17.02 – UPC : Unified Patent Court – ENG

SUMMARY

The Unified Patent Court (UPC) started its activity on June 1, 2023. It brings fundamental changes in the way to litigate patents in Europe.

The UPC is a court common to currently 17 EU Member States (in which the Agreement on a Unified Patent Court is in force) and thus part of their judicial system.

The UPC offers a uniform, specialised, and efficient framework for patent litigation at a European level. It hears both infringement and revocation actions. The UPC has exclusive jurisdiction in respect of “classic” European patents and European patents with unitary effect (Unitary Patents). The exclusive jurisdiction regarding “classic” European patents is, however, subject to exceptions during a transitional period of seven years. During this period, actions concerning “classic” European patents may still be brought before national courts. Furthermore, “classic” European patents can be opted out entirely from the UPC’s jurisdiction.

The UPC provides proprietors with a means of avoiding the high costs, risk and complexity associated with multiple litigation in different EU jurisdictions. Its specialised and highly qualified judges (including technically qualified judges) will establish harmonised case law and increase legal certainty. 

Concurrent with the opening of the UPC, the European Patent Office (EPO) began granting, on June 1, 2023, European Patents with Unitary Effect (Unitary Patents).

A Unitary Patent is a “European patent with unitary effect”, which means a European patent granted by the EPO under the rules and procedures of the European Patent Convention (EPC) to which, after grant, unitary effect is attributed for the territory of the participating Member States at its proprietor’s request.  

The Unitary Patent system is built on the EPC. This means that the pre-grant phase is exactly the same as for European patents.

A Unitary Patent enables inventors to obtain uniform and territorially broad protection in the participating Member States. Uniform protection means that the scope of the right conferred by a Unitary Patent and its limitations, as well as the available remedies, are the same for all the participating Member States.

Instead of validating their European patent in several States, which can be a costly, time-consuming and complex administrative process, patent proprietors can obtain a Unitary Patent by filing a single request with the EPO. The procedure for obtaining a Unitary Patent is very simple and straightforward and entirely free of charge.

The Unitary Patent makes the European patent system simpler and significantly lowers the costs of obtaining patent protection in the participating Member States. It eliminates the need to comply with validation requirements in the participating Member States and the high costs associated with this.

Moreover, under the current fragmented system, several renewal fees, which may vary in amount and currency, have to be paid to different national patent offices subject to different legal requirements. Unitary Patent proprietors pay one single renewal fee to the EPO, in one currency (i.e. in euros) and under a single legal regime as regards deadlines and admissible means of payment. This greatly simplifies matters for users.

The renewal fee level is very attractive and business friendly as it is set at a level equivalent to the combined renewal fees of the top four countries among the participating Member States, i.e. those where classic European patents were most often validated at the time the fee level was adopted. The total fees for the first ten years ‒ which is the average lifetime of a patent ‒ amount to less than EUR 5 000.

STRATEGIC CONSIDERATIONS FOR OPTING OUT OF THE UNIFIED PATENT COURT

Since June 1, 2023, i.e. when the UPC has opened its door for business, its competence to deal with disputes concerning classical European patents is subject to important limitations for a seven year transitional period. One such limitation is that proprietors of classical European patents and European patent applications are able to opt-out those patents from the jurisdiction of the UPC.

A classical European patent that has been opted-out can only be litigated in the national courts of its respective designated countries for its entire duration, subject to a later withdrawal of the opt-out. Opt-outs are thus defensive in nature, as they protect such patents from being revoked in a single court action brought before the UPC.

The following are likely to be the key factors in deciding whether or not to opt classical European patents out of the jurisdiction of the UPC:

• What is the potential cost if protection is lost in multiple jurisdictions?
• How likely is it that competitors would want to file a revocation action to revoke a classical European patent?
• How likely is it that a revocation action would succeed?

According to an article published on July 2, 2023 on “Kluwers Patent Blog” and written by Ms. Laurence Lai (https://patentblog.kluweriplaw.com/2023/07/02/upc-opt-outs-statistics-and-trends-one-month-in/), “as of the end of June 2023, 535,152 patents and applications have been opted-out of the jurisdiction of the Unified Patent Court (…). Since the opening of the Court, the number of opt-outs has stabilised to around 2,700 applications and 7,600 patents per week. This compares to around 3,700 applications filed per week at the EPO and approximately 1,500 patents granted per week by the EPO.”

It seems therefore that for the time being, many companies have decided to keep their classical European patents away from the jurisdiction of the UPC.

As we are UPC Representative, we can advise our clients on strategic considerations for opting-out their patents of the UPC and we can file on behalf of our client opt-out declarations before the UPC.

Please note that no administrative fee is to be paid for an opt-out.

