17/08/2023
As of 1 June 2023, the Unitary Patent and the Unified Patent Court (UPC) have been in effect. During the 3 month sunrise period (covering the period 1 March to 31 May 2023) and subsequently, proprietors of European patents and applicants of pending European patent applications have been able to file opt-out requests to avoid those European rights (if and when granted) falling under the jurisdiction of the UPC.
More detail on the opt-out regime and the pros & cons of opting-out is provided in the attached article. Briefly speaking, the idea of the opt-out regime is that any opt-out would be effective for the lifetime of the European patent/application, subject to the proprietor/applicant:
a) not choosing to opt back in to the UPC by filing an application for withdrawal of the opt-out, or
b) not choosing to have the European application grant as a European patent with unitary effect.
The UPC and associated rules of procedure are new. As with any new law, there will be some gaps or anomalies whose significance will be unclear until tested. One of these gaps or anomalies concerns the question:
What happens if a revocation action is filed at the UPC against a European Patent which has been opted-out of the UPC?
To get an answer to this question, a good starting point is the Rules of Procedure of the Unified Patent Court (the “UPC Rules”).
Rule 16.1 of the UPC Rules states:
“The Registry shall as soon as practicable check whether the patent concerned is the subject of an opt-out pursuant to Article 83(3) of the Agreement and Rule 5. In the event of an opt-out the Registry shall as soon as practicable inform the claimant who may withdraw or amend the Statement of claim as appropriate.”
But what happens if the claimant fails to withdraw or amend their Statement of claim?
Well, there is no explicit indication in Rule 16 (or elsewhere in the UPC Rules) that the revocation action would automatically be deemed inadmissible by the UPC Registry due to the existence of an opt-out.
Although Rule 16.5 refers to circumstances in which a judge may reject an action as being inadmissible by default, that Rule appears to relate to deficiencies in a Statement of claim concerning matters other than whether or not an opt-out exists for the patent.
So, what other parts of the UPC Rules may provide some guidance here?
Well, Section 2 of the UPC Rules (specifically Rules 42 to 60) addresses revocation actions. In particular, Rule 48 covers the filing of a Preliminary objection by the patent proprietor in response to a Statement of claim for a revocation action, and states that Rules 19.1 to 19.3 and 19.5 to 19.7 of the UPC Rules apply.
Rule 19.1 is of particular interest here, as it states:
“1. Within one month of service of the Statement of claim, the defendant may lodge a Preliminary objection concerning:
(a) the jurisdiction and competence of the Court, including any objection that an opt-out pursuant to Rule 5 applies to the patent that is the subject of the proceedings;
(b) the competence of the division indicated by the claimant [Rule 13.1(i)];
(c) the language of the Statement of claim [Rule 14].”
So, Rule 19.1(a) suggests that where a revocation action is filed by a claimant against an opted-out European patent, the UPC Registry will not automatically deem the action inadmissible. Rather, Rule 19.1(a) appears to put the onus on the patent proprietor to (quickly) assert the existence of the opt-out and argue that the UPC therefore has no jurisdiction.
But what happens if the proprietor fails to file a Preliminary objection citing the existence of the opt-out within the one month time limit?
Well, returning to the UPC Rules once more, Rule 19.7 states:
“The defendant’s failure to lodge a Preliminary objection within the time period referred to in paragraph 1 shall be treated as a submission to the jurisdiction and competence of the Court and the competence of the division chosen by the claimant.”
Taken at face value, this suggests that a failure by the proprietor to file a Preliminary objection citing the existence of the opt-out within the one month period risks nullifying the effect of the opt-out.
How likely is this to happen?
Only the passage of time and the hearing of cases before the UPC (and/or revision of the UPC Rules) will provide a definitive answer to this question.
Two hypothetical scenarios are considered below in which a revocation action is filed against an opted-out European patent:
| Scenario 1 Revocation action filed against an opted-out European patent where the opt-out request fulfilled the requirements of the UPC and/or where the claimant in the revocation action does not question the validity of the opt-out |
For the revocation action to be considered by the UPC in this scenario, the claimant would be relying on the patent proprietor failing to assert the existence of the opt-out through filing a Preliminary objection within the one month time limit mentioned above.
The likelihood of a claimant pursuing this speculative strategy may well be influenced by one or more of the following factors:
- The fee payable to initiate a revocation action:
A revocation fee needs to be paid in order for a revocation action to be considered as having been filed. The normal fee payable by a claimant to initiate a revocation action under the UPC is €20000. However, claimants who satisfy conditions in the UPC Rules to be regarded as being a “small enterprise” or a “micro-enterprise” are eligible to pay a reduced fee of 60% of the normal fee, i.e., €12000.
- The ability of a claimant to secure a partial refund of the revocation fee if they withdraw the action before the end of the written procedure
A refund of up to 60% of the revocation fee is possible if the revocation action is withdrawn (or if the claimant and proprietor reach a settlement) before closure of the written procedure.
So, this would allow the claimant to terminate the proceedings and obtain a partial refund of the revocation fee if the patent proprietor did file a Preliminary objection asserting the existence of the opt-out. However, could Rule 370.9(e) of the UPC Rules be an obstacle to a claimant obtaining a partial refund of the revocation fee paid under this scenario? Rule 370.9(e) states:
“In exceptional cases, having regard, in particular, to the stage of the proceedings and the procedural behaviour of the party, the Court may deny or decrease the reimbursement payable according to paragraph 9 (b) and (c) of the aforementioned provisions”.
So, could the filing by a claimant of a revocation action against an opted-out patent where the claimant has not included any arguments challenging the validity of the opt-out be regarded by a judge under the UPC as behaviour justifying a denial or reduction in the level of reimbursement of the revocation fee? Again, this is a question for which a definitive answer will only be forthcoming after the hearing of real-life cases before the UPC (and/or revision of the UPC Rules).
| Scenario 2 Revocation action filed against an opted-out European patent where the claimant in the revocation action includes arguments/evidence with their statement of claim alleging invalidity of the opt-out |
This scenario may apply where the claimant in the revocation action has evidence demonstrating the opt-out request had been filed by someone other than the legitimate owner of the European patent/application. This is a more likely scenario than Scenario 1, although it does highlight another anomaly in the UPC Rules – specifically, the UPC Rules are silent about whether a claimant is permitted (or prohibited) from challenging the validity of an opt-out in proceedings before the UPC.
The claimant would have the same ability to pay a reduced revocation fee and obtain a partial refund of the fee as mentioned for Scenario 1.
Conclusions:
Given the UPC Rules in their current form and the lack of any conflicting guidance / case law, even if a European patent has been opted-out from the jurisdiction of the UPC, it would be wise for the proprietor’s representative to closely examine any correspondence received from the UPC concerning the patent… and be ready to assert the existence of the opt-out.
In the event you would like to learn more about the provisions for opting out your European patents (or pending European applications) from the UPC, or revocation actions under the UPC, please do not hesitate to contact us for more information.
