European Patents: A very big change

Business secretary Vince Cable signed a very significant agreement in Brussels last month. The Government has given its preliminary backing to possibly the most significant change in intellectual property laws in 30 years: the Unitary Patent (UP). So, what does this mean for UK business? For the benefit of those unfamiliar with patent protection in Europe, there are two basic routes to obtaining a patent in each country in Europe. Your first option is to apply for patents independently at the national patent office of each country where you want to protect your technology. Alternatively, you can submit a single European Patent Application with the European Patent Office (EPO). This is a centralised system for granting patents. Once the EPO centrally grants a patent the applicant selects the countries for protection and receives national rights just like the national application route. So what is it that Mr Cable has signed? In short, and subject to ratification by Parliament, the UK Government has committed to bring the UK into the Unitary Patent System. The UP will fundamentally change the way the existing EPO system grants patents. Instead of granting a patent which is then converted (validated) in the countries of choice (to create separate national rights) the EPO will instead issue a single pan-european patent (a Unitary Patent) covering all of the countries that sign up to the deal. This means that instead of obtaining a bundle of independent national patents (one for each country) you will instead be given a single patent covering all the countries that sign up to the UP. Sounds good? There are some very different schools of thought as to whether this is a good thing or not. On the positive side the aim is for the UP is to encourage investment in R&D in Europe by giving companies reassurance that their technology can be protected right across the EU. Another aim is to attempt to reduce the cost and improve the simplicity of obtaining patents in the EU. However, a fundamental issue for many companies with the UP is that they will only have a single patent. If this is challenged and revoked then they lose all of their protection across the EU. Under the existing system they would retain rights in countries where the patent had not been challenged. It is also by no means certain that the costs will actually be reduced. The new court system has not been but in place and there are many questions about who will bear the cost of the court and all of the translation that will be required. Many questions remain unanswered. Perhaps the most contentious point is that the courts might adopt the German model of hearing patent infringement and patent validity completely separately and in different courts (called bifurcation). In the UK and many other countries these are brought together in a single court case. A worst case scenario for a company is to be found to infringe a patent and to be issued with an injunction preventing continued business activity whilst having to wait to contest the patent's validity. Will the UP actually happen? You might think that Mr Cable's signature means it will but this is not necessarily the case. To come into force the agreement must be ratified by each of the governments of the UK, France and Germany. In addition, it must be ratified by at least 10 other countries. Many large patent filers in the UK are very unhappy with the UP proposal and it is likely there will be lobbying either against the UP entirely or to modify the system (particularly for example in respect of where parties can litigate and the issue of bifurcation). However, there is considerable political momentum to make this happen and it seems inevitable. The European Commission plans to implement the UP by 2014; a timeframe that in the author's view is almost impossible to meet. More realistically we are looking into 2015 at the earliest, and of course subject to the necessary ratification. Those with pending European patent applications should be aware of a very significant aspect of the agreement: the UP will be issued for all pending applications. If your European application is pending when the new system comes into force, instead of being given the option of selecting the countries you actually want patents in you will be given a single UP. In the next article we will give some strategic advice on what you should do now to optimise your position. We will also explore your options for temporarily opting out of the system and offer some advice on revising your patent strategy. For more information please contact Anthony Albutt on 020 7269 8550 or email aja@dyoung.co.uk