3.1 Cost benefits of the unitary patent
For the sake of clarity, it has to be noted in advance that the European bundle patent will remain effective even if a request for unitary effect has been filed for
- the Contracting States of the EPC which are not EU Member States,
- the EU Member States which are not participating in the enhanced cooperation, and
- the participating Member States in which the UPCA has not yet entered into force.
For all three groups of states, only the traditional bundle patent remains applicable. Thus, no cost benefits can arise for these states. Switzerland and Spain, as well as the UK, belong to the first and second group. The potential benefits for the third group are determined by the successive ratifications of the UPCA.
3.1.1 Renewal fees
It is apparent that the unitary patent will significantly simplify the payment of annuities. Presently, all Contracting States of the EPC require the annual payment of renewal fees. A plurality of formal requirements is applicable.
Such requirements differ from country to country, (may) change on a regular basis and pertain to types of payment, accounts or amounts of fees or specific rules of representation for payments, for example. In contrast, a single renewal fee is payable to the EPO for the unitary patent.
The calculation of future renewal fees is based on the »True Top 4« model.6 It is based on the principle that the renewal fees for the unitary patent should correspond to the total sum of renewal fees currently paid for the four most frequently validated countries (DE, FR, NL, UK). So far, the Brexit has not yet been considered as a reason for recalculating the renewal fees. The amounts start at EUR 35 for the 2nd year, exceed the threshold of EUR 1,000 after the 9th year and end at EUR 4,855 for the 20th year. Over the whole term they sum up to EUR 35,555. For the first ten years the total is EUR 4,685.
3.1.2 Validation
As compared to a traditional bundle patent, costs of validation may be eliminated with the unitary patent. Such costs are comprised of the costs of translation, costs of the required representation by a national representative, and fees for the filing with the national Office.
Pursuant to Article 6 UPTR, a full translation of the granted patent has to be filed with the EPO during the transitional period of at least six and no more than 12 years (see item 1.3.2).
3.1.3 The relevant comparison
Thus, the patentee has to ask themselves two questions: in which countries can I achieve savings and for which countries do I need protection.
In this respect the fact that 50% of granted European patents are only validated in up to three EU Member States needs to be considered first. First of all, these will be the countries with the highest number of existing granted patents, that is Germany, France and the United Kingdom. No translation is required for these countries pursuant to the London Agreement. However, for a unitary patent a translation has to be filed during the transitional period in all cases, as mentioned above. Thus, for patents validated in these countries, the unitary patent actually leads to an increase of the translation costs.
What also needs to be taken into account is the fact that the United Kingdom will be excluded from the Unitary Patent because of BREXIT. Applicants that seek protection there will have to pay for the costs of validation and the renewal fees. They amount to GBP 720 for the fifth through tenth year, to GBP 2;050 for the fifth through 15th year and to GBP 6,640 for the fifth year through the expiry of the patent. This means that BREXIT considerably minimizes the advantages of the Unitary Patent in terms of renewal fees.
In contrast, about 1,000 patents are annually validated in all EU Member States, with estimated validation costs exceeding EUR 32,000. It is obvious that a proprietor who needs such a broad
territorial protection will achieve great cost benefits with the unitary patent. This applies even at the outset, when the patent-reform package will only be applicable in 17 Member States at the outset.
Thus, while the cost assessment is rather clear for about half the granted European patents, the circumstances of the individual case have to be examined for the majority of the remaining ones, i.e. the individual interest in broad protection, the present requirements of translation in consideration of the London Agreement and the status of ratification of the UPCA.
For the renewal fees too, it has to be taken into account that the European patent has been validated in some 50 % of the cases only in up to three countries, whereas the proprietor of the unitary patent has to pay the equivalent for four countries. In this respect, the question arises whether the users of the European patent system attribute an added value to the unitary
patent and whether they are willing to pay more for it (see item 5).
Finally, the proprietor’s obligation to pay the full single renewal fee for the whole life of the unitary patent has to be taken into account, whereas the bundle patent allows decreasing the financial burden during the term of the patent by allowing it to lapse in individual designated states.
3.2 National jurisdiction or Unified Patent Court
For the patentee, the route to the UPC has the advantage that they can enforce the unitary patent and the European bundle patent in one single procedure with effect in all states for which the UPCA has entered into force. While this increases the economic impact of the patent, it implies at the same time the indispensable risk that the patent may be invalidated in one single procedure for its whole territory, be it in isolated revocation proceedings, be it in infringement proceedings in which a counterclaim for revocation has been raised (“all eggs in one basket”).
Establishing local and regional divisions serves the purpose of integrating existing systems. This is particularly true for France, Germany, and the Netherlands, where experienced patent
judges work and these resources are especially used by the provision in the UPCA according to which local divisions in a country with more than 50 patent cases per year sit in a composition with two judges from this country and one judge from another country.
To a large extent, it is within the control of the patentee before which local division litigation takes place. They generally have the choice between the residence of the defendant and the
place of infringement.
The plaintiff, however, can hardly expect judges coming from their national jurisdiction with which they are familiar to attend the central division. At the central division, the principle of geographical distribution of staff will have a significant effect. While judges from countries with experienced national patent courts will mainly work in local and regional divisions, the central division will primarliy be comprised of judges from other countries. This may have the consequence that more judges from other countries will sit in the central division.
3.3 The bundle patent – opt-out and opt-in
A transitional arrangement which only applies to bundle patents and not to unitary patents is intended to increase acceptance by the users. During the transitional period, there is a concurring jurisdiction of the national courts. In addition, the applicant or patent proprietor may exclude the exclusive jurisdiction of the UPC up to one month before the end of a transitional period (opt-out).
Attention has to be drawn to the fact that the jurisdiction of the UPC is not limited to European bundle patents granted after the entry into force of the UPCA. Rather, it also comprises patents granted before and valid for the States in which UPCA has become effective.
Thus, at the entry into force of the UPCA, the patentee has to check their whole portfolio of European patents as to whether they want to exclude the jurisdiction of the UPC. No fee is payable for the opt-out.
An opt-out declaration can be submitted within a transitional period of seven years which can be extended up to 14 years.
Both, opt-out and opt-in (i.e. withdrawing the opt-out), are subject to the requirement that no action has been filed yet at the court which had jurisdiction until the relevant declaration. Accordingly, a patent proprietor may file a declaration of opt-out for the time being, assuming that they can withdraw this declaration if they eventually come to the conclusion that they want to make use of the advantages resulting from the enforcement of the patent before the UPC with effect to all UPCA states. However, an alleged infringer may file an action for revocation or for declaration of non-infringement at a national court before the proprietor declares an opt-in.
Patentees considering the unitary patent not attractive (yet) in respect of the renewal fees and the obligatory translation have to consider how to react to the jurisdiction of the UPC for bundle patents. A further possibility in addition to opt-out is escaping the UPC by filing national applications. In this context, a remarkable increase of German patent applications filed in recent years by Japanese and US applicants may be noted. This may be interpreted as an indication of a renaissance of the national patent systems. However, it has to be taken into account that a definite decision between the alternatives of a national patent and the national court on the one hand and a European patent and the UPC on the other hand is not necessary before the transitional period has lapsed and an opt-out is no longer possible.
Patentees choosing the unitary patent with the obligatory exclusive jurisdiction of the UPC who don't want to lose access to national courts may consider filing utility models in Germany.
They offer cost-efficient protection which can be obtained quickly, within a few weeks from filing at present. However, utility models are only available for products, not for processes. In the field of biotechnology, utility models are expressly excluded. The shorter term of utility models is of different relevance, depending on the different life cycles of products in different technical fields.
