Unitary Patent as an Object of National Property

Cole Porter: Life seems so sweet that we decide / It’s in the bag to get unified / It’s delightful, it’s delicious, it’s D’lovely

One topic, above all others, is engaging the collective mind of patent lawyers in the UK: the new, European ‘patent with unitary effect’, commonly known as the unitary patent.

Unitary

Unitary: the word is unfamiliar; its precise meaning, elusive. The first usages that come into IP Draughts’ mind are ‘unitary authorites’ (a type of local government body) and unit trusts (a type of investment – not remotely relevant).

According to the online version of the Oxford English Dictionary (OED), the first meaning is:

Of, relating to, characterized by, or based on unity; unified, inclusive; holistic.

That doesn’t help us much. The fourth meaning given by the OED is closest to the mark:

Of or relating to a system of government or administration in which the powers of the separate constituent parts are vested in a central body, as opposed to two or more tiers of jurisdiction, authority, or responsibility.

This definition doesn’t quite work: we are not concerned here with tiers of political authority, but with having a single patent throughout the EU (assuming all EU member states fall into line and ratify the new law, which has yet to be seen). But we get the general idea. The Unified Patent Court (UPC), in which unitary patents will be litigated, and particularly its central division, fits better within the definition. It is strange that the court wasn’t given the same adjective as the patent – eg Unitary Patent Court or Unified Patent.

The story so far…

At present, where a patent application is made using the route of the European Patent Convention (EPC), upon grant it splits out into national patents in the European countries that the applicant has designated in its application. In future, under the new law governing unitary patents, it will be possible to designate one’s EPC patent as a single patent throughout the participating countries of the EU, rather than as a bundle of national patents.

UK patent lawyers are involved with the unitary patent in different ways. The chemistry and life-sciences part of the central division of the UPC is to be located in London. This will require a new eco-system of court rooms, rules of procedure, administrative staff and judges. UK patent lawyers have been active in discussing these matters with the UK government, and will continue to do so. At least the location of the court has now been decided – the government has taken a lease on some rooms at Aldgate Tower.

Another area of activity for UK IP lawyers is learning how the new system will work, particularly when it comes to litigating unitary patents. IP Draughts’ former employer, Bristows, has taken a strong lead in providing training and dry-runs of how patent litigation might work in the new system.

Transactional IP lawyers are starting to think about how the unitary patent will affect the terms of licence agreements and other patent-related agreements. IP Draughts hopes to contribute to this area in the coming months.

Unitary patent as an ‘object of property’

The EU regulation on the unitary patent is not considered to be an erotic masterpiece

An area that has not yet received much scrutiny, but which affects both litigation and transactions, is the status of a unitary patent as an ‘object of property’ in a designated EU member state. Despite some ‘harmonisation’ (to use the Euro-jargon), IP laws remain largely national in character. In the area of traditional property laws (which sometimes affect IP transactions, IP being an example of personal property), EU harmonisation has barely scratched the surface. Therefore, transactions in respect of unitary patents will need to be anchored within a system of national property laws, as well as a system of contract law.

You might think that, if the parties have chosen an EU contract law to govern their patent transaction (ie by a choice of law clause in their contract), it would be logical to allow the same, national system of law to govern any property law issues that arise if the parties are in dispute. However, this is not what the new unitary patent law provides. According to Article 7 of EU Regulation No 127/2012 (implementing enhanced cooperation in the area of the creation of unitary patent protection):

Article 7

Treating a European patent with unitary effect as a national patent

1.   A European patent with unitary effect as an object of property shall be treated in its entirety and in all the participating Member States as a national patent of the participating Member State in which that patent has unitary effect and in which, according to the European Patent Register:

(a)	the applicant had his residence or principal place of business on the date of filing of the application for the European patent; or

(b)	where point (a) does not apply, the applicant had a place of business on the date of filing of the application for the European patent.

2.   Where two or more persons are entered in the European Patent Register as joint applicants, point (a) of paragraph 1 shall apply to the joint applicant indicated first. Where this is not possible, point (a) of paragraph 1 shall apply to the next joint applicant indicated in the order of entry. Where point (a) of paragraph 1 does not apply to any of the joint applicants, point (b) of paragraph 1 shall apply accordingly.

3.   Where no applicant had his residence, principal place of business or place of business in a participating Member State in which that patent has unitary effect for the purposes of paragraphs 1 or 2, the European patent with unitary effect as an object of property shall be treated in its entirety and in all the participating Member States as a national patent of the State where the European Patent Organisation has its headquarters in accordance with Article 6(1) of the EPC.

4.   The acquisition of a right may not be dependent on any entry in a national patent register.

Article 7 gives parties an opportunity to choose which system of property law they would like to govern their unitary patent. For example, an applicant might decide to form a company in a favoured member state and then file the patent application in the name of that company. Or, in the case of joint applications, the parties could agree to name as the first applicant the party that is based in a favoured member state. Just as parties may currently negotiate which contract law will govern their patent agreement, they may decide to negotiate which system of property law will govern a unitary patent, and then make arrangements that ensure, under the terms of Article 7, that their chosen property law prevails. This situation might arise, for example, where parties enter into a research collaboration agreement and inventions are made under the collaboration.

This is a new legal issue that does not currently arise – at present, with purely national patents, the system of property law is that of the country in which the patent is obtained. IP Draughts foresees that applicants may seek advice from their lawyers on which country’s property laws they should choose. It may be a difficult question for a lawyer to answer, if he or she is not qualified to advise on the laws of all of the countries of the EU. However, similar difficulties arise when helping a client to decide which contract law is appropriate.

To make an assessment of which property law might be most suitable or unsuitable, we first need some data on what national property laws provide, in areas that might be relevant to patent transactions, so that different countries’ laws can be compared. This is a very specialist topic, that is rarely discussed. One of IP Draughts’ books, Technology Transfer (Bloomsbury, 3rd edition, 2010) includes a chapter (at pages 359 to 398) on how English personal property laws may affect IP transactions, but he doesn’t recall seeing this subject discussed much in other publications.

If you have any information, or sources of information, on this subject, please let IP Draughts know via the comments section of this posting.