11/04/2022
The die is cast for the Unitary Patent System and Unified Patent Court (UPC) to come into legal effect towards the end of 2022/early 2023, as recently reported here. Applicants will shortly be able to decide whether they would like to be part of the UPC or not.
Being part of the UPC means that a common court is used for patent litigation in UPC member states, whereas opting out of the UPC means that the relevant national courts in those states are used for patent litigation instead. As discussed below, there are benefits to opting in or opting out of the UPC – but the actions of third parties could solidify the choice of whether rights are enforced and defended before the UPC or national courts.
Consequently, it is important for patent owners to identify key rights, determine whether they would prefer those rights to be litigated in the UPC or in national courts, and – if necessary – opt out of the UPC promptly to avoid third parties from seizing the impetus.
Background on the UPC:
The UPC will be something of a shake-up to how granted European patents will be enforced and challenged. At present, a European patent application is processed and granted centrally at the European Patent Office (EPO). After grant, the European application effectively fragments into a number of individual national rights – one for each of the 38 contracting states[1] – which must be validated in a particular country in order to be enforceable in that country. Each of these national validated rights may then be enforced or challenged in their respective national court.
By contrast, the UPC will provide a common court system that has exclusive jurisdiction for granted European patents that are validated as “unitary patents”, or validated as national rights in participating member states of the UPC. At present, the UPC will have exclusive jurisdiction over 17 different EU countries – but this could expand to 24 EU countries (or even more) in the future.
Owners of a unitary patent could therefore effectively enforce their rights across a large part of Europe with a single court decision issued by the UPC, rather than relying on decisions issued by individual national courts. For example, a granted European patent validated as a unitary patent and a UK national validation would cover all 17 UPC member states and the UK. The validated unitary patent would be litigated through the UPC, while the UK national validation would be litigated through the UK courts. Similarly, owners of a national validated European patent in one of the 17 UPC countries could also enforce the national right with a decision issued by the UPC, rather than relying on a decision issued by the relevant national court. For example, a granted European patent may be validated in Germany, France and the UK. One or more of the German and French validations may be litigated through the UPC as Germany and France are both members of the UPC, while the UK national validation would be litigated through the UK courts.
The main benefits and drawbacks of providing a common court system for patent infringement and validity are similar to any other “all-eggs-in-one-basket” scenario. On the one hand, patent owners will likely benefit from the relative speed, simplicity and low cost (as we reported here) to enforce rights in many major European countries based a single legal decision. On the other hand, an unfavourable decision by the central court will result in rights being revoked simultaneously in a large number of jurisdictions. Additionally, it is currently unknown how patent-friendly the new court system will be.
Opting Out of the UPC:
It will be possible for patent applicants and owners to opt out of the UPC during a transitional period that lasts at least 7 years from the introduction of the UPC. Opting a patent or patent application out of the UPC means that patent litigation would occur before national courts instead of the central UPC court. This may be desirable if a patent owner wishes to benefit from any familiarity that they have acquired through past experience with a particular national court.
However, it will not be possible to opt out if legal proceedings have already started before the UPC. This is significant as rights that have not been opted out may be the target of speculative revocation actions before the UPC, which would irrevocably tie those rights into the jurisdiction of the UPC.
To counteract this possibility, there will be a 3 month sunrise period preceding the start of the UPC that allows rights to be opted out early. The sunrise period will start 1 month after the German government deposits its ratification of the UPC agreement. We are therefore unsure precisely when the sunrise period will begin, but it is anticipated to occur in mid- to late-2022.
Approximate time line for opting out of the UPC
Opting out does not close the door on the UPC – a patent or application that has been opted out of the UPC can be opted back in again at any time, unless litigation proceedings have already been brought before a national court.
Therefore, regardless of whether patent owners opt in or opt out of the UPC during the transitional period, there is a risk that a speculative action brought by a third party will fix the choice of court as either being the UPC or the national courts.
Consequently, it would be prudent for owners of European patents and patent applications to start identifying their most important cases and considering whether they would prefer for those cases to be litigated before the UPC or the national courts. As indicated above, opting out of the UPC maintains the current status quo, whereby the national courts have jurisdiction over granted European patents.
It may seem early to start considering whether to opt in or out of the UPC. However, identifying whether any valuable and important cases should be opted out of the UPC at an early stage will ensure that those rights are placed towards the front of the processing queue once the sunrise period begins. This in turn will reduce the risk of those rights being tied into the UPC against patent owners wishes by the actions of a third party.
Take Home Messages:
- Opting out of the UPC maintains the current status quo for litigation of European patents before national courts
- Once the UPC comes into force already granted European patents that have not been opted out can be litigated before the UPC
- Once opted out, it is possible to opt back into the UPC – unless the opted-out patent is the subject of an action brought before a national court
- Similarly, a patent cannot be opted out of the UPC in the first place if an action against the patent has been brought before the UPC
- Patent owners should therefore identify whether they would prefer their key rights to be litigated before the UPC or national courts in UPC member states
- If key rights should be litigated before national courts, those rights should be opted out of the UPC at the beginning of the sunrise period to reduce the risk of being tied into the UPC by the actions of third parties
As recently reported here, our European Patent Attorneys will be competent to act before the UPC and will be able to assist you with any queries or applications for opting out of the UPC.
[1] Patent protection can also be extended to up to 6 further non-contracting states.
This article is for general information only. Its content is not a statement of the law on any subject and does not constitute advice. Please contact Reddie & Grose LLP for advice before taking any action in reliance on it.
