Unitary patent strategy
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Introduction
Since 1 June 2023 it has been possible to register a granted European patents as a Unitary Patent (UP) as an alternative to validating the patent in some of the 17 countries participating in the Unitary Patent. This article discusses some practical considerations to take into account when deciding whether to take up this option. The factor discussed at most length is cost, followed by litigation benefits and risks. A number of other factors are also listed towards the end of this page and we have a separate article with a summary of Unitary patent registration strategies.
The options
To begin with, 17 countries, all of which are European Union countries, are participating in the Unitary Patent. Applicants for a European patent will have two options to choose between when their application is granted:
A. Register a Unitary patent, which covers all of the participating countries; or
B. Validate their European patent in one or more of the participating countries.
These are exclusive options that cannot be mixed. If option A is chosen, there is no further choice for these countries. A Unitary patent will cover all participating countries with defined upfront costs and renewal costs. Any litigation will take place before the Unified Patent Court (UPC).
If option B. is chosen then the patent proprietor has some further decisions to make: (1) in which countries to validate their European patent, and (2) whether to opt out of the jurisdiction of the Unified Patent Court.
For the remaining European Patent Convention countries, which are not participating in the Unitary patent, only the option of choosing individual countries for validation will exist and national courts will have jurisdiction. We will return to these non-participating countries later in this article but here we will comment that as they include commercially important countries such as the UK, Spain, Switzerland, Norway and Türkiye (amongst others), most applicants will want to validate their European patent in at least one of the non-participating countries in addition to choice A or B above.
The participating countries
The countries which can currently be protected by a Unitary patent are listed below in descending order of population, which is given in brackets (source: Wikipedia). Together they have just under 50% of the total population of European Patent Convention contracting states:
Germany (83.2m), France (67.8m), Italy (58.9m), Netherlands (17.6m), Belgium (11.6m), Sweden (10.5m), Portugal (10.4m), Austria (9m), Bulgaria (6.8m), Denmark (5.9m), Finland (5.5m), Lithuania (2.8m), Latvia (1.9m), Estonia (1.3m), Luxembourg (0.6m), Malta (0.5m). (Total 296m).
Each business will need to assess the relative economic value to them of patent protection in these various countries, however assuming for simplicity that value is proportional to population, it can be seen that option A (a Unitary patent) provides protection in countries with a total population of almost 300 million people whereas option B (validation in individual countries) would require validation in 17 countries to achieve the same population coverage, meaning costs in respect of 17 national patents which would far exceed the cost of a Unitary patent.
However, one practical point to bear in mind is that validation in just two of these countries, Germany and France, would cover over half of the total population covered by a Unitary patent. Germany, France and Italy together would cover 70% of the total population of these countries and if the Netherlands is added this total reaches about 77% of the total population of participating countries. Therefore, few applicants outside of large pharmaceutical companies will actually be comparing option A (a Unitary patent) with option B (validation) in all of the 17 countries because the latter option would be very much more expensive. Most applicants will decide between option A (a Unitary patent) and option B (validation) in a limited number of the 17 countries, perhaps only Germany and France; or Germany, France and a small number of other countries.
1. Cost comparison
There are two cost elements to consider. The first cost element is validation charges, payable upfront shortly after the grant of a European patent if option B is selected, to obtain or maintain rights in specific countries. These have to be compared with the cost of registering a Unitary patent. The second cost element is renewal fees, payable annually for the life of the patent. These are spread out in time but are by far the larger cost overall. We will discuss each of these separately and then draw some conclusions.
Validation/registration costs
Option A. Register a Unitary patent
There is no official fee to register a granted European patent as a Unitary patent but there will be attorney fees (we are charging GBP 420 for this service). It is also necessary to submit a translation of the European patent into another EU language. If the European patent is already in English, the translation may be into any other official EU language. In many cases, the cost of obtaining this translation will be the main cost. Typical costs might be GBP 1500 - GBP 2000 for a patent of average length but, for long specifications, the cost may be a multiple of this. There may be some options to reduce costs by filing a translation which is less thoroughly checked than usual.
