Playing roulette with the Unified Patent Court judges

This article was Previously published in the Journal of the Chartered Institute of Patent Attorneys, who has agreed to it being made available on Simmons & Simmons elexica.

The quality of the Unified Patent Court judiciary will be a key factor in whether or not the Unified Patent Court (UPC) is a success.

Article 15(1) of the Unified Patent Court Agreement sets a high standard proclaiming that judges of the Court “shall ensure the highest competence and shall have proven experience in the field of patent litigation”. Although at first sight this would appear to ensure that the Court is fully staffed with experienced experts in patent law, the provision is watered down somewhat by Article 2(3) of the Statute of the Unified Patent Court which provides that “proven experience in the field of patent litigation” may be acquired by training provided through the Court training frame work.

The issue facing the Court is that the Court will be a multi-national court and in many of the participating member states there is little patent litigation. According to the Harhoff Report on the Economic Cost Benefit Analysis of a Unified and Integrated European Patent Litigation System published in 2009 only the UK, Germany, France, the Netherlands, Italy and Sweden had court systems which dealt with more than 30 patent cases a year. Thus, although there are some notable patent judges in countries including for example Denmark, Finland and Austria, in general the opportunity for practitioners and the judiciary outside of the UK, Germany, France, the Netherlands, Italy and Sweden to build up experience of patent litigation has been very limited.

Does this mean that there is a realistic prospect of Court decisions being taken by non-expert judges?

The answer is almost certainly not.

In 2013, 354 individuals who responded to the UPC Advisory Panel’s request for expressions of interest were identified as being eligible to be legal judges. The Advisory Panel considered 171 of those had sufficient experience of patent litigation to be considered to be eligible without further training. The qualifications of 124 of the applicants were considered by the UPC Advisory panel to be “outstanding”. That alone would suggest that the quality of the judiciary should be high. However, the structure of the Unified Patent Court further increases the influence the judiciary from experienced Courts will have on jurisprudence of the new Court.

The Unified Patent Court will have exclusive jurisdiction over European Patents with Unitary Effect which will begin to be granted once the court opens. The Court will also have shared jurisdiction (along with the national Courts) over existing European Patents granted by the European Patent Office (EPO). Initially, it will be the court’s jurisdiction over existing European Patents which will be of most importance.

Putting aside the possibility of suing an defendant in the local or regional division of the member state where they are domiciled or established or in the central division (if a defendant is not domiciled or established in any participating member state), infringement proceedings in the Unified Patent Court have to be initiated in the local or regional divisions where a patent is infringed or in the central division if patents are infringed in a country which does not establish its own local or regional division (e.g. Luxembourg or Malta). However, a patent has to be in existence in order for it to be infringed.

Typically European Patents are only maintained after grant in a limited number of member states. According to statistics from the EPO, roughly 50% of European patents are maintained in the UK, Germany and France. A further 40% of patents are maintained in those countries along with one or two more member states (typically chosen from Italy, the Netherlands and Spain - the latter of which is not participating in the Unified Patent Court). The final 10% are patents which are maintained more broadly. Often these broadly maintained patents are highly valuable pharmaceutical patents, many of which are likely to be opted-out from the jurisdiction of the Unified Patent Court in order to protect such patents from the threat of central attack.

Just for arguments sake assuming that half of the most broadly maintained European patents are opted-out and patent proprietors bring actions randomly in the local divisions eligible to hear infringement cases where infringement occurs, based on the above figures, 75% of infringement cases of European patents will be brought in the English, German or French local divisions of the Court. A further 20% of cases will be brought in the Italian or Dutch local divisions and only 5% of cases brought in any of the other local or regional divisions. Or put another way, it is reasonable to assume that something of the order of 95% of cases of infringement of existing European patents brought in the local and regional divisions of the Unified Patent Court will have to be initiated in the UK, Germany, France, the Netherlands or Italy (ie the local divisions which will be able to draw on an existing history of patent litigation and which will sit with two local judges) since 95% of existing European Patents which are not opted-out from the jurisdiction of the Court will not be in force in any participating member states outside of those five jurisdictions.

