The Unitary Patent and the Unified Patent Court will begin operating on 1 June 2023 – What impact will this have in the Czech Republic?

The Czech Republic joined the system and, in addition to participating in the enhanced cooperation within the EU on the Unitary Patent, also entered into the UPC Agreement with other countries in 2013. Subsequently, in 2017, the Czech Industrial Property Office commissioned a study which recommended that the Czech Republic should wait to see how the system works in practice. The Czech Republic should therefore participate in the system, but has not yet ratified the agreement and this is unlikely to happen immediately. Nevertheless, will this change have any impact in the Czech Republic?

What is the Unitary Patent and the Unified Patent Court?

The Unitary Patent is a new regional method of patent protection for inventions valid in all participating EU countries. Unlike current European patents, the Unitary Patent will not need to be validated at the national level and will not create separate national rights. The Unitary Patents will be granted by the existing European Patent Office following the same procedure as for standard European patents today. Once a patent has been granted by the European Patent Office, it will be possible to apply for unitary effect in the participating countries. The same patent can be validated in other countries that have not ratified the UPC agreement (or cannot ratify it because they are not EU members) but participate in the European patent system. In addition, the current system of standard European patents and national patents, as well as the international PCT system, will of course be maintained.

The Unified Patent Court is the body that will resolve disputes arising from Unitary Patents, both as to their validity and infringement. However, with certain exceptions, it will also deal with disputes arising from standard European patents in the participating countries. The Unified Patent Court will consist of a court of first instance with a central chamber in Paris and in Munich (another location is envisaged to replace London, probably Milan, as a result of Brexit) and other local or regional chambers, and a court of appeal based in Luxembourg. The central chamber will have jurisdiction over revocation proceedings and the local or regional chamber, depending on the place of infringement, will have jurisdiction over infringement proceedings and, in the absence of a local or regional chamber, the central chamber.

The Unified Patent Court is also to have its own mediation and arbitration centre based in Lisbon and Ljubljana.

The Unitary Patent should make it easier and cheaper to obtain patent protection in several EU countries by removing the need to validate a European patent in each participating country. The same applies to the subsequent maintenance of the patent. The Unified Patent Court should then simplify the enforcement of patent rights or the revocation of a patent in several countries, as they can be litigated before a single authority. It will therefore not be necessary to conduct parallel patent litigation in several countries as before, often with conflicting results. At the same time, the Unified Patent Court should be composed of some of the most experienced patent judges in Europe.

Which countries will participate?

To date, the UPC agreement has been ratified by most EU countries that will participate in the system, namely Austria, Belgium, Bulgaria, Denmark, Estonia, Finland, France, Germany, Italy, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Portugal, Slovenia and Sweden (seventeen countries in total).

A smaller number of countries have signed the agreement and are expected to join the system but have not yet ratified it. These countries are the Czech Republic, Cyprus, Greece, Hungary, Ireland, Romania and Slovakia (seven countries in total).

Poland and Spain have not signed the UPC agreement. The same applies to Croatia, which, however, did not become an EU member until after the agreement was concluded. The UK has withdrawn from the agreement as a result of Brexit, as only EU Member States can participate in the system.

What will the UPC decide and what can European patent owners do now?

The Unified Patent Court will have exclusive jurisdiction over disputes concerning the infringement and validity of Unitary Patents. However, with certain exceptions, it will also have jurisdiction over standard European patents in the participating countries. In the case of standard European patents, for a transitional period of seven years from the entry into force of the system (i.e., until 2030), the dual jurisdiction of the Unified Patent Court and national authorities will apply. The agreement foresees a possible extension of this period for up to another seven years. After the expiry of the transitional period, the Unified Patent Court will continue to rule exclusively on standard European patents in the participating countries.

However, owners of standard European patents will be able to request to be excluded from the jurisdiction of the Unified Patent Court - the so-called opt-out. This may be appropriate, for example, where the patent owner wants to avoid the risk of a central challenge to the patent. In the three months prior to the launch of the system, i.e., from 1 March to 31 May 2023, there will be a so-called “sunrise” period during which an opt-out can be requested for European patents already granted or their published applications. It will also be possible to apply for an opt-out later during the transitional period of seven years (with the possibility of extension up to fourteen years), but an opt-out cannot be made if proceedings are already pending before the Unified Patent Court. Therefore, if the owner of a standard European patent in the participating countries wishes to request an opt-out, he should do so before the system starts operating on 1 June 2023, when the patent may already be challenged before the Unified Patent Court.

The opt-out will be effective for the lifetime of the patent. The opt-out will be revocable, but only if no proceedings are initiated before a competent national authority. Once the opt-out has been withdrawn, it will not be possible to reapply for it. Thus, the patent proprietor may, for example, request an opt-out to avoid the possibility of a central challenge to the patent and subsequently withdraw the opt-out if this is more appropriate for effective enforcement (provided that national proceedings are not initiated at that time).

