Background

As has been widely reported, major changes are looming for the European patent landscape. After many years of preparatory work and negotiations, Europe’s new Unified Patent Court (UPC) is expected to open for business on 1 June 2023[1].  Applicants and owners of European Patents (EP) unaware of the scope of changes may lose valuable rights in their inventions. However, this change in the European patent landscape also provides for new opportunities, such as time and cost-effective proceedings to obtain a Pan-European injunction in 17 EU states participating in the UPC system. For some European countries enforcement of patent rights still needs to take place on a national level though, e.g. the UK, Poland and Spain. These countries are not participating in the UPC.

The vision for the UPC is a cost-effective specialized patent court providing uniform and reliable patent infringement and validity decisions for European patents collectively within all European Union (EU) countries, or “states,” supporting the free movement of goods within the EU by removing the possibility of divergent decisions on infringement and validity in different EU states. This had not been the situation in the past.  Several European Patent owners validated and renewed their patents in a small number of countries, and as a result may be not be protected throughout the entire EU. Moreover, the national courts of EU states have provided inconsistent outcomes. A unified court with known, predictable procedures and specialist judges should improve this situation.

The planned Unitary Patent (UP) and Unified Patent Court are rapidly approaching and will significantly change the European patent landscape, shifting to wide geographical coverage and allowing patent enforcement and revocation of EU patent rights for a large number of countries to be handled in a single court system. 17 EU states have already completed the process of ratifying the UPC Agreement and others are expected to follow.

After a little more preparatory work, including finalizing the Court’s IT system, the German government will set the Court’s start date by depositing its UPC Agreement ratification document. The UPC Administrative Committee has stated that “the Sunrise Period [the period where EU patent applicants and holders can “opt out” of the new system] will start on 1 March 2023 followed by the entry into force of the UPCA on 1 June 2023” (https://www.unified-patent-court.org/, posting of December 5, 2022).  In the meantime, Germany has deposited the instrument of ratification on February 17, 2023 and the “Sunrise Period” started on March 1st, 2023. The UPC is set to open on June 1st, 2023. (see e.g. https://www.unified-patent-court.org/en/news/practical-information-upcoming-launch-sunrise-period).

Thus as of June 1, 2023, the new UPC will have jurisdiction to adjudicate invalidity and infringement proceedings for existing “conventional” European patents unless patent owners formally register “opt out” decisions to keep their European Patents outside the jurisdiction of the new court (see below).

The UPC will have exclusive jurisdiction for the new Unitary Patents (there are no “opt outs” for Unitary Patents). Information about both the UPC and Unitary Patent can be found on the European Patent Office website and on the UPC website.

The new Unified Patent Court and Unitary Patent are the most significant changes to the European patent system since the opening of the European Patent Office in 1977. We are optimistic that the UPC will be a success – given time – offering cost-effective decisions on validity and infringement for UP and EP for all the Contracting Member States of the UPC Agreement. Proceedings on the merits are expected to be concluded within a year, and all divisions can hold proceedings in English. However, there are some uncertainties around interpretation of the UPC Agreement and the Rules of Procedures of the UPC as well as around the court’s future practices, which will only be clarified after the court begins operating, so the UPC will not be Europe’s most predictable court for patent infringement and validity actions in its first few months. Nevertheless, most UPC judges are highly specialized judges from well experienced national courts, motivated to demonstrate to the global patent community that the UPC brings several advantages over the national court systems.

“Opting Out” of the UPC

The option to opt European Patents out of the jurisdiction of the UPC is a significant part of the new court’s transitional arrangements.

For a transitional period of seven years (which may be extendable by another seven years), actions for infringement or for revocation of “classical” European Patents (i.e. patents other than Unitary Patents) can be brought before national courts in Europe or before the UPC. However, the owner of a granted European Patent or a published European Patent application applied for before the end of the transitional period will have an option to “opt out” of the UPC’s jurisdiction, potentially for the life of the patent.

