What is causing the delay?
For a while, it seemed the arrival of the UPC and unitary patents was fast approaching, and even expected by the end of 2017. The UPC, when established, will introduce a unified system for granting and enforcing patents. It will be a common specialised patent court with competence over: (i) classic European patents, if not opted out, (ii) European patents with unitary effect, and (iii) supplementary protection certificates (SPCs), if not opted out or originating from an opted-out European patent.
Arrival of the new system depends on the ratification of the Unified Patent Court Agreement (UPCA). Thirteen of the 25 participating states must have ratified before the UPCA enters into force. Those 13 states must include France, Germany and the UK. At the moment all eyes are on Germany and the UK, as France and 11 other states have ratified.
The formal ratification in Germany is expected in August 2017, while the ratification in the UK, which was expected to start after Easter 2017, is experiencing delay due to the early general election. Some predict that this delay in the ratification process means that the UPC will become operational a month or so later than scheduled. Others, however, (see for instance here) fear that the UK’s decision to ratify might be reassessed after the election. This reassessment would cause even more delay, regardless of the outcome. The UPC’s progress is further complicated by Germany planning to ratify after the UK, and that appeals on the compatibility of the European Patent Convention with the German constitution have meanwhile been filed with the Federal Constitutional Court. In addition, German media recently announced that the Federal Constitutional court has asked the German legislator to suspend the ratification process. Some commentators indicate that the background of this request seems to be a complaint filed by a private person against the new system for infringing the German constitution, while others speculate that the request is connected with the Federal Constitutional Court appeals. Whatever the reason may be, this means that Germany may postpone or even reassess its ratification, which was envisaged for August 2017. As a general election will be held in Germany in September 2017, this may also influence the ratification process.
These developments affect the launch date of the new patent system, as the UPC will come into effect four months after ratification by both Germany and the UK. At the moment, optimists expect the launch of the new patent system in spring 2018, but much depends on the factors listed above. The official UPC website currently states that the progress of the ratification process is continuously monitored with a view to publishing a new timetable as soon as possible.
Provisional application phase
Not only the launch of the UPC system will be delayed; the provisional application phase, which was planned for the end of May 2017, will also be pushed back. This six-month phase is aimed at ensuring a smooth transition into the operational phase and will come into force when 13 of the 25 participating states approve the Protocol on provisional application (again, this 13 must include France, Germany and the UK), and ratify or receive parliamentary approval to ratify the UPCA. In addition to Germany and the UK, two more states need to give their approval to trigger the start of the provisional application phase.
The provisional application phase includes a sunrise period, which begins three months before the launch of the UPC. During the sunrise period, proprietors of European patents – as well as applicants and proprietors of supplementary protection certificates originating from European patents – will be able to opt out their patent before the UPC becomes operative. Opting out means that the patent (an application or SPC) will not fall under the UPC’s exclusive jurisdiction.
For more information on opting out European patents and SPCs, please see our earlier article. One should also bear in mind that the UPC Beta Case Management System has been updated to bring it more in line with the UPC’s rules of procedure on opting out.
Rules of procedure
Meanwhile, an updated version of the UPC’s draft rules of procedure has been published on the official UPC website (the 18th draft). The updated version reflects amendments agreed by the Preparatory Committee, and mainly concerns corrections (such as internal references). The most notable change, which will be quite relevant in practice, is set out in Rule 5(3): a clarification about the information to be contained in the application to opt out of the UPC system, for example, allowing another person besides the proprietor/applicant or representative to lodge an application to opt out on the basis of a mandate.
The European Commission has been asked to give its opinion on the compatibility of the rules with EU law. Next, the rules need to be formally adopted by the UPC Administrative Committee during the provisional application phase.
US Supreme Court
A noteworthy US Supreme Court ruling has been published which may affect the UPC’s potential. In TC Heartland LLC v Kraft Foods Group Brands LLC, the Supreme Court limited the possibilities for “forum shopping”: patentees have less freedom in deciding exactly where in the US they can start infringement proceedings, because they will not always be able to litigate before a court of their preference, such as a patentee-friendly court or a courts that tends to award high damages. In cross-border cases, also involving Europe, alleged infringers could consequently expect more litigation actions as this development in the US might trigger US patentees to instead litigate in the UPC system, which provides for more forum-shopping options.
What should you do now?
Although there is some delay in the process, we advise you to continue preparing for the UPC’s arrival. In particular, we recommend considering your future patent filing strategy (unitary patent, European bundle patents and/or national patents) and to pay attention to the opt-out route. For more information about opting-out and other preparations, please see our earlier article.