How much will it cost?

There is no fee for filing a request for unitary effect for a European patent. The subsequent fees for the renewal of a Unitary Patent have been set at the level of the four countries with the highest number of validations of European patents - Germany, France, the Netherlands and the United Kingdom. This amounts to €35,500 over the 20-year life of the patent. Although the UK will not eventually become part of the system, it has been decided not to change the previously agreed fee formula. If the standard European patent is validated in more countries, the cost of renewing the Unitary Patent should be lower. On the other hand, the possibility of keeping the standard European patent in force in only a few countries that prove relevant over time will be removed, which may bring the maintenance fees below the level of the four countries mentioned above.

The fees for patent litigation varied considerably in the participating countries, and their level is therefore the result of a compromise. The basic fee for bringing a patent infringement action before the Unified Patent Court has been set at €11,000, which may be further increased depending on the value of the dispute, and the fee for a petition for revocation at €20,000. Proceedings before the Unified Patent Court may replace proceedings in up to 17 countries (and more in the future), where fees and legal costs in each country would likely be much higher. However, if we compare these fees with proceedings in the Czech Republic alone, the fees at the Unified Patent Court are several times higher. On the other hand, small businesses will be entitled to a 40% reduction in fees. The Unified Patent Court is also entitled to reduce or waive fees for companies for which the level of fees would threaten their economic existence. Proceedings before the Unified Patent Court will also facilitate, compared to the current situation in the Czech Republic, the more efficient recovery of reasonable costs in the event of success in a case.

What impact will this have in the Czech Republic?

The Czech Republic has signed the UPC agreement but has yet to ratify it. Until this changes, Unitary Patents will not be valid in the Czech Republic and the Unified Patent Court will not have jurisdiction here. European patents will therefore still have to be validated in the standard way, i.e., by submitting a translation into Czech to the Industrial Property Office together with the relevant application and by paying a fee. Infringement proceedings for European patents validated in the Czech Republic will then take place before Czech courts - in the first instance before the Municipal Court in Prague - and revocation proceedings before the Industrial Property Office.

In the event of the infringement abroad of a Unitary Patent or a standard European patent, for which there is no opt-out, in one of the participating countries, Czech persons can then be sued before the Unified Patent Court and a petition for revocation of the patent can (or must) also be filed before the Unified Patent Court. However, Czech persons can already be sued before foreign authorities and there will therefore be no fundamental change in this respect, although proceedings before the Unified Patent Court will, of course, have an impact on litigation strategy or costs.

Czech owners of or applicants for European patents should be especially concerned. For newly granted European patents, Czech applicants will also be able to choose whether to use the Unitary Patent in the participating countries, i.e., to apply to the European Patent Office for unitary effect after the grant of the European patent. This should save on the costs of validating the patent in each country, whether translation charges, fees to national offices or legal representation costs. At the same time, depending on the number of countries in which the standard European patent would otherwise be validated, there may be a significant saving in fees for maintaining the patent in force.

Similarly, Czech owners of European patents already granted in participating countries should decide, ideally before the system becomes operational on 1 June 2023, whether to exclude their patents in relation to participating countries from the jurisdiction of the Unified Patent Court. As already mentioned above, the jurisdiction of the Unified Patent Court may facilitate the enforcement of a patent in more countries, but on the other hand, there is a risk that a patent may be revoked in up to seventeen countries, and probably more in the future, in a single proceeding. It is also possible to request an opt-out and withdraw the opt-out if it is necessary to enforce a European patent in more countries if national proceedings have not been initiated at that time. However, the appropriate strategy must always be adapted to the specific situation.

Czech companies active on European markets will also be able to use the Unified Patent Court as part of their active strategies to protect their own European patents in the participating countries, but they must also expect to find themselves appearing as defendants before the Unified Patent Court.

Once the Czech Republic ratifies the UPC agreement, newly granted Unitary Patents will come into force here. European patents will therefore not need to be validated separately in the Czech Republic. At the same time, the jurisdiction of the Unified Patent Court will be established to decide on infringement and invalidity disputes of Unitary Patents and standard European patents for which the opt-out has not been exercised. In the case of standard European patents, the dual jurisdiction of the Unified Patent Court and the Czech national authorities, i.e., the courts in the case of infringements and the Industrial Property Office in the event of revocation, would apply for a period of seven to fourteen years from the start of the system.

The Czech Republic will be able to create a local chamber of the Unified Patent Court, as a court of first instance in infringement proceedings, or a regional chamber along with other countries, e.g. Slovakia, with the possibility of having proceedings conducted in the Czech language.

At this point, a review of own portfolios of European patents and patent applications is to be strongly recommended in order to adopt an appropriate strategy for registering, enforcing and defending own rights.

Read the article in Czech here