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April 08, 2022 - Litigation, European Union, Intellectual Property

A Long Courtship for Unity – As Europe’s Unitary Patent System Is Going Live Soon, Consultations About a Unitary Supplementary Protection Certificate Gain Momentum

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After a myriad of challenges, delays, and hurdles, the setting up of the pan-European patent court, the Unified Patent Court (UPC), is finally gaining traction. On January 19, 2022, the UPC came into existence as an international organization. This date marks the beginning of the Provisional Application Period (PAP), which was triggered by the thirteenth member state’s ratification of the PAP Protocol. The Administrative Committee, one of three governing bodies of the UPC, had no time to lose and took up its preparatory work with an inaugural meeting on February 22, 2022.  Since then, preparatory measures seem to be in full swing. The interview process for candidate judges began at the end of March 2022. As soon as the Court will be deemed functional, which is expected to take about eight months of preparations, Germany will deposit its ratification of the Unified Patent Court Agreement (UPCA), a final step which it is – in agreement with the other member states – currently holding back in order to control the timeline.  From that moment, the final countdown of three months will be initiated until the UPCA will enter into force and the UPC will open its doors.

With the UPC having reached the home stretch, Supplementary Protection Certificates (SPCs) have come into the limelight as the fundamental area of intellectual property (IP) protection that remains fragmented among the member states.

SPCs are sui generis IP rights. They grant up to five years (and in cases of pediatric extensions, five and one half years) of additional protection for a medicinal or veterinary product or a plant protection product that has gained market authorization. SPCs were introduced to offset the lengthy process of regulatory proceedings. Protection is based on EU regulation No. 1610/96 (concerning SPCs for plant protection products) and No. 469/2009 (concerning SPCs for medicinal products) (“SPC Regulations”) and is available in all EU member states. However, application and approval is handled on the member state level.  This remained the same despite the advent of the European Patent Package, which introduced the Unitary Patent (UP) and the UPC, but did not provide for unitary SPCs.

[The European Patent Package introduced the Unitary Patent (UP), a single patent having effect in all participating EU member states, and the Unified Patent Court (UPC), a court system having jurisdiction over UPs with its decisions having effect in all participating member states.]

As a consequence, UPs can only be extended by national SPCs.

During an evaluation in 2020, the European Commission (EC) found that the SPC system in general provides effective incentives for innovations, and the EC ascertained that the main shortcomings are rooted in the national administration and management of SPCs. Therefore, the EU Parliament called on the EC to address this SPC fragmentation. In the course of its legislative work, the EC has launched a so-called “Call for Evidence” to gather feedback on how to tackle that issue. The Call for Evidence brings up three topics for discussion:

a) The baseline scenario with no policy change. The SPC system would continue to operate on the basis of existing EU and national rules. Member states might continue in an uncoordinated manner to recalibrate their SPC practices, with different approaches persisting across the single market.

b) Non-legislative instruments, including guidelines based on the best practices of national patent offices and the case law of the Court of Justice of the European Union (CJEU), aimed at further harmonizing the current SPC system.

c) Legislative changes, which would possibly be combined with non-legislative changes, including:

1) Creation of a centralized system for SPC protection in the EU, with a view to reducing the cost and burden and making the procedure for granting SPCs more predictable. A centralized system would facilitate the setting up of standardized, common, and publicly available digital databases. This centralized system could consist of: (i) a unitary SPC, complementing the future unitary patent; (ii) a unified procedure for granting bundles of national SPCs, without creating a unitary SPC; or (iii) a combination of the two. The detailed features of a centralized SPC system will be assessed in an impact assessment (e.g., an examining and granting authority (a virtual authority comprising SPC experts from Member States, or an EU authority), language arrangements (English-only or multilingual), and judicial review); and

2) Targeted amendments of the SPC Regulations on the basis of the best practices of national patent offices and CJEU case law aimed at further harmonizing the current SPC system.

The Call for Evidence is open for feedback until April 5, 2022. Any members of the public may provide their feedback and comments. Submissions will be published here.

Meanwhile, the UPC committees will continue their preparatory work. A fully operational UPC is expected to open its doors in early 2023, if not in late 2022. From that moment, a seven-year transitional period, during which patent holders may opt out of the exclusive jurisdiction of the UPC, will kick off. It is crucial for holders and applicants of UPs to make well-balanced decisions and keep an eye on the UPC strategies of other market participants.

On the one hand, the exclusive jurisdiction of the UPC comes with the advantage of a
cost-effective litigation system. To participate in the UPC could be seen as an opportunity to shape this new system. On the other hand, being at the mercy of a newly set up court might be daunting, as outcomes could be perceived as less predictable than in the more familiar systems. This might particularly be the case in light of the fact that a declaration of invalidity would stretch to all participating member states.

Therefore, the right strategy can only be tailored in view of the risks or strengths attached to specific patent portfolio and its market environment. Owners and applicants should use the home stretch of the UPC to become familiar with the UPC system and its procedures and get advice on UPC strategy, where needed.