The Unified Patent Court will be a precious tool to help harmonizing the legal system in the EU and fostering innovation. That is the expectation of Elisabetta Papa, head of patents of the Italian IP firm SIB. She thinks Milan may replace London as Central Division seat dedicated to human necessities, chemistry, metallurgy, although “keeping only the two offices in Paris and Munich appears as a practical solution for the shortest term”.
In an interview with Kluwer IP Law, Papa said: “We understand it may take some time for the UP system conquer the hearts of patentees. As happens with all new legal tools, it will spark interest but may also, potentially, entail an initial bit of caution. A few potential users consider procedural and legal fees for litigating a patent under the UPC high as compared to the same fees for litigating a national portion of a traditional European patent before some national courts, therefore it may happen that, at first, mainly large companies will experiment with the UP system in case of infringement acts occurring in multiple EU countries.”
Are there particular issues you’re concerned about regarding the new system?
“There will be a ‘warming up’ period of the UP system in which critical issues may arise from the users’ (companies’) side. For companies, the most serious one is, of course, the risk of having all EU national portions of a European patent (with or without unitary effect) invalidated in a single stroke. Court fees and legal costs will be a likely concern for many SMEs.
In addition, the rules of procedure of the Court are a comprehensive body of provisions different with respect to those currently applying in national litigation (civil proceedings) in some countries. Therefore, also formal issue may arise, with a substantive impact, for example, on the admissibility of requests, issuance of orders and so on.
In the medium term, it will be interesting to see how patent litigation will develop and how the international jurisdiction of the UPC will be assessed, especially where infringements are carried out by third parties in third states (so called UPC ‘long arm jurisdiction’) or where the defendant is domiciled in EU Member States which are not parties to the UPC Agreement (such as Spain, Croatia or Poland) or where the defendant is domiciled in other countries (such as Switzerland, Norway, the United Kingdom or Turkey).
Possible conflicts of jurisdiction may arise and it will be necessary to fully understand the UPC system in order to assess the best judicial and filing strategies to avoid the risk of facing frivolous, “torpedo” lawsuits by competitors, which can also paralyse a patent owner’s judicial initiatives.”
Are there things which you welcome particularly?
“We think that there are many reasons to welcome the UP system. Of course, a single action brought before the UPC can cover all infringing acts across the contracting states and can apply preliminary measures and remedies across the whole territory within the competence of the UPC (and possibly also beyond, as mentioned above). Moreover – and maybe most important – UPC decisions will be more consistent and extremely fast. For instance, infringement proceedings with counterclaim are expected to reach conclusion in about 12 months. We also appreciate that there is a ceiling for recoverable costs, to be calculated according to the value of proceedings and taking into account the specific circumstances.”
How do you prepare your firm and your clients?
“As with all legal tools, we think that knowledge is the most precious element to provide colleagues and clients with. Sharing specific awareness allows us, colleagues and clients to better understand the system and to assess together how the business strategies should be fitted in the system and vice versa.
In this framework, we are constantly organizing seminars, discussion tables and mock proceedings concerning the new UP/UPC system involving clients and building up possible concrete scenarios.”
In what circumstances would you advise clients to choose or not choose for the Unitary Patent?
“In the transitional period, the choice depends upon the type of client (big companies, SMEs, universities/research institutions), the type of patent portfolio owned (or in the process of being built up) by such companies, the potential ‘strength’ of the patent/application and the client’s legal ‘status’, including territorial aspects linked to applicable jurisdiction.
In other words, different situations call for differentiated advice. For example, if we are talking about a patentee with existing ‘classic’ European patents who fears a revocation action by a competitor, we would probably suggest considering opting out – especially in the case of potentially ‘controversial’ patents – in order to avoid the risk of seeing all national portions of the European patent revoked in all the participating Member states through a single action.”
What do you think about the Unitary Patent fees? Should they have been lowered in view of the UK’s departure from the system?
“The UP’s single annual renewal fee is to be welcomed and the total cost of a UP for 20 years is, in our view, fully acceptable compared to the fees to be paid for a traditional European patent validated in all UP states and in consideration of the administrative simplification brought by the UP system.
For example, the UP is of course more expensive than a traditional European patent that has been nationally validated, for example, only in Germany, France and Italy – the top three validation countries of traditional European patents– and a UP is roughly as expensive as a traditional European patent validated in Germany, France, Italy and the Netherlands.”
Will you advise clients to opt-out their patents from the jurisdiction of the UPC in the first phase?
“Once again, it really depends upon the above remarks concerning the type of clients, its legal ‘status’ as defined above, the possible actions the client is going to take or is likely going to face and, of course, the client’s type of patent portfolio and commercial planning.”
Since the UK’s departure from the UP system, Milan – with the support of the Italian government – has repeatedly claimed it should host the UPC central division formerly assigned to London. Do you support this idea?
“Generally speaking, Italian IP attorneys strongly support this idea and are surprised by those who don’t, because they consider the choice of Milan as the logic evolution of the line of thought brought forward by all the contracting states in assigning the court’s seats, including the London one when UK was part of the UPC system.
