The Unitary Patent and the Unified Patent Court: engagement with the new European patent system

Introduction

With the second anniversary of the new centralised European patent system approaching, we assess the level of engagement with the new system by applicants for patents in Europe and proprietors of European patents.

The new European patent system consists of two separate but interrelated parts: the Unitary Patent and the Unified Patent Court (UPC).

What is a Unitary Patent?

Historically, European patents granted by the European Patent Office (EPO) were subsequently “validated” nationally in each individual contracting state of the European Patent Convention (EPC).  With the advent of the Unitary Patent and the UPC, applicants interested in protection in a subset of the contracting states of the EPC (currently that subset includes 18 countries) have the choice of a Unitary Patent in place of this “classical” validation.

The benefits of the Unitary Patent include reduced annual renewals and less onerous translation requirements in comparison with classical validation across all 18 countries covered. However, in practice most patent owners did not previously choose such wide protection, meaning that the transition to the new system means a change in strategy for those adopting it without necessarily a reduction in costs.

What is the Unified Patent Court? What is an “opt-out”?

The Unified Patent Court (UPC) is a shared court for the 18 participating member states. The UPC adjudicates disputes relating both to Unitary Patents and to classical European patents (i.e. patents granted by the EPO and validated in the traditional way) for the relevant states. However, for classical European patents only, there also exists the option for the proprietor to “opt-out” of the jurisdiction of the UPC and revert to the national courts.

For further details of the Unitary Patent and UPC system, we refer to our guide here.

Engagement with the new system

Faced with these changes, patent owners in Europe have had additional choices since the introduction of Unitary Patents (UPs) and the UPC in June 2023. Preferences can be discerned from their behaviour in terms of 1) the election of UPs and 2) the number of opt-outs filed.

European patents may be viewed as falling within three different categories: those for which a UP has been obtained, those for which an opt-out has been registered, and those for which neither a UP has been obtained nor an opt-out registered.  Where a patent owner has taken either of these actions, we can say with confidence that they have actively engaged with the system (even if that active engagement is to opt-out for now). Where neither has taken place, it may be that a positive decision to proceed as before has been taken or it may be that a full assessment of the consequences of the new system is yet to be taken. Crudely, then, we might say that higher rates of UP and opt-out registration are suggestive of higher engagement. As we will show below, there are some variations by technology and geography which are interesting in this context.

Overall, an analysis of patents granted since the start of the UPC in June 2023 shows that a UP has been registered for 23% of them, an opt-out for 43%, with the remainder constituting 34%; see Figure 1.  This demonstrates active engagement with the new system for almost two thirds of patents granted since the start of the UPC, with opt-outs numbering a little under twice the number of UPs.

The number of UPs requested since 2023 follows a fairly steady trend of around 7000 per quarter with a minor cyclic variation (see Figure 2).

On the other hand, for comparison, the number of opt-outs filed since 2023 (both for applications and patents), started off at around 30,000 per quarter but has since stabilised at around 10,000 per quarter (see Figure 3).  One reason for the high number of opt-outs in the third quarter of 2023 may be a residual effect of the opt-outs filed during the three-month so-called “sunrise period” before the start of the UPC when opt-outs could be filed in anticipation of the start of the new system.

An overview of the number of UPs registered

According to the EPO’s UP dashboard, to date 56,871 UPs have been registered with the uptake rate amongst EPC contracting states (as well as EU states) around 10% higher than the global uptake rate.  Our analysis shows that around 46% of these correspond to patents with filing dates in the 2020s, while more than half (around 53%) correspond to patents with filing dates in the 2010s.  The remaining 1% correspond to patents with filing dates in the 2000s.

An overview of the number of opt-outs registered

Our analysis shows that the total number of opt-outs registered to date number around 630,000 patents and published applications, of which around 540,000 correspond to granted patents.  Around 5,000 of these opt-outs were later withdrawn (or for around 400 deleted) with around 4,000 of these later giving rise to UPs.