The busyness of the English, French and German local divisions, and to a lesser extent the Dutch and Italian divisions, also has implications for the make-up of the other local divisions.

Outside of the UK, Germany, France, the Netherlands and Italy, local divisions will sit in panels of three with one local judge and two other judges drawn from the pool of other UPC judges. The exact numbers of UPC judges is not known at present. However, if it is assumed that the numbers of judges appointed in each jurisdiction will be proportional to the minimum number of judges required to staff the court, if the two non-local judges are picked at random from the pool, there is at least a 75% chance that one of the non-local judges will come from the UK, Germany, France, the Netherlands or Italy. This is because as the local panels in the UK, Germany, France, the Netherlands and Italy must consist of two local judges more judges from those countries will be available.

The same logic applies to the composition of panels sitting in the central division which will sit in multinational panels consisting of one technical judge and two legal judges. Since at least half of the pool of legal judges will be English, French, German, Italian, or Dutch, in 75% of cases at least one legal judge of one of those nationalities will be on the panel.

In practice probably the chances of at least one judge from UK, Germany, France, the Netherlands or Italy serving on a local panel outside of those countries or in the central division will actually be higher than that.

At present only Germany has announced that it will establish more than one local division; it will establish four and hence there will need to be at least eight German judges staff those divisions. Although the numbers of cases of patent infringement dealt with by the German Courts is significantly higher than in say for example the UK and France, there is no reason to suppose that, in situations where a patent proprietor has a choice, four times as many UPC cases will be brought in the German divisions than say in the UK or France. Unlike the current system where patent litigation in Germany may be particularly attractive because of the German practice of trying infringement and validity separately, the procedures within the UPC will be the same regardless of which division is used. The only notable difference will be the languages in which proceedings may be brought. It is therefore likely that multiple panels may well sit within the English and French divisions further increasing the numbers of English and French judges available in the pool.

Furthermore, all the above assumes that judges are allocated to panels and cases are allocated to divisions at random. It is of course open to the judicial authorities to weight matters in favour of ensuring that all panels include at least one highly experienced patents judge.

Equally importantly, if infringement occurs on an EU wide basis, patent proprietors will have a choice of where to initiate proceedings. Although it is possible some proprietors might want to take their chances in local division which might have a less experienced panel (even though that option is only likely to be available in a minority of cases and the odds are at least 3:1 against that any such panel will be so constituted), it is far more likely that they will opt for the local divisions drawing on two experienced local judges.

The spread of work across the local and regional divisions will change as the EPO starts to grant European Patents with Unitary Effect with force across all participating member states. However, such changes will occur gradually.

The costs for obtaining and maintaining a European Patent with Unitary Effect will be significantly higher than merely maintaining patent protection in the UK, Germany and France alone due to the need, at least during the transitional period, to prepare a full translation of the patent on grant and the fact that the renewal fees for a European Patent with Unitary Effect have been pitched as the level of renewal fees for maintaining patent protection in four countries.

It is therefore highly likely that a significant proportion of patent proprietors may well still choose maintaining European patents in the UK, Germany and France alone which will limit proprietors to enforcement in the English, French or German local divisions.

Assuming that the 50% of patent proprietors who choose to maintain protection only in the UK, Germany and France continue to do so and everyone else opts for the European Patent with Unitary Effect and assuming on average each European patent takes five years to grant and is maintained for its full life time, the steady state where half of the time patent proprietors would have the option to enforce in local and regional divisions outside of UK, Germany and France would only be reached in around 15 years’ time.

However, by then much of the procedural jurisprudence of the UPC will have been settled and with 15 years of experience of the UPC there should be no distinction between the experience of any of the judicial panels. In the meantime the judges in the English, French and German local divisions are likely to have a disproportionate influence on the Court as it develops.