Implementing a unitary patent system in G20 countries: A legal analysis

The Unitary Patent System (UPS), successfully launched in Europe on June 1, 2023, represents a major milestone in intellectual property protection. This innovative framework provides inventors, businesses and research organizations with a streamlined and cost-effective approach to obtaining patent protection across participating EU countries.

Moreover, the Unified Patent Court handles disputes related to both classical European patents and unitary patents, ensuring consistent and efficient resolution of patent conflicts within the participating member states.

Given the advantages of the UPS in Europe, it is worth considering the implementation of a similar model in the G20 countries - 19 countries and the EU - representing a significant portion of the global Gross Domestic Product (GDP), trade and population.

The potential for a UPS in G20 countries

The G20 countries, being prominent players in the global economy, stand to derive numerous advantages from the implementation of a UPS:

• Streamlining: The introduction of a UPS would streamline diverse legal systems and patent laws, effectively reducing administrative burdens and associated expenses.

• Facilitating collaboration and innovation: The modified patent system would serve as a catalyst for increased collaboration among inventors and companies through the exchange of knowledge, research and technological advancements, across national boundaries.

• Attracting foreign investment: The presence of a unified and predictable patent system would instill confidence in investors, thereby facilitating the inflow of capital and knowledge into these jurisdictions, enabling them to compete based on the merits of their innovations rather than grappling with patent intricacies.

• Efficient patent enforcement: The establishment of a centralized enforcement mechanism, akin to the Unified Patent Court within the EU, would enhance the efficiency and consistency of patent dispute resolution across G20 nations.

• Effectual patent litigation: By establishing a singular court to handle patent disputes, parties involved in such conflicts would be spared the ordeal of navigating multiple legal systems, resulting in expedited and cost-effective resolutions.

Legal challenges for a UPS in G20 Countries

Implementing a UPS across the G20 countries would be a difficult undertaking, necessitating extensive international cooperation, negotiation and harmonization of intellectual property laws.

Patentability Criteria

The patentability criteria across G20 countries presents a formidable challenge to unification due to significant variations in their legal frameworks. 

The US employs a stringent "utility" requirement for patentability. Under 35 USC § 101, an invention must have a practical application and provide a useful and tangible result to qualify for patent protection. This requirement has been interpreted through landmark case law such as Diamond v. Chakrabarty, where the US Supreme Court upheld the patentability of a genetically engineered microorganism based on its utility in breaking down crude oil.

In India, the patentability criteria are governed by the Patents Act, 1970. Under Section 3, subject matters that are excluded from patentability include inventions contrary to public order, morality, or health etc. Notably, pharmaceuticals and software algorithms are subject to additional scrutiny and specific examination guidelines. This has been exemplified in Novartis AG v. Union of India, where the Indian Supreme Court rejected the patentability of a pharmaceutical product due to a lack of enhanced therapeutic efficacy. In OpenTV Inc v The Controller of Patents and Designs and Anr, the Delhi High Court stated that the provisions in the Patents Act which lay down that ‘business methods’ are not patentable, need to be revisited.

Examination Procedures

G20 nations employ distinct patent examination procedures. 

The adversarial nature of the process is exemplified by the inter partes review (IPR) mechanism, established under the America Invents Act, 2011, allowing third parties to challenge the validity of granted patents before the Patent Trial and Appeal Board (PTAB). The involvement of third parties in the examination process, as seen in the US IPR mechanism, can enhance the quality of granted patents by providing additional scrutiny.

Streamlining examination procedures entails addressing variations in the interpretation of patentability requirements, such as novelty and inventive step, and developing consistent guidelines to ensure uniformity in the examination process.

Patent Term and Renewal 

Variances in patent term and renewal practices further challenge the feasibility of a UPS. 

