By Julie Nixon
On the 19th February EU ministers, including the UK Business Secretary Vince Cable, signed the Unified Patent Court (UPC) Agreement, which sets out the framework for a new centralised court to deal with European patent law. This is a key stage in the move towards an EU-wide system for patents, 40 years in the making. The intention is that more UK businesses will increase their investment in research and development as a result of the cheaper and easier process to protect their ideas. However the UPC could see SMEs faced with litigation in countries where they can’t afford to defend themselves.
The UPC will include a Court of First Instance and a Court of Appeal. The Court of First Instance will be comprised of a central division in London, along with local and regional divisions scattered throughout the participating member states.
25 EU member states are participating, with Spain opting out. The EPO will continue to grant patents but, on the request of the applicant, patent protection will be given effect for the territory of the 25 participating member states. But in reality, would SMEs even need patent protection as wide ranging as this? Their key markets might be based only in a few European countries.
On paper the new EU patent law seems to promise much; less time and money registering patents European wide, and if you need to defend your patent this can be done now in one court with one judgement applicable in all the countries where the patent was being infringed. The flip side of this of course is that any patent holder in Europe could go to their local court to raise an action of infringement, leaving UK SMEs vulnerable to foreign judgements they can’t afford to defend. SMEs could be deterred from entering a market in which they would be free otherwise to compete but for the threat of litigation. There is also a real possibility that businesses may spring up European wide whose only intention is to “patent troll” innovative small businesses.
Patents are highly technical documents requiring expertise and experience to understand. There is a a concern that some European states use judges that are not suitably qualified to be passing judgements relating to patents. In the UK, Germany and the Netherlands there are many patent cases but fewer in the Eastern European countries. Forum shopping could also become a reality with courts being chosen on the basis of being friendlier to infringers or more inclined to invalidate patents.
The British Parliament's House of Commons European Scrutiny Committee, which examines European legislative proposals and advises Parliament as how to respond, also described the UPC as “unfit for SMEs”.
The new EU patent law is likely to benefit big pharmaceuticals, who would want their blockbuster drugs registered throughout the 25 countries, and who can afford to defend infringement actions. This follows criticism of the Patent Box scheme, also intended to encourage innovation in SMEs but in reality far more likely to favour large corporations.
However the agreement must first be ratified by 13 participating countries for it to enter into force with extensive technical discussions still to take place. If all goes smoothly, the unitary patent package will come into force on 1 January 2014.