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Japan – Further Update On The EU Patent Package.

 29 September, 2012

For many decades, the patent system in Europe has been under review.
Recently, momentum has been gathering behind new proposals that may soon have a profound effect on European patent prosecution and enforcement. Over the last 18 months, we have been reporting on the key changes that may affect Japanese companies arising from the so-called “EU Patent Package“, which includes (i) a regulation establishing a unitary patent (“UP“) system (the UP Regulation“); (ii) a regulation establishing a translation regime (the Translation Regulation“); and (iii) an agreement establishing a unified patent court or “UPC” (the “Agreement“).
 
As discussed in more detail below, the European Parliament (“EP“) and 
Council of the European Union (“Council“) negotiators were close to reaching a political deal in December 2011. The contracting European Union (“EU“) countries (as defined below) then apparently stalled on the issue of the location of the seat of the central division of the UPC (the Central Division“) until this “final element” of the EU Patent Package was finally agreed and announced by the European Council (The European Council, not to be confused with the Council (one of the two legislative institutions of the EU, referred to above), comprises the heads of state or government of the EU countries, along with the President of the European Commission (the “Commission“) and the President of the European Council. While it has no formal legislative power, it is charged under the Treaty of Lisbon with defining “the general political directions and priorities” of the EU.) on 29 June 2012. However, the European Council also made controversial proposals, which led the EP to postpone its vote on the EU Patent Package originally scheduled for July 2012. In this newsletter, we report on the recent developments regarding the EU Patent Package and the likely next steps.
 
Background
 
The proposed EU Patent Package would represent a radical change in the way that patents are prosecuted and litigated in Europe. In terms of patent prosecution under the new system, an applicant for a European patent will have the option of requesting a UP covering the contracting EU countries. As under the current European Patent Office (“EPO“) system, patent applications will be examined and granted in one of the official languages of the EPO (English, French or German), and include translations of the claims into the other two EPO official languages only at this stage. In terms of patent litigation, after an initial five-year transitional period, the UPC would have exclusive jurisdiction in respect of civil litigation related to infringement and validity for both “classical” European patents and UPs.
 
In our January 2012, the increased pace of negotiations between 25 out of 27 EU countries (the “contracting EU countries”) to agree the EU Patent Package in the second half of 2011 was reported. It was also reported the growing concern, due to political motivation to present a success for the EU, the proposals agreed in December 2011 had been formulated too hastily and would be implemented without resolution of the issues raised by the patent community or the proper evaluation, appreciation or understanding by the users of the system.
 
Key developments since January 2012
 
February 2012:
 
A committee was formed and started work on the draft Rules of Procedure for the UPC. This draft will be the basis of a consultation with stakeholders, and should be finalised well before the end of the ratification of the Agreement.
 
Expert judges, lawyers and industry representatives are due to contribute to the finalisation of the Rules of Procedure, and the hope is that such input willalleviate some of the perceived problems with the EU Patent Package proposals.

  

25 April 2012:
 
The UK Parliament’s European Scrutiny Committee published its second report on the UPC, (European Scrutiny Committee – Sixty-Fifth Report, “The Unified Patent Court: help or hindrance?“) which concluded that the draft Agreement is “likely to hinder, rather than help, the enforcement of patents within the EU.” In particular, it agreed with the strong opposition to the inclusion of Articles 6 to 8 in the UP Regulation. These articles, which set out what acts will infringe (both directly 
and indirectly) the UP, make substantive patent law a matter of EU law, within the jurisdiction of the Court of Justice of the European Union (“CJEU“).
 
28 – 29 June 2012:
 
As mentioned above and in our January 2012 newsletter, the issue of the seat of the Central Division halted the agreement of the EU Patent Package in December 2011. After months of negotiation, the European Council finally agreed (The European Council Conclusions of 28-29 June 2012 are available here.) that Paris will be the main seat of the Central Division, with two specialist sections in London (for cases involving chemistry, including pharmaceuticals (classification C), and human necessities (classification A)) and Munich (for mechanical engineering cases (classification F)).
 
However, the European Council also made proposals in respect of the EU Patent Package, relating to (i) the ability of EU and non-EU parties 
(respectively) to bring an infringement action before the Central Division rather than a Local Division and (ii) the deletion of Articles 6 to 8 of the UP Regulation.
 
The patent industry has been advocating strongly for Articles 6 to 8 to be deleted from the UP Regulation in order to eliminate the opportunity for courts to refer questions on the interpretation of infringement of the UP to the CJEU.This proposal has been met with hostility by the EP and its Legal Affairs Committee (known by its French acronym “JURI”) in particular, with Mr Rapkay (one of the EP rapporteurs appointed by JURI to negotiate the EU Patent Package with the Council and the Commission) suggesting that the European Council will be to blame “if there is no [UP]”. (See the JURI press release of 10 July 2012.) 
 
In their opinion, a Patent Regulation without Articles 6 to 8 would not be effective in ensuring EU-wide protection of patent rights, and would thus (like the European Patent Litigation Agreement before it) likely be found null and void by the CJEU as contravening EU law. (The arguments in support of this view are set out in Professor Tilman’s written submission to the UK Parliament on 28 January 2012 (“The battle about Art.6-8 of the Union-Patent-Regulation”), available here.) 
 
3 July 2012:
 
The EP voted to postpone its plenary session planned for 4 July 2012, on the basis that the European Council’s latest proposals had triggered the need for further debate before the EU Patent Package could be put to the EP’s vote.
 
Likely next steps
 
At the time of writing, the next steps envisaged are as follows. (See the Annex to the Council Limité of 24 May 2012.) 
 
September – December 2012:
 
  • The proposed deletion of Articles 6 to 8 of the UP Regulation is discussed by the relevant parties in the Council, Commission and EP
  • Assuming the draft Agreement and Regulations are agreed, the EP votes on the EU Patent Package.
  • The Council adopts the UP and Translation Regulations.
  • A draft of the Rules of Procedure is submitted to a public consultation.The resulting consolidated draft is then discussed by the contracting EU countries in the Council before signing the Agreement.
  • The contracting EU countries sign the Agreement. Immediately after, ratification processes begin in national parliaments. A preparatory committee is constituted to prepare the practical arrangements and to set out a framework and timetable for establishing and commencing the UPC.
 
By November 2013:
 
  • At least 13 contracting EU countries should have ratified the Agreement in order for it to enter into force on 1 February 2014.

 

1 February 2014:

 

  • The Agreement and the UP and Translation Regulations enter into force.

 

1 April 2014:

 

  • The system should be ready for the first registration of a UP at the EPO.
 
Conclusion
 
The contracting EU countries remain committed to achieving agreement on the EU Patent Package as soon as possible, and their compromise on the seat of the Central Division should have moved it a step closer to reality. There remain, however, a number of significant challenges to be overcome, first, before the Agreement can be signed (the proposal to remove Articles 6 to 8 from the UP Regulation appears unlikely to be accepted by the EU legislative authorities) and then, before it can be ratified by the relevant countries. In the meantime, stakeholders await the consultation on the draft Rules of Procedure, which are expected to alleviate some of the perceived problems with the EU Patent Package proposals, or at the very least, to provide further clarity as to the 
nature of the new system. 
 
 
For further information, please contact:
 
Gavin Margetson, Partner, Herbert Smith
gavin.margetson@herbertsmith.com  
 
Dr Frederick Ch’en, Herbert Smith
frederick.chen@herbertsmith.com  
 
Graeme Preston, Herbert Smith
graeme.preston@herbertsmith.com  
 
Naomi Lisney, Herbert Smith
naomi.lisney@herbertsmith.com
 

 

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