WHERE DID WE GO WRONG? THE IMPORTANCE OF CONDUCTING PRIOR ART SEARCHES ON A REGULAR BASIS.

By Andrew Reed and James Ortega

Imagine your company has developed a great new product, and you have gone through the steps to protect your intellectual property in the product.  Now, a year down the road you are facing an accusation of infringement of a patent that you were not made aware of during the development of your product, but you would have found through even a short and straightforward prior art search performed by your patent attorney.                  

In the fast-paced development found in industry today, it is not uncommon for products to move from development to production in a matter of days or weeks, and not the months or years of previous generations.  However, this does create some issues in the realm of intellectual property, as many of these products never have even a short and straightforward prior art search conducted to find if there are any patents or patent applications that would be an issue for patentability or possible infringement.  In this article we discuss some of the basics of why companies and individuals should run not only an initial prior art search, but then also do periodic searches on their products, technology fields, and on their competitors.

What are Prior Art Searches?

Prior art searches are searches done on the subject matter (scope or technology area) of your idea or invention to discover “prior art,” that is, published documents involving that subject matter or technology field that predate your patent application.  These searches can give you a general knowledge of what others are doing or have done on the same subject matter or in the same technology area.  A prior art search can range from a patent attorney searching for a couple of hours to determine if there is anything exactly like your idea or invention, to the hiring of a professional search firm to find every relevant patent, patent applications, or publications discussing the subject matter of the idea or invention.  The level of searching is often dictated by the intellectual property strategy of the company or individual, and the cost of prior art searches varies among those levels.  If your patent is meant to be a defensive weapon, protecting against others using your idea or invention, then a short search can yield many of the best prior art references and can be supplemented at many points throughout the patent prosecution process.  However, if your patent is intended to be an offensive weapon, then a comprehensive and in-depth prior art search would likely be your best option. The reasoning behind these two options is discussed below.

The Importance of Prior Art Searches to Your Patents 

Prior art searches can be critical in both the patent preparation and prosecution phases, as well as on granted patents if there may be litigation involving such patents.  During the prosecution of a patent application, the inventors, patent attorney, and anyone involved with the application all have a duty to disclose any known material prior art to the U.S. Patent Office.  In practical terms, this means that if you as an inventor have conducted any searches, reviewed any products, or read any articles or other references that discuss the subject matter of the invention, these should be disclosed to the Patent Office.  These disclosures help to ensure that the invention does not already exist, and allow the examiner a more thorough understanding of the invention.  Additionally, if a patent attorney reviews any patents, applications or other references while preparing and developing the scope of coverage for the patent application on your invention, those references must be disclosed as well.  All of these disclosures are helpful because when your patent issues, these disclosures are printed on the face of the patent to inform any future parties what documents were reviewed during examination of the patent, or helped develop the invention or the scope of the patent claims.

Once you patent issues there comes with it a presumption of its validity.  The presumption of validity makes it more difficult to challenge your patent based on the prior art disclosed previously to the Patent Office during the patent prosecution stage, or even additional prior art that is deemed to be merely duplicative of the prior disclosed to the Patent Office.  Thus, the more relevant prior art that is provided during the patent prosecution stage, the stronger your patent will be.

Avoiding Willful Infringement 

In addition to the presumption of validity, the more material prior art that is provided during the prosecution stage of a patent application, the more likely an assertion of willful infringement can be overcome.  The prevention of a finding of willful infringement can come in two different forms.  First, a prior art search can establish if there are any patents or patent applications that cover your invention.  If any of these prior art references are of great concern, in addition to providing insight in how best to adjust the scope of your patent application to avoid such references, a non-infringement opinion can also be provided by your patent attorney if it is believe that the practice of your invention does not infringe those references.  Second, prior art searches can find patents and patent applications that are close but do not completely disclose or cover your idea.  Even prior art references that do not directly cover your idea or invention can help prevent a finding of willful infringement if your patent is issued after the Patent Office has already determined those prior art references do not cover your invention.

Freedom to Operate Searches

Another advantageous use for prior art searches is to determine the scope of the technical field in which you and your company are operating whether or not you have patents of your own.  Fundamentally, a patent grants one the right to exclude others from practicing the patented invention(s), but it does not necessarily grant one the right to practice their own invention(s).  For example, if your patented invention is an improvement over an existing, patented technology, then you may still require a patent license before conducting business within the coverage of that prior existing patent.  Thus, a prior art search may be used to identify the patented areas in a given technology field so that the risk of infringement may be reduced or eliminated.  Moreover, ongoing periodic prior art searches are also advantageous to determine if any new patent filings or granted patents now exist in areas previously free of patent protection.  By staying informed of any new patent filings in your relevant areas of technology, you can continually operate your business with a reduced risk of infringing any such patents.

