Unified (European) Patent Court: 9-Months Away

ScreenShot173By Dennis Crouch

A pan-European patent court is a big deal. Once in operation, the Unified Patent Court will allow owners of European patents to use a single court action to enforce a patent across Europe.  The UPC Preparatory Committee continues to solidify practical elements of court operation – most recently, the committee set a fee schedule: 11,000 Euros fixed fee plus an additional value-based fee. For actions with a claimant-set-value of >50 million Euros, the additional value-based fee would be 325,000 Euros.  Small enterprises will receive a 40% reduction in fees and fees for all parties will be partially reimbursed if the case settles before final verdict.

In addition to court fees, the Committee also set a schedule for a successful party’s ‘recoverable costs’ from the unsuccessful party.  The general rule for the UPC is that the unsuccessful party bears the reasonable, proportionate, and equitable costs of the successful party. The Preparatory Committee has set ceilings for these costs that also depend upon the ‘value of the proceeding.’  For lower-value cases, the fee cap will be around 10% of the case value.  For actions with a claimant-set-value of >50 million Euros, the fee is capped at 2 million Euros.

Within the next few months, the Preparatory Committee will wrap-up its activities and we will then await ratification by the member nations.  The UPC Agreement was signed by 25 EU Member States.  However, it must be ratified by at least 13 states, including France, Germany and the United Kingdom – That process is likely to be concluded this summer as well.  If that schedule goes forward then the UPC may be open-for-business for the start of 2017.

 

About Dennis Crouch

Law Professor at the University of Missouri School of Law. Co-director of the Center for Intellectual Property and Entrepreneurship.

18 thoughts on “Unified (European) Patent Court: 9-Months Away

  1. This appears to assume that ratification is inevitable. However, I have spoken with some attorneys from Europe that are concerned about the upcoming UK referendum, which is in June, I think. Now, many of them also feel that the referendum is more of a charade to appease the few, and that it will not pass. Furthermore, even if it does pass, an actual break from the EU is still not likely. Nevertheless, if the referendum results in a vote to break from the EU, then this could, at the very least, complicate and delay UPC ratification.
    The article mentions that “[ratification by at least 13 states, including France, Germany and the United Kingdom] is likely to be concluded this summer as well.” Does this statement account for the possible complication by the referendum, or does it assume that the referendum will result in a vote for the UK to remain in the EU?

    1. Adam, what are the thoughts there about the EU? I get mixed signals from the clients with which I have this conversation. Many thought, for instance, that Greece would be kicked out.

      To me, the EU seems like a good idea in theory, but I wonder about it in practice.

      1. Some might have said the same about the USA, but it seems to be doing alright.

        As for the UK referendum, British bookmakers are offering odds of 4/11 for staying in, against 12/5 for leaving, which looks pretty positive for those who think the EU is a net positive. However it is a tight race, if you want to bet for above 70% or below 40% voting stay, the odds are 16:1.

        Nothing like a little off course betting to enliven a political debate.

        1. Nothing like a little off course betting to enliven a political debate

          Sounds like you have identified a little utility there…

          😉

  2. Two interesting aspects of substantive law in the UPC agreement. link to epo.org

    Indirect infringement:

    “(1) A patent shall confer on its proprietor the right to prevent any third party not having the proprietor’s consent from supplying or offering to supply, within the territory of the Contracting Member States in which that patent has effect, any person other than a party entitled to exploit the patented invention, with means, relating to an essential element of that invention, for putting it into effect therein, when the third party knows, or should have known, that those means are suitable and intended for putting that invention into effect.
    (2) Paragraph 1 shall not apply when the means are staple commercial products, except where the third party induces the person supplied to perform any of the acts prohibited by Article 25.”

    Same ambiguity in US law: Does this require knowledge of the patent.

    I still cannot get over that an “innocent” direct infringer must bear all the damages when the person responsible for the infringement has a defense of lack of scienter. It seem to me that selling the essential aspect of the invention with the intent or knowledge that the final steps to completion would occur should be all that suffices for liability. That used to be the law in the US prior to the 5-4 decision in Aro II.

    Then we have this:

    Exhaustion

    “The rights conferred by a European patent shall not extend to acts concerning a product covered by that patent after that product has been placed on the market in the European Union by, or with the consent of, the patent proprietor…”

    and this

    “the use by a farmer of the product of his harvest for propagation or multiplication by him on his own holding, provided that the plant propagating material was sold or otherwise commercialised to the farmer by or with the consent of the patent proprietor for agricultural use” is not infringement.

    It looks like the Euros looked at Monsanto and did not like what they saw.

    1. You do realize that had the Supremes not been bamboozled (and had realized that Monsanto’s own drafting of its protections in the Monsanto first sales were insufficient – and this necessitated a holding against Monsanto), the normal rules of property, contract and patent law coinciding (in exhaustion) would have prevailed here.

      The more interesting aspects are the necessary conclusions that also flow from the Supremes (that every single grain operator is necessarily infringing because there is no exhaustion found.

    2. Ned, on the Metallising thread, at 9.2, I ask about the origin of the wording “made available to the public” imported into Section 102.

      In the Morgan Paper I note that it “derives from House bills in earlier Congresses”. But where did they get it from? Was it, as Morgan surmises, a Congressional “intent of harmonization with other countries’ patent laws”?

      If not, what then?

