By Erin Geiger Smith 

(Reuters) - European Union countries have agreed to create a unified system to allow patent holders to enforce their rights in participating EU nations, rather than having to do so in each country.

The agreement to establish the new patent court system was signed by 24 of the current 27 EU countries in Brussels on Feb. 19. Spain, Bulgaria and Poland have not signed.

The new EU patent courts have a parallel in the U.S. court system, where patent cases are tried in federal rather than state courts, Laurence Cohen, a partner at Latham & Watkins who is based in London, told Reuters.

The new courts will be empowered to issue judgments relating to the infringement and validity of patents that are binding across all signatory EU member states, according to a paper by Cohen and associate Donald McCombie.

The courts are targeted to be up and running in early 2014, though the paper cautioned that is an "ambitious timeline" considering judges must still be chosen and facilities selected.

While each participating country is entitled to a local court, so-called "Central courts" will also have jurisdiction over anything the local courts can hear, the paper noted.

Certain courts are expected to hear patent cases on particular subject matters, Cohen said. For instance, a court based in London will hear pharmaceutical, chemical and agricultural cases, among others, while Munich judges will hear automotive cases and a court in Paris will hear the remainder, he said. An appeals court will be located in Luxembourg.

U.S. SIMILARITIES

The divisions, Cohen said, have certain similarities to the United States, where if you sue in an inappropriate geographic venue, you're likely to be transferred to the court best suited to hear the case.

Unlike in the United States, however, cases will be heard by a three-judge panel, even at the initial level. Part of the purpose of a panel is to "even out national differences," Cohen said. Only one judge on the panel can be from the country where the court sits.

The judges are expected to be selected from current members of the judiciary and practitioners with expertise in patent law, Cohen said.

While the new system is generally thought to be a positive step for patent holders, Cohen noted the possibility of an unintended consequence, one that the U.S. patent system has long dealt with: litigation brought by non-practicing entities, or so-called "patent trolls."

In the past, potential damages were limited to the single country in which a suit was filed, but now plaintiffs will be able to recover nearly EU-wide damages, Cohen said, a change that could mean a greater incentive to pursue lawsuits.

The courts will not have jurisdiction over patents registered only in a particular country but instead will oversee so-called "European Patents" that are granted by the European Patent Office, as well as a new "unitary patent" classification that will go into effect when the courts are working, the paper said.

During a seven-year transitional period, European Patent holders can opt out of the system, meaning their patent can be revoked only on a country-by-country basis, the paper said.

In addition to selecting judges and finding courtrooms, the EU committee overseeing the implementation must also finalize a set of procedural rules for the courts.

The rules, Cohen said, are likely to be a combination of the German, French, and British systems.

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