Additional Uses for Prior Art Searches

Prior art searches may be conducted not only before or during prosecution of a patent application for the reasons discussed above, but also periodically even after your patent has issued.  In some cases, if prior art found during a prior art search after your patent issues raises a concern of its invalidity, a reissue application can be filed to disclose the newly found references to the Patent Office and allow an examiner to review your patent in light of these new references.  While the negative to this approach is a risk that the examiner may find the previous patent invalid because of the newly disclosed prior art, such a result could also prevent the expense associated with attempting to enforce a patent that would eventually have been found invalid.  However, if the reissue patent is granted after review of the newly discovered references, that reissue patent is now typically stronger than the original patent.

Prior art searches can also be used to identify potential infringers of your issued patent.  For example, prior art searches performed after your patent is issued can find potential infringers of your patent by identifying those trying to patent ideas that are very close to your patented idea.  These infringers or potential infringers can then be informed of your patent, which can give rise to a potential claim of willful patent infringement if they continue infringing your patent after such notification.

Prior art searches can also be utilized to determine the patent strategy of your competitors.  For example, a prior art search may show that a competitor always files patent applications in a certain country before filing international patent applications that are then eventually filed in the United States.  After discovering this strategy, a periodic prior art search of patent applications filed by the competitor in that initial country can give you an upper hand in knowing the focus of your competitor’s technology, as well as their ongoing patent strategy.

For all of the reasons discussed above, there are significant advantages for clients to have prior art searches performed before filing a patent application, during prosecution of patent applications, and even periodically after the issuing of your patent.  Moreover, prior art searches can be advantageously conducted even if you have no granted patents of your own in order to determine the scope of patent coverage in certain technology areas.  If you are interested in discussing the advantages of prior art searches or any of the other topics addressed in this article, please call or email us to see how we may be of assistance.

Cease and Desist Letters After TC Heartland—Best Practices

By Vince Allen

The Supreme Court recently reversed over 20 years of Federal Circuit precedent that allowed patent infringement suits to be filed anywhere that the court could exercise personal jurisdiction over the defendant.  So long as, for example, the infringing product was sold in the district, venue was proper there.  As a result of the liberal interpretation of the venue rules, the Eastern District of Texas became a popular forum for patent infringement cases, with more cases being filed there than any other district in the country.

Subsequently, new decisions regarding the inconvenience of a forum required the trial court to transfer the case if it was found to be clearly more convenient for the parties for the case to be heard elsewhere.  But now, after the Supreme Court’s TC Heartland decision, a patent infringement suit can only be filed against a corporate defendant either 1) where the defendant is incorporated or 2) where the defendant has a regular and established place of business and has committed acts of infringement.

The Supreme Court’s decision has resulted in a decline in filings in the Eastern District of Texas and a rise in filings in the District of Delaware where many companies are incorporated.   Motions filed in numerous cases have resulted in disputes over what is a “regular and established place of business” under the patent venue statute, and it will be some time before the specific parameters of the venue statute are defined.  But in the meantime, we know that the venue in many patent cases will be limited depending on where the defendant is doing business.

Historically, patent owners have been reluctant to send detailed cease and desist letters to alleged infringers in many cases because of fear that the infringer might file a declaratory judgment action in the venue of its choice seeking a finding of non-infringement and/or invalidity of the asserted patent.  However, this may be changing after the TC Heartland decision given that the possibilities for venue are more limited for those infringers who do not have places of business around the country.

Knowing this, the concern of a declaratory judgment action being filed in response to a cease and desist letter will be lessened in many cases, which may lead the patent owner to include more specifics about the infringement in the cease and desist letter.  The patent owner may not even have the option of choosing a forum like the Eastern District of Texas to file suit before sending the letter.  Likewise, the infringer will know this as well and is less likely to incur the expense of filing a declaratory judgment action.

Assuming that the patent owner does send more detailed allegations of infringement in its cease and desist letters, this could help the patent owner support a claim of willful infringement which provides enhanced damages in a patent infringement suit.  So when receiving such a letter, it is prudent to seek advice of counsel regarding the allegations of infringement and secure an opinion of counsel if necessary to help prevent a later finding of willful infringement.  The court in making an willfulness determination will look at the actions taken by the accused infringer to determine the subjective intent of the infringer in a willfulness determination.  By taking prompt measures to determine that the patent is not infringed and/or that it is invalid, the infringer can likely avoid a finding of willful infringement.