The UPC Agreement sets forth that Central Division’s seats are assigned to the states that in 2012 had the largest number of validated European patents. The four top states for number of validated European patents in 2012 were Germany, the United Kingdom, France and Italy. Therefore, since the United Kingdom has withdrawn from the UPC, Italy appears as a privileged candidate to host the Central Division seat dedicated to human necessities, chemistry, metallurgy. Milan is Italy’s most industrialized city, it may be considered the Italian ‘economic capital’ and it hosts many companies in the pharmaceutical and chemical sector (42% of the pharmaceutical sector and 31% of the chemical sector), that is precisely the sector to be devolved to the section of the Central Division formally assigned to London.
Milan is an inclusive and organized city fully structured to become one of the three European patent capitals along with Munich and Paris. It is already the centre of competitiveness of Italian economy and one of the fulcrums of European economic recovery after the pandemic, and in the last decades it has been attracting investments from all over the world.”
It seems to be the plan that at the start of the Unified Patent Court all cases for the central division will go to Munich and Paris, as a temporary solution. Is that acceptable, you think?
“The hypothesis of keeping only the two offices in Paris and Munich appears as a practical solution for the shortest term and possibly the only one suitable to make the system start by the end of 2022.
In the medium term, this solution might not be practical and farsighted for the same reasons that had induced the contracting states to choose three different premises in the first place. In particular, ever since the beginning of the negotiations between member states the need clearly emerged for the competence of the Central Division to be split according to patent categories, and the Agreement provides, accordingly, for the Central Division to have premises in three seats. Three seats, therefore, are seen by many attorneys as necessary and desirable.”
Is there anything else you’d like to mention?
“Just a final remark. A unified court of the European Union dedicated to IP matters is a unique occasion to strengthen the EU and the cooperation among its members states. This calls for an attitude of proactive and fair collaboration among all stakeholders in the process, particularly the attorneys as a sensitive link between the system and its users. Let’s make it work!”
Mario Pozzi contributed to this interview
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There is no legal reason at all to provisionally move the London section to Paris/Munich, instead of Milan.
In fact, Milan is the natural location according to the “authentic” interpretation of art. 89 UPC: if Italy replaces UK then Milan replaces London.
London is in France:
Actually, moving the London section to French London seems to be quite legal, which is not the case for Paris/Munich.
By the way, according to which EU law, a EU body (which the UPC is not) cannot have a branch outside the EU?
“Actually, moving the London section to French London seems to be quite legal, which is not the case for Paris/Munich.”
Except for the little matter of Article 88(1) UPCA, according to which the English, French and German language versions of the Agreement are equally authentic. The French version of Article 7(2) UPCA uses the word “Londres”, which in French unambiguously means the city in England.
“In fact, Milan is the natural location according to the “authentic” interpretation of art. 89 UPC: if Italy replaces UK then Milan replaces London.”
As I already said before, why not Livorno, Lecce, La Spezia, or Lucca? These cities have a name which starts with an “L”, whereas Milan does not.
Of course, as always, I am being tongue-in-cheek, if not downright cynical. All of this has no basis whatsoever in the only thing that should matter under the rule of law, i.e. the text of the Agreement.
As I already mentioned, Milan is the city chosen by the third Art 89 State, like Munich and Paris are the cities chosen by the first and second Art. 89 States, respectively.
I do not believe that “United Kingdom” can become “Italy” in the PAP, but if this is possible then “London” (a city chosen by the United Kingdom) must become “Milan” (a city chosen by Italy) in the UPCA.
Let’s not forget that Art. 89 means that the UPC cannot start without the approval of the three most important EU states.
I can follow, in principle, the logic that Italy replaces the UK, but why would the choice of Milan be automatic (rather than, e.g., Rome or Naples or Florence…)?
I don’t disagree that Milan would be a sensible choice and that it has good arguments in its favour. I just don’t see how Milan naturally (one might say “directly and unambiguously”) flows from the text of the UPCA, even if one accepts that Italy does.
Milan is the city chosen by the third Art 89 State, like Munich and Paris are the cities chosen by the first and second Art. 89 States, respectively.
Can you use the Italian language as a defendant, including in appeal?
I do not often disagree with you, but here there are two points I have to query.
First is the provisional allocation of the duties previously thought for London to Paris and Munich. I am of the opinion that there is no legal basis for such a move.
Whilst I can agree the replacement of UK by IT in the PAP. But it needs a common declaration under Art 31/32 VCLT. Such a declaration was announced but never signed.
As far as Art 7(2) UPCA is concerned the story is different. In view of its clear wording, Art 31/32 VCLT do not apply. You can turn those articles how you want, they do not give this interpretation! And certainly Art 87(3) do not give this at all. Even a common declaration would not do.
The second point is consistency of case law. Whilst I can agree on infringement, I cannot agree on validity. It is expected that there will be diverging case law. Just think of added matter. There is not even a way to exchange information between the two jurisdictions. This is the case between the EFTA court and the CJEU.
As a UP is granted by the EPO, validity becomes a question if a UP is opposed.
The first instance and the BA at the EPO are bound by decisions of the EBA. I do not wish a string of “dynamic interpretations” in the style of G 3/19 in order to align one court to the other. Why should the UPC prevail? There is no reason!