The bulk of opt-outs are in respect of applications with filing dates in the 2010s (around 420,000), with filing dates in the 2000s (around 115,000) and 2020s (around 90,000) coming in next.

A significant number of opt-outs were filed in the sunrise period before the court came into effect. Indeed as shown in Figure 4, the number of opt-outs filed in the sunrise period out number those filed since the start of the new system by almost exactly three to one.

Since the start of the UPC, German and Japanese applicants have filed opt-outs at a lower rate compared with before the start of the UPC; that is to say the ratio of opt-outs filed during the sunrise period compared to opt-outs filed since the sunrise period is higher than the average 3:1 ratio for German and Japanese applicants.  Conversely the ratio for Chinese, Dutch and British applicants is slightly lower; that is, applicants in these countries have filed opt-outs at a slightly higher rate than the average since the start of the UPC compared to before the start of the UPC.  These shifting trends may be related to a difference in levels of engagement with the new system in different countries during the sunrise period as compared with the start of the new system.

Henceforth, in order to facilitate a comparative analysis of the UP and opt-out registration trend, we focus on UPs and opt-outs filed in respect of patents granted since the start of the UPC.

An analysis of UPs and opt-outs by various parameters

Level of engagement on a proprietor basis

Proprietors obtaining the most number of UPs for patents granted since the start of the UPC include Samsung Electronics, Qualcomm, Ericsson, and Siemens.  This reflects the fact that these proprietors are amongst those that have obtained the most number of granted patents since the start of the UPC.

To allow a more useful comparison, Figure 5 shows the proprietors who have obtained the highest proportion of UPs relative to their granted patent portfolio.  A threshold of 400 patents granted since the start of the UPC in June 2023 has been applied for inclusion of a proprietor in the analysis.  The list is dominated by proprietors in EPC contracting states, with Volvo Truck coming on top with more than 80% of granted patents being registered as UPs.  However, interestingly, Ethicon (part of the Johnson & Johnson group) and Qualcomm, both US proprietors, also feature with above-average UP registrations.  Another interesting aspect of the list is that the top ten proprietors include two public research organisations, the German Fraunhofer-Gesellschaft and the French CNRS.

Proprietors who have filed the most number of opt-outs for patents granted since the start of the UPC include Microsoft, Google, Huawei, LG Energy, and Boeing, as well as other Chinese, Korean, US, and Japanese proprietors.  Interestingly, the list of top 12 proprietors filing opt-outs does not include a proprietor from an EPC contracting state

Considering the top proprietors in terms of proportion of patents opted-out in the portfolio of patents granted since the start of the UPC, Figure 6 again shows a largely non-EPC list of companies, with the exception of Nike Innovate, a Dutch registered company.  The proprietors shown in Figure 6 have all opted-out almost all of their granted patents.  This contrasts with the top proprietors obtaining UPs as a proportion of their patent portfolio shown in Figure 5, which shows a more selective approach to obtaining UPs as opposed to the bulk opting-out strategy of some proprietors.

Level of engagement by residence country of applicant

The raw number of UPs and opt-outs registered by country of residence of proprietor follows, perhaps unsurprisingly, the total number of patents granted by country of residence; namely the US, Germany, Japan, China, and France.

However, if we consider the proportion of UPs or opt-outs relative to the total number of patents granted by proprietors of the country in question, a different pattern emerges that is consistent with the distribution of proprietors displayed in Figures 5 and 6.  We consider countries with proprietors that have been granted a total of more than 1000 patents altogether since June 2023.

Figure 7 shows that with one exception, the top six countries are all EPC EU member states.  The proportion of UPs registered for proprietors from Germany, France, China, Korea, US, and Japan is also shown for comparison.  Of the countries included in the analysis (i.e. those with patents numbering more than the threshold of 1000), proprietors from all EPC contracting member states filed UPs at a rate above the average of 23%, with France coming in at the lowest rate for EPC states at 26%.

