UP & UP myths and misunderstandings

• Myth: The court has three locations – London, Munich and Paris – all cases will be heard there.
• Reality: These are just the locations of the branches of the Central Division. There will be many more locations than that.

The UPC will have three kinds of division at first instance:

Local divisions

Regional divisions

Central division

Any participating member state can have a local division (so long as it is prepared to pay for it) and there are likely to be local divisions in at least the UK, Germany, France, Italy and the Netherlands. There may also be local divisions in Ireland, Belgium, Denmark, Austria and Finland.

Participating member states can also join together and form a Regional Division. Sweden, Latvia, Estonia and Lithuania have already agreed to have one. There may be others in Central and Eastern Europe.

The Central Division will have three branches – London, Munich and Paris.

Most infringement cases will be heard in the local and regional divisions because the rule is that an infringement case must be brought in the local or regional division for the country of domicile of the defendant, or alternatively where infringement occurs.

The main exception is for non-EU defendants, who can be sued in the Central Division. However, the primary role of the Central Division is for revocation and declaratory proceedings, and the branches have jurisdiction over different technical areas in this regard (broadly, life sciences in London; mechanical engineering in Munich; and everything else in Paris).

The second instance Court of Appeal will be located in Luxembourg.

• Myth: The court procedures are based on a German / French / UK / EPO approach.
• Reality: A very substantial myth. The UPC has always been intended to be, and designed as, an international court.

The UPC procedures have been compiled by an international committee of experts, based on procedures and remedies in all existing EU national courts and in consultation with interested parties from all parts of the EU and beyond. The Rules of Procedure reflect this. The panels of judges in all divisions will also be international.

While initially it is reasonable to expect a degree of "local flavour" at least in the local divisions in the larger countries, over time the approach will harmonise. As for the European Patent Office (EPO), it is clear that EPO case law will be highly relevant but the UPC is nevertheless a court. There will be similarities with existing EPO practice, especially where invalidity is involved, but as a court the UPC will adopt a different approach to both submissions and evidence.

• Myth: There will be bifurcation (separation of infringement and validity) in the UPC.
• Reality: Bifurcation is possible in the UPC although it is very unlikely.

Much comment has been made about the fact that there is the possibility under UPC Procedure for a local division to send an invalidity counterclaim to the Central Division, while continuing to hear the infringement action. The possibility was maintained in the UPC procedure despite the objections of many participating member states.

However, there is a very significant difference between bifurcation in German national proceedings, and the UPC procedures. In Germany, there is no possibility for an infringement court to hear an invalidity counterclaim. In most EU countries this is possible but in German national proceedings, a separate invalidity action has to be brought in the Federal Patents Court in Munich.Bifurcation is therefore not optional in German national proceedings – it is compulsory.

The UPC however will not have compulsory bifurcation. In response to an infringement claim, a defendant can bring a revocation counterclaim in the same division, as is the case in most national patent proceedings in Europe. It will be entirely inconsistent with a key objective of the UPC, namely to be an efficient forum for patent litigation, if half of a case is sent away to another location (and possibly another country) for adjudication. The judges in the German (and other) local and regional divisions of the UPC will have the option to hear all parts of a case and every indication is that they will do just that, not least because it makes little sense to do otherwise.

• Myth: You will have to sue a defendant in the UPC division located in its home country.
• Reality: There is considerable flexibility in terms of where an infringement claim can be brought.

The UPC division in the defendant's country of domicile is one option for EU based defendants but a case can also be brought in any division in a country in which there is infringement. In addition, if there is a non-EU defendant, a case can be brought in the relevant (by technology) branch of the Central Division. Where there are multiple defendants of different nationalities, there is even greater scope for choice since a case could be brought against one of those defendants in their home country, with cases against other defendants being joined together in the same action.

Alternatively, multiple cases could be brought in several different divisions, if desired.

• Myth: You must use the language of the defendant in the UPC.
• Reality: There will be a choice of language in most UPC divisions.

Participating member states have indicated that in addition to the local language, an official EPO language can be used for proceedings in their local divisions. In the Central Division, the language will be the language of the patent in suit, and in the Swedish / Baltic Regional Division it will be English. This means that in most cases, the claimant will be able to choose English as the language of the proceedings, although undoubtedly the quality of English usage will vary from division to division.

Of course, as a defendant, it is possible that you could be sued in an unfamiliar language (where for example jurisdiction is based on the place of infringement) but that will of course reflect the fact that you are doing business in that country. Further, there is the possibility that the UPC will order that the case is to be heard in a different language where the original choice makes no sense bearing in mind the nationality of the parties, for example. This should help to avoid tactical language choice although it may not eliminate it.

