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FAQs on the Unified European Patent and Unified Patent Court

When will these changes take effect?

The UPC Agreement will take effect on the first day of the fourth month after 13 signatory states (of which France, Germany and the UK must be three) have ratified the agreement and deposited their instrument of ratification. A sufficient number of signatories have so far done so, including France, so only Germany and the UK remain before the system can come into effect. Before the UK can ratify, certain statutory instruments must be made; these are currently before the Westminster and Scottish parliaments for approval and it is unclear when this will be completed. Germany’s ratification has been delayed by a constitutional complaint and it appears likely that the German Constitutional Court will take some time to decide.

A “Provisional Application Phase” of about six months is planned before the UPC can open its doors. This would establish the Court as a legal entity and allow preparatory matters such as the recruitment and training of judges to take place. This requires 13 signatory states (of which France, Germany and the UK must be three) to have (i) ratified the UPC Agreement or received parliamentary approval to do so; and (ii) signed or notified their intention to be bound by the Protocol on Provisional Application. So far, the number of signatories to have satisfied both criteria is not sufficient, and two of the remainder must be Germany and the UK.

What is the position in relation to opt-outs? When would we need to take action?

During an initial seven-year transitional period, it will generally be possible to opt-out of the jurisdiction of the Unified Patent Court (UPC) in respect of European Patents (EPs), Supplementary Protection Certificates (SPCs) and applications for them filed and/or granted before and during the transitional period. The transitional period may be extended by a further seven years by the Administrative Committee following consultation.

The wording of the provisional procedures is somewhat unclear. However, pending further guidance on the interpretation of Article 83 of the Agreement which deals with the transitional arrangements, it is generally understood that the transitional regime will operate as follows:

Formal Opt-Out Procedure: Patentees may apply to the Registry to opt-out of one or more of their patents up to a month before the end of the transitional period. Once opted-out of those patents, the SPCs and applications will not be subject to the exclusive jurisdiction of the UPC at all, including after the end of the transitional period. As long as no proceedings have been brought before a national court, patentees can opt their rights back into the system at any time.

Informal Opt-Out Procedure: During the transitional period, an action can still be brought before national courts whether or not patentees have used the formal opt-out procedures. If a claim in respect of a non opted-out patent or SPC is first brought before national courts, then the national courts will be seized. However, if a claim is commenced concerning a non-opted-out patent or SPC in one of the Unified Patent Courts before the end of the transitional period, then that right becomes subject to the exclusive jurisdiction of the Unified Patent Court, ie non-opted-out patents are subject to the jurisdiction of the court first seized. It is, therefore, important to opt-out of any relevant rights before an action is commenced in the UPC.

After the transitional period, no further opt-outs are possible. Patents, SPCs and applications that have not been opted-out and are not subject to a pending claim before a national court will automatically be subject to the exclusive jurisdiction of the UPC. European patents, unitary patents and SPCs granted after the transitional period are automatically subject to the exclusive jurisdiction of the UPC.

Does it make sense to opt-out?

Yes. Patents/SPCs that are subject to the jurisdiction of the UPC will be subject to central validity challenges which, if successful, will revoke the patents/SPCs in respect of all participating Member States. To avoid this, we believe it makes sense for patentees to opt their patents (or some of them) out of the system. At such time as the patents need to be asserted, patentees will then be able to decide on a case-by-case basis whether it is better to assert the patents nationally (ie on a country-by-country basis with the patents remaining opted-out) or on a pan-European basis (ie by opting the patents back into the system).

Should I file unitary patent applications?

The new unitary patent should be less expensive than filing classical European patents with designations in each relevant Member State where a patentee wishes to enforce their patent. A new unitary patent would immediately come into effect in the participating Member States and would be automatically subject to the exclusive jurisdiction of the Unified Patent Court where a decision of one court would also be immediately effective in the other participating Member States. This feature would, in theory, reduce the amount of filing and enforcement costs commonly associated with classical European patent protection.

However, under current plans unitary patent protection is still relatively expensive (about the equivalent of seven designations which is more than the number of designations of many classical European applications). A further downside is that of flexibility in litigation. Because unitary patents are immediately subject to the exclusive jurisdiction of the Unified Patent Court, patentees and defendants have no choice but to litigate the unitary patent in one of the Unified Patent Courts (see below on forum and bifurcation).

Is there any downside to opting out?

Yes. It is likely to be more expensive to assert patents on a country-by-country basis – that being the main criticism of the current patent litigation system in Europe and the primary reason for the introduction of the new unified system.

What are the rules on forum when bringing an infringement action in the UPC? Is there scope for forum
shopping by patentees?

We believe there will be considerable scope by forum shopping for patentees. For instance, a patentee bringing an infringement claim can chose to bring the claim:

1. in the local/regional division where the infringing act has occurred or is likely to occur; or

2. in the local or regional division where the defendant has its residence, principal place of business or if none, any place of business. The principal place of business is likely to be the most important place of business; or

3. where the defendant has no place of business in a participating Member State, the patentee can sue for infringement in the relevant branch of the Central Division; or

4. where the potential infringer has already brought an action for revocation or declaration for non-infringement in the Central Division, the patentee can bring an infringement claim in the same court.