This is the more so as the number of oppositions might not diminish, be it only for a problem of fee and the possibility for the EPO to provide free interpretation. At the UPC, costs for simultaneous are to be borne by the losing party!
I will not say anything much about SMEs, but the impact of the UPC on SMEs has not be assessed and they are facing big surprises with the UPC. Even if they do not export, they might be infringers under the UPC whilst they were not with a bundle patent not designating their country of residence.
Also in the PAP there is a “clear wording” which cannot be interpreted, not even with a common declaration.
Why do you think that “United Kingdom” can become Italy in the PAP and “London” cannot become e.g. Milan (or any other city, if so agreed) in the UPCA?
Is a protocol more flexible than an agreement?
For the simple reason that in Art 3 of the PAP there is no country mentioned as such. It only mention countries which at a given date would have the most valid patents. This implied at the time DE, UK and FR. In this respect it could be accepted to replace UK by IT.
The situation in Art 7(2) UPCA is quite different, as at the time the three countries UK, DE and FR were mentioned expressis verbis with London, Munich and Paris. On top of it Annex 2 defines clearly the technical areas according to the IPC to be deat with in each location.
The only clean way to take into account the withdrawal of the UK would have been to reopen the negotiations on Art 7(2) UPCA. The proponents of the UPC new very well that if Art 7(2) would have been renegotiated and re-ratified, the chances for the UPCA to enter into force would have been drastically reduced as it would have taken a few years.
That is why they came to the idea to fiddle around with Art 7(2) UPCA and propose the provisional allocation of the duties allocated to London to Paris and Munich. The final allocation would be done at the first revision of the UPCA under Art 87(3) UPCA.
It is a nice construction, but does not even have the beginning of a legal basis.
You say: “For the simple reason that in Art 3 of the PAP there is no country mentioned as such.”
Well…I do not think so:
“Article 3 – Entry into force
(1) This Protocol shall enter into force the day after 13 Signatory States of the Agreement on a Unified Patent Court including Germany, France and the United Kingdom, have either ratified…”
Thus, the same reasoning (which I find correct) you apply to Art 7(2) UPCA, must apply also to Art. 3(1) PAP and Art. 18(1) PPI, since they all mention expressis verbis the UK.
As a consequence, the PAP and the PPI cannot be in force now.
Dear Patent robot,
It is in Art 83(2) UPCA which does not mention a country.
But I could understand the wish for changing UK to IT.
I do however agree that without a corresponding declaration the PAP has not legally entered into force. It was a fait accompli by the secretariat by a lobby which is easy to guess.
But when looking at Art 7(2) UPCA I fail to see any possibility to conclude that the duties allocated to London should be “provisionally” transferred to Paris and Munich.
It is amazing to see judges, that is learned legal specialist to show interest into a court which has no legal basis whatsoever!
I wonder why?
Dear Simona Fonzi,
As a UP held by an Italian proprietor will have been delivered in one of the official languages of the EPO, the procedure before the UPC will be in one of those languages before the central division.
It might at best be in Italian during OP before an Italian local division.
But should simultaneous interpretation costs accrue, they will be borne by the losing party.
When you look at the whole language regulation at the UPC, it is a nightmare!
Those who claim that the UPC will solve the language problem do not know what they are talking about!
By the way, according to which EU law, a EU body (which the UPC is not) cannot have a branch outside the EU?
It is a question of liability of the contracting states. See Art 20 UPCA.
Thank you for your answer: I guess that you referred to Art. 22 UPCA, which however does not enter into the details of the liability of the single divisions, which are governed in greater detail by the PPI (which cannot enter into force because of the UK withdrawal).
However, both the EU and the CMS have a delegation or embassies, respectively, in London.
So what if, in theory, the London section of the UPC was established at the EU delegation, at the German embassy or at another building having the same diplomatic priviliges and immunities?
This would be a UPC section based in London but under Union law, wouldn’t it be?
Of course, the PPI should be amended to deal with this specific situation but the PPI has to be amended anyway because of art. 18(1) PPI.
I can follow your argument, but rather than fiddling with the PPI and coming up with a construction which is on very shaky grounds, it might have been better and certainly more intelligent to amend and re-ratify Art 7(2) UPCA.
The Brexit goes back 6 years ago and the withdrawal was acted 4 years ago. There would have been ample time.
But the prospect of further filling already deep pockets, let the proponents of the UPC to give up any rule of law.
Mme UPC has said that where there is a will there is a way.
There was manifestly no will for a correct and legally sound solution! All the UPC proponents did not want to go this way.
They neither wanted the UPC to be checked by the CJEU. Allegedly because nobody thought of it.
Please do not pull my leg or add insult to injury.
I am therefore still of the opinion that the UPC is not a court within the legal system of Union law.
It is also not a court according to Art 6(1) ECHR, as it is presently envisaged.
The hope has not died on the side of the proponents that no jurisdiction, be it at EU or at national level will dare blowing up the system once it has started.
I would not be so sure about it!
On the other hand what is there to be held from judges who apply for a position at such a court? I leave the answer open!
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