While many G20 countries adhere to a 20-year patent term, certain jurisdictions, such as Japan and Argentina, have adopted an extended patent term for pharmaceutical products to compensate for regulatory delays. Brazil allows for patent term extensions under specific circumstances, notably for pharmaceutical products. Article 40 of the Brazilian Intellectual Property Law permits extensions of up to ten years beyond the standard 20-year patent term to compensate for regulatory review periods. Notably, the Supreme Court of Brazil upheld the constitutionality of these extensions in the case of ADI 5529 in May 2021. 

Transitioning to a unified patent term system may necessitate the development of transitional provisions to address existing patents and their term calculations.

Patent Enforcement Mechanisms

G20 countries diverge in their patent enforcement mechanisms. Common law jurisdictions like the UK follow a bifurcated system, separating infringement and validity proceedings, while civil law countries employ a unitary approach.

• Procedural Rules and Standards: This entails developing consistent rules and guidelines, consistency in case management practices, including pre-trial procedures, discovery and trial timelines to ensure fairness, efficiency and predictability in patent litigation.

• Allocation of Burdens of Proof: In the common law system, the burden of proof lies with the patentee in infringement cases, while the burden of proving invalidity rests with the alleged infringer. In civil law jurisdictions, the burden of proof may be shared between the parties or lie primarily with the patentee. A uniform standard needs to be developed.

• Specialized Expertise: It needs to be considered how to ensure access to specialized expertise in patent litigation while maintaining consistency across jurisdictions.

Remedies and Damages

Significant disparities in the remedies and damages awarded for patent infringement exist among G20 nations.

While patent holders seek fair compensation for the unauthorized use of their inventions, infringers may argue for proportionate damages to avoid excessive financial burdens. The US stands out with its provision for treble damages, under 35 U.S.C. § 284. Damages up to three times the amount determined as actual damages can be awarded, based on considerations of willful infringement or bad faith. This is to deter patent infringement and compensate patent holders for the harm caused.

Many civil law jurisdictions in the G20 provide for reasonable royalties as the primary measure of damages for patent infringement. Factors such as the nature of the patent, the scope of the infringement and the economic value of the patented technology are considered.

Some jurisdictions, such as the US, grant injunctions as a primary remedy for patent infringement, while others adopt a more restrictive approach. Consistent standards for granting injunctive relief in patent infringement cases can be established

Jurisdiction and Venue

G20 countries exhibit varying rules concerning jurisdiction and venue for patent disputes. The US operates under a federal system, where patent cases are primarily adjudicated in specialized district courts. Variations may arise in different district courts, leading to forum shopping concerns and potential discrepancies in the application of patent laws.

Civil law jurisdictions often have specialized patent courts or chambers dedicated to handling patent disputes. However, disparities may exist in the structure and procedures of these courts, as well as the allocation of resources and judicial capacity.

Differences in the criteria for establishing jurisdiction, such as the presence of a domestic establishment, the location of the alleged infringement, or the nationality of the parties involved, need to be reconciled.

Patent Licensing and Exhaustion

The treatment of patent licensing and exhaustion varies among G20 nations.

Some jurisdictions, such as the US, adopt international patent exhaustion. Once a patent holder sells a patented product or grants a license, their exclusive rights to control subsequent sales or uses of the product are exhausted worldwide. This allows for parallel importation and resale of the patented product across international borders.

In contrast, many jurisdictions follow national exhaustion, by which patent rights are exhausted only within the specific territory where the first authorized sale or use of the patented product occurs. This approach allows patent holders to maintain control over their patented products in different jurisdictions.

Resolving conflicts requires careful consideration of the balance between the rights of patent holders and the interests of licensees and consumers.

While the implementation of a UPS in the G20 countries is undoubtedly complex, it is not entirely unfeasible. A step-by-step approach could be adopted, starting with bilateral or regional agreements among G20 members that share similar legal systems or have established economic partnerships. This gradual expansion would allow for the testing of the system's effectiveness and ironing out any challenges before wider adoption. Collaboration among patent offices could further streamline the process.

Lakshmidevi Somanath is Head of the Intellectual Property Practice at Surana & Surana International Attorneys and a former member judge of the Intellectual Property Appellate Tribunal (IPAB).