Our Speakers: Rudy I. Kratz Partner; Fitch, Even, Tabin & Flannery LLP. Tony Wray Director and Founder; Optimus Patents Ltd.

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1 Our Speakers: Rudy I. Kratz Partner; Fitch, Even, Tabin & Flannery LLP Tony Wray Director and Founder; Optimus Patents Ltd. August 30, Fitch, Even, Tabin & Flannery LLP

2 First of All... These materials are provided pursuant to the Fitch, Even, Tabin & Flannery LLP Professional Development Program, an ongoing professional growth series intended to encourage peer-to-peer dialogue regarding various matters concerning law and legal practice. Consequently, opinions and views expressed in these materials are not necessarily those of Fitch Even or Optimus, nor do they necessarily represent Fitch Even or Optimus policy or recommended procedure at any given time. The information conveyed is of a general nature and is not intended to address the circumstances of any particular individual or entity. Given that legal advice in this area is very fact-specific and changes from one fact pattern to another, no one should act upon such information without appropriate professional advice after a thorough examination of the particular facts involved in their case. 2

3 Overview of Presentation Patent Filing Routes to Europe National Patents European Patent Office (EPO) Patent PCT Routes National Patent vs. EPO Patent UK and Germany German Utility Model Recent Developments Unitary Patent and Unified Patent Court (UPC) Effect of UK vote to leave EU (Brexit) Examples of Some Filing Strategies 3

4 Patent Filing Routes to Europe Many patent filing routes to Europe 4

5 Patent Filing Routes to Europe Why bother with Europe? EPO has 38 member countries Gross domestic product in 2015 US GDP US$18tn EU GDP US$16tn (26% of the world economy) China GDP US$11tn Population in 2015 US population 320 million people EU population 508 million people Well-established IP systems 5

6 National Patents US Germany France UK National Route Direct filing route to European countries US priority filing One year to file directly in each desired European country Can file separately in over 30 European countries Italy Netherlands 6

7 National Patents Some reasons to use this approach Applicant may already know countries of interest Targeted efficient approach Less delay Disadvantages Not much time to decide where to file Different filing requirements (translations) Separate prosecutions Expensive to file in many European countries 7

8 National Patents Estimates using IP estimator software assuming a standard application Direct national patent filings Annuities are over half of the total lifetime costs EXPENSIVE! EXAMPLE 1 EXAMPLE 2 File in a small number of countries File in Germany, France, and UK Lifetime costs (20 years): Filing, translation, prosecution, annuities Estimate: Germany ($33,267), France ($25,136), UK ($19,897) Total estimate: $78,300 (annuities alone are $48,820) File in a large number of countries File in Germany, France, UK, Belgium, Denmark, Italy, Netherlands, Spain, Switzerland Lifetime costs (20 years): Filing, translation, prosecution, annuities Total estimate: $236,410 (annuities alone are $138,205) 8

9 National Patents Factors to consider Countries to file Applicant Location and size of applicant s markets Potential emerging markets Location of applicant s manufacturing Licensing opportunities Competitors Location and size of competitors markets Location of competitors manufacturing Enforceability (countries with established infringement courts) Cost 9

10 EPO Patent Filing through EPO US priority filing One year to file in EPO Delays decision of selection of European countries Possible validation into over 30 countries Germany France US EPO UK Italy Netherlands 10

11 EPO Patent EPO Members Not EU 38 members 42 total possible states Defer choice of countries until EPO grant 11

12 EPO Patent EPO process and timeline Single application filing Single application prosecution Grant of EPO patent Validation in desired European countries EPO patent may only be enforced in countries where it is validated Applicants have no rights whatsoever in an EPO country (after grant) if they do not validate in that particular country Validation on country-by-country basis A few countries do not require any specific validation acts 3 months after EPO grant Costly to validate in all 38 members estimate of $46,511 Opposition may be filed by third parties up to 9 months after EPO grant 12

13 EPO Patent EXAMPLE 1 (Revisited) Validate in small number of countries Validate in Germany, France, UK Lifetime costs (20 years): Filing, translation, prosecution, annuities Total estimate: $68,797 EXAMPLE 2 (Revisited) Validate in large number of countries Validate in Germany, France, UK, Belgium, Denmark, Italy, Netherlands, Spain, Switzerland Total estimate: $166,278 EPO may be more cost-effective option than filing directly in a large number of countries (more than 2 or 3) 13

14 EPO Patent Most-frequent countries for validation Germany UK France Under one estimate, over 50% of all EPO patents are only validated in DE, FR, GB Some other frequent validation countries: Ireland, Italy, Netherlands, Spain Depends on technology (field of invention) 14