Figure 8 shows the countries with the highest proportion of opt-outs granted since June 2023.  The US has the highest opt-out rate with around 58% of granted patents opted-out.  The remaining countries with an above-average opt-out rate are all EPC contracting states, which mirrors the trend with UP registrations.  This seems to suggest a higher overall level of engagement with the new patent system in Europe, both positively and negatively.  To highlight this point, Italy and Austria, both participating countries in the new patent system, have both a high UP and opt-out registration rate.  The proportion of opt-outs registered for proprietors from China, Korea, and France is also shown in Figure 8 for comparison.

Level of engagement by technology field

Finally, we consider the level of engagement of the new system in terms of the technology field, specifically the International Patent Classification (IPC) subclass.

For reference, the top five IPC subclasses for patents granted since the start of the UPC are in order H04L (digital communication), G06F (computer technology), H04W (digital communication), A61B (medical technology), and A61K (pharmaceuticals).  The description of the subclasses in the brackets is taken from the WIPO IPC technology concordance table (https://www.wipo.int/ipstats/en/docs/ipc_technology.xlsx).

The IPC subclasses for which the highest number of UPs have been registered are (in order) A61B (medical technology), A61K (pharmaceuticals), and H04L (digital communication).  Subclass H04L includes patents declared as standard essential patents (SEPs) that are subject to FRAND obligations.   The proportion of UPs registered in the top subclasses A61B and A61K is above the average of 23%, while the proportion of UPs registered in H04L is below the average.

For comparison, the IPC subclasses for which the highest number of opt-outs have been registered are (in order) G06F (computer technology), A61K (pharmaceuticals), and H04L (digital communication).  The proportion of opt-outs registered in the top subclasses G06F and A61K is above the average of 43%, while the proportion of UPs registered in H04L is below the average.

For a better insight into the popularity of UPs and opt-outs within IPC subclasses we depict in Figures 9 and 10 the highest proportion of UPs and opt-outs, respectively, for patents granted since the start of the UPC by IPC subclasses.  A threshold of 2000 patents granted since the start of the UPC in June 2023 has been applied for inclusion of a subclass in the analysis.

Figure 9 shows that almost 50% of granted patents in H05K (audio-visual technology) have been registered as a UP.  Patents in subclass B65D (mechanical engineering, handling) also feature a noticeably higher rate of UP registration, with the remaining subclasses featuring a high proportion of UP registration broadly belonging to the fields of pharmaceuticals, biotechnology, and medical technology.

As for the subclasses with the highest portions of opt-outs depicted in Figure 10, the opt-out rate for the top ten subclasses is relatively uniform within the range of around 53-59%.  While C07K (biotechnology) features as the top subclass for rate of opt-outs, as well as C12N (biotechnology) also featuring amongst the top subclasses, the top ten list is dominated by macromolecular chemistry and polymers, and organic fine chemistry.  The technology fields that feature both within the list of subclasses with the highest proportion of UP registration and opt-outs are biotechnology (in particular C07K and C12N) and pharmaceuticals (in particular A61P and A61K).  This suggests a high degree of engagement with the new system across these technology fields, which is perhaps not surprising given the generally high value of patents within these technology fields.

Final remarks

Amongst the variation, it can be seen that engagement with the new system is high. At present, there are not substantial changes in approach over the time in which the system has been in place, but this stability might be seen as a relative success. Fears that the substantial changes introduced by the introduction of Unitary Patents and the UPC might upset the functioning of the overall European patent system have so far proved unfounded. The UPC itself, while still a nascent court, has quickly gathered international respect and as that trend continues it will be interesting to watch how and if proprietors adjust their strategies from the current status quo. Proprietors will also need to bear in mind that opt-outs will no longer be possible from the end of the transition period (currently set for 2030) and that a long-term strategy will need to include a provision for this.