Hogan Lovells

Unitary patent – the situation in Italy

Out of the three instruments comprising the "unitary patent package", Italy only signed the agreement in respect of the Unified Patent Court and opted-out of the enhanced cooperation procedure that led to the adoption of the Regulations instituting the unitary patent itself. Let's see why, where we are and what are the consequences of the Italian decision.

After decades of discussions surrounding the adoption of a single patent valid for the entire European Union ("EU") (the so-called European Patent with unitary effect, or "Unitary Patent"), the 27 EU Member States could not reach a unanimous agreement and so 25 Member States opted to use the EU's "enhanced cooperation" legislation to achieve unitary patent protection across their territories.

1. The enhanced cooperation and the opposition by Italy and Spain

"Enhanced cooperation" is a legislative procedure available under the Treaty on European Union (the "TEU") to Member States that wish to establish EU-wide systems in certain areas that fall outside the exclusive competences of the EU, when a unanimous agreement between all Member States cannot be reached1.

In March 2011, the EU Council gave the green light to the use of the enhanced cooperation procedure to create a Unitary Patent, as proposed by 25 out of the 27 EU Member States (decision 2011/167/EU, 10 March 2011). Indeed, an unanimous agreement between the 27 Member States on the Unitary Patent could not be reached, the main hurdle being the proposed trilingual regime for translating Unitary Patents, where the official languages would be English, French and German only. Italy and Spain strongly opposed such proposals and filed complaints with the Court of Justice of the European Union (the "CJEU") (cases C-295/11 and C-274/11, now joined). Spain and Italy sought annulment of the decision on the grounds that:

  • the Council's competence to establish enhanced cooperation did not extend to unitary patent protection (which Spain and Italy argued belonged solely to the EU),
  • misuse of Council powers;
  • disrespect for the judicial system of the EU;
  • failure to fulfil the "last resort" condition in Article 20 of the TEU;
  • violation of Article 326 of the Treaty of the Functioning of the European Union (the "TFEU") (in that such enhanced cooperation "undermines the internal market and economic, social and territorial cohesion, constitutes a barrier to and discrimination in trade between Member States and distorts competition between them"); and
  • failure to comply with the patent translation and language regime requirements set out in Article 327 and 328 of the TFEU.

The decision of the CJEU is expected in the next few months. In the meantime, the CJEU's Advocate General, Mr Yves Bot, gave his opinion on 11 December 2012 that the CJEU should dismiss the actions2. Although the Advocate General's opinion is not binding, it is to be noted that it is often followed by the CJ.
UPDATE: on April 16, as it was expected, the CJEU dismissed the actions brought by Italy and Spain. The Court indicated that the competences to create European IP right and adopt related language arrangements are shared between the EU and Member States: being non-exclusive, the Council is competent to authorize enhanced cooperation is this field. In addition, it stated that the enhanced cooperation does by no means circumvent the requirement of unanimity but rather contributes to the process of integration, that the "last resort" condition was indeed met (as negotiations in this matter had begun as early as 2000), and that no damage is caused to the internal market and the cohesion of the EU but rather the opposite, without prejudice to competences, rights and obligations of any member states. The full text of the judgement is available here: http://curia.europa.eu/juris/documents.jsf?num=C-274/11

2. The approval of the "unitary patent package"

The so-called "unitary patent package" is composed of three instruments:

i. a regulation implementing the enhanced cooperation procedure in the creation of a unitary patent protection;

ii. a regulation implementing the enhanced cooperation procedure with regard to applicable translation arrangements; and

iii. an agreement on the Unified Patent Court ("the UPC Agreement").

Notwithstanding the claims pending before the CJEU, the first two instruments were approved and Regulations No. 1257/2012 (unitary patent protection)3 and No. 1260/2012 (related translation arrangements4 (the "Regulations") were adopted on 17 December 2012, implementing the enhanced cooperation procedure between all EU Member States, except Italy and Spain. The Regulations entered into force on 20 January 2013, but they will only apply from 1 January 2014 or the date of entry into force of the UPC Agreement, whichever is later.

