What are the pros and cons of the unitary patent?
12 Oct 2022
The EU has been trying to implement a Community patent since the 1970s. Successive attempts at conventions, regulations and agreements have been made with varying degrees of success, but all eventually hit roadblocks and were set aside – until now. The unitary patent is finally expected to come into effect on 1st June 2023.
This latest incarnation of the unitary patent was proposed in 2009, with the stated aims of enhancing the single market with uniform patent protection, and of fostering innovation among organizations with limited budgets. By dramatically cutting filing costs, reducing administrative procedures and minimizing translation requirements, the EU hopes to enable patent filers – in particular small and medium-sized enterprises (SMEs), non-profit organizations, research organizations and even individuals – to register patents for their inventions more easily.
What is the unitary patent? How will it work?
The unitary patent will be a single filing system that grants the holder uniform protection in all EU countries that have both signed and ratified the Unified Patent Court agreement.
So far, 25 current EU member states have agreed to participate in the system, but only 16 have ratified. Germany and – most recently, in July 2022 – Ireland have also stated an intention to ratify. Spain, Poland and Croatia will not be participating. The UK had also been a signatory but withdrew in 2020 in the wake of Brexit.
Applications will be managed through the European Patent Office (EPO) and will be based on the normal European patent system. Once an applicant has been granted a European patent, they have a month from the publication of the grant in which to request unitary effect. To receive a unitary patent, the underlying ‘classic’ European patent must have identical claims in all participating member states.
While the benefits of lower costs and increased efficiency are attractive to patentees, they should also consider the potential risks. A careful look at the pros and cons of the new unitary patent will help potential applicants prepare the filing strategies that work best for their businesses.
What are the advantages of the unitary patent?
Given that the stated purpose of the unitary patent is to foster innovation by making protection more accessible, it naturally comes with a number of up-front financial advantages. The benefits of the new system include major cost reductions for national validations, translation requirements and ongoing renewal fees (annuities):
- Validation: A standard European patent, once granted by the EPO, still must be validated in all countries where protection is sought through each national patent office. The fees and rules vary by country. Under the unitary patent system, a single action provides protection in all participating countries, eliminating the need for national validations.
- Renewal: Maintenance of the unitary patent also is simplified, requiring a single renewal request and associated filing fee every renewal period to maintain the patent in all participating nations, rather than separate national renewal. In order to keep the costs reasonable, the EU has fixed the renewal fees at the sum of the four countries in which European patents were most often validated in 2015, namely, Germany, France, the UK and the Netherlands.
- Translation: Along with national validation for each nation where coverage is requested under the traditional European patent system, translations are required. Further, patent owners often must retain local patent counsel. Even if a patent owner reduces administrative costs by using a single-vendor solution for translations and other requirements, costs can add up over time. In contrast to the numerous translations needed to validate European patents, only one translation is required to accompany the request for unitary effect: English (for source German and French applications) or one official EU language (for source English applications). After a transition period of six to twelve years, no translation will have to be supplied at all. There will also be a compensation scheme to cover translation costs for SMEs, natural persons, non-profit organizations and research organizations and universities.
Moreover, there is no official fee for the initial request for unitary effect, although applicants will still pay the usual application fees for the underlying European patent.
What are the disadvantages?
Potential unitary patent applicants will need to weigh the benefits in cost and efficiency against these disadvantages:
- Central attack: First, and arguably most importantly, there is a significant risk involved in holding a single patent right for multiple countries. If a competitor successfully challenges a patent, the limitation or invalidity will apply across all participating nations. Even if the infringement claim underlying the validity challenge relates to a national patent only in force in one country, the all-or-nothing nature of the unitary patent can result in cancellation of the challenged unitary patent in its entirety. This is in stark contrast to the standard European patent, which provides a bundle of separate national patents, thereby keeping separate national rights insulated from each other. A successful challenge to the traditional European patent in one country has no legal effect on that same innovation in any other country.
