The new unitary patent system makes it more important than ever for Finnish companies to actively engage with patent system

The new unitary patent system will have serious consequences for Finnish companies' freedom to operate both in Finland and abroad. As the unitary patent system rolls out, there will be many more foreign-owned patents in force in Finland than there have been until now, highlighting the need for Finnish companies to take more care in ensuring their freedom to operate as well as investing in and maintaining their own patent portfolios.

Background

Under the existing European patent system, patents granted by the European Patent Office must be "validated" in individual European countries in order to be enforceable in those countries. As a result, a relatively small number of granted European patents end up being enforceable in Finland. This can be seen easily from the statistics: in 2020, the European Patent Office granted approximately 133,000 European patents, of which around 6,600 – around 5% – were validated in Finland.

The new unitary patent is a new type of European patent: a single patent that has legal effect in multiple EU member states, including Finland. The unitary patent does not replace the existing European patent system; it can be thought of as an alternative to national validation in participating countries. Every unitary patent that is granted will be enforceable in Finland (provided that the renewal fees are paid each year).

Outlook

No one expects all of the patents granted by the European Patent Office to be turned into unitary patents. However, even if the initial uptake of unitary patents is as low as 10%, this will represent at least a doubling of the number of new patents in force in Finland each year. Indeed, given that the unitary patent will cover big European economies like Germany and France, it is likely to be an attractive option and 10% seems like a very low estimate in the long term, even if the initial uptake is cautious.

To estimate the long-term situation, consider the statistics for Germany, where 742,636 European patents were in force in 2021. In the same year in Finland, 50,370 European patents were in force. If it is assumed that the long-term trend is that a quarter of European patents which would have been nationally validated in Germany are instead turned into unitary patents, then based on the 2021 numbers, there would be at least 185,000 European patents in force in Finland – almost four times as many as there are currently.

Implications

All of these additional European patents that will be in force in Finland will reduce Finnish companies' freedom to operate domestically, as well as internationally. Thus, even companies serving only the domestic market will have a significantly increased risk of infringing a third party's patent and it will become more important than ever for Finnish companies to carefully investigate their freedom to operate before developing and offering new products and services.

Another way that companies will be able counter the increased risk of patent infringement is to build or strengthen their own international patent portfolios. If a Finnish company infringes a foreign company's unitary patent in Finland, the Finnish company's negotiating position will be significantly stronger if it has one or more patents that cover the foreign company's activities in a large market such as the United States, or in the foreign company's own country.

Although not every patent infringement dispute is ultimately litigated and decided in court, the increased risk of patent infringement also increases the risk of litigation for Finnish companies. Unitary patents fall under the jurisdiction of the Unified Patent Court (UPC), which introduces another significant change in the patent and patent litigation systems in the European Union. The UPC, which is anticipated to start its operations on 1 April 2023, will be a single court system that has competence over invalidity and infringement matters for unitary patents. The UPC will also have competence over the same matter for "classic" European patents – that is, those that have been nationally validated and that have not been opted out of the UPC's jurisdiction. The UPC is a new court for all patent holders, but for Finnish companies specifically, the risk of litigation and invalidation cases outside of Finland may also increase.

Comment

The new unitary patent will be a double-edged sword for Finnish companies: as well as offering new opportunities to protect their own inventions across Europe at a lower cost, the system will present new risks that need to be managed and mitigated.