Clarifying the Distinction Between the “Inventive Concept” and “Patentability” Requirements When Determining Patent-Eligible Subject Matter

By James Ortega

In the continuing wake of the U.S. Supreme Court’s attempt in Alice v. CLS Bank to define what is eligible to be the subject matter of a patent, two recent decisions have been issued by the Federal Circuit that provide an important piece of the puzzle the Supreme Court left us with more than two years ago. In the Alice decision, which held that abstract ideas merely implemented using a computer are not eligible for patent protection, the Supreme Court created an “inventive concept” requirement in its two-part test, which requires the finding that a claim either is not directed to an abstract idea, or that if it is so directed, the claims recite “something more” than what has been done conventionally. Although Congress had seemingly removed any “inventiveness” requirement from patent law decades ago, its resurrection in Alice has caused confusion as to what exactly is needed to meet this new “inventive concept” standard. Numerous district courts, as well as the Patent Office itself, have equated an “inventive concept” with satisfying the patentability requirements of novelty under 35 U.S.C. § 102 and nonobviousness under 35 U.S.C. § 103. The two recent Federal Circuit decisions help shed light on whether the patent eligibility analysis under § 101 and the Alice decision implicate the novelty determination under § 102 and/or the nonobviousness determination under § 103.

The first of these decisions is Bascom Global Internet Services Inc. v. AT&T Mobility LLC, decided June 27, 2016. The Federal Circuit reversed a Northern District of Texas court’s decision that found patent-ineligible Bascom’s patent claims directed to an internet filtering system located on a remote ISP server that associates each network account with (1) one or more filtering schemes and (2) at least one set of filtering elements. The district court held that “filtering content” is merely an abstract idea, regardless of whether the content being filtered is provided on the internet or through older mediums such as books. However, the Federal Circuit recognized this as yet another reviewing entity overly simplifying a patent’s claims so that it can meet the still-undefined term “abstract idea.” More specifically, the district court had found that the claims at issue did not contain an “inventive concept” under the second step of the Alice analysis.  In so finding, the district court stated that each individual claim element was a well-known, generic computer component or standard filtering mechanism, and that even the combination of these elements was not “inventive” because filtering software and the use of ISP servers to filter content was well known.  In sum, this district court proved once again that most patent reviewing entities still confuse the term “inventive concept” from the Alice decision with “patentability,” which is probably the most glaring problem created by the Supreme Court in the  Alice decision. 

In an analysis that has been asserted by countless patent practitioners since the Alice decision, the Federal Circuit in Bascom condemned the district court’s analysis that it “looks similar to an obviousness analysis under 35 U.S.C. § 103.” This well overdue acknowledgment of the district courts’ (and the Patent Trial and Appeal Board’s) inclusion of an obviousness analysis into step two of the Alice test makes clear that the patent-eligibility inquiry of § 101 does not include the obviousness analysis of § 103.  In elaborating on what is required during an analysis under step two of the Alice test, the Federal Circuit held that step two cannot be satisfied merely by conclusory statements regarding the prior art, explaining that the “inventive concept inquiry requires more than recognizing that each claim element, by itself, was known in the art.”  The court went on to state that “an inventive concept can still be found in the non-conventional and non-generic arrangement of known, conventional pieces.”  Unfortunately, these statements follow the reasoning of the Supreme Court in KSR v. Teleflex, 550 U.S. 398 (2007), which was a decision under the obviousness standard of § 103 and not § 101.

So unfortunately, after condemning the district court for conducting an obviousness-style analysis under the Alice test, the Federal Circuit used reasoning from a prior holding directed only to an obviousness inquiry.  Thus, what was almost a completely positive decision for patent owners, became another decision conflating the “inventive concept” of the Alice decision with an obviousness type determination. While the Bascom holding at least helps patent owners by making clear that a more thorough analysis under step two of the Alice test is required, the Federal Circuit has proven that even it  does not understand that § 103 is a different section of the patent statute from § 101 and thus not only requires a separate analysis, but  also a recognition that obviousness determinations have no place in a § 101 analysis.

The most basic canons of statutory construction make clear that one statute cannot be interpreted in a way that obviates another statute.  Requiring an obviousness inquiry in a § 101 analysis eliminates the need for § 103 and therefore that interpretation cannot be correct.  It would seem then that the search for an “inventive concept” as required by the Supreme Court in Alice is not the search for a “patentable invention” (which includes satisfying §§ 102, 103 and 112, in addition to 101), but is simply the search for an attempt by an inventor to claim a concept that is more than the implementation of an abstract idea on a computer, but still may later be found obvious or not novel.

After the Bascom decision, the Federal Circuit decided McRO Inc. v. Bandai Namco Games America Inc., on September 13, 2016.  McRO provided the opportunity for the Federal Circuit to clarify that its use of the language from the KSR decision in a § 101 analysis should not be interpreted to mean that such a nonobviousness analysis should be used when determining patent-eligibility. 

