Europe’s new unitary patent system: Key considerations for medical device companies

The marketplace for medical technology in Europe was estimated at 150 billion Euro in 2021, making Europe the second-largest medical technology marketplace and a key jurisdiction for patenting medical device technology. The importance of medical technology patents is reflected in the number of applications filed in this field at the European Patent Office (EPO). Medtech filings have continuously increased since 2017, and medical technology was the field in which the greatest number of patent applications were filed in 2021.

Currently, patents granted by the EPO must be individually validated in those European countries in which a patent owner wishes to protect their inventions. The procedural requirements and costs (including translation fees, validation fees and attorney fees) for validation vary depending on the countries selected. Annuity fees for maintaining patents in force must be separately paid in the selected countries during the life of the validated patents. Further, these validated patents are individually enforced and revoked subject to the different national laws and procedures of the selected countries. As a result, the current system can be administratively and financially burdensome for patent owners.

On June 1, 2023, a new system — the unitary patent system — aimed at reducing these burdens on patent owners will come into operation. The unitary patent system will enable applicants to validate and maintain their patents in up to 25 European Union member states via a single procedure and payment of a single annuity fee by obtaining a European patent with unitary effect, also known as “a unitary patent.”

In addition, a new court — the Unified Patent Court (UPC) —will have exclusive jurisdiction over unitary patents and “classic” European patents granted prior to June 1 and individually validated as described above. During an initial 7-year transition period, patent owners may avoid the jurisdiction of the UPC by filing an opt-out declaration.

This article outlines key considerations for medical device companies to guide their decisions on whether to participate in the unitary patent system.

Consideration 1: Financial and administrative benefit of reducing costs for validation, translations, and annuity fee payments

The top 10 medical device markets in Europe (in descending order) are Germany, France, the U.K., Italy, Netherlands, Spain, Switzerland, Belgium, Austria, and Sweden. The U.K., Spain, and Switzerland will not participate in the unitary patent system, which may limit the financial benefits to patent owners, because it will be necessary to continue with individual validations in these countries.

Here’s a hypothetical: Based on a simulation of validation costs and annuity fees using the SimUp tool, it is financially beneficial to continue with the traditional validation process rather than obtaining a unitary patent when a patent owner seeks protection only in the top three markets of Germany, France, and the U.K. The cumulative post-grant costs are €37,000 for those three member states versus €56,000 for unitary patent coverage in 18 member states.

A second hypothetical estimating the cost of validation in the top five markets (Germany, France, U.K., Italy and Netherlands) versus unitary patent coverage for 18 member states shows it is financially beneficial to obtain a unitary patent.

Finally, a third hypothetical of validation in the top 10 countries compared to unitary patent coverage for 20 countries a unitary patent is once again the less expensive option.

Consideration 2: Risk of invalidation versus ease of enforcement of patent rights

For patents considered key to the patent owner’s business, the possibility that a single court (the UPC) with an unestablished precedent and untested procedure could invalidate patent rights in 25 European countries may be too high of a risk.

However, for patents in which the patent owner is confident of validity based on, for example, the results of examination procedure or patentability studies, the power to enforce the patent against infringers in any of the up to 25 European participating countries via a single litigation procedure may be of enormous strategic and financial benefit.

Patent owners must evaluate their entire European patent portfolio to determine whether to file an opt-out such that classic European patents will continue to be enforced in the national courts rather than at the UPC.

The decision to opt out for classic European patents is reversible. Thus, for administrative simplicity, patent owners may consider filing an opt-out for their current portfolio of European patents to avoid a revocation action, and then withdraw the opt-out once an infringer is identified and a single UPC enforcement action is more attractive.

Consideration 3: Effect on co-owned patents and licensing agreements

For those patents owned by two or more entities, the decision to request unitary effect for a European patent and the decision to opt out of the UPC must be unanimous.

Therefore, medical device companies should consider how future joint development agreements and ownership provisions therein should be drafted in view of their desire to obtain unitary patents.

For patents subject to licensing agreements, it may be necessary for licensors to give notice to their licensees as the decision, for instance, not to opt out of the UPC may affect the licensee’s rights to enforce a patent in a particular national court.

Bailey Ziegler is a U.S. patent attorney at Regimbeau with expertise prosecuting patents across a wide range of technical fields including medical devices, chemical and material processing, and aircraft equipment design and manufacturing. Her practice focuses on counseling clients on international patent portfolio development strategies and infringement risk assessments with an emphasis on the U.S. and Europe.

Frédérique Durieux is a French and European patent attorney and the head of the Grenoble office at Regimbeau with technical expertise in mechanics, robotics, and materials. She has significant experience in client counseling, patent prosecution, and oppositions before the European Patent Office for start-up clients in the medical device sector. 

Jerome Collin is a French and European patent attorney and serves as the international director at Regimbeau. His expertise covers the acquisition and use of intellectual property rights through oppositions, litigation, and transaction and intellectual property asset valuations.

Original Article: (https://www.medicaldesignandoutsourcing.com/europe-unitary-patent-system-medical-device-medtech-opt-out/)