For proprietors of classical European patents or applicants for European patents, there exists a possibility to lodge multiple and automatic opt-outs in one step. For this, an Application Programming Interface (API) is available to communicate directly and, in a secure way, with the UPC.

There is an important limitation on the right to opt-out. If, before an application to opt-out a classical European patent has appeared on the register of the UPC, the UPC is seized with an action concerning that patent, that action must continue in the UPC and the opt-out cannot be applied.

Finally, please note that it is possible to opt out published European patent applications, European patents as well as Supplementary protection Certificates (SPCs). If a patent application is opted out, this will automatically cover any patent as granted or any SPC. The same applies to any SPC that is based on a patent that has been opted out. It is also possible to opt out patents or SPCs that have already lapsed. However, it is not possible to opt out European Patents with unitary effect.

THE JURISDICTION AND STRUCTURE OF THE UNIFIED PATENT COURT

As mentioned before, the UPC is a court common to the Contracting Member States and thus part of their judicial system. It has exclusive competence in respect of European patents, European patent applications, European patents with unitary effect, as well as Supplementary protection certificates (SPCs). The exclusive competence is however subject to exceptions during the transitional period.

The UPC consists of a Court of First Instance, a Court of Appeal and a Registry.

The Court of First Instance has a Central Division, as well as Local and Regional Divisions.

The Central Division is seated in Paris (France), with a section in Munich (Germany) and a section in Milan (Italy).

Every Contracting Member State may host a Local division or share together with one or more other Contracting Member States a Regional Division of the Court of First Instance.

The Contracting Member States designated the seats of such local and regional divisions (https://www.unified-patent-court.org/en/court/locations).

The Court of Appeal has its seat in Luxembourg.

The Registry is set up at the seat of the Court of Appeal.

To date, all Contracting Member States have announced the establishment of one Local Division in their territory, except for Germany which establishes four Local Divisions (in Düsseldorf, Mannheim, Hamburg and Munich), as well as Bulgaria, Luxembourg and Malta which currently do not intend to have their own Local or Regional Division. Sweden and the Baltic states Estonia, Latvia and Lithuania have jointly established a Regional Division, the Nordic-Baltic regional Division, which has its seat in Stockholm.

As mentioned above, the Central Division is located in Paris with a section in Munich. The jurisdiction of the originally planned London section of the Central Division is to be replaced temporarily by the remaining locations of the Central Division in Paris and Munich. However, a Milan (Italy) section of the Central Division shall open in 2024.

THE JUDGES OF THE UNIFIED PATENT COURT

It is very important to note that any panel of the Court of First Instance and of the Court of Appeal shall have a multinational composition with judges from different nationalities, and that the UPC is composed both of legally qualified judges who have lot of experience in patent litigation and technically qualified judges with qualifications and experience in all kinds of fields of technology.

Some Local Divisions shall sit in a composition of one legally qualified judge who is a national of the Contracting Member State hosting the Local Division concerned and two legally qualified judges who are not nationals of the Contracting Member State concerned and are allocated from the Pool of Judges on a case by case basis.

Some other Local Divisions (Germany, France, Italy and the Netherlands) shall sit in a composition of two legally qualified judges who are nationals of the Contracting Member State hosting the Local Division concerned and one legally qualified judge who is not a national of the Contracting Member State concerned and is allocated from the Pool of Judges.

Upon request by one of the parties, any panel of a Local or Regional Division shall request the President of the Court of First Instance to allocate from the Pool of Judges an additional technically qualified judge with qualifications and experience in the field of technology concerned. Moreover, any panel of a Local or Regional Division may, after having heard the parties, submit such request on its own initiative, where it deems this appropriate.

The Central Division comprises two legally qualified judges and one technically qualified judge. The two legally qualified judges must be nationals of different Contracting Member States.

The Court of Appeal hears cases in panels consisting of three legally qualified judges and two technically qualified judges. The three legally qualified judges must be nationals of different Contracting Member States whereas there is no such requirement for the two technically qualified judges.

The judges of the UPC have been appointed in a formalized appointment procedure by the Administrative Committee of the UPC. The appointment procedure was completed on 19 October 2022 with the appointment of 34 legally qualified judges and 51 technically qualified judges.

The UPC will be led by Mr. Klaus Grabinski (Germany), as President of the Court of Appeal, and Ms. Florence Butin (France), as President of the Court of First Instance. 

The technically qualified judges have been appointed as per field of technology. A complete list of the names can be found on the Unified Patent Court website.

Appointed judges are assigned to a pool of judges from which the President of the Court of First Instance will arrange assignments to the respective Divisions.

THE UNIFIED PATENT COURT AND PARIS, AND LOCAL JURISDICTION OF THE LOCAL DIVISIONS OF THE UPC

At the UPC, the competent forum at first instance is determined by the type of action.

Isolated revocation actions of patents or actions for declaration of non-infringement shall be brought before the Central Division.