In McRO, the Federal Circuit reversed a Central District of California court’s decision that found patent-ineligible McRO’s claims directed to automating the matching of audio to three-dimensional computer animation of mouth movements to provide lip-synchronized animation.  The district court analyzed the claims under a “point-of-novelty” style test, and the judge determined the claims’ “point of novelty here is the idea of using rules, including timing rules, to automate the process of generating key frames.”  But because the claims did not identify what those specific timing rules were, the judge found that “the claim merely states ‘an abstract idea while adding the words ‘apply it.’”  In overturning the district court, the Federal Circuit distinguished between eligible and ineligible types of computer-based automation.  Specifically, if automating a previously manual process simply involves programming a computer with the exact same steps as the manual process, such a process will be considered abstract, and thus such claim(s) would be patent-ineligible.  But if, by automating a process on a computer, new steps must be developed that did not exist before, then the process will be considered new and not abstract so long as those specific, new steps are actually recited in the claims.  “It is the incorporation of the claimed rules, not the use of the computer, that improved the existing technological process by allowing the automation of further tasks,” the court found that it was different from the invention in cases like Alice, “where the claimed computer-automated process and the prior method were carried out in the same way.”  And importantly, this is this case even if the computer being used is a “general-purpose computer.” 

So although the McRO decision provided patent practitioners with a valuable decision regarding software-type patent claims, it also included this novelty-style analysis in reaching that holding.  While this appears at odds with the Federal Circuit’s Bascom admonition not to conduct a § 103 obviousness analysis as part of the § 101 eligibility determination, it appears that the court may have been simply using novelty to show that the invention was not an abstract idea. .  If we assume that Bascom did in fact hold that a § 103 analysis should not be done during an Alice test, then it should follow that a § 102 novelty analysis should also not be part of the § 101 analysis under Alice.  And looking more closely at the court’s reasoning in McRO, it did not actually conduct a full § 102 novelty analysis when determining that the software claims at issue included process steps not included in the previous manual approach to the audio matching process.  Instead, the court simply stated that claims at issue required additional process steps necessary for computer automation that were not shown to be part of the prior manual process.  Therefore, the McRO decision could be read to mean that the identification of additional steps required for computer automation of a process, that was not performed in the original manual process(es),  is evidence that the claims do not simply recite an abstract idea.

This interpretation of both Bascom and McRO would comport with a separation of the analyses under the different sections of the patent statute, and thus that a patent owner need not prove that those additional recited steps not found in the prior manual process are also novel and nonobvious under the requirements of §§ 102 or 103.  As a result, patent owners should at the least proceed with process claims that do not simply recite the use of a computer as a tool to automate the same steps of a conventional activity, and instead recite an automated process that has specific additional (or alternative) steps from what had been manually done before.  And importantly, the flip-side of this interpretation should also hold true – that specific limitations in a claim that distinguish the invention from the prior art not only overcome concerns under §§ 102/103, but can provide the additional benefit of making the claims so specific that they should not be considered abstract.  Thus, if those recited additional or alternative process steps are also novel and nonobvious over the prior art, then the likelihood the claims will be found to satisfy § 101 will be further increased.

Delay Might Put Patent Ongoing Royalties and Injunctive Relief at Increased Risk

By Shaukat Karjeker

Plaintiffs in patent cases are entitled to damages stretching back six years from the date of filing the suit for patent infringement under the Patent Statute, 35 USC § 286 — unless these were barred by laches.  This has been the law for over 20 years, since at least Aukerman,[1] which held that the defense of laches is applicable to bar past patent damages, even within the six-year statutory damages limitation period.  Laches arises when it is established that there was (1) an unreasonable delay in bringing the suit, and (2) the defendant suffered material prejudice attributable to the delay.  Aukerman did not allow a court to take into account laches when deciding prospective relief, such as an ongoing royalty or an injunction.  Now, the facts that support laches can be taken into account when a court weighs factors to decide on appropriate prospective relief.

This change is premised in large part on reconsideration based on the Supreme Court’s recent Petrella[2] opinion, which held that a copyright plaintiff was not barred by laches, despite a long delay in filing suit, and that laches could affect prospective relief.  This holding motivated plaintiff SCA Hygiene, whose patent damages had been barred by laches, to seek en banc review of the appropriateness of this ruling in light of Petrella.

The SCA Hygiene[3] Court was presented with two questions to consider.  These questions may be simplified as follows (with answers of the en banc panel majority):

1.       In light of Petrella, should laches be barred as a defense to a claim for damages that is brought within the 6 year damages limitation period of 35 USC 286?  (SCA Hygiene answered: No, it is an available defense in this period.)

