Luxembourg Joins The Unified Patent Court System That Goes Hand In Hand With The Creation Of The European Patent With Unitary…

Luxembourg has adopted the law that approves the Agreement on a Unified Patent Court (the “Agreement”) on 12 April 2015, about two years after the signature of the Agreement by 25 Member States on 19 February 2013. Luxembourg is the seventh country which has ratified the Agreement (after Austria, France, Belgium, Denmark, Malta and Sweden). However, the Agreement will enter into force only upon ratification by 13 contracting Member States (including Germany, France and United Kingdom).

  • Relationships between the unitary patent and the Unified Patent Court:

The implementation of a European unitary patent and of a Unified Patent Court (the “UPC”) has been praised as the two major innovations in European Patent law since the signature of the European Patent Convention in Munich on 5 October 1973. These two innovations go hand in hand. As provided for in Regulation (EU) 1257/2012 of 17 December 2012 implementing enhanced cooperation in the area of the creation of unitary patent protection, the rules governing the new unitary patent title shall only apply from the date of entry into force of the Agreement on a Unified Patent Court. Only 25 EU Member States agreed on implementing a European patent with unitary effect (Italy, Spain and Croatia did not want to participate).

The UPC will have jurisdiction for cases in relation to (i) European patents with unitary effect (“Unitary Patent(s)”) and (ii) current or future European patents not benefiting from the unitary status (“European Patent(s)”). However, with respect to European Patents, the Agreement provides for derogations to the exclusive jurisdiction of the UPC.

Finally, the Agreement on the Unified Patent Court may be signed by an EU Member State even if this Member State is not party to the Unitary Patent system, as Italy did. In this case, the UPC will have jurisdiction only for European Patents granted in the concerned territory.

  • Structure of the Unified Patent Court:

There will be a Court of First Instance with central, local and regional divisions. The central division will have its seat in Paris and two sections in London and Munich (cases will be distributed according to the nature of the invention at stake). The Court of Appeal will be located in Luxembourg. This will contribute to further establish the reputation of Luxembourg as a key place for intellectual property.

  • Advantages of the Unitary Patent:

When a European Patent is granted by the European Patent Office and a unitary effect registered in a specific registry, the European Patent will turn into a Unitary Patent and will thus provide uniform protection and have equal effects in all the Member States which participate in the Unitary Patent system and which have ratified the Agreement. There will be no need for a national separate validation and a single annual tax will be payable after the grant of the Unitary Patent. Quite to the contrary, when a “simple” European Patent is granted, it will, in each of the contracting States for which it is granted, have the effect of and be subject to the same conditions as a national patent granted by that State, unless otherwise provided in the European Patent Convention. A European Patent still needs to receive a national validation in every country where patent protection is sought and national taxes shall be annually paid in each country chosen to maintain the national title.

Advantages of the Unitary Patent are expected to be reduced costs, reduced administrative formalities and a more effective management of the patent.

As a consequence of the unitary protection of the patent and similarly to a Community trademark, a Unitary Patent may only be transferred, revoked or limited, or lapse, in a single block in all the contracting Member States.

  • Other side of the coin:

A single action (i.e. an action for revocation in the main proceedings or a counterclaim for revocation within an infringement action) before the UPC may result in the revocation of the Unitary Patent at a global level. It means that Unitary Patents will be more vulnerable compared to European Patents, the revocation of which only have effects at a national level.

The purpose of the UPC is to create a new court capable of harmonising and unifying the legal rules governing Unitary Patents and European Patents. The creation of the UPC should also facilitate prosecution for patent infringement acts. Upon ratification of the Agreement, legal certainty should be strengthened by the existence of this unique litigation resolution system binding on all the contracting Member States.  

  • Forum shopping:

The Agreement sets out the actions for which the UPC has jurisdiction. First, parties may agree to bring infringement actions or actions for revocation before the local or regional division of their choice or the central division. Then in case of patent infringement (actual or threatened infringements), the patentee shall either decide to bring the case before (i) the local division hosted by the contracting Member State where the infringement has taken or threatens to take place (or before the regional division in which that contracting Member State participates) or (ii) before the local division hosted by the contracting Member State where the defendant has its residence or principal place of business or in the absence of residence or principal place of business, its place of business (or before the regional division in which that contracting Member State participates). However, if the contracting Member State does not host a local division and does not participate in a regional division, the central division shall have jurisdiction. These provisions leave the patentee a wide degree of freedom regarding the choice of the division that will render the decision that will produce its effects in every contracting Member State. The risk of forum shopping is already put forward by some practitioners.

Another critical issue arises in relation to counterclaims for revocation of patents (either a Unitary Patent or a European Patent). The Agreement provides that if, in the course of a patent infringement case, a counterclaim for revocation of the patent is raised by the defendant (necessarily before the same regional or local division), such division has the discretion either (i) to rule on both matters, (ii) to refer the counterclaim for revocation to the central division (while suspending or proceeding with the infringement action), or, (iii) with the agreement of the parties, to refer the entire case for decision to the central division. Therefore, judges within a local or regional division could potentially, in the second scenario, rule on a patent infringement and then the central division could rule on the invalidity of the same patent. This could lead to inconsistent decisions.

  • Conclusion:

In light of the above, the role of the Court of Appeal, will be hugely significant to unify the views of the different divisions within the Unified Patent Court. It remains to be seen in practice how the actors of the industry will respond to this new system composed of the Unitary Patent and of the UPC. The entering into force of the Agreement and the whole system shall not take place before 2016 or 2017.