Unitary Patent Protection for Plant Innovations
In June 2023, the Unitary Patent Package came into effect, introducing a Unitary Patent and a Unified Patent Court. To understand the impact of its implementation and operation, Fleur Tuinzing-Westerhuis, Counsel at Houthoff (The Netherlands), has prepared this interesting report that will enable us to comprehend the impact of this new regulation on the innovation of plant breeders.
The Unitary Patent Package
With effect as of 1 June 2023, the Unitary Patent Package entered into force, consisting, amongst other things, of the Agreement on a Unified Patent Court ("UPCA") and the Unitary Patent Regulation ("UP Regulation"). The plant breeding industry is already accustomed to protecting their varieties with EU-wide rights based on the Community Plant Variety Right Regulation ("Basic Regulation"). But now also plant-related innovations, such as resistance traits, breeding technologies or treatments, can be protected with one single right that has effect in all participating Member States of the UPCA.
Under the European Patent Convention ("EPC"), plant varieties as such are excluded from patentability. The same applies to essentially biological processes and plants obtained therefrom. In the well-known Broccoli and Tomato cases, the Enlarged Board of Appeal of the European Patent Office ("EPO") held that the addition of technical steps to assist or enable the classical breeding process does not make it a patentable process. However, the process is not excluded from patentability if it includes an additional step of a technical nature, which step by itself introduces a trait into the genome or modifies a trait in the genome.
In such an event, the introduction or modification of that trait is not the result of mixing the genes of the plants chosen for sexual crossing. If for example a plant has been developed by using a mutagenesis technology (random or targeted, such as CRISPR-Cas or other gene editing technologies), a patent can be obtained, provided -of course- that also the other substantive requirements such as novelty and inventive step are met. Statistics published by the EPO show that over the past years, the number of biotech patent applications is growing steadily.
The Unitary Patent is obtained by filing an application for a European Patent based on the EPC. After the grant, the classic European Patent breaks down into a bundle of national patents. Instead of validating the European Patent at national level, the patent holder can obtain a European Patent with a unitary effect. Unlike a Community Plant Variety Right, the Unitary Patent does not cover the whole EU territory. Currently, 17 of 27 EU Member States participate in the Unitary Patent system.
Spain and Poland are amongst a number of EU countries that have decided not to join the system at this stage. For these countries, and other non-EU EPC member states (such as the UK), the holder must validate the European Patent for the respective national territories.
Unified Patent Court
To assure cost-efficient and effective enforcement of Unitary Patents, a new specialized court has been established: the Unified Patent Court ("UPC"). In case of an EU-wide infringement, a classic European Patent has to be enforced on a country-by-country basis. The holder of a Unitary Patent can obtain an injunction for all participating Member States of the UPCA with only one infringement action. Furthermore, it is possible to involve multiple parties in the same proceedings that have a commercial relationship and are involved in the same infringement.
The Central Division of the UPC is seated in Paris and has sections in Munich and Milan. The Central Division will have competence inter alia in respect of revocation actions and actions for declarations of non-infringement. The cases brought before the Central Division will be distributed between these locations on the basis of the IPC classification. Most cases relating to plant innovations will be heard by the Milan section of the Central Division. The UPC furthermore consists of local and regional divisions, dealing with infringement claims and related defences, and counterclaims for revocation.
Opt-out or stay in?
The UPC has exclusive jurisdiction over Unitary Patents. It also has jurisdiction over classic European Patents that have not been opted out of the system. During a transitional period of seven years, as of 1 June 2023, the patent holder can decide to opt-out of the unitary system and keep things as they are. Despite the economic benefits for patent holders, recent statistics show that a substantial part of the patents (roughly about 1/3) have been opted-out of the unitary system. A frequently heard reason for opting-out is the fear for a central attack: enforcement has become more efficient, but the other side of the sword is that the patent owner risks losing protection in the whole unitary territory in only one revocation action. Most companies take a 'wait and see' approach. It will be possible to withdraw the opt-out at any time. This strategy is not without risk, as it will no longer be possible to withdraw the opt-out after an action has been brought before a national court in the meantime. There are valid pro's and cons for patent holders to opt-out of the system or to leave their patents in. It is to be assessed on an individual patent basis what is most favourable, taking all relevant factors into account.
Breeder's exemption under the Unitary Patent System
One of the main principles under UPOV is the breeder's exemption, allowing breeders to use plant material of protected varieties for the development of new varieties. These activities generally do not fall in scope of a research exemption under most national patent laws. The UPCA introduces a 'limited' breeder's exemption, pursuant to which parties are entitled to use biological material for the purpose of breeding, or discovering and developing other plant varieties. The exemption is limited in the sense that a license will be required for the production and commercialization of the new plant variety, if the plants fall in scope of the patent. This is largely in line with CIOPORA's position on patents for plant related inventions. The same exemption has been implemented in the national laws of a number of EU member states, including Germany, France, Switzerland, Belgium and the Netherlands. Under the unitary system, access to plant material is secured for further breeding.
Licensing Unitary Patents
Unitary Patents can be licensed for the whole unitary territory or parts thereof. The UPCA provides that besides the holder an exclusive licensee can bring actions before the UPC. If this is not desirable, the parties can make different arrangements in the license agreement. To encourage patent holders to exploit their inventions by licensing them out to third parties, patent holders can file a license statement with the EPO in return for a reduction of the renewal fees of 15%.
At this stage, there are many uncertainties about if and how biotech companies will use the unitary system in practice, and which types of cases will be brought before the UPC the coming years. However, there will likely be an increase of patents relating to pant innovations. By introducing a breeder's exemption, the unitary system secures access to biological material for further breeding. Furthermore, the licensing statement may be an incentive for the creation of new licensing platforms, such as the ILP or ACLP that are used in the agricultural sector.
 Agreement on a Unified Patent Court (2013/C 175/01) of 19 February 2013.  EU Regulation No 1257/2012 of 17 December 2012 implementing enhanced cooperation in the area of the creation of unitary patent protection.  EU Regulation No 2100/94 of 27 July 1994 on Community plant variety rights.  Convention on the Grant of European Patents (European Patent Convention) of 5 October 1973, as revised by the Act revising Article 63 EPC of 17 December 1991 and the Act revising the EPC of 29 November 2000.  Article 53(b) EPC.  Rule 28(2) Implementing Rules and decision of the Enlarged Board of Appeal dated 14 May 2020, Pepper (G3/19).  Enlarged Board of Appeal, 9 December 2010, Broccoli (G 2/07) and Tomato (G 1/08).  Article 33 (1) (b) UPCA provides that an action may be brought against multiple defendants only when the defendants have a commercial relationship and when the action relates to the same alleged infringement.  By Decision of 26 June 2023 of the Administrative Committee under Article 87 (2) UPCA amending the Agreement, it was agreed that the Milan section will handle patents in IPC section (A) Human necessities (without supplementary protection certificates). The decision will take effect 12 months after its adoption.  The costs for a Union Patent are equal to approximately the fees due for 5 EPC countries.  Article 83 (4) UPCA.  CIOPORA's position on patents for plant-related inventions (2017), par. 2.  Article 3 (2) UP Regulation.  Article 47 (2) UPCA provides that the holder of an exclusive license shall be entitled to bring actions before the UPC, provided that he gives prior notice to the patent holder.  Article 8 (1) UP Regulation. According to Article 3 of the Rules of fees, the discount on the renewal fees is 15%.