2.       In light of there being no statute of limitations in patent cases, and in view of Supreme Court precedent, should the defense of laches be available, under some circumstances, to bar an entire suit for either damages or injunctive relief?  (SCA Hygiene answered: Absent “egregious circumstances,” when injunctive relief is appropriate, so are ongoing royalties.)

Because the petition for en banc rehearing was motivated by Petrella, a brief review of Petrella, as it is explained in the SCA Hygiene opinion, is helpful to understand the rationale of SCA Hygiene. 

Paula Petrella, the daughter of the author of the screen play Raging Bull,” filed suit for copyright infringement about nine years after her last communications with MGM on the issue.  MGM moved for summary judgment based on laches, due to the long delay.  The trial court and the Ninth Circuit Court agreed with MGM, but the Supreme Court reversed.  Relying on the statute of limitations in the Copyright Statute, 17 USC 507 (b),[4] the Court said that the equitable defense of laches could not bar the suit as Congress had set the time limit.  Nonetheless, the Court indicated that if Paula Petrella prevailed on the merits, the court could take into account the delay in assessing the amount of damages and any injunctive relief.  The Court took no position on the applicability of its opinion on patent law, but did note that “the Federal Circuit has held that laches can bar damages incurred prior to the commencement of the suit, but not injunctive relief.  We have not had occasion to review the Federal Circuit’s position.” (emphasis added)  This set the stage for SCA Products to seek en banc review of a summary judgment in the patent suit that applied laches to deny it recovery of damages, to determine whether the Petrella ruling might apply to patents as well.

At the outset, the SCA Hygiene majority points out that the Patent Statute, 35 USC § 286, is a limitation of time within which to recover damages, and is not a statute of limitations which sets the time limit for filing the suit.  Perhaps recognizing that the case was likely to proceed to the S. Court next, the SCA Hygiene majority engaged in an extensive analysis of the defenses to infringement in 35 USC § 282, legislative history, prior case law precedent, treatises, the distinction between equity and law and the 1938 merger, and the distinction between laches and equitable estoppel.  Based on this analysis, the SCA Hygiene majority concludes that laches, albeit an equitable defense, is applicable against legal relief, such as monetary damages, in a patent suit.

In its final “major” distinction between patent and copyright law, the SCA Hygiene majority noted that a copyright infringer must “copy” which means that it is not an “innocent” party, whereas patent law allows no defense of “innocence” of copying.  The majority reasoned that a copyright infringer is “typically aware of a risk that it is infringing and can estimate its exposure when making its initial investment decision.”  However, the majority opines that the patent infringer has a different risk calculus.  Using a medical device example where a company invests millions in development and marketing, only to have a patentee emerge years later to claim damages based on the 6 most profitable years.  Thus, the majority concludes that patent law, where independent invention is no defense, should retain laches as a defense to tardily filed law suits.

The SCA Hygiene majority then proceeded to consider prospective relief, and to re-examine its earlier Aukerman opinion in light of Petrella and the Supreme Court’s eBay[5] opinion (as it relates to injunctive relief).  SCA Hygiene first noted that in Aukerman it had relied in part on the Supreme Court’s Menendez[6] opinion (relating to laches in a trademark context).  In so doing, Aukerman, to preserve a “bright line distinction” between laches and estoppel, held that laches only relates to tardiness and cannot bar prospective relief.  Aukerman therefore allowed that the defense of estoppel, which does not necessarily involve delay, might be available prospectively.[7]  It is this Aukerman “bright line” separation between laches and estoppel in the context of prospective relief that the SCA Hygiene panel now revisits.

Conceding that Menendez allows for the possibility that laches could foreclose injunctive relief, the SCA Hygiene majority rejects Aukerman’s “bright line distinction” between laches and estoppel.  The SCA Hygiene majority, instead, adopts the approach that, insofar as the act of infringement is ongoing, the eBay factors that are used to determine whether or not injunctive relief is appropriate must weigh the facts underlying laches as well.  The former bright line separating laches and estoppel in the injunctive relief context is no more.  The majority said:

[I]n sum, we must recognize the difference between . . . estoppel and laches . . .  Whereas estoppel bars the entire suit, laches does not.  . . . laches in combination with the eBay factors may in some circumstances counsel against an injunction.  However, a patentee guilty of laches typically does not surrender its right to an ongoing royalty.

The SCA Hygiene majority recognized that the test for estoppel is “more exacting” than the test for laches.  Consequently, it could be argued that defendants gain an “edge” now that facts that relate to laches (time delay) must be weighed in deciding injunctive relief in patent cases.  But, the majority also expressed the view that “absent egregious circumstances,” when injunctive relief is appropriate, the patentee remains entitled to ongoing royalties.  An appeal to the Supreme Court is expected.