However, applicants who already plan to validate their patent in a non-participating country which requires the entire patent to be translated as part of the validation process (for example, Spain) can use a single translation for validation in that country and for registration of the Unitary patent and so incur no additional translation cost to register a Unitary patent (or no additional translation cost to validate in, for example, Spain, depending on your perspective).
Option B. Validation in individual participating countries
If option B is selected then the patent proprietor must instead validate their patent in their choice of the 17 participating countries. This process may be as simple as appointing an address for service or more complex, including paying official fees and filing translations, depending on the country.
For the following 'low-cost' countries, no translations are required: Germany, France, Belgium, Luxembourg, Malta.
For the following 'medium-cost' countries, it is necessary to file a translation of the claims which pushes up costs: Netherlands, Finland, Sweden, Denmark, Lithuania, Latvia.
For the following 'high-cost' countries, it is necessary to file a translation of the entire patent, incurring substantial translation charges: Italy, Austria, Portugal, Bulgaria, Estonia.
Our charges average a few hundred pounds per country for the 'low-cost' countries, just over GBP 1000 for the medium cost countries and typically several thousand pounds per country for the 'high cost' countries,for patents of average length. Translation requirements above refer to European patents prosecuted in English.
Validation in even a handful of participating countries is significantly more expensive than registering a Unitary patent and validation in all 17 participating countries would be very much more expensive than a Unitary patent. But what about validation in a few carefully chosen countries? This should be evaluated on a case-by-case basis, and we are happy to provide cost information for this purpose to our European patent clients on request but, roughly speaking, validation in individual participating countries will usually be more expensive than registering a Unitary patent if the applicant wishes to obtain protection in more than one of the high-cost countries. However, if the applicant is happy to obtain protection in just low-cost countries, such as Germany and France, and maybe one or two of the medium-cost countries, then option B, validation costs may work out cheaper than registering a Unitary patent, including a translation into a single language prepared for that purpose.
As mentioned above, if the patent will be validated in a non-participating country requiring a full translation (such as Spain), the same translation can be used for registering a Unitary patent and so the only cost to register a Unitary patent will be the attorney fee for that. In this case, the Unitary patent will likely be the cheapest option unless the applicant only considers validation in one or two of the low-cost countries, e.g. France and Germany.
Please note that the above validation/registration costs are incurred after the regular costs payable on grant of a European patent, to respond to the rule 71(3) communication, file claims translations in two languages and pay the grant and printing fees. These costs are the same for either the Unitary patent or validation route.
Renewal Costs
Once a European patent has been granted, renewal fees are paid to the Patent Offices of the countries in which it is validated and there are also renewal fees for the Unitary patent, if that option is chosen.
The official renewal fees for the Unitary patent start at a trivial sum rising to EUR 4,855 per annum for the 20th and final year. In total, they amount to EUR 35,555 at the time of writing. This excludes attorney fees for monitoring, reminding and payment of these fees. This compares to about EUR 160,000 to pay renewal fees in all 17 participating states. Renewing a Unitary patent is clearly a lot cheaper than renewing national patents in all 17 participating states for the relatively small proportion of applicants who would seriously consider validation in all 17 states.
However, for many applicants, including not only start-ups and SMEs, but large corporations with budgets that must stretch to many patents, the alternative to a Unitary patent would be validation in a selection of Germany (total renewal fees EUR 14,160), France (total renewal fees EUR 5,910), Italy (EUR 6,620) and the Netherlands (EUR 11,040) or other less populous countries. As it happens, Unitary patent renewal fees have been set to be about the same as the sum of the renewal fees in these four countries. Nevertheless, in practice, unless the countries are chosen to be those with low renewal fees, it will usually cost more to renew a European patent in three or four countries than to renew a Unitary patent because of the need to pay multiple attorney fees for renewals in multiple countries, rather than just a single attorney fee for renewing a Unitary Patent.
