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EU Patent Court, Months from Launch, Spurs Wariness Amid Zeal

May 10, 2022, 9:05 AM

Patent-savvy companies are of two minds about the blank slate presented by the Unified Patent Court, the long-awaited EU-wide tribunal scheduled to make its debut in the coming months.

While some are eager to jump in, others are reticent.

The push for a pan-European court that could resolve patent disputes in one place has spanned decades. After years of setbacks—including the U.K. backing out after Brexit, and legal challenges in Germany—it’s finally on track to be up and running by early 2023, if not sooner.

Right now, the UPC doesn’t have judges. Nor does it have clearly defined boundaries on how it will set precedent. While some patent owners see opportunities despite—or even because of—the uncertainties, other companies will take a much more cautious approach.

“Either you sit on the sidelines and find out or you participate in the court and be able to influence its jurisprudence,” said Regina Sam Penti, a partner in Ropes & Gray LLP’s Boston office and solicitor of England & Wales.

‘Sea Change’ in Enforcement

Long-term, many are excited about the UPC’s potential. Under the current system, companies with patent protection in Europe must enforce their patents in individual countries, each with their own body of law. The UPC is designed to migrate from the patchwork of national laws to a more cohesive framework.

Assessing the UPC’s potential importance, Penti drew comparisons to the U.S. Court of Appeals for the Federal Circuit, which was created in the early 1980’s as the top patent court in the U.S.

“The important thing for all U.S. companies to know is that this is effectively a sea change from an enforcement regime that is very complicated and costly to one with the hope of a single body of law,” Penti said.

Drug companies have approached the launch of the UPC with caution, wary of the potential that patent protection for a blockbuster drug could be lost for much of the EU in a single court proceeding. Other companies with patents critical to their operations might also be reluctant to expose those patents to invalidation in an untested forum.

But there are companies that see a chance to help shape case law, or feel hampered by the current patchwork system. They sense a chance to extract more from European patents than they were able to in the past.

“Those clients are looking forward to being able to bring one action and have it on a brisk timeline, in a forum where they do have the opportunity to potentially influence the jurisprudence and be a leader in that area,” Penti said.

One group that attorneys expect to quickly test the new court are patent licensing companies, particularly as the number of disputes over patents essential to WiFi and other industry standards increases. The potential for an injunction spanning much of Europe will be enticing.

“I think they see the new system as a chance to improve and strengthen their position,” said Constanze Krenz, an attorney at DLA Piper’s office in Munich.

Unified, But A Hodge-Podge

Right now, case law at the UPC is non-existent. The UPC advisory committee says the court’s decisions will be based on various existing laws and agreements, including European Union law, the agreement establishing the court, and the national law of the various countries.

“It’s going to be a bit of a hodge-podge of various things,” said Tom Hamer, a U.K. and European patent attorney based in Kilburn & Strode LLP’s San Francisco office.

The advisory committee has started interviewing judge candidates. It will make recommendations to the UPC administrative committee, which will appoint the judges. The advisory committee expects the process to finish this summer.

That will be an important milestone.

While the goal of the UPC is a unified body of law, there will be areas where judges have discretion. Attorneys anticipate judges’ backgrounds could be a factor in those types of decisions. How a judge from Germany, for example, weighs an injunction request could be different than a judge from the Netherlands.

And American companies sued in the UPC are expected to push, in some instances, for approaches that are more aligned with the U.S. view. Injunctions in the U.S., for example, are more difficult to obtain than in a place like Germany. How it all shakes out remains to be seen.

“Many questions involve some kind of crystal ball reading at the moment,” Krenz said.

Knowledge Gap

Among some attorneys is a growing sense that there are U.S. companies not paying close attention.

“The more I talk to American attorneys and companies in house, the more I’m getting a bit worried,” Hamer said., “I feel like people aren’t preparing and not doing adequate due diligence.”

The UPC will have jurisdiction over “unitary” patents, a new patent right that will cover most of the EU and sit alongside standard European patents. There will be a transitional period, during which companies have the option to pull European patents out of the UPC and litigate in national courts.

Opting out won’t, however, entirely insulate companies from the new tribunal. Even if they don’t want to litigate their own patents at the court, there will be nothing stopping other patent owners from hauling them into the UPC with an infringement case.

There is a widening knowledge gap between companies keyed into the changes and those that don’t appear to understand the potential ramifications of the UPC, attorneys warn. Unprepared companies risk getting blindsided with a sweeping injunction, said Emily Collins, a U.K. and European attorney who also works in Kilburn’s San Francisco office.

“It is worrying that a knowledge gap, especially from foreign applicants, could lead to huge consequences of having a big injunction that you weren’t expecting.”

To contact the reporter on this story: Matthew Bultman in New York at mbultman@correspondent.bloomberglaw.com

To contact the editors responsible for this story: Adam M. Taylor at ataylor@bgov.com; Jay-Anne B. Casuga at jcasuga@bloomberglaw.com