Co-Ownership of Patents: Are Your Co-Owned Patents Ready for the Unified Patent Court?
The Situation: With the introduction of the Unified Patent Court ("UPC") system in Europe, the co-ownership of patents will have material effect on patents with unitary effect ("Unitary Patent").
Action Required: Patent proprietors are well-advised to review and potentially revise co-ownership agreements, sort the order of listed co-applicants in future patent applications, and determine whether existing co-owned patents should be opted out.
Looking Ahead: When filing a European patent application, joint applicants must consider questions of applicable law, so that the most favorable order of applicants is selected for those European patents they wish to convert into Unitary Patents. Also, the role of the future co-owners with respect to the UPC should be clarified at the outset of the cooperation.
When the UPC enters into force (June 1, 2023) and Unitary Patents become available, the current patent grant procedure governed by the regulations of the European Patent Convention ("EPC") will also apply for obtaining a unitary patent. This has consequences for co-owned patents.
The Role of the Common Representative
When determining representation in the case of European patent applications, the European Patent Office looks to the common representative appointed by the joint applicants. If no common representative is appointed, the first-named applicant or proprietor is considered to be the common representative, unless the obligated applicants have already appointed a professional representative (Rule 151 EPC). Already here, the order of the listed co-applicants may become decisive.
For the conversion of a European patent into a Unitary Patent, the formal request must be filed by the "proprietor" of the European patent. In the case of co-ownership, it is important to have agreed on a common representative and whether to request a Unitary Patent. Notably, even if the co-owners agreed on a common representative, proper representation still requires that all patent proprietors have duly signed the request for unitary effect.
The Applicable Law as Determined by the Order of the Co-Owners
For Unitary Patents, the order of the listed co-applicants is then decisive beyond the granting procedure, as it determines which law is applicable to the unitary patent as an object of property. This will determine how the unitary patent can be assigned to other proprietors, what effect licenses will have, and what rights and obligations the co-owners have. Specifically, the first applicant as entered in the European Patent Register in conjunction with its residence or place of business at the filing date will determine the applicable law. If neither the first nor any of the further applicants are domiciled within the territory of the states participating in the UPC system (e.g., being domiciled in the United States, China, Korea, or Japan) nor have any place of business in the UPC territory, then German law will apply.
Importantly, the applicable law as determined on the date of filing will be permanent. It will stay the same even if the applicant transfers the Unitary Patent or later changes its place of business. Considering this, the following should be taken into account for future and already filed European patent applications.
How to Treat Future and Existing European Patent Applications
In the case of future European patent applications with several applicants, the co-owners should carefully consider in which order the applicants are named when filing a European patent application.
In the case of already filed European patent applications, the order of the co-owners cannot be changed. Co-owners should determine whether they convert the patent application upon grant into a Unitary Patent or whether it shall remain a European patent to, for example, avoid unwanted effects of the applicable law on the patent as an asset.
If the patent is not converted into a Unitary Patent, it remains a European patent which may be opted out from the jurisdiction of the UPC. An opt-out requires a joint application by all co-owners. For this purpose, the co-owners must mandate and authorize a joint representative to submit an opt-out (or opt-back-in) request on their behalf. As consent from all co-owners is required, it is recommended that the parties agree on these formalities in a co-ownership agreement and define the responsibilities of the individual parties, ideally in advance, but even in the case of already granted patents. In view of statutory provisions (under whichever applicable substantive law) on a patent as a property right, such as licensing rights, rights to transfer the share in the patent, and rights to exploitation, it is in any event strongly recommended that co-owned applications or patents are governed by a co-ownership agreement.
Three Key Takeaways:
- Joint applicants should pay particular attention to the order in which the applicants are listed in future co-owned European patent applications.
- The co-owners should define a common position or process for deciding on whether or not to seek a Unitary Patent, and whether to opt out of the UPC system.
- Even for already granted European patents, it is recommended to review and potentially amend the existing co-ownership agreement that also defines the strategy for a possible opt-out and opt-back-in of the patents. If no co-ownership agreement exists so far, the entry into force of the new European patent system is one additional reason to put one in place now.