It is also notable that the country with the largest population, Germany has the highest renewal fees, being 40% of the total renewal fees of a Unitary patent. The fourth most populous country, the Netherlands, has relatively high renewal fees too. As virtually all applicants will want protection in Germany, it is quite hard to save a substantial sum on renewal fees by choosing option B, validation in selected countries, instead of option A, registering a unitary patent. That being said, a decision to validate in only Germany and France, of the participating countries, would lead to significantly lower renewal fees than a Unitary patent over the full lifetime of a patent.
The Unitary patent renewal fee trap
However, there is another issue to consider. Unitary patent renewal fees eventually become very high. Importantly, with a Unitary patent there is no option to later change to maintaining protection in only some of the participating countries. If you then stop paying Unitary patent renewal fees, protection is lost in all of the participating states. If, however, you have taken option B and validated the patent in selected participating countries then you can later decide to stop paying renewal fees, and so lose protection, in only some of the selected countries, but keep maintaining the patent in other countries. Renewal fees increase each year and the official renewal fee for the 20th year of a Unitary patent is currently set at EUR 4,855 compared to say EUR 800 for France or EU 650 for Italy (EUR 2,030 for Germany).
Finally, the numbers given above relate to renewal fees over the maximum 20-year patent term. Most patents are not renewed for their whole term. Furthermore, some businesses, particularly start-ups, are much more focused on short-term costs than long-term costs. The Unitary patent renewal fees have been set to start very low before becoming very large. The fees payable on the 2nd and 3rd anniversary of the filing date of a patent are lower than the combined official renewal fees for France and Germany, before starting to increase more rapidly and so, once attorney costs to monitor and pay the fees are included, Unitary patent renewals are especially competitive, compared to multiple national patent renewals, for the first few years of patent term.
Summary as to Cost
In short, registering a Unitary patent is much cheaper than validating a European patent in a handful, or all, of the 17 participating countries both in terms of up-front costs and renewal fees. However, registering a Unitary patent would lead to more cost than validation in just Germany and France (for example). Whether registering a Unitary patent is more or less expensive than validation in three or four countries would depend on the countries.
2. Litigation Risks
If you choose option A and opt for a Unitary patent, then any patent infringement action that you wish to file (or revocation action filed by a third party) will be filed before the new Unified Patent Court (UPC).
If you choose option B and don't opt out of the UPC, then you will have the option of filing an infringement action before the UPC or filing an infringement action before one or more national courts. While your patent is not opted out, third parties have the option of filing revocation actions before the national courts of the UPC.
If you choose option B and opt out of the UPC, then third parties can only file revocation actions before the national courts of the UPC. You will be able to file an infringement action in the national courts or, if no legal action has taken place before any national court, you will usually have the option to withdraw the opt-out and file an infringement action before the UPC.
Some applicants may not care whether they use the Unified Patent Court or national courts for litigation because patent litigation is quite rare. The UPC and national courts theoretically apply the same law, although there are differences in practice. It is hard to say whether litigation before the UPC will be more or less expensive than litigation before a single national court. However, it is likely to be cheaper than parallel litigation in multiple national courts.
Nevertheless, some applicants are concerned about the risk of losing their protection in all participating countries to a single revocation action filed by a competitor. These applicants will prefer to choose option B and opt out of the UPC in order to avoid being dragged into a UPC revocation action. We have written a more detailed article on whether or not to opt out of the UPC which discusses the pros and cons of the UPC versus national Courts.
3. Remedies
If you enforce a Unitary patent you can potentially obtain an injunction to infringement across all 17 participating countries within a single legal action. Furthermore, you may obtain damages or an account of profits for patent infringement across all 17 participating countries. This will be an attractive benefit of a Unitary patent for patent proprietors in industries where competitors can easily sell product in any countries where they do not have a patent (e.g. pharmaceuticals, paints, cosmetics, simple electrical and mechanical goods etc).