[1] Ac Aukerman Company v. RI Chaides Construction Co., en banc, 960 F.2d 1020 (Fed. Cir. 1992).

[2] Petrella v. Metro Goldwyn-Meyer, Inc. 134 S. Ct. 1962 (2014); 2014 U.S. Lexis 3311.

[3] SCA Hygiene Products LLC, et al. v. First Quality Baby Products et al., en banc, (slip op. September 18, 2015) ___U. S.____( 2015)

[4] 17 USC 507 (b) No civil action shall be maintained under the provisions of this title unless it is commenced within three years after the claim accrued.

[5] eBay Inc. v. MercExchange LLC., 547 U.S. 388 (2006); 126 S. Ct. 1837; 2006 U.S. LEXIS 3872.

[6] Menendez v. Holt, 128 US 514 (1888).

[7] For estoppel, it must be established that statements or conduct of the plaintiff were misleading so as to give the defendant the impression that plaintiff would not disturb the defendant, and the defendant relied upon this such that it would be materially prejudiced, if the claim proceeded.

The Proposed Unified European Union Patent System

by James H. Ortega and Elizabeth M. Dale

The European Patent Organization has been developing a unified European Union (EU) patent system, which will include both a unitary EU patent, issued from the European Patent Office (EPO), as well as a Unified Patent Court (UPC) for harmonized enforcement of unitary EU patents.  Although a specific date for implementation of the proposed system has not yet been established, it is presently hoped that it will take effect in early 2017.  Thus, the upcoming implementation requires patent practitioners involved in European patent practice to become familiar with the system in order to properly advise their clients.

Under the current European patent system, an applicant files a patent application at the EPO; this application can be a so-called “direct” European application – being a first application for an invention, or claiming priority to a prior application filed in any other country – or it may be filed as a European regional phase application stemming from an application filed under the Patent Cooperation Treaty (PCT).  The EPO provides a centralized search and examination of the application, and if allowed, grants a European patent nominally covering all European states for which the application was designated, extended or validated.  So, a granted European patent can be considered to be a “bundle” of national patents.  The patentee must then choose which countries he wishes his European patent to cover and must follow the specific steps required by each country of interest.  Only in those countries where this has been done will the European patent be enforceable.

Unfortunately, there are a number of disadvantages to this approach, most of them related to the fragmented nature of the grant and enforcement process.  For example, each country has its own rules regarding translation, with several requiring the patentee to translate the whole patent into an official language of that country.  Also, each country will typically demand a separate annual renewal fee that must be paid to maintain the enforceability of the patent in that country.  Moreover, post-grant procedures vary between different countries, and need to be conducted in each country, sometimes requiring the input of a local attorney.  Similarly, enforcement proceedings against infringers must be conducted separately in each individual country, as well as revocation proceedings for invalidating a patent once the 9-month period for centrally opposing a European patent has expired.  Still further, in addition to the potential uncertainty caused by different results in each country’s judicial system, the potential for different results typically leads to “forum shopping.”

In an effort to combat these deficiencies, the EPO has proposed the new unitary EU patent and accompanying UPC system.  Specifically, the goals of the newly proposed system seek to create a more cost-effective patent process and a single enforcement forum across EU member states.  In addition, the combined system is intended to provide symmetry in patentability standards, as well as symmetry in enforcement and interpretation of prior and future EPO and judicial decisions.  The proposed unitary patent system has been accepted by 26 of the 28 EU countries (with Spain and Croatia not yet joining), and goes into effect for the participating countries on the date the Agreement on a Unified Patent Court is put into force.  The Agreement on the UPC system has been signed by 25 of the 28 EU countries (with Spain, Poland and Croatia not yet participating), and will enter into force on the first day of the fourth month after the 13th participating country has officially ratified the Agreement (these 13 countries must include France, Germany and the United Kingdom) or  on the first day of the 4th month after the date of entry into force of the amendments to Regulation (EC) 1215/2012 concerning the Agreement, whichever is later.  At present, 8 of the 25 agreeing countries have officially ratified the Agreement, including France.  Currently, the UPC Preparatory Committee is reviewing the 18th draft Rules of Procedure, and they are predicting that the UPC system will commence in early 2017.

THE UNITARY EU PATENT

To achieve the aforementioned goals, the EPO has proposed the unitary EU patent procedure.  As with the current EPO system, a single European patent application is filed and examined by the EPO.  The difference would be at grant: once a unitary patent is granted, it would automatically be valid in each of the participating EU countries.  It should be noted that a unitary patent would not be recognized by non-EU countries, such as Turkey, Switzerland, Norway and Hungary, even though those countries are currently party to the European Patent Convention.  European patent validation in those non-participating or ineligible countries would remain under the current rules by individually translating and maintaining the granted European patent in each individual country as now.

