GERMANY: An Introduction to Intellectual Property: Patent Attorneys: Contentious

The launch of the Unified Patent Court (UPC) and European patent with unitary effect (unitary patent) in June 2023 was probably the most important development in patent law in Europe since the implementation of the European Patent Convention in the 1970s.

The unitary patent enables applicants to obtain a patent via the European Patent Office (EPO) covering all participating member states. This encompasses 17 countries at launch and the number is likely to increase in the next few years. The UPC, meanwhile, provides a single forum to resolve disputes concerning both infringement and validity of unitary patents and classic European patents (unless they have been opted out from the UPC system). The UPC promises streamlined and more cost-effective litigation without the risk of inconsistent or contradictory decisions in terms of infringement and validity of the respective patent.

Together, the unitary patent and UPC provide important new additional opportunities for the protection and enforcement of patents in Europe, as well as many new strategic decisions for businesses to make. After the first six months of operation, some trends are already apparent.

Unitary Patent 

According to the EPO, as of mid-January 2024, more than 18,000 requests for unitary effect had been received, and nearly 97% of these had already been registered. This amounts to 17.4% of all European patents granted. The most popular technology fields for unitary patents are medical technology (11.7%), civil engineering (5.9%), transport (5.5%), other special machines (5.3%) and measurement (5.3%). The countries with the most unitary patent applications (based on the first named proprietor) are Germany (3,492 requests), the United States (2,719), France (1,308), China (976) and Italy (964).

It is already clear that the unitary patent is a popular option for high-tech companies, both large and small, across various industries. However, it is still only being used for less than one in five European patent applications, which suggests that classic European patents remain important for many applicants. It will be interesting to see how this proportion changes over the coming year.

The benefits of unitary patents include the possibility to cover more countries without additional validation costs, greater potential for licensing and enforcement due to the greater geographical coverage, and the opportunity to bring actions in the UPC. How that court develops is therefore critical to the evolution of the new system.

UPC 

The UPC comprises Local and Regional Divisions, a Central Division and a Court of Appeal, as well as a Registry and a Patent Mediation and Arbitration Centre. It includes judges from all over Europe, who sit in panels that comprise both legally and technically qualified judges. Currently, there are 14 Local and Regional Divisions located across the participating member states. The Central Division is split between Paris and Munich, with Milan to become a third branch of the Central Division. The Court of Appeal has its seat in Luxembourg. In just the first six months of operation, a number of trends have already become apparent at the UPC. According to statistics published by the court, by 21 December 2023 it had received 160 cases, including 67 infringement actions, 24 revocation actions, 48 counterclaims for revocation (relating to 18 infringement actions) and 13 applications for provisional measures, as well as a small number of other applications. This shows that the court is already a popular forum for patent disputes in Europe.

The German divisions have proved the most popular for infringement actions, with Munich leading the way with 23, followed by Dusseldorf and Mannheim with 11 each. This is likely because the German judges have considerable experience in hearing complex patent cases, many of the parties and/or their representatives are based in Germany and perhaps because the courts have a reputation for being pro-patentee. To begin with, German was the most popular language. This may be because the German divisions did not announce that they would accept English until the last minute, and many parties had already prepared filings in German. As of December, 49% of proceedings were in German and 40% in English. Going forward, English is likely to become more common.

Even in its relatively short life so far, the UPC has delivered a number of important judgments in cases in various sectors, including medical devices, pharmaceuticals and telecoms. These address questions such as when an interim injunction is appropriate and what the threshold should be for granting one, to procedural matters relating to the production of evidence, confidentiality, transfer between divisions and change of language. In the coming year, we expect to see some final decisions on validity and infringement as well as remedies, and to see the outcomes of the first substantive appeals.

While it is still very early in its development, it is clear that the UPC is going to be an important tool in litigation for both patent proprietors and defendants and is going to have an impact not just in Europe but worldwide. Several high-profile disputes have been brought before the court and the outcome of these will be closely watched.

SEP and FRAND 

One area where the UPC may play an important role is in relation to standard essential patents (SEPs). There continue to be many disputes between holders of such patents and implementers of standard-compliant technologies regarding issues such as how to determine fair, reasonable and non-discriminatory (FRAND) licensing terms, when an injunction is justified, which courts have jurisdiction, and defences based on competition law.

There have already been several significant judgments in the telecoms field relating to 4G and 5G standards in national courts and we are likely to see more disputes in sectors such as video and audio codec and automotive as well as other products impacted by the internet of things and connected devices. It will be very interesting to see how the UPC handles SEP cases that come before it and whether it becomes the go-to forum for such disputes.

AI and Sustainable Technologies 

Looking ahead, there are two big issues on the horizon that are likely to affect IP in Europe. One is the impact of artificial intelligence, in particular machine learning and deep learning. We have already seen some interesting decisions which have found that an AI cannot be named as the inventor of a patent, and there are likely to be more questions arising around the patentability of algorithms used in AI tools, as well as issues relating to how AI will affect questions of patent validity, infringement and liability.

The second issue concerns sustainable technologies. The European Green Deal aims to reduce the EU’s climate, energy, transport and taxation policies fit for reducing net greenhouse gas emissions by at least 55% by 2030 compared to 1990 levels. Many businesses are investing heavily in innovation in this area, in fields such as power generation, smart grids, batteries, electric vehicles, charging, recycling and novel materials.

The patent system has a vital role to play in incentivising the development of sustainable innovation through commercialisation and licensing, including by promoting information-sharing and mapping. Patent practitioners will likely see more cases involving sustainable technologies, which will generate their own interesting legal challenges in due course.