AIPPI Congress Report 2: Unified Patent Court may be ready for business in 2017, but are we?

The AmeriKat's view during Sunday evening's
UPC session 
Sunday late afternoon sessions are generally a killer for attendance as conference participants are either exploring the sites or getting in a quick Kat nap before evening festivities.  It was therefore a surprise that facing the panel during Sunday's Unified Patent Court session were over 100 attendees.

The session was organized by AIPPI's UPC and Unitary Patent Standing Committee who are tasked with exploring issues that are important to the operation of the UPC and recommending potential solutions to resolve or clarify matters.  Over the past year the Committee of 28 members from 18 countries has prepared four papers.  Two of these papers have addressed the uncertainty surrounding the jurisdiction and applicable law during the transitional regime under Article 83.  The other two papers have asked a series of survey questions to AIPPI's National and Regional Groups and Indpendent Members.  The first survey relates to how various national courts interact with EPO oppositions (i.e. whether national revocation proceedings are stayed pending the outcome).  The second survey relates to how national courts treat court fees in patent actions. The purpose of these surveys is to identify common themes on how these issues are addressed in order to inform and make recommendations to the Preparatory Committee and Member States on these issues.

Alan Johnson (Bristows), the Chair of the Committee, opened the session by giving an introduction to the Committee's work, the background to the UPC project and steps required in the run-up to the launch date.  The UPC comes into force after 13 signatories ratify, of which three have to include UK, Germany and France.  With France and seven other countries already ratified and the UK anticipated to do so around Spring 2016, the UPC will soon be knocking on our door.  However, the remaining uncertainty is the status of Germany's ratification which could delay proceedings.  In the meantime, several matters have to occur, including the appointment and training of judges (which is on-going as the AmeriKat types), the establishment of the court computer system, the setting of court fees, unitary patent renewal fees and the setting of the distribution key.   Alan suggested that hte earliest start date would likely be January 2017, but his best guess was that the doors would be open by mid-2017.  

Niclas Morey (Direct of IP5/Trilateral Affairs at the EPO) then took the audience through the role the EPO will be playing in the UPC project, specifically in respect to the granting of unitary patents.  With a growing number of European patent applications being filed, the availability of a unitary patent will only continue this trend.  The application and examination procedure will remain unchanged.  The only difference is that an applicant has the option of requesting that, upon grant, their patent has unitary effect in the 26 participating Member States.  The request has to be made in writing in the language of the proceedings no later than one month after the mention of the grant is published.  Unitary effect can only be requested for European patents which were granted with the same set of claims in all participating Member States.  The unitary patent will co-exist with national patents and there may be various combinations of such protection.  For example, an applicant could have a unitary effect for the 26 participating Member States together with a classical European patent taking effect in one or multiple EPC Contracting States, such as Spain, Switzerland, Turkey and Norway.  However, double patenting is not permissible.  

Niclas also explained the role of the Select Committee of the Administrative Council which has representatives from the 26 participating Member States, together with the European Commission, epi and BusinessEurope.  With 15 meetings already under their belt, the principle tasks of the committee is to implement the unitary patent into the European patent system, including the adoption of the implementing rules relating to unitary patent protection (which were adopted in principle on 9 December 2014) and the setting of the level of renewal fees and distribution shares.  The level of renewal fees is the current recommended True TOP 4 proposal (see IPKat posts here).

It is what is NOT in Article 83 that is
causing all the confusion.
The AmeriKat in her human Allen & Overy/AIPPI UPC Committee secretary form was next in line with a run-through of the issues concerning the transitional provisions under Article 83 of the Unified Patent Court Agreement.  The UPC's exclusive jurisdiction and competence over existing classical European patents (and SPCs based on them) is subject to a transitional regime that lasts an initial 7 years, extendable to a maximum of 7 years. Pproprietors can opt-out of the UPC during this time by lodging formal opt-outs at the Registry under Article 83(3) unless an action has already been commenced in respect of that patent before the UPC.  An opt-out can be withdrawn at any time unless an action concerning that patent has been commenced before a national court.  Although this regime seems straighforward, the uncertainty relates to what happens with non-opted out patents.  Which court has jurisdiction over those patents - national courts, the UPC or both?  If both, how will the courts resolve conflicting decisions?  Is it a "race to the court" lis pendens situation whereby the court that has jurisdiction over the patent is the court first seized of the matter?   Given that the UPC was designed to overcome the obstacles of a fragmented European patent landscape, the current lack of clarification on how Article 83 operates will only increase uncertainty and costs during the most crucial years of the UPC.  Indeed, the result may be that the system in its early years looks similar to the current system of national patent litigation in Europe.  To address this issue the Committee advanced a recommedation urging Member States and the Preparatory Committee to clarify the operation of Article 83 and, at least, to issue an interpretative note.  