Once the unitary patent process is in place, to obtain a unitary patent an applicant simply files and prosecutes a single application at the EPO, as with the current process.  Applicants are not required to choose a unitary patent at the time of filing.  Instead, once the patent is allowed, the applicant then elects whether to receive a unitary patent, or whether the applicant will receive a traditional European patent as under the current rules.  In situations where patentees wish to validate their patent in countries participating in the unitary patent scheme as well as non-participating countries, they will have both a unitary patent and traditionally-obtained national patents.  Also, there are simplified translation requirements for unitary patents.  Specifically, if prosecution of the patent at the EPO was conducted in French or German, then a translation of the patent into English must be provided, and if prosecution at the EPO was in English, a translation into any other official language of the EU must be provided.  However, it is hoped that these translation requirements will expire after 12 years following the unitary patent scheme taking effect, by which time the EPO hopes machine translations will be of sufficient quality.  For complete reference, practitioners may find the final full EU Regulation providing unitary patent protection at: http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2012:361:0001:0008:EN:PDF and the final full EU Regulation providing for the translation arrangements at: http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2012:361:0089:0092:EN:PDF

THE UNIFIED PATENT COURT SYSTEM

Enforcement of a unitary patent would also follow a proposed unified judicial enforcement system.  The organizational structure of the proposed UPC system would include a Court of First Instance, a Court of Appeals, a Patent Arbitration and Mediation Center, and a Registry.  The Courts of First Instance would serve as the forums for initial patent invalidity and infringement actions.  The Court of Appeals, which will be located in Luxemburg, will serve as the forum for appeals from a Court of First Instance, and the Patent Arbitration and Mediation Center, with seats in Lisbon and Ljubljana, would provide alternative dispute resolution services for parties.  The Courts of First Instance will include a Central Division (itself split into three) and several Regional and Local Divisions to be spread across Member States.  The Registry will provide a central repository for registration of unitary patents and UPC decisions, and will be based with the Court of Appeals, with sub-registries at each location of the Local and Regional Division courts.

The Central Division will hear cases according to technical discipline, broadly as follows: the court in Paris hearing physics and electrical cases, the court in London hearing life sciences, chemistry and pharmaceutical cases, and the court in Munich hearing mechanical and engineering cases.  The Local Division courts will be specific to certain individual member countries; however, exactly which countries will have a Local Division court has not yet been finalized.  Regional Division courts will be multi-jurisdictional for groups of countries that will not each have their own Local Division court, although which countries will use Regional Division courts, rather than Local Division courts, has also not yet been finalized.  Moreover, as the UPC systems continues to be used, countries employing Regional Divisional courts may eventually create Local Divisional courts, as needed.

Jurisdiction for unitary patent actions will fall to the Local or Regional Division courts where an act of infringement occurred, or where any defendant resides or has its principal place of business, or if no residence or principal place of business is present in a member country, then any place of business of any defendant in a member country.  If no infringement occurred in, and a defendant has no place of business or residence in, a country having a Local or Regional Division court, plaintiffs may file in a Central Division court.  The exception to these forum provisions is that the Central Division courts will have jurisdiction over validity challenges (i.e., a revocation action) that are not counterclaims in an infringement action, although counterclaims of infringement may also be filed by a defendant in such a revocation action at the Central Division, or as a separate action in a Local or Regional Division court.  Additionally, when a revocation claim is made as a counterclaim to an infringement action brought in Local or Regional Division court, the Local or Regional Division court has discretion to hear the revocation counterclaim as well, or to refer the revocation claim to the Central Division.

For the make-up of the new courts, each court, no matter if it is a Local, Regional, or Central Division court, will include a mix of judges (typically sitting in panels of 3 or 5) selected from the country(s) local to the court, as well as European countries not local to that court, in an effort to fairly balance the unified courts.  Applicable law will be determined by a patentee’s residence or place(s) of business; however, German Law will be applied if the patentee does not have a place of business in a member EU country.  The applicable language for a given patent action will be an official language of the Local or Regional Division court, or a language specified by the Local or Regional Division court if a party requests a different language (for example, the language in which the patent at issue was prosecuted or perhaps a language common to both parties to the suit).  In the Central Division courts, the applicable language will be the language in which the patent at issue was prosecuted in the EPO.