• Myth: You have to instruct a lawyer in the UPC.
• Reality: While parties in the UPC must be represented, both lawyers and, subject to suitable qualifications, European patent attorneys have the right to represent clients in the UPC.

The reality is likely to be mixed representation, given the hybrid procedures in the UPC and the fact that there will be both legal and technical judges in most cases.

• Myth: The UPC is for litigation of unitary patents only.
• Reality: The UPC will have jurisdiction over both unitary patents and conventional European patents.

This means that the default position is that all European patents can be enforced or revoked in the UPC. However, it will be possible for conventional European patents to be opted out of the UPC system, provided this option is exercised before the end of a transitional period and the patent concerned has not been litigated in the UPC already.

• Myth: When the UPC starts, existing conventional European patents will automatically cover all participating EU member states and renewal fees will be paid to the EPO.
• Reality: Nothing will change in relation to coverage and maintenance formalities of conventional European patents once the UPC comes into effect.

It is important to distinguish between unitary patents and conventional European patents.

Once the UP / UPC system comes into effect, the unitary patent will be an option that can be selected within a month of grant of an application for a European patent. If selected, it provides a single patent right for the territory of all participating EU member states (in the early years, coverage may be limited if a given member state has not yet ratified the UPC Agreement). It will not cover European Patent Convention (EPC) countries that are not part of the EU (eg Turkey), or non-participating EU member states (eg, Spain, Poland). Renewal fees for unitary patents will be paid to the EPO and they cannot be allowed to lapse on a country by country basis (it is all or nothing).

Conventional European patents will remain available on a country by country basis both as an alternative to unitary patents for participating EU member states (ie, if the unitary patent option above is not chosen) and for countries outside the UPC/UP regime. Renewal fees for all conventional European patents will continue to be payable to national patent offices and they can be allowed to lapse on a country by country basis, if desired. Conventional European patents in EU member states, whether existing or obtained in the future, cannot be converted into unitary patents, and vice versa

The only change that will affect conventional European patents is jurisdiction. If a conventional European patent, valid and in force in one or more participating EU member states, is subject to the jurisdiction of the UPC (because it has not been opted out) then any relevant decision of the UPC will take effect for all participating EU member states in which it is valid and in force.

Myth: National patents will cease to be available.

Reality: There are no plans to get rid of national patents and these will continue to be available by application to national patent offices if desired.

National patents cannot be enforced or revoked in the UPC, which has no jurisdiction in relation to them.

• Myth: The UP and UPC will be cheap.
• Reality: It depends what you mean by cheap.

The UP will definitely be more cost effective than conventional European patent protection, or national patent protection, where you want to obtain and keep broad patent coverage in a number of member states. The upfront costs will be the same as a conventional European patent (because they will be obtained via an application for a European patent in the usual way) but the costs post grant will vary. There will be no need for translations, so if your coverage involves extensive translation costs, then a UP could be attractive. However, post the London Agreement the effect of translation costs is limited.

The big issue is therefore renewal fees. The renewal fees for the UP are being in set in a way that aims to be equal to the renewal fee costs of conventional European patent protection in the top four EPC countries (currently this has been based on Germany, France, the UK and the Netherlands). However, what you cannot do with a UP is reduce renewal fees by reducing coverage – so if you wanted to drop protection in one or more country, you can't with a UP. If say you might want to limit protection to France and the Netherlands in order to reduce renewal fees, then you cannot do that with a UP. You can with a conventional EP. It will require careful analysis of your lifetime costs to decide which route is more cost effective although you will of course get broader protection with a UP for the potential additional cost.

As for the UPC, in addition to attorney's fees (which will of course depend on who you engage and how complex and time consuming a case is), there will be relatively substantial court fees involved. These will include value-based fees for the larger cases, and these could be quite large. The UPC is likely therefore to be more expensive than an individual case in a national court, especially some of the lower cost options including the Intellectual Property Enterprise Court (IPEC) in the UK. It will also be more expensive than an opposition in the EPO (although there is no time limit as to when you can bring a revocation proceeding in the UPC so there is always the possibility of doing both). It is also important to note that there will be a "loser pays" cost recovery process in the UPC, covering attorneys', experts' and court fees, subject to caps on reasonable attorneys' fees that are based on case value. There is no such regime in the EPO, so there is a greater risk in costs in the UPC.

Compared to multiple country litigation, however, especially where it might involving the three big jurisdictions and markets of the UK, France and Germany, it will certainly be more cost effective than three sets of national proceedings. It will therefore all depend on the nature of the case and the extent of infringement.