The launch of the new European patent system, consisting of the EU patent and a central Unified Patent Court (UPC), is becoming more and more of a rollercoaster ride. At the time of going to press, the UPC launch was still unclear, after a June 2017 complaint to the Federal Constitutional Court (Bundesverfassungsgericht) put a stop to German ratification for the foreseeable future. But ratification by Germany, the UK, France and ten other participating countries is necessary for the UPC to start operations. Across Europe, large parts of the industrial sector and legal market are in favor of the court and do not doubt that it will be launched in the coming years.
The German UPC laws had already been submitted to the Federal President and were ready for signing when the constitutional complaint brought the process to a halt. The reason behind the complaint is the voting model in the Bundestag and the lacking democratic legitimacy of the UPC agreement. The matter is highly complex and experts expect the ruling to have far-reaching consequences.
While this makes a quick ratification in Germany uncertain, things are looking much clearer in the UK now. Following a period of major uncertainty about the impact Brexit would have on the project in summer 2016, London is aiming to ratify the last of three UPC laws by October 2017, so it can take part in the UPC for the long term. This appears to be legally possible as a non-EU member. But if Brexit negotiations do not result in an agreement over the details, for instance concerning the involvement of British judges at the UPC and London as the home of a local division and parts of the UPC, it is now clear that the remaining 24 UPC countries will seek other ways to launch the court without the United Kingdom.
Despite all of this there is hope. If the Federal Constitutional Court does reach its decision quickly, the court could feasibly launch in 2018. Once in force, experts are saying that the new court would soon be supplied with cases and would be a success. Chemicals, consumer goods and pharma corporates are the potential advocates of the system, mainly because of the possibility for Europe-wide injunctive relief. The auto industry, on the other hand, which traditionally only files its patents in a few countries, is still reacting cautiously to the EU patent and UPC for cost reasons. The biggest supporters of the new court, however, are NPEs.
Germany is now the world’s central port of call for NPE suits, since the legal conditions at the US courts have become far more difficult for such suits. The three main German patent courts, Düsseldorf, Mannheim and Munich, are currently busy with suits by NPEs including Intellectual Ventures, Saint Lawrence Communications (SLC), Unwired Planet and IPCom against the mobile communications industry. SLC above all is enjoying huge success in the form of multiple settlements. Sisvel is still active as well, and successfully contested the ECJ’s precedent decisions concerning the interpretation of FRAND case law at the Düsseldorf Regional Court (Landgericht) and the Higher Regional Court (Oberlandesgericht) against Haier. The next target for the flood of lawsuits by NPEs is the auto industry, with the advent of connected cars.
In Germany, reputable NPEs generally take action based on solid patents. Predatory NPEs taking action against the industrial sector with bad patents would have slim chances before the experienced German patent judges, experts believe.
Even the industrial corporates themselves are seeking out the reliable German courts as a stage for their global patent battles. Nokia and Apple fought in 32 cases, before settling in the early summer. Even Nikon attacked ASML and Carl Zeiss SMT regarding machines for manufacturing storage chips. Both suits have a cross-border dimension, so they are prime examples of potential UPC suits.
UPC proceedings: a growth engine for law firms?
Experts believe that extensive, complex proceedings conducted by large teams will be the norm at the UPC, and German law firms are getting ready for this. Out of the many activities among firms, three trends have emerged:
1. A growing number of patent attorney firms, such as Prüfer & Partner and Viering Jentschura & Partner, are building up their own litigation practices with experienced lawyers. Law firms are no longer shying away from integrating technical expertise into their own ranks. Hogan Lovells caused a stir with employment ads for patent attorneys, who would be responsible exclusively for litigation. Bird & Bird went one step further and, since hiring two patent attorneys from Uexküll & Stolberg in Hamburg, is no longer restricting itself to deploying patent attorneys in litigation and is instead filing patents actively.
2. Up-and-coming litigation firms are growing their teams and bringing experienced laterals on board to boost their expertise: DLA Piper bolstered its partnership with an experienced counsel from Allen & Overy. McDermott Will & Emery managed to do the same with a Loschelder partner. The examples also show how more US and British firms are currently looking to enter the German market, to improve their starting position for the UPC and to compensate for the uncertainty in their domestic markets.
3. Since ever more patent litigation is conducted across Europe, independently from the UPC launch, and clients are requesting international skills, firms are building on their international litigation competence. The frontrunner for this trend is Hoyng ROKH Monegier, whose 2015 launch is considered a success. It was also noteworthy in this respect that a Munich and a Paris Olswang partner decided to set up their own international IP litigation firm, Taliens, after their firm went to CMS Cameron McKenna in the UK.
Internationality, the integration of technical and legal expertise under one roof and raising the team size – the challenges posed by the UPC on firms are immense. Internal debates over the correct UPC strategy can also be explosive, as shown by the developments at Preu Bohlig & Partner. After the entire Düsseldorf IP team spun off as Kather Augenstein at the beginning of 2016, summer 2017 saw a large team specializing in soft IP leave the Hamburg office for CBH Rechtsanwälte. Two experienced patent litigators also went there from Munich. Preu Bohlig & Partner responded quickly and rebuilt its Düsseldorf and Hamburg offices with partners from DLA Piper and Harte-Bavendamm. Similar discussions are keeping virtually all German litigation firms busy and are likely to keep the market in motion. In the new section “European strategy”, JUVE analyzes firms’ setups with regard to litigation before the UPC.
Technical protection rights are of vast importance for companies: patents and registered designs contribute to a company’s economic development. In Germany, two professional groups provide advice on this. Patent attorneys perform what is known as patent prosecution: they file patents and register designs, as well as conducting official proceedings. Lawyers are in charge of litigation in infringement proceedings. Both professional groups litigate in nullity suits and provide advice in connection with protection right strategies and invention rights.