- Loss of flexibility: In a similar vein, the uniformity of the unitary patent right can lead to inability of patentees to structure their portfolios on a country-by-country basis. Under the present European patent system, patent holders may be able to limit their claims or refrain from seeking registration in particular member states in order to avoid challenge by an existing national patent holder. Thus, the ‘classic’ European patent system provides a higher degree of flexibility than the unitary patent. As an added benefit, the flexibility of national filing also can reduce future renewal costs.
- Fixed geographic scope: As noted above, the unitary patent system has not yet been ratified by all signatories. However, the geographic scope of a unitary patent won’t change once it’s granted. This means that early adopters of the unitary patent will only receive protection in the countries where the system is in force when their patents are granted, even when more signatories ratify.
While the unitary patent is intended to simplify the patenting process, achieving international cooperation on this scale is no small task – as evidenced by the current landscape, which appears fragmented and riddled with caveats.
The hope is that all signatories of the unitary patent agreements will eventually participate fully in the system. However, the dozen years it’s taken to persuade 18 countries to not only sign but also ratify the relevant agreements suggest it may be some time before the unitary patent is adopted more widely in the EU. It is possible, instead, that uneven adoption around the EU will lead to a stratified system whereby SMEs file the riskier unitary patents, while larger businesses that can afford the various fees prefer to file the more secure European patents.
One thing is clear: in a system where a single pre-existing national right can threaten your patent in 25 countries, thorough IP research will become more important than ever. However, the reduced translation requirements may make it harder for researchers to assess the novelty of their inventions. Machine translation should suffice for a basic initial search, but to be sure of the crucial details that could make or break an invention, researchers would need a more precise and expert translation from an experienced linguist with knowledge of both patents and the subject matter.
Whichever system you choose to use, you need to be aware that the new Unified Patent Court (UPC) will have jurisdiction over not only unitary patents, but also European patents filed in unitary patent countries, unless you specifically opt them out. This opt-out period will only be available for a limited time, which is currently set for seven years but could be extended. Remaining opted-in to the UPC comes with a number of benefits, such as centralized control and reduced costs: a decision made in respect of your patent in one country would potentially be enforceable across all UPC countries that your European patent is validated in. However, this cuts both ways – the UPC’s rulings will apply in all countries that have ratified the UPC agreement, so if an objection is raised against your patent at a national level and is upheld, you risk losing your European patent across all those countries.
So should my company file unitary patents?
As noted above, the new system will give European patent applicants the choice to elect unitary patent coverage once the ‘classic’ European patent is granted. The current European patent system will still apply as it did before, for both the unitary patent states and the rest of the European Patent Convention (EPC) states. Therefore, a patentee could continue to validate European patents on a state-by-state basis, even if that includes some or all of the unitary patent states. Another option may be to cover all unitary patent participating states in one go with a unitary patent, while also using the European patent system to validate the patent in any other EPC states on a state-by-state basis. This second approach may free up funds to validate in more EPC states than you might otherwise have been able to afford – but don’t forget that you risk leaving your patent vulnerable to a central invalidity attack. Further, a company considering portfolio strategies that combine national and unitary patents must be mindful of double patenting. Each member nation is able to decide whether double patenting is permissible.
The EPO estimates that a unitary patent will be cheaper than a European patent held in four countries by 3% for the first 10 years, 5% over the course of 12 years and 8% over 15 and 20 years. If these projections hold true, the savings under new system could be game-changing for small and medium-sized businesses and non-profits.
While these figures may seem alluring, look before you leap. Ask yourself whether you actually need protection in more than four countries, and check the national validation and renewal fees to work out a more accurate cost comparison for your specific situation. Then consider your budget carefully, as well as the benefits you expect this patent to bring to your business – and the consequences of suddenly being without protection in any of the participating countries in the event of a successful challenge.
Whether the unitary patent is the right choice for any patent owner will depend on a number of factors: for more details, read our earlier article on the topic. RWS will continue to watch the situation as it evolves so that we can provide the best services for your patenting strategy, no matter which option you choose.