15 PCT Routes Via EPO Add cost of filing PCT application ($3,000 $5,000) Gives most time for choosing European countries (likely at least 5 years after US priority filing) Germany France US PCT EPO UK Italy Netherlands 15

16 PCT Routes Direct from PCT application Add cost of filing PCT application ($3,000 $5,000) Delay decision to months after US priority filing CANNOT FILE INTO SOME COUNTRIES FROM PCT: Belgium, FCyprus, France, Greece, Ireland, Italy, Lithuania, Latvia, Monaco, Malta, Netherlands, Slovenia Germany US PCT UK 16

17 PCT Routes Allows applicant to delay decision on proceeding in Europe until months after the US priority date Filing and search system, not granting system Applicant may have better idea about patentability at months Applicant may have better idea about marketability and commercialization of technology at months Delays translation costs and multiple filing expenses Applicant is buying time to make decision 150 PCT contracting states (not just Europe) 17

18 National Patent vs. EPO Patent 18

19 National Patent vs. EPO Patent EPO Advantages Keep options open, as potentially covers 42 countries with one application Very clear EPO guidelines and some mandatory case law, more reliable decisions, particularly with inventive step. Speed... Slow, so take control if you want a faster outcome Applicant may request accelerated examination (PACE) No fee Receive communications within 3 months Must adhere to reduced time limits to respond during examination Applicant may use the Patent Prosecution Highway (PPH) UKIPO has to grant (or refuse) an application within 4.5 years of filing 19

20 National Patent vs. EPO Patent EPO Disadvantages Independent Claims Generally, EPO does not allow prosecution of multiple overlapping independent claims (limited exceptions) One apparatus and one method independent claim per application May force the filing of divisional applications to cover all independent claims from the US priority application Divisional applications are expensive All past (and relatively expensive) renewal fees are due upon filing the EPO divisional application More flexibility in US Slightly more restrictive than national offices, e.g., Germany and UK 20

21 National Patent vs. EPO Patent EPO Disadvantages Limited Amendment Strict amendment practice re: support from the spec. as filed. More restrictive than Germany and UK... and much less than in the US No intermediate generalization Example: Patent description is of a car with 4 wheels, with no other mention in the description of an alternative mode of transport that could be used in the invention An attempt to modify a claim to include a vehicle would not be allowed An attempt to modify a claim to include a 4-wheeled vehicle would also not be allowed 21

22 National Patent vs. EPO Patent EPO Disadvantages Oppositions Opposition after validation Validations required within 3 months of grant Oppositions can be filed up to 9 months after grant Opposition may invalidate the patent after applicant has paid to validate in selected countries Inescapable trap Claim is amended during prosecution Examiner should not have allowed amendment because not sufficiently supported by disclosure Limitation may not be removable during opposition because that would broaden claim Claim is invalid 22

23 National Patent vs. EPO Patent Estimated Cost Comparison EPO vs. UKIPO Renewal Fees EPO fees in US Dollars (current rate) US Dollars Renewal Fee Year 23

24 National Patent vs. EPO Patent Estimated Cost Comparison Total Fees and Costs (US$) Fees UK & German Applications EPO Application Patent Office fees at filing Patent Office fees after filing $801 $4084 $614 $4266 Translation Costs $2000 $500 Total: US$3415 US$

25 National Patent vs. EPO Patent Summary Table EPO European National Offices (e.g., DE + UK) Total Filing Fees US $4084 US $801 Population Covered 600,000, ,000,000 Opposition Yes Likely only DE Support for Amendments from Spec. Essential Less Strict Speed Slow, if you allow Relatively Fast 25

26 National Patent vs. EPO Patent German Utility Model US applicants are less familiar with this option because US does not have utility models Utility models are available in a number of European countries No EPO utility model No examination of utility model (search is optional) After filing, utility model application may register quickly (e.g., 6 12 weeks) In contrast, patent applications will take years to grant 26

27 National Patent vs. EPO Patent Advantages of German Utility Model Low-cost option: Translation fee, lower filing fee, no examination or search fees, lower maintenance fees It becomes effective immediately It can be used in conjunction with a German patent application to provide both immediate short-term and long-term protection. The DPMA allows an applicant to postpone examination of the patent application for up to 7 years. Damages and injunctive relief are available 27

28 National Patent vs. EPO Patent Advantages of German Utility Model It can be split off from a pending EPO, German, or PCT application and tailored to the product of a known infringer Useful if outcome of examination is uncertain 6-month grace period and non-written disclosure outside Germany is not prior art Can be used in lieu of an expensive EPO divisional application Creates uncertainty for competitors 28