However, some patent proprietors may find it sufficient to control their market across Europe if they can enforce a patent in a few key countries, perhaps even just one or more of Germany, France and Italy. They may be more interested in an injunction tham damages. It would be difficult for a competitor to sell a mobile phone, for example, into the European Union if they cannot sell it in even one major EU country. In these industries, the Unitary patent may not be a priority and the option of validation in a limited number of countries may be most attractive.
4. Licence income
Patent proprietors who expect to license a patent to others and collect royalties depending on the geographical scope of the patent will be attracted to the Unitary patent due to its wide geographical scope.
5. Transferability
A Unitary patent is a single indivisible IP right and so it is not possible to assign it to different owners for different participating countries. Patent owners who may wish to do this will need to choose validation in individual countries. That being said, a Unitary patent can be licensed to different parties in different countries.
6. Validity risks
When examining European patent applications, the EPO does not look at novelty only national patent rights which may affect patentability in just one European country. If a Unitary patent is found invalid in respect of any one participating country then it is revoked as a whole. Accordingly, there will be some European patents for which option B, validation, should be selected. The European Patent Office have recently introduced a top-up search for national rights which will sometimes indicate when this issue arises.
Related to this, a Unitary patent may be of concern to third parties in any of the 17 participating countries and so may be at a slightly higher risk of facing a validity challenge than a patent validated in only some of these countries. It is also possible that filing a revocation action against a Unitary patent may be more attractive than revocation actions in national Courts for a number of reasons ranging from the broad geographical impact of a successful revocation action to the fact that European patent attorneys may file revocation actions before the UPC without a need to instruct other legal professionals.
Non-participating Countries
Options A and B, discussed above, relate to the 17 participating countries. For the remaining 22 countries the only option is validation. Most applicants will want to validate in at least one of these countries and so incur further up-front and renewal costs. These countries are listed below in descending order of population.
Türkiye (84.8m), United Kingdom (67.3m), Spain (47.5m), Poland (38.3m), Romania (19.3m), Czechia (10.5m), Greece (10.4m), Hungary (9.7m), Switzerland (8.7m), Serbia (7.3m), Norway (5.4m), Slovakia (5.4m), Ireland (5.0m), Croatia (4.1m), Bosnia & Herzegovina (3.3m), Albania (2.8m), North Macedonia (2.1m), Cyprus (1.2m), Montenegro (0.6m), Iceland (0.4m), Monaco (<100k), San Marino (<100k). (Total 334m).
Again, these can be split into countries with low, medium and high validation costs:
For the following 'low cost' countries, no translations are required: United Kingdom, Switzerland, Ireland, Monaco.
For the following 'medium cost' countries, it is necessary to file a translation of the claims which pushes up costs: Hungary, Norway, Iceland, Croatia, Bosnia & Herzegovina, Albania, North Macedonia, Montenegro.
For the following 'high cost' countries, it is necessary to file a translation of the entire patent, incurring substantial translation charges: Türkiye, Spain, Poland, Romania, Czechia, Greece, Serbia, Slovakia, Cyprus, San Marino.
If validation takes place in any of the countries listed as high cost above then the translation prepared for the purpose can also be used as the translation filed with an application to register a Unitary patent. We expect there will be an increase in validations in Spain for this reason. Sometimes, translations can be used for more than one country which will also affect costs.
Conclusions
There are several different tactics which can be adopted and we have written another article which sets out various possible UPC registration strategies in more length. However, in brief, cost pressures will push many applicants towards registering Unitary patents, although the possibility of not doing so and validating a granted European patent in, say, the UK, France and Germany, and perhaps one or two other countries will remain cost effective with the additional flexibility of being able to allow the patent to lapse in some UPC participating countries later in its life, when renewal fees become large. Some applicants will find the broad geographic scope of the Unitary patent attractive whereas others will be concerned about the possibility of third parties applying to revoke their rights across such a large territory in a single revocation action.
Costs mentioned in this article exclude VAT which we charge to UK-based clients. Applicants should carefully check the validation and renewal charges of their individual service providers before making decisions.
If you have any questions about the issues raised in this article or are looking for European patent representation, please do not hesitate to contact us.
Author: Alistair Hindle