Press Release, 1st of June 2024
One year ago, the eagerly awaited UPC was launched as a unified court for 17 EU member states - including the heavyweight economies of Germany, France and Italy. The aim of the UPC is to harmonize patent law and increase legal certainty. This is intended to create a greater degree of predictability and safeguard investment in the EU. In conjunction with the newly created unitary patent, the enforcement and administration of patents in the participating EU member states has been simplified.
Has the new EU patent system been able to meet these requirements? Who benefits and who is disadvantaged? “The most important innovation of the Unified Patent Court is that companies can now enforce their patents centrally before a single court in 17 member states of the European Union,” explains Tilman Pfrang from the IP law firm Meissner Bolte. “This is a huge advantage over the previous situation, when European patents had to be enforced individually in each country - a costly and time-consuming undertaking.” Indeed due to the success of the UPC Romania ratified the UPC agreement in April 2024, and looks likely to become the 18th EU member covered by the UPC later this year.
The UPC was intended to strengthen small and medium-sized companies that had previously shied away from the immense costs of enforcing their European patents throughout the EU. However, so far it has mainly been large corporations from other EU countries that have actively used the opportunities offered by the UPC. “This is probably due to the fact that medium-sized companies are waiting to see how the case law of the UPC develops and what their initial experiences with the new court are like. A perfectly understandable position, especially when financial resources are tied up in a patent dispute,” says Tilman Pfrang.
The situation is different with the Unitary Patent, the second pillar of the new EU patent system alongside the UPC. “Many medium-sized clients consciously opt for the Unitary Patent after the grant of a European patent and use it as a new tool in their IP toolbox. We are also seeing a similar trend in the use of the opt-out option, which allows classic European patents to be removed from the jurisdiction of the UPC. Only around 30 percent of our clients have made use of this option so far. The majority entrust their classic European patents to the jurisdiction of the UPC, which is an indication of the acceptance of the new system,” says Tilman Pfrang.
Whilst UPC court costs are low compared to German courts, adverse cost awards against a losing party can be significantly higher at the UPC. In a German court, legal costs can be easily predicted thanks to remuneration tables. With the UPC, however, the reimbursement of legal fees is at the discretion of the court. This creates an element of uncertainty in relation to the level of adverse costs that may be awarded. This is mitigated somewhat by the introduction of a maximum limit for the reimbursement of costs. Moreover, as more cases reach completion practitioners will get a more accurate feel for the level of adverse costs that can typically be awarded by the UPC – thus increasing certainty over time.
“The territorial extent of patent infringement judgments is an enormous advantage in the event of a victory in court. At present 17 EU states are covered by the UPC but this is expanding to 18 states as of September 1, 2024, when Romania will join. Further additional states are likely to follow suit in the years ahead. However, proceedings before the UPC can entail a considerable financial risk, expecially for smaller comanies, due to the complexity of the proceedings and the reimbursement of costs, ”says Andreas Kabisch from the IP law firm Meissner Bolte. “A well-thought-out strategy combined with a well-founded assessment of the prospects of success usually makes the risk manageable - but unfortunately, patent cases are rarely completely risk-free.”
“Whether you are a small or large company, you need to have a strategy for proceedings before the UPC,” advises Andreas Kabisch. “Especially since the first year has clearly shown the speed at which the Unified Patent Court makes its decisions. The time pressure is enormous due to the short deadlines and requires a well-coordinated team of lawyers and patent attorneys. The highly dynamic and complex rules of the proceedings and the emerging case law are a challenge for every law firm, but also offer a unique opportunity to actively influence the development of a new legal system from the very beginning. A stroke of luck for ambitious lawyers!”
