European Commission Agrees on Unified Patent Court Location

The European Commission has agreed on the location of the Unified Patent Court (UPC). As per the agreement, the court's central division is to be located in Paris (France), with specialised regional clusters in London (United Kingdom) and Munich (Germany).

The UPC forms a part of the agreement for the creation of a single European patent system: a so called "unitary patent". The unitary patent system implies that companies would be able to attain patent protection for 25 member states (i.e. all EU member states excluding Italy and Spain) through one application. The system therefore implies that companies will not be required to go through validation and translation processes in each of the member countries separately.

Having a single patent, however, required the creation of a patent court, where grievances related to the unitary patent could be heard and resolved. The absence of such a court has up until now prevented the introduction of a single European patent. With the creation of the UPC, this last obstacle has been removed.

The UPC will be in charge of managing issues related to the "future unitary patents" as well as the "current classical European patents". Although the UPC has been designed to be a "single specialised court", it will also have local and regional representations.

The decision on the location of the court comes following months of disagreement, which had delayed the negotiations for the overall system. Based on the agreement reached, the UPC is to be split between three locations—London, Paris, and Munich—with the seat of the central division being in Paris. According to the Guardian, the London division will be responsible for pharmaceutical and chemistry patents, while the Munich division will have responsibility for mechanical engineering applications. The UPC will be launched in 2014 at the earliest.

Outlook and Implications

Spain and Italy's decision to opt out of the agreement does not come as a surprise, as the two countries objected to the initial proposal to create a single European patent system when it was introduced in December 2010 due to the prospect of the patents being mainly in English (see Europe: 15 December 2010: European Commission Gives Backing to Single European Patent Plan).

The "unitary patent" system is designed to replace the current European system, according to which a company has to apply for validation separately in each country in which it is seeking patent protection. Thus, as per the current system, the European Patent Office, which comprises the EU 27 countries and 11 other European countries, is responsible for examining patent applications, as well as granting "European patents". After securing the European patent, however, a company must go through the abovementioned validation process, which involves significant validation and translation costs.

According to European Commission estimates, the overall costs of obtaining patent protection for the 27 EU states could amount to around EUR36,000 (USD44, 232), of which EUR23,000 comes from translation costs. The translation costs under the unitary patent system are expected to go down to EUR2,500 in the transitional period, and further to EUR680 in the long run. Thus, the introduction of the unitary patent system comes as positive news for pharma companies, in particular those specialising in originator drugs. Firstly, the unitary patent system and the UPC would streamline the patent application process, and obtaining a European patent would imply that the patent would be valid across all European member states, excluding Italy and Spain. Secondly, the negation of the need for further administrative processes, including validation and translation, would lead to considerably lower costs for pharma companies. Consequently, this would help reduce the time and costs for market entry in Europe. Considering the cost-containment measures that the various European countries are currently undergoing, a more streamlined and less costly patent application and obtaining process could potentially help make the European market more attractive for innovator companies. Furthermore, having one patent court would streamline the litigation process, allowing originator companies to cut costs and reduce time and effort required to obtain a decision that applies across all the 25 participating EU states.

As the decisions and disputes will be under the UPC, however, the implementation of the system will depend upon resources and procedures being put in place for the UPC to handle EU-wide cases.