Unitary Patent Package (part 1): why it might be not so popular after all

Hello there, fellow patent administrator!

All good with you? Have you cleaned the docket of the day? Yes? Then you can sit, relax and spend your next working hours reading about the exciting world of patents!

Today I would like to open a series about the Unitary Patent Package (UPP).

As you might know, there is a lot of noise around it. By now you might have heard about its impending arrival (last rumours say 1st October!!) and how it is going to change the way we do patent prosecution for ever.

Maybe you have also heard about the preparations that we would need to do BEFORE the Package arrives. If you have missed something, or you want to know more, you might find useful the presentation I did together with NAIPA (you can find it here).

If you know already a bit about what is going to fall over our admin heads (maybe during the summer!), then you might have heard rumours about the Unitary Patent Package NOT being as popular as the makers of this patent adventure envisioned, and maybe you are asking yourself why specifically it is creating so much noise.

Well, you don't need to tear your clothes in despair anymore! In this new article I am going to try and summarise what the main controversies around the Unitary Patent Package are and why it is so.

I. Great Britain and Switzerland (among other countries) are not a part of the Unitary Patent Package

We all love the Britons (unless you are French or you live in Benidorm), so Brexit was for sure a major knock-out for everyone in Europe, and it was no less for the Unitary Patent Package. Being amongst the biggest filers of patent applications and validations in Europe, the UK had a lot to say in the UPP. The participation of the UK was seen as essential, even with one of the regional courts of the UPC settled in London. But they finally left the UPP.

The same happens with Switzerland, another big validator. Please remember all the pharma and food companies which have their place of business there. Morphine and chocolate might not be good if combined, but it is obvious that Switzerland have a say in the EPC and it will also be missed in the Unitary Patent Package.

The fact that big validators or big filers are out of the Unitary Patent has of course implications. When its makers talked about its benefits, they say that there will only be one renewal fee to be paid and no more validations needed. But as everybody understands now, this might be unlikely.

But even more! Just after GB withdrawal, some voices say, well, then, what is the point of the Unitary Patent Package? (more info here). However, makers of the UPP went on as if nothing had happened and, where the text said Great Britain, they substitute it for Italy.

Now, even if the date of coming into force is uncertain, the fact that no decision has been reached yet as to where to settle the regional court of the UPC intended for London brings questions about how much the legislators are improvising and why they do not open their ears to any alternatives or debate.

II. European Union definitely loses control over patent prosecution AND enforcement

This is why a lot of scholars are pretty much concerned.

First it was the EPC in 1972, a supranational organisation that took control of patent prosecution from the European Union (or was the ECC at that time?). But at the end, even if you get a European patent granted from the EPO, you still need to file validations before every national office and, in cases or infringement, etc., it would be the national courts of justice who would rule.

Even with the EPC, the EU had ultimate control over national court decisions, because national courts of justice are subject to the CJEU (Court of Justice of the European Union). The CJEU is not only the last resource court for nationals in the European Union, but also develops jurisprudence and interprets EU law to make sure it is applied in the same way in all EU countries. Most important, it rules against states or institutions that have not fulfilled their obligations under the EU law, which is inherently democratic.

But then the Unified Patent Court came and it is taking patent litigation out of the national courts to create a supranational court of justice in which the CJEU would have nothing to say, or at least no way of influencing important patent decisions, such as medicines matters or patent limitations. And this is seen by some scholar almost as an attack to European Union and its safeguard of democracy.

III. Unified Patent Court decisions could enter in conflict with EPO ones

Only time will tell, but this is indeed another hot topic.

The Unified Patent Court Agreement (UPCA) says that the Court will base its decisions in: 1. European Union law; 2. UPCA itself; 3. EPC; 4. International agreements applicable to patents; 5. National law.

European Union law says nothing about patents except when talking about free movement of goods and competition law, so the judges of the UPC will likely get inspiration in the EPO rulings, but then start to develop their own jurisprudence.

Experts such as the ones talking in this article say that national courts and EPO Board Of Appeal are normally quite aligned, but national courts and their judges tend to focus more in questions in competition law rather than in the technicality of the patent , because that it what a national court experience is more. And, again, because that is what the EU law says.

But UPC judges will be a mix between technical experts as well as law experts with no organism to overlook what they do. As stated in point nr. II above, Who Watches the Watchers? But the fact that these judges are technology experts might derive in the rulings going to a different direction of that of the national court, so bye-bye competition law, and welcome bias towards technology-based values.

Going back to the relationship of UPC and BOA, it is envisioned that that UPC is going to be way faster than BOA proceedings, so, what is the BOA going to do? Could it be that a patent is invalidated by the UPC in UPP member states but granted in non UPP member states? It might sound unlikely, but it is indeed an open possibility.

IV. UPC might not be as attractive for SMEs as we were told

One of the main advantages that the UPC makers are advertising is that the Unified Patent Court will be good for SMEs. But there are a lot of voices that are asking, "is that so??".

Probably you have heard already about court costs being too high for SMEs. And that large companies might bomb SMEs with litigation processes to weaken their position. But there is more to say about SMEs really being harmed by the UPP, so let's dive a bit more into it.

They main question that we could ask ourselves is: is the patent system good for SMEs after all, and would the SMEs benefit (more) with UPP?

Mmmh... Let's see: SMEs & Universities (European or not) filed 18,3% of European Patent Applications in 2014, while major corporations filed the rest. SMEs patenting activity is very small, so the enforcement framework benefits mostly large companies and corporations, meaning that normally it will be the large companies who take SMEs to court. Since the Unified Patent Court makes it easier to litigate and covers more countries in just one go, guess who will benefit from this.

Creating a patent with European Unitary Effect will make large companies have right of enforcement in more countries than expected, being this countries also largely SME based. So some experts are afraid that these "massive increase of intellectual property monopolies" will affect all innovative activity in the EU.

And why is this? Well, just look at what European Commission says: "SMEs are the back-bone of European Economy and they represent 99% of all business in European Union. They employ around 100 million people, account for more than half of Europe's GDP and play a key role in adding value in every sector of the economy." Ooops.

So if you are implementing a system that exposes SMEs, it looks like you are doing a disservice to countries, specifically those who are SMEs based (as a whole, basically all of Europe except Germany, which has quite a few large companies). We now understand why countries with a big SME base, such as Poland, Croatia or Spain are not even participating in the Unitary Patent Package.

V. Conclusion

It seems clear that patent admins will not be the only ones having a headache in the near future. When (if) the Unitary Patent Package comes into force, we will need to sit and wait who is really going to benefit from it and what new strategies will clients and companies devise in order to embrace or slip away from the system.

So what do you think about all this fuss?