A Unified Patent Court for Europe – where are we now?

Preparations to implement the Unified Patent Court (“UPC”, see here) are moving forward, with a target date for it to become operational in spring 2016. Whilst this date has already slipped from the original target of 2014, it may still be somewhat ambitious given that the Rules of Procedure have not yet been finalised, the process of appointment of judges has not yet commenced, and the IT systems necessary to enable the court to receive and process documents are still at the pilot stage prior to procurement.

Procedure

A 17th draft of the Rules of Procedure was published at the end of October 2014. This is expected to be the penultimate draft, as no further consultation is planned. A hearing was held with invited representatives of interest groups in late November 2014, but this was of the nature of a presentation and discussion rather than an opportunity to suggest further changes. The final form of the Rules is expected in early 2015.

This draft does address a number of the concerns which had been raised over earlier versions.

Possibly the most critical issue in earlier drafts was the perceived risk that the bifurcation of a validity challenge from an infringement action could lead to a patentee obtaining a pan-European injunction against a defendant by asserting an invalid patent. Obviously, the commercial pressure which an injunction effective throughout most of the European Union could exert would incentivise many defendants to settle despite believing that no valid claim was being infringed. The draft rules now provide that if the Division trying the infringement action decides not to stay the action pending the Central Division’s separate decision on validity, the Local/Regional Division must inform the Central Division of the dates of the interim conference and oral hearing on infringement. The Central Division must then ‘endeavour’ to accelerate the validity proceedings, under draft rule 40 (b), with the aim of hearing the revocation action ahead of the infringement hearing.

The fact that it is not mandatory for the validity case to be tried before the infringement decision remains some concern, however. Particularly given the substantial (not to say total) uncertainty at this stage as to the resourcing of the various Divisions, there must be a real possibility that in practice the Central Division will not succeed in its endeavours to accelerate all validity proceedings sufficiently. Nor is there any requirement for co-ordination between any first instance Division and the Court of Appeal. Since the new draft also clarifies that a patentee will normally be entitled to an injunction following a finding of infringement (except in “very exceptional circumstances”, which appears to exclude the commonplace situation of a patentee which does not actually practice the invention and may not have carried out the underlying research) the risk of an “injunction gap” persists.

On the positive side, the new draft does give the Court of Appeal in Luxembourg the ability to grant leave to appeal on procedural questions where the relevant Division has refused. This is essential to enable the Court of Appeal to establish, over time, a Europe-wide consistency in procedural matters which, in turn, should lead to an EU-wide predictability as to the course an action will run and ultimately increase the likelihood of consistent decisions being reached.
The provisions on opting a patent out of or into the UPC jurisdiction have been clarified to make it clear that once proceedings are pending or have been completed before the UPC or a national court in respect of a particular patent, it will no longer be possible to opt that patent out/ in of the UPC thereafter. This is to avoid the risk of divergent decisions either in parallel or sequentially. The rules do not eliminate entirely the possibility of an opt out/opt in where proceedings in either court settle without a judicial decision, but the most likely interpretation is that this will not be possible either – to avoid parties forum shopping by settling a case at a late stage in order to avoid an adverse decision and then bringing subsequent proceedings under the alternative jurisdiction.

This goes some way towards addressing the concerns of a number of companies that troll-like patent owners could use weak patents at the UPC to block product sales across 25 EU Member States until the patent is held to be invalid. There remains still a strong view that the draft does not go far enough.

Judges

In December 2013 the Preparatory Committee issued a “Call for expressions of interest” in becoming a candidate for the bench of the UPC. Some 1300 people expressed such an interest, meaning that it took until July 2014 for the Preparatory Committee to assess those expressions. The purpose of the exercise became apparent after the event: there was a concern that there would not be sufficient qualified candidates with the necessary expertise in patent matters to sit as judges, from all of the Member States. This turned out to be the case, and so the next stage will be training for a number of potential candidates to enable them to meet the criteria for appointment.

Presumably the application process will begin once all candidates who fall into this category have been trained, which will begin in early 2015 in the new judges’ training centre in Budapest. Given that it took 7 months even to filter the potential candidates, it must be expected that processing actual applications for the as-yet unknown number of vacancies as legal or technical judges will also take a considerable time. It seems unlikely that the successful candidates will have been identified and also trained in the Rules of Procedure and logistics of the court, in time for the target date of Spring 2016. There could be further complications if the current rumours as to the salary for judges, of only €50,000 per annum, prove to be correct since this will make it far less attractive to candidates from northern Europe where both judges and patent professionals ordinarily earn far higher salaries. From an abundance of 1300 applicants, some 800 of whom were said to be from Germany, the Preparatory Committee could find itself facing a dearth.

IT

The UK Intellectual Property Office received the dubious honour of devising an IT system suitable for the new court, and after considerable work launched a pilot for testing by interested parties in autumn 2014. It appears that a range of different potential users have identified different issues with the way the system accepts and processes documents – for instance, it did not provide a mechanism for submitting a document as an attachment enabling a draft Claim to be circulated among a party’s legal and expert teams for finalising before submission. Notwithstanding this, the Preparatory Committee propose to issue a procurement notice before the end of the year with a view to awarding the tender in spring 2015.

It will be impressive indeed if the system is fully implemented throughout the participating Member States in time for the Court to open its doors in spring 2016.

Conclusion

The UPC project is slowly taking final shape, but a lot remains to be done before it can start hearing and deciding cases. Spring 2016 is not impossible, but only if progress on every one of the strands continues in precise accordance with the planned timetable – whereas on a complex international collaboration such as this the opportunities for hitches and delays makes that rather less than more likely. But by 2017, there must be a real prospect that the new system will indeed be operational. Consequently, enterprises whose interests in the EU are tied up with protection and exploitation of patent rights need to be preparing now, to ensure they have a strategy fit for purpose in the new unified regime.