On June 1st 2023, significant changes in the European patent system will enter into force. On the one hand, patent owners will be able to obtain a Unitary Patent, a single European patent for most EU member states. On the other hand, the Unified Patent Court will be established to handle patent litigation on a European level. This article focuses on the Unified Patent Court.
The Unified Patent Court (UPC) will be a common court for the EU member states participating in the Unified Patent Court Agreement (UPCA). The purpose is to offer patent owners and alleged infringers a supranational platform where patents can be asserted or attacked for the whole territory in a single court case, rather than in multiple national actions as it is the case today. The beauty of the new system is that the court will not only have competence for the new Unitary Patents (UP) but also for existing European patents (EP) unless the patent owner registers an “opt-out”.
In fact, after a transitional period of 7 years (which can be extended up to another 7 years), the UPC will have exclusive competence for all UPs and not opted-out EPs.
The new patent system that enters into force next year changes nothing in the granting procedure for obtaining a European patent at the European Patent Office (EPO). But when the patent grants, the patentee now will have to choose between UP and EP. One aspect to consider in this decision is whether or not you want the UPC to be competent for patent litigation with respect to this patent.
For UPs, the UPC will be the only competent court. The national courts of the member states only retain competence for entitlement actions and the like.
For existing EPs, it depends. During the transitional 7-year period the default situation is that both the UPC and the national courts will have competence. The patentee has the option of registering an “opt-out” to opt out of the competence of the UPC. In this way, the patentee can avoid that an alleged infringer would for example initiate a nullity action or an action for non-infringement centrally at the UPC against the respective EP.
When the patentee has opted out and then detects infringement, they can then withdraw the opt-out if they do want to initiate an infringement action at the UPC. This opting in again is however not possible if, in the meantime, an action relating to the respective EP has been initiated on the national level. For example, if an alleged infringer initiates a national nullity action or action for non-infringement in any of the participating member states, the patentee can no longer withdraw the opt-out and can only attack the infringement on the national level.
Thus, on first sight, it would seem that registering the “opt-out” for all EPs is the best choice for patent owners because it avoids a central attack against the EPs while still leaving the option open to opt in again when infringement is detected. However, the big risk is that a competitor initiates an action for non-infringement in a country of low importance so that the opt-out can no longer be withdrawn. Furthermore, the patent owner’s possibilities of launching a counterattack may then be hampered by the Brussels Regulation (EC No 44/2001) in view of which the already pending action initiated by the competitor may take precedence.
Therefore, our general recommendation is to not register an opt-out for existing EPs, except if you are completely certain that you want to avoid that the EP is litigated at the UPC.
The UPC will have a central division with its seat in Paris and a branch in Munich. Originally it was intended to have also a branch in London, but after Brexit it has temporarily been decided to distribute the cases that would have been allocated to the London branch over the Paris and Munich branches. The expectations are that the third branch of the central division will be located in Milan.
Further, the UPC will have local divisions and regional divisions. Local divisions have been confirmed in Austria (Vienna), Belgium (Brussels), Denmark (Copenhagen), Finland (Helsinki), Germany (Munich, Mannheim, Dusseldorf and Hamburg), Italy (Milan), the Netherlands (The Hague), Portugal (Lisbon), Slovenia (Ljubljana). One regional division has been confirmed, namely the Nordic Baltic Regional Division with a branch in Sweden (Stockholm) and Lithuania (Vilnius).
The UPC’s court of appeal will be located in Luxembourg.
The UPC will also comprise arbitration and mediation centres in Portugal (Lisbon) and Slovenia (Ljubljana).
In the Central Division, the language of the proceedings will be the language in which the patent was granted. In most cases this will therefore mean English, regardless of whether the case is being heard in France or in Germany.
In the Local and Regional Divisions (see above), the language of the proceedings will be the language (or one of the languages) of that Local or Regional Division. Many of the Local and Regional Divisions are expected to allow English to be used as the language of the proceedings alongside the national language of the country where the division is located.
The parties can agree, with consent of the court, to change the language. Alternatively, the presiding judge may determine that it is more appropriate to use the language in which the patent was granted.
The costs of patent litigation at the UPC will be significantly less than the aggregate costs of several national litigation actions in many of the participating member states.
The court fees have already been published, for example:
The cost of the attorney(s) and patent attorney(s) are not fixed and will highly depend on the case and the number of attorneys involved. Part of this cost may however be recoverable from the losing party according to the value attributed to the case. The ceiling for recoverable costs ranges from € 38,000 (for cases valued up to € 250k) to € 2M (for cases valued at more than € 50M). In limited situations, these ceilings may even be raised up to a maximum of € 5M.
For patentees, the main benefits are:
For competitors & third parties:
For patentees, the main risk is losing their patent right across most of the EU as a result of a single revocation action.
For competitors & third parties: risk of an injunction across most of the EU as a result of a single enforcement action. As a defendant party, one my further be faced with an action initiated by a patentee in a country that one is not familiar with but which may have consequences across most of the EU.
For any plaintiff or defendant, there is a risk of having to reimburse part or all of the attorney costs made by the winning party.
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