Under the currently proposed rules for the new UPC system, patentees will have the option to opt-out of UPC jurisdiction and seek enforcement of their patents, whether validated nationally or with unitary effect, under the current system (i.e., in a national court of a court of validation of the patent).  However, it is intended that the UPC system will eventually have exclusive jurisdiction of EU patents (of all types, unitary and otherwise), but it is unclear exactly when that exclusivity would come into effect.  The period during which patentees may opt-out of UPC jurisdiction will be seven years from the date the UPC system is put into effect, though it may be extended to 14 years after a review.  Whether that period may or will be extended is currently unclear.  When patentees opt-out of the UPC system, they may opt-out for the entire term of the patent, and not simply the term during the seven year opt-out period.  Although patentees may opt-out of UPC jurisdiction for both their nationally validated and unitary patents, and may do so on a patent-by-patent basis, they may do so only if no proceeding before a UPC has begun.  Moreover, patentees will be permitted to opt-out/in multiple times, if desired, unless such a proceeding has already begun in a UPC forum.  A Provisional Application Protocol to the UPC Agreement was signed by member states on 1 October 2015.  This allows early implementation of certain aspects of the Agreement, including practical aspects relating to IT systems and recruitment of judges.  For complete reference, practitioners may find the complete Agreement on a Unified Patent Court at: http://documents.epo.org/projects/babylon/eponet.nsf/0/A1080B83447CB9DDC1257B36005AAAB8/$File/upc_agreement_en.pdf

ADVANTAGES AND DISADVANTAGES

The proposed advantages of receiving a unitary patent are in line with the stated goals of the new system mentioned above.  Specifically, a unitary patent would eliminate the need for translating a granted patent into the language of each country where it will be validated, and thus translation costs can be significantly reduced.  Also, a single renewal fee is all that must be paid to maintain the unitary patent, and the fee is to be set at the cost of renewing a European patent in the UK, France, Germany and the Netherlands (which are the 4 most frequently validated countries).

A central forum for enforcement or attacking a unitary patent will also relieve applicants from having to assert or defend their patent(s) in each country, which should significantly reduce such costs in those cases where a large number of countries is implicated.  Likewise, a single injunction for all 25 member countries will also be available to applicants, again without the need and associated costs of pursuing an injunction in each country.  Finally, and perhaps most importantly, a centralized judicial enforcement system would theoretically provide symmetry in the case law, including standards for patentability, infringement, invalidity, and claim construction.

Despite the numerous advantages proffered for the new unitary system, skeptics and opponents point to a number of potential disadvantages of the new rules.  For example, a single renewal fee could prove to be cost-prohibitive for those patentees who, at the time of grant, may only be interested in a few countries or who typically choose only the UK, France or Germany where there are no further translation requirements.  Proprietors may be wary of choosing to expose their patent to central attack beyond the EPO’s opposition period.

Another significant concern is a potentially confusing enforcement process.  For example, significant language concerns based on the language selection rules for enforcing or challenging a patent discussed above have been raised.  These language concerns include the potential for conducting proceedings in a language different than the language used to prosecute the patent, which can implicate significant claim and specification translation issues.  In addition, conducting proceedings in a language foreign to a patentee and/or inventor(s) of a patent can alienate persons that may be material witnesses in the proceeding.

Another concern is the potential for bifurcated validity & infringement cases when validity is initially challenged in the Central Division courts.  Additional confusion, or even inconsistent result, can occur when the applicable law for a particular matter are applied in a court or by judges that are unfamiliar with those particular laws.  The potential for increased cost of enforcement is also a concern to many.  For example, translation costs in validity challenges or enforcement proceedings may be required when they would not have been under the traditional EPO system.  Similarly, obtaining counsel or legal experts in applicable laws and/or counsel or technical experts fluent in particular languages may also increase expense in proceedings under the UPC system.

CONCLUSION

The proposed unitary patent and UPC systems offer an interesting, if not necessary, solution to an often expensive and tedious current system requiring the translation, validation, fee payment (validation and renewal), and enforcement in each individual country.  The unitary patent will allow simultaneous validation in all member countries with the payment of a single validation fee (and single annual renewal fee), along with limited translation requirements and associated costs.

While the disadvantages of the size of the single fees and the lack of unitary validation in all EU countries (at least for now) has created some opponents to the unitary patent, there appears to be more opposition to the proposed UPC system.  Although a unified judicial system promises symmetry in both legal standards and judicial decisions, the applicable law and applicable language provisions of the UPC system seem cumbersome, uncertain and expensive, which many patentees may ultimately find unworkable or simply undesirable.  So just which patentees should consider employing these new systems will likely be a case-by-case determination.

Because an opt-out provision is provided, patentees who conduct all or a majority of their business in a number of the member countries may still find the unitary patent process an easy and cost-effective solution to the current EPO validation process.  In those situations, the typical advice being given to such patentees is to take advantage of the unitary patent process, while deferring use of the UPC system until there has been some time to work out potential problems.  However, for those patentees who would not typically validate a patent in more than 4 or 5 member countries, the unitary patent process is likely unnecessary and too expensive.