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EU Unitary Patent System Has Major Cos. Wary
By Ryan Davis
Law360, New York (December 12, 2012, 9:53 PM ET) -- A unitary patent for the European Union will
soon be a reality, but many large companies, including drugmakers, may be reluctant to participate in a
system in which a patent can be asserted across the EU and enforced with a single court ruling,
attorneys said Wednesday.
The system — approved by the European Parliament on Tuesday and set to take effect in 2014 — will
allow applicants to obtain one patent that is enforceable throughout the EU, reducing application costs
and eliminating the need under the current system to file suits in multiple countries to enforce patents.
While the cost savings are clear for small companies, larger companies with valuable patents are likely
to be wary of the new system, which could result in a patent being invalidated across the EU on the
basis of a single court ruling, said Jonathan Ball of Norton Rose LLP's London office.
Rather than seeking unitary patents, they may continue applying for national patents, which will remain
available, to ensure that if a patent is found invalid in one country, the invention will still be protected in
others, he said.
"There's no way in a million years that a big pharmaceutical company with a blockbuster drug will put it
on the back of one patent. It's too risky," he said. "If that patent falls, there's nothing to fall back on."
On the flip side, the technology sector, which is frequently the target of patent litigation, has expressed
concern that a single patent that can be enforced in all EU countries at once will benefit the owners of
weak or invalid patents.
In letters sent Monday to members of the European Parliament urging them to vote against the plan,
Nokia Corp. and Ericsson argued that the new system will allow such patentees to "use threats of panEuropean injunctions to extract money from legitimate European businesses."
Currently, companies can apply for either a national patent that offers protection in only one EU
country, or a European patent, which is essentially a bundle of national patents that must be enforced
with separate litigation in each country.
Both options will remain available under the new system, with a third option for a unitary patent that
covers 25 of 27 EU countries and can be litigated in a specialized patent court system. Italy and Spain are
sitting out of the new system because of concerns about translation.
It's too soon to know how the new patent system will work in practice, but "there's so much that could
potentially cause problems," said Simon Mounteney of Marks & Clerk LLP's London office.
"Obviously, it's a big step and a big advantage on the part of small companies," he said. "But a lot of
people are very concerned about the way it's been put together. The key thing now is how people will
work with it and how people use the system procedurally."
In addition to the risks for patentees and defendants inherent in a single European patent, other
unanswered questions about the new system are generating concern, attorneys said.
For instance, no one yet knows where the judges for the new courts will come from or what kind of
results they'll deliver, and the role of the Europe's highest court, the European Court of Justice, in the
system is still vaguely defined.
"There's sound logic behind those concerns, but whether or not they're real will depend on the
implementation and how the courts are set up," Hiroshi Sheraton of McDermott Will & Emery LLP's
London office said.
It's difficult to predict whether the ability to obtain and enforce a patent on an EU-wide basis will be
appealing enough for companies to apply for the new patent when it becomes available, Mounteney
said. The prospect of dealing with a new and unfamiliar system may prompt companies to play it safe
and stick with the national patent they know, he said.
"At the moment, we're very much in a state of flux," he said. "It's not the case that everyone is saying
'This is a great new thing; we're all going to apply for EU patents.' We'll know more as people get a
better feel for how it works, but there's still a ways to go."
Despite the concerns, Charles Larsen of Ropes & Gray LLP's London office said a patent system that
provides the ability to get EU-wide relief with streamlined litigation and shorter trials marks an
improvement in EU patent law.
"I think it will be a better system than we have now and potentially better than the U.S. system," he
said.
Under the new system, a strong patent in Europe will be more valuable than it is now, since it no longer
will have to be enforced country by country, Larsen said. At the same time, weaker patents will be more
susceptible to being invalidated, since they can be taken out with one court action, he said.
For companies that may have patents asserted against them, both factors will mean that EU patents
take on greater significance in a company's IP strategy, he said.
"Risk assessment will become a more complex and more important calculation than it is now," he said.
Marianne Schaffner, head of the IP practice group at Dechert LLP's Paris office, also praised the benefits
of the unitary patent over the current system.
"It will be less expensive than it is today to get patents, and it will avoid the possibility of irreconcilable
decisions in different national courts," she said.
Under the current system, patentees must file suit in multiple jurisdictions, so there is a chance the
same patent can be found invalid in one country, valid and not infringed in another and valid and
infringed in a third.
"That's a problem," she said. "To me, I would welcome this new system."
Despite the worries about how the new system will work, there's no way for companies to avoid it now,
Sheraton said.
"It's the dawn of a new era, and a complete landscape change in European patent law," he said.
"Irrespective of the voices of concern, the fact is it's coming and companies need to think about how it
will impact them."
--Editing by John Quinn and Richard McVay.
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