Unitary Patent: Cost Savings Opportunity

Introduction:

This article focuses on the Unitary Patent system (‘UPS’) and its potential for significant cost savings. With the UPS set to take effect on 1 June 2023, as announced on the Unitary Patent Court (‘UPC’) website [1], we enter an era marked by its implementation of the Agreement on a Unified Patent Court (‘UPCA’).

In our previous article titled “Territorial Scope of the Unitary Patent System,” we explored the participation of EU Member States in the UPS and explored the option of validating a European Patent within the Member States of the European Patent Office (‘EPO’).

Decision-Making: Unitary Effect or classic European patent:

After the grant of a European Patent, proprietors face a crucial decision: whether to seek unitary effect or adhere to the conventional process of validating the patent in national offices of the EPO Member States.

If opting for unitary effect, it is necessary to submit a request within one month of the grant being published in the European Patent Bulletin (as per Rule 6(1) UPR).

If the deadline for submitting a request for unitary effect is missed, it may be possible to request the restoration of rights (as per Rule 22(1) UPR). However, the request for restoration must be submitted within two months after the expiration of the one-month period (as per Rule 22(2) UPR), along with the request for unitary effect and the applicable fee within the same two-month period (Rule 22(3) UPR, Article 2(2) RFeesUPP) [2].

Unitary Effect Benefits and Validation Option:

Applicants can request unitary effect by filing Form 7000 through various methods provided by the EPO, such as Online Filing and Online Filing 2.0, or the web-form filing service. Alternately, the request can be submitted via postal services, fax, or in person.

Unitary effect gives a patent proprietor a Unitary Patent that is valid in all of the 17 Member States that have ratified the UPCA. Additionally, the proprietor can choose to validate the European Patent, if necessary, in one or more of the remaining 22 EPO Member States and 5 extension and validation states.

Now, let’s explore the potential cost savings achievable by requesting unitary effect compared to classic European Patents.

Exploring Cost Savings:

By examining the decision-making process between unitary effect and traditional validation, with a specific focus on the cost-saving opportunities offered by the UPS, this article aims to assist patent proprietors in making informed decisions that align with their objectives and budget considerations.

Opting for unitary effect allows patent proprietors to streamline the patent protection process, reduce administrative and translation costs associated with individual national validations, and potentially lower renewal fees.

1. Validation fees:

In the case of a classic European Patent, validation fees are necessary to ensure the legal effectiveness and enforceability of the patent in individual countries within the EPO Member States. This requires the need to validate and maintain the granted European Patent separately in each country that is designated.

These costs can be substantial and typically include expenses for translation, publication fees to national patent offices, as well as fees charged by attorneys or service providers for validation and the payment of national renewal fees.

However, with the Unitary Patent, requesting unitary effect eliminates the need for national validation costs that would otherwise be incurred when validating a classic European Patent in the same 17 Member States of the UPCA.

The UPS and Unitary Patents remove the requirement for costly validation procedures for these Member States of the UPS. Importantly, there are no costs associated with filing, examination of the request for unitary effect, or the registration of a Unitary Patent.

2. Translation costs:

In the case of a classic European Patent, translation costs can be substantial, as the patent often needs to be translated into multiple languages of the countries where patent protection is sought as part of the national validation procedures.

However, with the implementation of the UPS, translation costs are significantly reduced during the transitional period of the UPS which spans seven years (Art. 83(1) UPCA), which can potentially be extended by a further seven years (Art. 83(5) UPCA).

During this transitional period of the UPS, a patent proprietor is only required to file one full translation of the European Patent. Therefore, by opting for unitary effect, patent proprietors can achieve substantial cost savings by minimising the translation expenses associated with validating classic European Patents.

Under the UPS, if the language of proceedings before the EPO was French or German, then the translation needs to be in English; if the language of proceedings was in English, then the translation can be in any other official language of an EU member state. It is important to note that this translation during the transitional period is for “informational purposes only” and does not actually have any legal effect.

Moreover, a translation of the claims into the EPO’s other two official languages will have already been filed at the end of the European grant procedure. This means that if one of those two official EPO languages is chosen for the translation, only the description needs to be additionally translated when filing the request for unitary effect, while the translation of the claims can be reused.

In situations where the language of the proceedings is English and the patent proprietor decides to file a translation of the specification into an official EU language other than French or German, it may be possible to revert to an application filed with a national patent office and make necessary adaptations [3].

In summary, the UPS requires translation into only one official language, making it a more cost-effective option compared to the multiple translations required for validating classic European Patents.

The requirement that the translation must be filed together with the request for unitary effect means that after the transitional period, no further translations will be required to obtain a Unitary Patent. Additionally, a new compensation scheme is available for EU-based SMEs, natural persons, non-profit organizations, universities, and public research organisations.

This scheme covers the costs related to the translation of the European Patent application or Euro-PCT application if it was filed in an official EU language other than English, French, or German.

However, in order to be eligible for compensation, the entities must have their residence or principal place of business in an EU member state and should file the request for compensation together with the request for unitary effect. The compensation, provided by the EPO’s Unitary Patent Division amounts to a lump sum of EUR 500 and is paid when their Unitary Patent is registered.