Infringement actions have to be filed with the Local or Regional Divisions. Once infringement proceedings are pending before a Local or Regional Division, a respective counterclaim for revocation has to be brought before the same division. Please note however that the Central Division is also competent to hear infringement actions under specific circumstances: see below.

The competent Local or Regional Divisions for patent infringement proceeding are determined by the residence and/or the place of business of the alleged infringer as well as the location of the alleged infringing activities. Infringement actions against defendants having their residence or place of business within the territory of a Contracting Member State shall be brought before the Local Division hosted by that Member State or the Regional Division in which that Member States participates.

Actions against defendants having their residence or place of business outside the territory of the Contracting Member States (for instance in Japan or in the United States) shall be brought before the Central Division.

An infringement action can also be filed with the Local or Regional Divisions where infringing activities have been committed. In the absence of a Local or Regional Division in the Contracting Member State in whose territory an alleged infringement occurred, the action can be brought before the Central Division. At present, this concerns the Contracting Member States Bulgaria, Luxembourg and Malta which have not announced any intention to establish a Local Division or participate in a Regional Division.

When several acts of infringement are involved, the unlawful act is regarded as committed everywhere, where acts of infringement have been committed. In the case of a EU-wide offer not limited to a specific State, the plaintiff can choose the forum within the territories of the Contracting Member States of the EU.

If a Local or Regional Division which handles an action for infringement is seized by the defendant of a counterclaim for revocation, the Local or Regional Division concerned shall, after having heard the parties, have the discretion either to:

• proceed with both the action for infringement and with the counterclaim for revocation and request the President of the Court of First Instance to allocate from the Pool of Judges a technically qualified judge with qualifications and experience in the field of technology concerned;

• refer the counterclaim for revocation for decision to the Central Division and suspend or proceed with the action for infringement;

• or with the agreement of the parties, refer the case for decision to the Central Division.

In light of the above, there are large opportunities for “forum shopping” between the different Local and Regional Divisions of the Contracting Member States as well as the Central Division.

While divergent approaches that might be taken by different divisions at the first instance may, over time, be levelled out by the case-law of the Court of Appeal, the potential for forum shopping can be expected to play a significant role during the initial years of existence of the UPC.

In this connection, Paris should play an important role in the construction of the future case-law of the UPC since it is in Paris that the headquarters of the Central Division is located and that this Central Division benefits from extended powers and jurisdiction compared to Local and Regional Divisions. Paris also hosts a Local Division.

WHAT CAN WE DO FOR YOU?

The fact that we are lawyers specializing in litigation, that we are registered with the Paris Bar, that we are located near the Paris headquarters of the Central Division of the UPC as well as that of the Paris Local Division, the fact that the three French judges appointed within these two Divisions (one in the Central Division and two in the Local Division) have previously exercised the functions of judge within the Judicial Court of Paris, before which we are accustomed to plead, give to our Firm valuable assets that we want our Clients to benefit from, especially if our Clients need to start an action before the Central Division.

Moreover, France has been an important patent litigation venue in Europe. Notwithstanding the UPC’s expected future uniformity, some local habits should remain. Proper understanding of such custom constitutes a competitive advantage. We know the case law of these French judges and will be able to develop the best litigation strategy for each case filed by our clients before the Central Division or the Paris Local Division.

Our Firm can draft all kinds of statements of claim or defense and plead both in French and in English, it being specified that these two languages, in addition to German, may be used before the Paris Local Division. The language of proceedings before the Central Division will be the language in which the patent in question was granted.

Our offer of services is the following:

REPRESENTATION OF OUR CLIENTS BEFORE THE UPC, AS PLAINTIFF OR DEFENDANT

• Preparation of litigation strategies;

• Representation in infringement and revocation proceedings.

OPT-OUT SUPPORT

• Advice and filing of opt-out declarations;

• Advice and filing of opt-in declarations.

PATENT FILING STRATEGY

• With the help of our network of patent attorneys, review of the patent portfolio of our clients to decide which European patents and European patent applications should be opt-out;

• With the help of our network of patent attorneys, legal advice on the choice of the patent. Indeed, as mentioned before, Unitary Patents will coexist with national patents as well as with traditional European bundle patents. Regarding jurisdiction, traditional European bundle patents can be kept in the jurisdictions of the established national courts by means of the opt-out or can be made accessible to the UPC. UPs will be in the jurisdiction of the UPC while national patents will remain in the jurisdiction of the national courts.

HOW CAN WE HELP YOU?

Mandel & Associes’ patent litigators and our network of European patent attorneys advise its clients on all aspects of UPC strategy. We are registered as Representative before the UPC, which gives us the right to conduct, on behalf of our clients (be it plaintiffs or defendants) patent infringement and revocation actions. We can also file opt-out declarations before the UPC.