March 2014 WHETHER TO OPT OUT?
The “European Patent with Unitary Effect”, otherwise known as the “Unitary Patent”, is a single patent that will cover all participating Member States of the European Union. We provide below some pointers as to whether patent owners should opt in or out of the new system.
The new unitary patents will be granted using the existing European patent application procedure, with the proprietor being able to choose whether to have a unitary patent or a number of national patents on grant.
The Unitary Patent System is not currently in force as Member States must ratify the Agreement. Twenty-five members of the European Union have signed the Agreement, with Croatia, who recently joined the EU, expected to sign within the next few months. However, so far only Austria and France have ratified the Agreement. As the Agreement cannot come into force until three months after at least thirteen members have ratified it, including the UK, France and Germany, there is still quite a long way to go. The current best guess appears to be some time around mid to late 2015.
Spain, Italy and Poland have decided not to sign the Agreement and Spain is currently taking action at the European Court of Justice to challenge the validity of the Unitary Patent Court (UPC). While it appears unlikely that this action will be successful it does add another uncertainty.
Furthermore, none of the fees for the unitary patent have been set. In particular the renewal fees and the fee for opting out, which are likely to have a significant effect of the take-up of the System, have not as yet been determined.
Opting out is possible only while there is no current national proceedings ongoing or any proceedings before the UPC. As a result, if the opt-out is to be used, it would be sensible to file the application to opt out as soon as this becomes possible, to avoid the possibility of proceedings before the UPC being filed on the first day. As there will be a three month notice period before the Agreement comes into effect, it will be possible to file applications to opt out before the Agreement does come into effect. However as this time scale is quite short, decisions will have to be made quickly once the start date is known.
Turning to the question of whether opting out is the best option, there are two schools of thought. Firstly, that opting out is the sensible approach as the System is as yet untested and it is better to wait and see what is going to happen. The other school of thought is that the ones to influence the System are the ones that are initially involved and using the System. Thus staying in will give more influence. The other important factor is the commercial situation of the proprietor. If a business has a strong patent then they may be better off in the system as their patent will be upheld centrally which will be advantageous. Equally, if a company is involved or likely to be involved in offensive infringement issues across Europe, then staying in would be the best option as action can be taken centrally rather than having to file separate actions in each individual country. However, in other cases where the patent is particularly valuable, then the possibility of it remaining in force just a little longer in certain European countries might be material, so opting out would be the best option.
Thus there is no straightforward answer as it depends on the commercial situation of each individual patent.
The most common feeling is that a significant number of large companies, in particular pharmaceutical companies, will opt out all of their patents at the start of the process due to the uncertainty.
Overall we recommend:
- awaiting publication of the fee schedules;
- comparing relative renewal fee costs of opting out against staying in;
- if the cost difference is significant, err towards lower cost; and
- if the cost difference is not significant, err toward opting out.