Thierry Calame (Lenz & Staehelin), the Committee's Co-Chair, lead the panel session with an expert panel including Judge Meier-Beck (Presiding Judge of the German Federal Court of Justice), Larry Welch (Eli Lilly), Tina Chappell (Intel) and Michael Frohlich.  In response to Thierry's opening question as to what industry considered to be the key issues that still needed to be addressed in the run-up to the UPC, Larry explained that from the life sciences perspective it was the granting of SPCs based on unitary patents.  SPCs, as a suis generis right, are currently granted by national patent offices on the basis of the relevant marketing authorizations (which can be granted via a variety of routes) and the basic patent for the product.  The big question is who will have the authority to grant SPCs?  Larry explained that a recent Efpia proposal suggested the creation of a Virtual Body composed of  existing national SPC experts from national patent offices.  If the SPC application is refused, there is then a dialogue with the applicant in order to overcome the objections raised.  Applicants would then have a right to an oral hearing if their application was again refused.  The full Virtual Body can be consulted where unprecedented issues arise.  If the applicaiton is refused again, then the matter can be appealed to the UPC who could then also make a reference to the CJEU for guidance on the interpretation of the SPC Regulation ("Yay, more referrals!", snarks Merpel).  Larry also proposed the idea of an early resolution mechanism which would set the wheels in motion for resolving disputes regarding declaration of infringement/validity issues once a company has filed a marketing authorization application for a generic version of an innovative product.  

Tina emphasized the need for the judges in the UPC to think carefully when deciding whether it would be appropriate to grant an injunction.  This is especially the case, she said, where a product such as a smartphone incorporates multiple technologies and numerous patents.  If a smartphone is protected by 10,000 patents, there are 10,000 opportunities that a party could obtain an injunction to stop that product being sold in the European market irrespective of how crucial or valuable that patent is to the product.  Judges should therefore be conscious of the business impact that a patent has on a product and a market.  Tina also expressed concern that if injunctions are granted without a deeper analysis of the role that patent plays in the entire product, the risk of a pan-European injunction may force companies to settle irrespective of the merits of the case.  It is this risk of settlement that may open up the system to abuse as the matter is then taken out of the hands of the judges.

Ratification of the UPC -
almost there...
Michael Frohlich, giving views in his personal capacity, felt that the Rules of Procedure were pretty much set in concrete following the latest 18th draft.  There had been a number of improvements, including the insertion of a balance of convenience and urgency test into the preliminary injunction provisions.  Although there was more he and others would have liked to have seen changed, his view was that the focus needed to be on making the system a success.

Judge Meier-Beck stated that he thought that there was an over-emphasis on the training of judges, especially those in the local, regional and central divisions.  His main concern was ensuring that the judges in the Court of Appeal are sufficiently experienced as the appellate court will have a crucial role to play in the initial years of the UPC system.  The role of the Court of Appeal also has to be determined (i.e. will it adopt an English or German type approach on how it handles appeals, for example?).  He also noted that there are more technical judges on the appeallate panel than at first instance.  Therefore, he said litigants could expect going into more technical details on appeal than they may have expected, including at first instance.  Giving advice to the new UPC judges, Judge Meier-Beck recalled his early days as a judge.  He said that the best way to learn is watch experienced judges which lead Thierry to comment that the current group of highly experienced patent judges in Europe must be encouraged to have a role as a UPC judge.  Judge Meier-Beck also commented that the legally qualified judges should also embrace the technical details of the case and not rely only on technical judges to do so.

Michael also commented that one of the most underestimated threats to the UPC system are the wider issues that come up during patent litigation, including matters of joint tortfeasorship and contract law, which are not harmonized under European law.  Although there were attempts to look into this issue a few years ago, it was put on ice as the focus from legislators was to get the UPC Agreement signed.  This was something that needed to be considered as a matter of urgency.

After a short round of questions from the floor, the session concluded.  The key point coming from the discussion was that although the ratifications are rolling in, there are still several issues that remain uncertain.  Although there will always be uncertainty given that this is a new system, the more that these issues are considered and discussed in advance of the system, the more chance the system, the judges and the litigants will be equipped to tackle them.  

The AmeriKat will be back later with reports from today's Pharma and trade mark sessions and the trade secrets question.  She is also compiling a repository of presentations and resolutions which she will share with the Kat's readers in a follow-up consolidated post.  
AIPPI Congress Report 2: Unified Patent Court may be ready for business in 2017, but are we? AIPPI Congress Report 2:  Unified Patent Court may be ready for business in 2017, but are we? Reviewed by Annsley Merelle Ward on Tuesday, October 13, 2015 Rating: 5

1 comment:

  1. But what of the most immediate decision required


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