Following the adoption of the Regulations, the UPC Agreement was signed by 25 Member States, including Italy but excluding Spain and Poland (signing day was 24 February 2013 for all signatories, except Bulgaria who signed on 5 March 2013)5. The UPC Agreement is the third and last component of the "unitary patent package", setting up a single and specialized patent jurisdiction6. The UPC Agreement will enter into force on 1 January 2014 or on the first day of the fourth month after it is ratified by 13 Member States, including France, Germany and the United Kingdom, whichever is later (Article 89 of the UPC Agreement).

In practical terms, the next step is therefore that the UPC Agreement is now subject to ratification by sufficient signatories]. Given that the deadline of 1 January 2014 seems too close to be met, the UPC Agreement is more likely to enter into force four months after 13 signatory Member States have ratified it (including France, Germany and the UK). At that date the full "unitary patent package" will come into force and it will be possible to file an application for a European Patent with unitary effect.

3. The consequences for Italy

As seen above, Italy signed the UPC Agreement, but did not take part in the enhanced cooperation that led to the adoption of the Regulations establishing the Unitary Patent. In other words, the Unitary Patent will not be effective in Italy, while the Unified Patent Court (the "UPC") will have jurisdiction within the limits set out below.

To understand the consequences of the Italian situation, we have to briefly explain what will be the competences of the UPC. The most notable aspect of the UPC is that it will have competence not only in respect of the "new" Unitary Patent, but also the "classical" European Patent, i.e. the bundle of national patents (which can comprise up to 38 patents, i.e. the number of states participating in the European Patent Convention) that can be obtained through the centralized registration procedure offered by the European Patent Office ("EPO") under the European Patent Convention. In addition, the Court will also have competence over supplementary protection certificates ("SPCs"). However, it is to be noted that the UPC will have jurisdiction only in respect of designations of European Patents for any of the 25 signatories of the UPC Agreement, and not in respect of designations of the European Patent for any of the other 13 states.

Article 32(1) of the UPC Agreement stipulates which actions in respect of Unitary Patents, European Patents and SPCs should be heard by the UPC . Article 32(2) explicitly states that all issues relating to patents and SPCs that do not fall with the UPC's exclusive competence shall remain with the national courts of the Member States signatories of the UPC Convention (therefore, including Italy).

As a consequence, once the "unitary patent package" comes into force, and until Italy takes part in enhanced cooperation, an Italian applicant may choose to apply for a Unitary Patent that will be immediately valid in the Member States that have ratified the UPC Agreement. To obtain patent protection in the remaining 13 states that are members of the European Patent Convention but did not take part in the enhanced cooperation procedure (therefore, including Italy), the choice will be applying for the "classical" European Patent or for national patents.

In case of disputes, competence rules can be summarized as follows:

  • for Italian national patents the competence will remain with the Italian Courts;
  • in case of a "classical" European Patent designating Italy, those aspects that fall into the exclusive competence of the Unified Court will be litigated before it, while all other aspects will remain within the competence of Italian national Courts;
  • in case of Unitary Patents owned by an Italian applicant (which would not have effect in Italy, but only in the 25 jurisdictions taking part in the unitary patent protection), there are two possibilities:

a) with respect to those issues falling within its exclusive competence under Article 32(1) UPC Agreement, the Unified Court will have jurisdiction. In this case, the Unified Court's Italian division will be competent only in the event the defendant is Italian and jurisdiction is chosen based on the criteria of the domicile of the defendant. The claims will otherwise be litigated before other divisions of the Court; and

b) with respect to all other matters, Italian national courts will be competent but, again, provided that the competence is chosen based on the criteria of the Courts of the defendant, indeed, the locus commissi delicti rule could not designate Italian Court divisions as competent courts, because infringement cannot occur in Italy, given that Italy does not at present participate in the Unitary Patent protection. 

