19 February 2015Big PharmaPaul England

Momentum building for the UPC

Not many years ago, the conventional wisdom was that the Court of Justice of the European Union (CJEU) would usually follow the opinion of its Advocate General (AG) on any question before it, but that it could not be guaranteed to do so.

More recently, and although it is still a minority, the proportion of cases in which the CJEU has not followed the AG has increased. What does this mean for the challenges by Spain to the legislation implementing and governing the unitary patent and its translation arrangements?

The Spanish government’s two challenges to the patent were filed before the CJEU on May 31, 2013. It sought a declaration that the Unitary Patent Regulation which provides for the patent is legally non-existent or should otherwise be annulled, and a request that the ‘Translation Regulation’, providing rules for the patent’s language, is annulled in whole or in part. In other words, the action is intended to stop the unitary patent in its tracks.

The detail of the action lies in a number of pleas against these regulations, including a lack of a legal basis for the regulations and claims against the European Parliament and Council. These claims cover a breach of the rule of law and misuse of power; failure to have regard to the proper European case law; infringement of the principle of the autonomy of EU law; and infringement of the principle of non-discrimination.

AG Yves Bot has given his opinion on these challenges. He has not only said that all of the objections are unfounded, but has gone further. The AG actually advocates the benefits of the unitary patent for the uniformity and integration of protection it will enable for patentees. He also suggests that member states should ratify the separate Unified Patent Court (UPC) agreement as soon as possible, to enable the unitary patent to come into being (it cannot come into force without the UPC).

The opinion is so emphatic as almost to defy the CJEU to come to a different view. It would be a shock if the CJEU did not follow such an opinion but it cannot be discounted.

If the CJEU follows the AG on all aspects of the case, the way is cleared of legal objections to the patent and its accompanying translation arrangements (assuming that no new challenges are filed). Otherwise, and depending on which objections the CJEU upholds and which it does not, the architects of the unitary patent may have to take it back to the drawing board.

However, whatever the decision of the CJEU, it does not directly affect the progress of the UPC. The UPC is not at issue in the Spanish challenges and it does not depend on the unitary patent for its existence (some observers also think the patent was an unnecessary addition to the proposed new system in the first place).

The UPC is intended to be a forum for disputes concerning the new unitary patents and the existing European patents (the term ‘classical’ patents is now being used to describe these in order to distinguish them from unitary patents). Consequently, there is no reason why the UPC should not go on to hear disputes concerning classical patents, whatever happens to the unitary patent.

Progress report

It is now two years since the UPC agreement was signed, on February 19, 2013, by the representatives of 25 EU governments in Brussels. Spain and, to the surprise of most, Poland, did not attend (although Italy, which did not sign up to the unitary patent itself, did sign the UPC agreement). At the time Croatia was not a member of the EU. It has subsequently joined the EU, but not yet signed the unitary patent’s regulation or the UPC agreement.

"Confidence in the UPC judges will also be vital to the success of the court. A preselection procedure for candidate judges has already been completed"

The UPC’s signing marked only the beginning of the process of actually implementing the court and addressing practical questions, including what the rules of procedure will be; who the judges will be; how the IT system will work for the court and its users; where the courts will be; and so on. Above all, from the user’s point of view, how much will the court (and the patent) cost?

On the most difficult aspect of patent costs—renewal fees—the European Patent Office’s select
committee responsible for the unitary patent has been running ‘renewal fee scenarios’ as recently as last December, but there is no outcome yet. Likewise, although it is known that the cost of using the UPC will be based on the value of the case, the formula for relating the two has yet to be decided. The fee for opting out classical patents from the UPC system and the fee for registering a unitary patent are also undecided.

The level at which the renewal fee and the court fees are pitched will be an important factor in the success of the unitary patent and the UPC, and it is reasonable that time is being taken to get these right. Furthermore, there are many other areas where progress has been more visible. Take for instance, the subject of judges.

Confidence in the UPC judges will also be vital to the success of the court. A preselection procedure for candidate judges has already been completed, with a formal process of selection due to take place in 2015, as well as training. The results of the preselection exercise suggest there will be sufficient suitable judges to hear UPC cases. We should expect to see some familiar names from the patent judiciaries of Europe among them.

The UPC and the unitary patent will not happen unless 13 of the member states contracted to the UPC agreement ratify it. These must include the UK, France and Germany. France has ratified it already, and so have the non-mandatory member states Austria, Denmark, Belgium, Malta and Sweden—nearly half of those needed. In the UK, ratification is expected to take place in the spring of this year.

Germany is reported to be awaiting further information on costs, but given that it has already announced where it wishes to locate its UPC local divisions, few doubt that this ratification will come.

Other countries that have announced a local division (Ireland) and membership of a regional division (Latvia, Lithuania and Estonia, which will participate in a regional division with Sweden) might also be expected to add their ratifications when their national procedures allow. Together, these countries represent 11 of the 13, including all of the mandatory nations.

There is another key area in which progress is being forged: the rules of procedure. The rules will be the manual for lawyers on how to use the procedures and powers of the UPC. The rules are now in their 17th draft and the addition of a small number of amendments to the latest draft suggests that it is nearly complete.

There remains work to be done from a practical point of view, however. This includes developing and implementing IT, hiring staff, and locating and refurbishing court premises. There is no doubt that these are huge undertakings, but there is no reason to suppose that they cannot be achieved.

The overall picture is one of considerable momentum and progress towards the UPC.

If progress continues at its current rate the court, and hence the unitary patent, could start at the beginning of 2017. This date is within the timelines to which many life sciences companies plan their development and marketing operations. The likelihood of the UPC at least coming into being by this date is now high enough that those businesses that are dependent on patent protection in this sector, and those competing with them, need to get to grips with its implications.

Paul England is a senior associate at Taylor Wessing in London. He can be contacted at p.england@taylorwessing.com

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