This compensation scheme complements the existing reduction in filing and examination fees available when a European Patent application and request for examination are filed in a language of an EPC contracting state other than English, French, or German (Rule 6(3) EPC) [2].

3. Renewal fees:

Classic European Patent: For European Patent applications, renewal fees are paid annually at the EPO starting from the second anniversary of the filing date, for the third year. After the grant of a European Patent, renewal fees are paid to the national patent offices of each country where the European Patent is validated.

In light of the rules introduced by the UPS, the renewal fee system under the conventional European Patent procedure can be said to be relatively fragmented as compared with that under the UPS. This is because the renewal fee system under the conventional European Patent procedure requires separate payments to each national office, following their respective legal requirements and deadlines. The total cost of renewal fees can vary among countries, and the payment intervals may differ as well; hence, proprietors are responsible for managing and paying these renewal fees separately for each of the countries designated by the European Patent.

Unitary Patent: In contrast, under the UPS, a single annual renewal fee is payable to the EPO for the entire territory covered by the Unitary Patent. This eliminates the need to manage and pay separate renewal fees in multiple countries. The UPS streamlines the process with one procedure, one currency (Euros), and one deadline. Patent proprietors are not obligated to use a representative for renewal fee payments.

The renewal fee for a Unitary Patent is set at a level equivalent to the average renewal fees due for the same patent in four countries participating in the UPS – this calculation being based on the most frequently chosen countries for validation in 2015, and four being the average number of countries in which European Patents are validated according to the EPO. A summary of the renewal fees can be found on the EPO website [4].

Renewal fees under the UPS are due for the years following the publication of the mention of the grant of the European Patent benefiting from unitary effect in the European Patent Bulletin (see Rule 13(1) UPR).        

The UPS offers an attractive fee structure, particularly in the early years. The annual fees for maintaining a Unitary Patent for ten years, which is the average lifetime of a European Patent, amount to less than EUR 5,000. Therefore, by choosing unitary effect, patent proprietors can significantly reduce the cost of patent renewal in Europe.

It follows that a Unitary Patent will be less expensive than a European Patent validated and maintained in four of the 25 Member States participating in the UPS – in relation to “enhanced cooperation”. Hence, the more countries a proprietor intends to validate a classic European Patent in, the more cost-effective it would be to request unitary effect and obtain a Unitary Patent.

In other words, the overall cost of renewing a Unitary patent will be lower as compared with that for a classic European Patent that is validated and maintained in four participating countries. For example, the estimated overall costs for a European Patent validated in the four most frequently chosen countries over 12 years can amount to EUR 11,850. In contrast, the equivalent renewal fees for a Unitary Patent for the same period will EUR 11,260, resulting in a 5% saving. This saving can increase to 8% for patents maintained for 15 years [4].

4. Litigation:

It is also important to consider the potential costs of litigating infringement or validity disputes related to the patent. While the UPC can provide a more efficient and consistent forum for resolving patent disputes across multiple jurisdictions, opting for unitary effect also means that a single invalidation attack could potentially invalidate the patent across all participating Member States. This could be costly for patent holders who may need to defend their patent in multiple jurisdictions.

On the other hand, opting out of unitary effect and validating the European patent in selected Member States may provide greater flexibility in tailoring the scope of protection to specific markets. Patent holders can choose to validate their European patent in any of the participating Member States, and can also choose to opt out of the Unitary Patent System altogether.

While opting out of unitary effect allows patent holders to maintain the territorial scope of their European patent, it also means that they will have to litigate any infringement or validity disputes related to the patent in multiple national courts, which can be time-consuming and costly. However, this could be cost-saving for patent holders who may only need to defend their patent in a few jurisdictions.

In summary, patent holders should carefully consider their business needs and the potential costs and benefits of opting for unitary effect or opting out before making a decision.

Conclusion:

The UPS offers decent cost savings compared to the traditional validation process of a classic European Patent. By opting for unitary effect, patent proprietors can streamline the patent protection process, reduce administrative and translation costs, and potentially lower renewal fees. These advantages make the Unitary Patent a more cost-effective option, particularly when compared to maintaining a classic European Patent in multiple participating countries.

The Unitary Patent eliminates the need for costly national validations with a single annual renewal fee payable to the EPO for the entire territory covered by the Unitary Patent.

These advantages make the Unitary Patent a more cost-effective option, particularly when compared to maintaining a classic European Patent in multiple participating countries. In summary, the UPS can provide patent proprietors with a simplified and more economical approach to patent protection in Europe, but are these advantages including cost savings significant enough to make such a critical decision in favour of requesting unitary effect?

In particular, while opting for unitary effect can provide cost savings in terms of validation, translation, and renewal fees, it could be costly for invalidation attacks. On the other hand, opting out of unitary effect and validating the European patent in selected Member States may provide greater flexibility, but it could be costly for litigating infringement disputes in multiple national courts.

References:

[1] Unified Patent Court – https://www.unified-patent-court.org/

[2] Unitary Patent Guide – https://new.epo.org/en/legal/guide-up/2022/index.html

[3] Translation arrangements and compensation scheme – https://www.epo.org/applying/european/unitary/unitary-patent/compensation.html

[4] Cost of a Unitary patent – https://www.epo.org/applying/european/unitary/unitary-patent/cost.html

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