After the transitional period, the UPC will have exclusive jurisdiction for European patents in all Contracting States of the UPC Agreement, except for “opted out” EPs, for which the national courts will have exclusive jurisdictions.

Some patent owners will be taking advantage of the possibility of registering opt outs for some or all of their existing granted European Patents. This is already possible in the three month “Sunrise Period“ before the UPC opens for business. However, some patent owners are going to make use of the possibility to leave their patents in the UPC system, in order to be amongst the first to bring infringement proceedings before the UPC.

Why would patent owners opt out, given that this will limit their enforcement options unless and until an opt out is withdrawn?  As well as offering European Patent owners a new enforcement option, the UPC will also offer a new opportunity for any of their competitors to apply for revocation of the owner’s European Patents. A decision in these Central Revocation proceedings will be effective for all Contracting Member States of the UPC Agreement covered by the patent. Importantly, this option to apply for Central Revocation for a large number of EU states will be available at any time after the UPC opens for business unless patent owners register “opt outs.” Actions for revocation in the UPC are expected to be less expensive than separately seeking revocation in multiple countries via national courts and can also be brought in parallel or after the EPO opposition proceedings.

The combination of uncertainties about future UPC practice and the desire to avoid this new revocation opportunity reason enough for many patent owners to opt patents out of the jurisdiction of the UPC, leaving competitors to rely on the existing options of EPO oppositions and revocation actions in national courts and patent offices in each individual EU state.

Patent owner who registered their opt out have the option to withdraw this opt out later on, e.g. before stating infringement proceedings before the UPC. However, if an action has already been brought before the national court, the patent owner will be unable to start proceedings before the UPC in respect to the nation portion of the EP that is subject to the national proceedings. This has to be carefully considered before making the decision to opt-out, as competitors might try to block the withdrawal of opt outs and limit the possibility to apply for a Pa-European injunction by starting low-costs national proceedings.

Unitary Patents (patents having unitary effect)

The Unitary Patent is a new option to consider when providing instructions for grant and validation of newly approved European Patent applications. With the start of the UPC, the European Patent Office will be accepting requests for newly granted European Patents to have unitary effect in a set of participating EU states (i.e., either being renewed in all states or being allowed to lapse in all or none of the EU states). Stradling intends to explain the new UP option alongside other options when reporting new EPO allowances, seeking instructions for each case at the relevant time.

The UPC will have exclusive jurisdiction for infringement and revocation of Unitary Patents in the countries that were Contracting Member States of the UPC Agreement when the EPO granted the Unitary Patent. National courts will have jurisdiction in other European states.

To allow application for unitary effect, the EPO will accept applications for delayed grant from 1 March 2023 for applications that have received an approval for grant but have not yet granted. This is a transitional arrangement to help applicants take advantage of the new option to request unitary effect.

UPC revocation actions versus EPO oppositions

As noted, a litigant may apply to the UPC for revocation of a European patent at any time during the patent term.  UPC revocation decisions will be effective for states that have ratified the UPC Agreement, but not for all 39 contracting states of the European Patent Convention. This differs from the EPO’s low cost opposition procedure, which provides an option for centralized revocation actions for all 39 contracting states of the European Patent Convention.

We believe EPO oppositions will remain an important part of the European landscape. However, note that EPO oppositions require filing a notice of opposition within 9 months of grant of a European patent, whereas the UPC Agreement does not impose any such timing restriction for bringing a revocation action..

Questions?

We are available to answer your questions about:

• The Unified Patent Court, the Unitary Patent, and their relevance to your business
• The option to protect existing European patents from the possibility of revocation in the new court, by applying to opt them out of the jurisdiction of the UPC
• Opting out and withdrawal of opt outs
• Patent enforcement in the new court
• Applying for revocation in the new court

[1] The UPC Administrative Committee announced this revised date on 5 December 2022.