the UK to be part of a European patent system that supports growth and fosters innovation. The Prime Minister was personally involved in the negotiations on the Unitary Patent regulations and the UPC Agreement and the UK is taking an active role in the current work to implement the new system.

There is still work to be done before the UK can ratify the Agreement, and I am committed to pressing ahead with this. It is the Government’s intention for our domestic preparations to be completed by Spring 2016.

The UK – along with France, Germany and 10 other EU member states – must ratify the UPC before it can begin operating. There has been speculation that the British government’s commitment to having a referendum on the country’s continued membership of the EU some time between now and the end of 2017 would hold up the UK’s plans to finalise its UPC membership; and while the IPO statement does not completely rule that out, it does give the very strong impression that the UK will be depositing its instruments of accession sooner rather than later.  Should that turn out to be the case, because seven countries have already ratified (including France), it would mean just Germany and four others doing the same for it to be all systems go for the UPC.

The second development last week was concrete and could directly lead to more countries ratifying. On 24th June it was announced that the EPO’s Administrative Council’s select committee on the unitary patent system had agreed that the renewal fee package for the new patent would “corresponds to the total sum of the renewal fees currently paid for the four most frequently validated countries (Germany, France, UK and the Netherlands)”. According to a statement later released by EU Internal Market and Industry commissioner Elzbieta Bienkowska:

It means that a company protecting its innovation with the Unitary Patent will pay less than €5000 in renewal fees over 10 years covering a territory of 25 Member States, instead of the current level of around €30 000 which has proven to discourage companies from patenting in Europe. The agreed level of fees will reduce the gap between the cost of patent protection in Europe compared with the US, Japan and other third countries.

Perhaps as significantly, it also looks like the select committee will decide the way in which the UPC fees the EPO collects are to be shared between the office and national offices by the end of the year. Should that turn out to be the case, then perhaps the last major barrier to implementing the whole system will have been overcome.

The practical effect of these two major developments is to bring closer the day on which the entire European patent system undergoes profound change. This blog has already detailed how a one-stop jurisdiction encompassing up to 26 countries, with a combined population of around 600 million, will be created, and why the relatively low cost of litigating, the generally high-quality of EPO-issued patents and the potentially wide availability of injunctions to successful plaintiffs are likely to make Europe a far more popular centre for global patent litigation, so driving up the value of patents here and significantly increasing Europe’s importance in the IP market. Now, it seems, with the wind blowing in the right direction, we could be only 18 months or maybe even less until that actually begins to happen.

All of this means that if you are not now in the final preparation stages of your UPC strategy you could find yourself in deep difficulties not too far into the future. I am not a lawyer and would never presume to give legal advice, but if you do business in a patent-rich area in Europe you need to be speaking to someone tomorrow (Monday) about how all these developments might have an impact on you; and you should be devising and implementing plans to mitigate any exposure and/or to maximise opportunities.

If you own EPO-granted patents, have you assessed their strength and enforceability? Do you realise that in a year’s time they could be a lot more valuable than they are now? What does that mean for you as a business? Should you be selling them, should you be developing your own monetisation programme on the back of them or outsourcing that to a third party, or are you going to stick to defence? Have you studied the rather confusing transitional regime and worked out what you want to do? If your portfolio is short in some areas, or you want to increase your monetisaiton options, should you be looking to make acquisitions when prices are lower than they are likely to be in, say, June 2016? And so on. For intermediaries, aggregators, law firms and other support service providers, there are also numerous strategic issues to think through.

We have been waiting many years for a unitary patent system in Europe and at times it has seemed like it is never going to get off the ground. Over recent months, though, we have moved from “whether” to “when”; now we could be seeing a shift from “later” to “sooner”. That all this is happening at a time when the US is in the process of abdicating global patent leadership makes current events even more significant, and puts even more emphasis on corporate and other IP decision makers to make sure they are fully prepared. The unitary patent package train will soon be leaving the station. You need to be on board.   

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