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Innovators in orthopedics will soon benefit from a unified patent protection process in the European Union. After years of fits and starts caused by delays and legal debate, the Unitary Patent (UP) System is scheduled to go live on June 1, 2023.
The new system will be enforceable across most EU member states and offers an alternative to the traditional European Patent (EP) application process. Companies must now weigh the pros of both options as they evaluate individual patent filing to determine the best fit for the technology the patent will protect.
Working Toward Needed Improvement
Obtaining patent protection in Europe has always been an expensive and time-consuming endeavor. In the past, a company would file a single patent application with the European Patent Office (EPO) and then wait a few years for it to be examined. When the company received the EPO’s Notice of Grant, their excitement was usually tempered by having to pay to validate the EP in each of the 27 EU member countries — and a few non-EU member countries like Switzerland and Norway — from which they wanted a patent issued.
In the United States, a company that is granted a patent only has to pay maintenance fees three times — at 3.5, 7.5 and 11.5 years — over the life of the patent to keep it in effect. In Europe, each country has its own rules regarding when the renewal fees are due — it’s annually in some countries — and how much the fees cost.
The EU recognized that the EP system was expensive and difficult to manage and proposed transitioning to the UP system. The goal was to provide uniform protection of intellectual property across participating EU countries under a single patent that would be recognized and enforceable across participating member states.
Under the UP system, a single application can be filed with the EPO, and the UP would be granted in a single review procedure. Once granted, the UP would be enforceable in all participating EU member states without the need for separate national validations.
In 2013, the European Parliament approved regulations to create the UP system, but the proposal faced numerous legal challenges. One of the difficulties involved the establishment of a Unitary Patent Court (UPC) that would have jurisdiction over all patent-related litigation, no matter in which country the action was brought.
In December 2020, the German Federal Constitutional Court issued a decision that cast doubt on the legality of the planned UPC and caused further delays in its implementation. But Brexit is probably the biggest issue that stalled the implementation of the UP system. Brexit delayed moving forward with the system by several years as the remaining EU member states assessed the overall impact of the United Kingdom’s departure.
The Start of a Gradual Transition
Currently, 38 countries are part of the traditional EP process. As of today (and this will change with time), 24 of the 27 EU member states have signed on to participate in the UP system. The three countries currently not participating are Croatia, Poland and Spain. Of the 24 participating countries, only 17 are expected to be ready by the June 1 start date. These countries include Austria, Belgium, Bulgaria, Denmark, Estonia, Finland, France, Germany, Italy, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Portugal, Slovenia and Sweden. Missing from this list are Ireland, Spain and the U.K., which are popular markets for orthopedic device companies.
Not all European countries are ready to participate in the UP system, so a patent owner will likely need to use a combination of an EP and UP to protect their product portfolios. Because of this reality, a seven-year transitional period will be implemented. The transitional period might be extended for an additional seven years, during which infringement and revocation actions can still be brought in the courts of the individual countries where an EP has been validated.
During this seven-year transitional period, owners of the EP have a choice of litigation forum: the court of the validated country in which the challenge has been filed or the UPC. When the seven-year transitional period ends, the EP and the UP will fall under UPC’s jurisdiction.
During the transitional period, patent owners may be able to remove an EP granted by the EPO from the jurisdiction of the UPC. This is accomplished by filing an “opt-out” with the UPC registry and can be done at any time after the grant with no payment required.
Patent owners can also file to opt out of all pre-existing EPs before the UPC is in force during a three-month “sunrise period” that ends on May 23. By filing these EP opt-outs, any infringement or validity challenges will only be possible in the validated country’s national courts. The UPC has no jurisdiction over an opted-out EP.
Importantly, if an opt-out has not been registered, any existing EPs granted in a participating EU member country will be subject to the jurisdiction of the UPC by default. This means that any party may be able to challenge the validity of an EP right after the UPC comes into force on June 1. Further, any EPs granted after June 1 will be eligible for “unitary effect,” meaning patent owners can elect the patent to grant as an UP.
Determining the Right Fit
Orthopedic companies and innovators must now weigh the pros and cons of both patent options when filing for coverage in Europe.
The advantages of the UP system include the fact that there’s no individual country validation required. When issued, it is valid in all participating EU countries. It requires a single renewal fee and a single translation. If the UP is filed in English, it must be translated into German or French. There is a six- to 12-year phase-out of this single translation requirement.
However, the UP system is subject to a central attack, meaning a company could file a single invalidity action with the UPC and, if successful, the UP would be invalidated in all EU countries. In contrast, invalidity actions would need to be filed in individual validated countries — each of which has its own standards — to invalidate an EP. The EP could therefore be invalid in one country and remain valid in others.
The UP system also eliminates filing flexibility. Filing must occur in all or none of the EU countries, so the ability to trim a portfolio on a country-by-country basis is lost. Plus, as mentioned, not all EU countries are participating.
Patent holders could also face negative central renewal fee implications. If the EPO raises renewal fees, the patent owner is required to pay the higher fee unless they want to lose the UP in all participating countries.
Validating and maintaining an EP in more than a few EU countries is a time-consuming and expensive proposition. However, there are advantages of the traditional EP in that it allows an inventor to obtain patent protection in multiple countries with a single application, thereby reducing filing costs and simplifying the application process.
The UP system was designed to save on costs and provide an efficient filing process with resultant broad European protection. Such efficiencies come at the expense and risk of centralized enforcement and fee determination and decreased filing flexibility.
Orthopedic companies that want to protect innovative designs in Europe must now decide how to best move forward in a changing patient protection landscape.
This article is for informational purposes only and should not be interpreted as legal advice.
John W. Boger is a partner with the boutique Intellectual Property Law Firm of Heslin Rothenberg Farley & Mesiti P.C. and is the Chairman of the firm’s Medical Products and Technology Practice Group. Before attending law school, Mr. Boger worked for eight years with a large orthopedic device manufacturer in various product development and marketing positions. He can be reached at 518-452-5600 or via email.
Heslin Rothenberg Farley & Mesiti P.C.
hrfmlaw.com
