existing patent portfolio

2 Euro Law Conference 2016

EP-Patent with Unitary EffectImpact on Future Filing Strategy and

Existing Patent Portfolio

Holger Stratmann Attorney at Law


PATENT SYSTEM IN EUROPE

The Status Quo

Actions on

national leveleffective only in the

respective country

Actions on

National Leveleffective only in the

respective country

Grant Enforcement

National

Patents

European

Patents

38 Member

States


PATENT SYSTEM IN EUROPE

The Future

Centralised Actions

UPC

Grant Enforcement

EP-UE/

Community

Patent

Actions on

National Leveleffective only in the

respective country

European

Patentsopted-out


THE UNIFIED PATENT COURT

Jurisdiction of the UPC

• Patents with Unitary Effect (EP-UEs)

• Existing traditional European Patents (EP-

Patents), if not opted out

• SPCs



Types of Action Within the UPC‘s Competence

• Infringement Issues

• Invalidity Issues

• Other Issues



Infringement Issues

Infringing activities in all UPCA

Member States can be stopped

by just one infringement action



Invalidity Issues

• Separate Invalidity Action

• Counterclaim for Revocation



Invalidity Issues

EP-UE or a not opted-out European patent (EP) or SPC

can be invalidated for all UPCA Member States by just

one judgment of the UPC


Opt-out or Stay In?


STRATEGIC CONSIDERATIONS

Basic Rule – NOT Opted-Out

During the transitional period, actions for infringement or

for revocation may still be brought before national courts

(Art. 83(1) of the UPC Agreement).



Example

Competitor X :

• launches infringing

products

Company P :

• EP patent

• validated in

DE, UK, FR, NL

• not opted out

UPC action



Example

Competitor X :


products

warning letter

(to start communication)

invalidity action in UK

Company P :

• EP patent

• validated in

DE, UK, FR, NL

• not opted out

UPC action



Example

Company P :

• EP patent

• validated in

DE, UK, FR, NL

• not opted out

Competitor X :


products

warning

letter

invalidity action in UK

can P stil l bring an

infringement action with

the UPC?

Is the national UK court „f irst seized“ according to Brussels Convention?

• I f so: UPC claim cannot proceed

• On the other hand: if dist inction is drawn between national revocation

action and UPC infringement action: how could defendant then defend

himself?



Opt-out (Art. 83(3))

Opt-out removes the UPC’s competence with regard to EPs (not EP-UEs) granted or applied for prior to the end of the transitional period

Only possible before lawsuit is pending

2015 2016 2017 2019 202120202018 2022 2023 2024

Sunrise Period

Transition of 7 years (possibly extended)Start?



Who can Opt-out?

• Application has to be filed by the proprietor of a

European Patent or the applicant for a published

application, Rule 5(1)

• Co-owners: all proprietors or applicants, Rule 5(1)(a)

• Licensees are NOT entitled to file an application to opt

out



Scope and Duration of the Opt-out?

• all of the Contracting Member States for which the

European patent has been granted or which have been

designated in the application, Rule 5(1)(b)

• for the lifetime of the patent (not only for the

transitional period)



Opt back in

• possible to opt back in (withdraw the opt-out), Rule

5(8)

• no further opt-out, Rule 5(11)


OPT-OUT: TIMING

Entry into force

Transitional period (7+α) yearssunrise

Application of Opt out1 month

EPO

GrantEP

(DE)

A

DE court

EP(DE)

Opt out

DE court

Y

UPC

N

Choice

EP(DE)

Opted out

DE court

Y

UPC

N

Opt out


OPT-OUT: TIMING

Entry into force



EPO

GrantEP

(DE)

A

DE court

EP(DE)

EP(DE)

N NOpt out

DE court

Y

UPC

Choice

Opted out

DE court

Y

UPC

Grant ChoiceB

EP(DE)

EPUE

EP(DE)

EPUE

Opt out


OPT-OUT: TIMING

Entry into force



EPO

DE court

N N

Y

Opt out

DE court UPC

Choice

Opt out

Y

UPC

EPUE

EP(DE)

EPUE

Grant ChoiceB

EP(DE)

Grant ChoiceC

EP(DE)

EPUEOpt out



What should influence your decision to opt-out of the

UPC?

• Potential risk vs. potential reward

• all eggs in one basket

• one shot clears the market

• Strength of validity of the patent

• Forum shopping

• non opted-out “classical EP-patents” may be litigated in either national courts

or the UPC




UPC?

• Is the Patent likely to be Litigated?

• If yes, it may be better to opt out to avoid the possibility of central revocation by the UPC, in particular if the validity of the patent is perceived not to be strong




UPC?

• Assuming Litigation is likely, is Maintaining Flexibility in the

Ability to Litigate in Certain European Countries and Not

Others Important?