      1. Max, the whole effort by the IPO over years, primarily lead by Bob Armitage and Gary Griswold, was to harmonize US patent law with the ROW in order that we might eventually have one examination and one patent effective over the world. A lofty goal, and one worth pursuing.

        I recall a discussion about drafts of the 102 language introduced based upon Bob’s early drafts. I believe the intent was to define prior art effectively as printed publications, public uses and subject matter otherwise made available to the public. There was push back, and the language of the old 102(b) was largely retained.

        But the effort was to harmonize.

        But, then we have the matter of patents and patent applications being prior art as of their filing dates for 103 purposes, a retained aspect of first to invent that is going to damage prospects for harmonization unless repealed.

        And, we have all that cr*p about excluding common ownership from prior art which might have been necessary in a first to invent system and when 103 was involved, but which makes no sense at all outside of that context.

        As I said, the AIA turned out to be a lot to do about nothing. It fundamentally changed the law, screwed it up, in my view, and did not achieve the goal of the reformers.

    3. Indirect infringement:
      […..]
      “….. when the third party knows, or should have known, that those means are suitable and intended for putting that invention into effect.”
      […..]
      Same ambiguity in US law: Does this require knowledge of the patent.

      Note that the quoted statutory language refers to knowledge about the invention, not about the patent.

      So suppose the patent claims the novel combination of a widget fitted to a trundlehumper. I sell you a widget which I have specifically designed with special brackets so that it can be retro-fitted onto your existing trundlehumper.

      Then it doesn’t matter whether I know that the widget/trundlehumper combination is patented. What matters is that I know that the widget is suitable and intended for combining with a trundlehumper. That’s what puts the invention into effect.

      1. I am not seeing the ambiguity that you see.

        Clearly, the answer as to knowledge of the patent is not required, but rather, the invention which may be covered by the patent.

        You do seem to grasp this with the rest of your comment, so I think that you understand the clear difference.

        Or perhaps you are just questioning what Ned thinks as ambiguity (and in that case, I am in full accord with you). Ned, being confused, does happen somewhat regularly, after all.

        1. I’m not seeing why you think that I’m seeing ambiguity. I just quoted Ned, who thought it was ambiguous. Then I explained why it isn’t.

  3. What, no MaxDrei here to tell us how the European system is great and the US system is bad?

    Are the Italians (for one) really going to allow a “foreign” court to provide decisions that are then applicable to Italy?

    1. Are the Italians going to allow a “foreign” court to provide decisions that are applicable to Italy? Yes. That is why they changed from being against the UPC to being for it. And given the speed of Italian courts, the UPC will make a refreshing change.

      Will the UK allow a foreign court to provide decisions that are applicable to the UK? Yes (providing they don’t decide suicidally in the June referendum) as they have just passed in principle all the necessary legislation.

      Will the UPC be a foreign court? No, it is a shared court.

      Will this all be ready for 2017? Probably. The keys of the Court are in Germany’s hands. If their recently announced legislation can be got through reasonably quickly, the necessary trio of DE, FR, GB will have ratified.

      Will it be big? If UK, DE, NL, and IT ratify (and the Dutch are fast-tracking their legislation) there will be sufficient number of countries for the UPC to come into effect, and you will have the possibility of judgements effective in a market similar in size to the US, for a much lower litigation cost (albeit with a “loser pays” costs system).

      I’m not a booster of this system (it is not the best one we could have had) but in economic terms, it is a pretty compelling proposition.

    2. Good morning Bob. Sorry about the delayed reaction: I was sleeping.

      Since when have I been extolling the European “system”? What I extol is the scheme of substantive law of patentability set out in the 1973 EPC. It was arrived at in negotiation between experts from the English common law regime and the German civil law regime.

      You will recall that at the outset the USA based itself on English law while Japan, Korea, China based their “system” of patents on that of Germany. Thus it was then, that in 1973 the EPC gave the world a model of “harmonised” patent law. My point is that there ain’t a lot wrong with that 1973 compromise. Outside the USA, the rest of the world appears to agree. This (ROW good, USA bad) is the point I keep banging on about, understandably irritating some commentators here.

      Now, when it comes to patent disputes, litigants in Europe can choose as forum the inquisitorial “branch of social services” approach practised in Germany or the adversarial “red in tooth and claw” English approach. I think the competition between these two forums in Europe, about how to find facts, has benefitted both England and Germany and, even more, the clever legal merchants in that forum in the middle, The Netherlands. Experience on “The Continent” of English-style fact-finding (discovery, x-exam) has confronted mainland Europe with the deficiencies of its own fact-finding “systems”. How litigants will forum shop under the UPC remains to be seen. We live in interesting times.

      By the way, back in 1973, it was intended to have a UPC as well as an EPO. After all, the EU is supposed to be a “single market”. But the pols baulked at the idea of a court in another country enjoining their voters. It has taken until now for the driving single market logic of EU membership (27 countries and 500 million residents) to push past these reservations and create an EU patent court.

      1. What is less understandable about your “value” hawking (good/bad) is your simple lack of courtesy for a soveriegn’s choices which do not align with your desired ends.

        That, and the plain fact that until the US system had been steadfastly weakened and polluted, the US was the clear better system – quite opposite your “EP uber alles” mantra.

  4. As I read it, there is a value fee for the initial action. And then, whoever loses must pay a second, additional value fee in order to file/maintain an appeal. Is that how everyone else reads it?

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