Patentees can sue multiple defendants provided that the companies have a commercial relationship and the claim relates to the same infringing act. There is potential scope for using a so-called anchor defendant to found jurisdiction under 2 above and then also suing other defendants in the same local or regional divisions.

What options does a potential defendant have to take pre-emptive action, for example by seeking a
declaration of non-infringement or bringing a revocation action? Can the defendant initiate proceedings
in its choice of forum?

Unfortunately, defendants wishing to take the initiative have relatively little choice of forum – both revocation actions and actions for declarations of non-infringement (DNIs) can only be brought in the relevant Central Division of the UPC.

If the patentee subsequently sues for infringement in a local/regional division within three months of a DNI action, the DNI action is stayed in favour of the patentees infringement claim in the local/regional division. If the patent infringement claim is brought over three months from the start of the DNI, then the court will decide how to proceed, including possibly staying one or the other action.

Similarly, if following the start of a revocation action in the Central Division, a patentee commences an infringement claim action in a local or regional division, the court will stay the revocation proceedings. The stay will last until the local/regional division hearing the infringement claim decides whether to hear both claims or bifurcate the claims (see below).

Is there the possibility to bifurcate a claim? How does it work? When will it happen?

Bifurcation is when a court decides issues relating to the infringement and validity of a patent separately. The new system allows for this possibility.

Generally, if the parties cannot agree on whether to bifurcate the claims, it is a decision for the local or regional court hearing the infringement claim who will decide whether or not to bifurcate the two claims.

The panel is presented with this decision in two instances:

1 . When the patentee brings an infringement claim in a local or regional division and the defendant then counterclaims for revocation. At the end of the written procedure, the local/regional panel will decide whether or not to bifurcate the claim.

2. When the potential defendant brings a revocation action in the Central Division and then the patentee brings an infringement claim in a local or regional division. The revocation action will be stayed pending the local or regional's decision on whether to hear both claims or bifurcate the claims.

If the panel decides to bifurcate the claims, then it must also decide whether to stay the infringement claim. The current draft rules provide that the panel may stay the infringement claim but it must stay the infringement claim if there is a high likelihood that the relevant claims of the patent will be held to be invalid.

How do the local and regional divisions work?

Any participating Member State can host a local division. Member States with a minimum case load can host more than one local division. For example, Germany is planning to set up four local divisions, in Düsseldorf, Mannheim, Munich and possibly Hamburg. Alternatively, two or more Member States can group together to form regional divisions. There are plans for a Nordic regional division (Denmark, Finland, Sweden and the Baltic states) and regional divisions in Central Europe (Czech Republic, Hungary and Slovakia) and Southeastern Europe (Bulgaria, Cyprus, Greece and Romania). However, the downside of doing so is that the country or countries hosting the local/regional division must pay for the costs associated with the court. In addition, there are constraints as to which nationalities of judges can sit in the relevant courts, depending on how many patent cases the courts in question hear (see below for further details of judicial panels).

Which judges will hear the cases? Will they be nationals of the country where the local division is hosted? Will they be technically qualified?

Cases will generally be heard by a panel of between three and five judges. The judges will be a mixture of legally-qualified and, in some circumstances, technical judges from different Member States. Each panel will be chaired by a legally qualified judge. For appeals from the EPO, only legally qualified judges will sit. The rules vary between each division as follows:

Local/Regional Divisions: A panel of three judges will hear a case. For local divisions, the panel will comprise of one legally qualified judge who is a national of the Member State hosting the local division and two legally qualified judges who are not nationals of that Member State. Where a Member State hosting the local division has 50 or more patent cases prior to the unitary patent taking effect, then the composition is reversed: two of the judges will be nationals of that Member State and one will be a national from another Member State. For regional divisions, the panel will comprise of two legally qualified judges chosen from the regional list and one legally qualified judge who is not a national of a Member State participating in that regional division.

Where a local/regional division decides to hear a revocation claim at the same time as an infringement claim, the panel will appoint a technical judge. Further, in the local/regional divisions, parties or the panel can agree and request that only one legally qualified judge hear the case.

Central Division: A panel of three judges will hear each case – two legally qualified judges of different Member States and one technically qualified judge with qualifications and experience in the field of technology.

Court of Appeals: A panel of five judges will hear each case – three legally qualified judges from different Member States and two technically qualified judges with qualifications and experience in the field of technology.

What will be the language of the proceedings in the new court? Are we going to be forced to conduct
proceedings in lesser-used European languages?

Potentially, unitary patents will be granted in English, French and German. However, the rules governing the language of the proceedings in any division may vary and, where permitted, the relevant panel can exercise a degree of discretion as to what language will apply. The rules are as follows:

  • an official EU language of the Member State hosting the division;
  • an official EU language designated by the Member States sharing a regional division;
  • one or more of the official languages of the EPO as designated by the Member State at their option;
  • the language in which the patent was granted in (ie English, French and German), subject to approval of the panel of judges. If the panel refuses, the case can be transferred to the Central Division;
  • the language in which the patent was granted where the case is in the Central Division; or
  • the language of the proceedings of the local, regional or Central Division when a case is heard by the Court of Appeals.

 

What time are proceedings before the UPC likely to take?

Under the current draft of the Rules of Procedure, a standard case before the First Instance Court is expected to take about twelve months from filing of the Statement of Claim until judgment. Bifurcation of infringement and revocation (see above) is likely to cause delay.

 

 



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