29 National Patent vs. EPO Patent Disadvantages Term is only 10 years from filing date Limited subject matter: May cover products, apparatuses, and substances No method claims With no search or examination, the validity and scope of protection is uncertain In enforcement action, the burden is on the registrant to prove that the unexamined claims of a German utility model are patentable Following publication, a German utility model may be prior art against further development of the invention 29

30 Recent Developments 30

31 Unitary Patent and UPC Unitary Patent Protection Unitary Patent Unified Patent Court (UPC) Effects of Brexit Initially, UK can no longer participate Long-term effect is unknown, as yet? 31

32 Unitary Patent and UPC Unitary Patent Protection File National Applications File EPO Applications EPO Applications 32

33 Unitary Patent and UPC Unitary Patent Single application filed with EPO (UNCHANGED) Single prosecution at EPO (UNCHANGED) Grant of patent by EPO (UNCHANGED) Validation of patent Country-by-country basis (UNCHANGED) classical European patents Possible unitary patent option (NEW) may cover 25 countries 33

34 Unitary Patent and UPC Unitary Patent Protection States participating that have ratified States participating that have not yet ratified EU members not participating Other European Patent members not able to participate at present 34

35 Unitary Patent and UPC Unitary Patent Advantages Provides additional patent option in Europe (national patents, classical patents, unitary patent) Convenience One-stop shop approach Uniform coverage across all 25 countries Cost savings compared to validating separately in more than 4 EPO member states Fewer validation translations Reduced renewal fees Licensing opportunities for a large market 35

36 Unitary Patent and UPC Unitary Patent Disadvantages Subject to central invalidation attack National and classical patents must be attacked in each country Unitary patent can be lost from a single invalidation attack More cost than validating in a few EPO member states All-or-nothing renewal decisions Still need to validate separately in some EPO countries (Spain, Switzerland, Turkey, UK?, etc.) 36

37 Unitary Patent and UPC Unitary Patent and UPC Opt Out vs. Opt In EPO applicants can opt out Their classical EP patents will be subject to national courts Can still opt back into the UPC, but only once UPC will apply to all EPO patents existing, pending, and granted under UPC 7-year transitional period 37

38 Unitary Patent and UPC Unified Patent Court (UPC) Decisions from the UPC affect all ratified member states The unitary patent system cannot proceed until UPC is set up Target date still 2017, although 2018 (or beyond) is more likely Court Structure Trial level court (Court of first instance) Local or regional division infringement actions Central division (Paris, London, and Munich) independent revocation actions Appellate level court in Luxembourg (Court of Appeal... second instance) Courts will be presided over by 3 judges, each both legally qualified and technically qualified Likely language of all proceedings was English Likely that infringement and validity treated separately 38

39 UK Vote to Leave EU Effect of UK Vote to Leave EU (Brexit) No effect on EPO membership EPO is NOT the same as EU EPO has 38 member states EU has 28 member states Applications filed at the EPO can continue to be validated in the UK No effect on UKIPO 39

40 UK Vote to Leave EU Effect on Unitary Patent and UPC Predictions Unitary patent and UPC may go into effect in 2017, as planned? Unitary patent and UPC may go into effect after 2018, initially without UK signing up? Implementation of unitary patent and UPC may be delayed indefinitely 40

41 Examples of Some Filing Strategies 41

42 Examples of Some Filing Strategies Development of Filing Strategies to Address Specific Circumstances Single strategy often will not address different circumstances Some factors to consider Cost concerns Anticipated commercial value of invention Known infringers or imminent infringement Prior art Specific strategy may be developed for each different type of product or business unit 42

43 Examples of Some Filing Strategies Example 1 Least-important inventions Low filing and prosecution costs desired File in Germany and/or UK Biggest markets in Europe Many applicants and competitors have presence in these countries May not be easy for competitors to sell in Europe and avoid these markets Established infringement litigation systems 43

44 Examples of Some Filing Strategies Example 2 Inventions deemed to be of average value Relatively moderate filing and prosecution costs desired File in Germany, France, and UK Cost comparison to EPO (file in EPO instead) Biggest markets in Europe Many applicants and competitors have presence in these countries May not be easy for competitors to sell in Europe and avoid these markets Established infringement litigation systems Consider filing German utility model 44

45 Examples of Some Filing Strategies Example 3 Inventions deemed to be of above-average value Filing and prosecution costs are less of a concern File in EPO Leaves open most options in European countries Largest coverage of potential markets and manufacturing locations Possibility of unitary patent Possibility of German utility model split off from EPO application if applicant becomes aware of potential infringer Possibility of divisional applications 45

46 Thank You! Questions or Comments? Rudy I. Kratz Tony Wray

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