Consequently, please do bear in mind that, when a dispute concerning a Unitary Patent is heard before the UPC's Italian division because the defendant is domiciled in Italy, the Italian division would be in a position to revoke the entire Unitary Patent. It is to be noted that panels of the local divisions of the Court of First Instance are multi-national, as prescribed by Article 8(2) of the UPC Agreement. However, in practical terms a Unitary Patent owner will always be able to sue an Italian infringer in non-Italian local divisions because claims can be brought in the place of infringement.

Concerning the UPC's competence over the "classical" European Patents and supplementary protection certificates issued for products protected by such patents,  Article 83 of the UPC Agreement provides for a transitional period. Accordingly, for 7 years from the date of entry into force of the Unitary Patent package, it will be possible to opt-out of the exclusive competence of the Unified Court with regards to actions of infringement or revocation, which may therefore still be litigated before national courts. Depending on the outcome of an Administrative Committee consultation, this transitional period may also be extended for a further 7-year period. In addition, there are still some uncertainties as to the scope of the opt-out procedure.

Finally, it remains to be seen if and when Italy will take part in the enhanced cooperation procedure and adopt the unitary patent package.

By Hogan Lovells Partner Giovanni Ghirardi and Associate Carolina Cordero di Vonzo

1. The conditions are set forth by Art. 20 TEU and include (i) a minimum participation of 9 Member States, (ii) the aim of furthering the objectives of the EU, protecting its interests and reinforcing its integration process, (iii) the relevant decision to be adopted by the Council as a last resort, when it has established that the cooperation cannot be reached by the EU as a whole within a reasonable period of time.

2. The Advocate General's opinion is available on the official ECJ website at this link: http://curia.europa.eu/juris/celex.jsf?celex=62011CC0274&lang1=en&type=NOT&ancre

3. The text of the Regulation (EU) No. 1257/2012 of the European Parliament and of the Council of 17 December 2012, implementing enhanced cooperation in the area of the creation of unitary patent protection is available at: http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2012:361:0001:0008:EN:PDF

4. The text of the Council Regulation (EU) No. 1260/2012 of 17 December 2012, implementing enhanced cooperation in the area of the creation of unitary patent protection with regard to the applicable translation arrangements is available at: http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2012:361:0089:0092:EN:PDF

5. For an overview of the status of the ratification progress, please see this link: http://ec.europa.eu/internal_market/indprop/patent/ratification/index_en.htm

6. The text of the Agreement on a Unified Patent Court is available at: http://register.consilium.europa.eu/pdf/en/12/st16/st16351.en12.pdf

7. Namely, (a) actions for actual or threatened infringements of patents and SPCs and related defences, including counterclaims concerning licences; (b) actions for declarations of non-infringement of patents and SPCs; (c) actions for provisional and protective measures and injunctions; (d) actions for revocation of patents and for declaration of invalidity of SPCs; (e)  counterclaims for revocation of patents and for declaration of invalidity of SPCs; (f) actions for damages or compensation derived from the provisional protection conferred by a published European patent application; (g) actions relating to the use of the invention prior to the granting of the patent or to the right based on prior use of the invention; (h) actions for compensation for licences on the basis of Article 8 of Regulation (EU) No. 1257/2012; and (i) actions concerning decisions of the European Patent Office in carrying out the tasks referred to in Article 9 of Regulation (EU) No 1257/2012. For a comprehensive explanation of the competences of the Court, please refer to Katie McConnell's contribution "What is the jurisdiction of the UPC", at http://www.theunitarypatent.com/what-is-the-jurisdiction-of-the-upc and, for a clarification of the structure of the Court, as divided in Court of Appeal and Court of First Instance (with central divisions and local/regional divisions), to Sabine Boos' contribution "What is the structure of the Unified Patent Court", at http://www.theunitarypatent.com/what_is_the_structure_of_the_unified_patent_court.

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