• If you or your competitor’s key commercial activities concern only a small number of countries, it may be less expensive and faster to litigate in only those countries

• An injunction in all jurisdictions in which your patent is valid, which will be available at the UPC, may not be required

• Alternatively, if you prefer to enforce and/or defend your patent across all validated jurisdictions in a single action you may choose not to opt out




UPC?

• Where are my main markets?

• Where are my main competitors?

• Do the EPs cover my competitors’ products?




UPC?

• Does the Patent Protect a Core Part of a Commercially

Important Products/Technology?

• If yes, then the financial consequences of central revocation by UPC across all validated jurisdictions are likely to be much greater

• Conversely, the consequences will be less significant for less important patents which do not cover commercially important technology

• Indirect Infringement

• Process Patents


Indirect Infringement:essential means relating to an invention must be

• offered

and

• applied

in the same country

Current situation: no jurisdiction in DE or UK


Indirect Infringement:essential means relating to an invention must be

• offered

and

• applied

in the same country

UPCA:somewhere in the designated countries

jurisdiction in DE or UK




UPC?

• Is the Patent Important Enough to Warrant High Litigation

Costs?

• Litigation in multiple jurisdictions may well be more expensive than a single action at the UPC (depending in the jurisdictions in question). However, this can have its advantages. For instance, litigation in multiple jurisdictions might be prohibitively expensive for some competitors




UPC?

• Litigation Costs

• national/one country vs. UPC




UPC?Costs of f irst-instance proceedings

Value in Dispute

(Invalidity Action DE + 25%)

1,000,000 € 10,000,000 €

UPC Proceedings

• Court Fees

• Reimbursable Attorneys Fees up to

Total (without party‘s own legal expenses)

36,000 €

150,000 €

186,000 €

132,000 €

800,000 €

932,000 €

German Proceedings

• Court Fees

• Reimbursable Attorneys Fees

Total (without party‘s own legal expenses)

44,070 €

50,880 €

94,950 €

323.520 €

354,630 €

678,150 €

Comparison: Cost Risk German vs. UPC Proceedings appr. 51 % appr. 73 %




UPC?

• Speed of Litigation

• The UPC imposes a precise procedure to be complied with

• For example, the statement of defence must be lodged no later than three

months from the statement of claims being served, the defence to a

counterclaim for revocation must be lodged within two months of the

counterclaim being served, and the president-judge must endeavour to

complete the oral hearing within one day

• In the case of pan-European litigation, the one-stop-shop UPC may well

reduce companies’ litigation costs and time




UPC?

• Evidence Gathering Tools

• The Rules of Procedure of the UPC incorporate the procedural practices of

various European jurisdictions. Whilst there is no discovery or disclosure, it

does provide various other tools for gathering and preserving evidence. These

go beyond the options currently available under the national laws of certain

jurisdictions, and opens up possibilities in fields classically fraught with

evidentiary problems such as - most notably - process claims and biosimilars

cases




UPC?

• Experience of Judges and ‘New Rules’

• The uncertainty over the quality of judgments, procedure and availability of

tools such as cross -examination and disclosure in the new system may favour

a “wait and see” approach

• You can always withdraw the opt out once the quality of the UPC has been

proved , assuming the patent has not been the subject of national litigation by

the time you wish to do so




UPC?

• Opt-out Fees

Official Fee:

• There will be no official fee for the opt out and opt back in

Attorneys’ Fee:




UPC?

Long-term opt-out: going national

• by either applying directly to national patent offices or via the PCT route,

designating the relevant European jurisdictions;

• particularly appealing for those patentees that only designate a handful of

EPC Member States in their European patent applications


Which Strategy do other Companies Apply?


DE, FR, UK:

7,007,624

NEW REGISTRATIONS 2014


EP-UE:

9,824,668



EPC:

12,744,029*

* No data for

Albania, Croatia, Macedonia, Serbia



• smaller patent portfolio, but patents

cover the blockbuster products

• “crown jewels” will be opted-out


Philips:

• is among the top-10 Patent Cooperation Treaty

(PCT) applicants and the top-3 European

Patent Convention (EPC) applicants

• owning about 64,000 patents and fi l ing

approximately 1,500 patent applications each

year

• usually validates in Germany, France, United

Kingdom (all to be covered by the UP) plus

Turkey (not an EU Member State and thus

outside the UP).

Leo Steenbeek, Principal IP Counsel:

“Philips won’t opt-out patents when the UPC

starts functioning .”


Review existing EP patent portfolio now• Identify commercially valuable patents

• Identify co-owned patents

• Assess costs

Consider position if acquiring EP in one jurisdiction – will co-

owners agree to opt out?

Exclusive licences (current and future) – position on opt out?

Be ready for sunrise period

Action Points

46

Holger Stratmann

Thank you for your attention

Attorney at Law | Partner

[email protected]

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