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UPC: THE “OPT OUT” – TAKING EXISTING PATENTS OUT OF UPC JURISDICTION
This is part of our series of articles on the UPC. Here, we consider the pros and cons of allowing existing European patents to be subject to the jurisdiction of the Unified Patent Court (UPC). Do you want to make use of the option to opt out?
As we discussed in our first article in this series, current granted European patents exist as a “bundle” of national patents. Each patent is independent of the others in the bundle and must be enforced and challenged before the national court in each country.
Now the UPC has taken effect existing European patents automatically fall under the jurisdiction of the UPC, unless opted out (see below). A decision by the UPC to revoke or limit a classical European patent would take effect in all the countries which are signed up to the system. This could be almost all the countries in the “bundle”, so a negative decision by the court could have a significant impact.
For a transitional period lasting until at least April 2030, a patentee can choose to opt an existing classical European patent out of the UPC system for the life of the patent. If the patentee does nothing, their “bundle” of European validations will remain in the UPC’s jurisdiction.
During the transitional period, national actions will remain possible even if a patent is not opted out of the UPC’s jurisdiction. After the end of the transitional period, if the patent has not been opted out, such national actions will no longer be possible. It should also be noted that, even after the end of the transitional period, opted out patents may be opted back in (provided no national court actions have been commenced whilst opted out).
Do I want the UPC to have jurisdiction?
There are pros and cons to the new system. One positive feature is the likely reduction in overall costs in cases which would previously have required litigation in many countries. This will be helped by a streamlined procedure, which we look at in more detail here. Consistency and resulting clarity across several countries will also be helpful to many parties.
However, this is a brand-new system. Judges have been appointed from across Europe and may have differing experience (if any) of hearing patent cases involving complex technology. The effectiveness of the procedural rules is unknown, so the cost impacts may vary. Perhaps most importantly, although the UPC Agreement indicates that previous decisions by the European Patent Office and national courts will be taken into account, currently the UPC has no body of case law of its own to follow. Since the EPO and national courts sometimes reach different conclusions even for the same patent, it may take a while for important questions of law to be settled. Given the risk of central revocation of the patent for all participating countries, patentees may prefer to avoid becoming the “guinea pigs” in this process, at least not without careful planning.
In light of the uncertainties, patentees may prefer to opt out from the system, particularly for important cases. If a patentee subsequently does wish to make use of the UPC for a particular litigation, they can opt the relevant patent(s) back in before starting proceedings. It will only be possible to opt a patent out once, so if an opted-out patent is subsequently opted back in it will be subject to the jurisdiction of the UPC for the rest of its lifetime. However, a patent can only be opted out if no UPC proceedings have been started.
How to opt out
The patent proprietor (or their representative) can opt the patent out via the UPC’s case management system. If a patent is co-owned, all parties must agree; this would also apply if some countries in the patent bundle had been assigned to a different party, as the opt out will apply to all countries covered by the UPC.
If the patent proprietor isn’t the original owner, it is important to ensure that the paperwork is available to demonstrate the chain of title, and that the ownership of the patent has actually transferred to the new owner. It is always advisable to ensure that the proprietor of the patent is shown as such on the official registers, but this provides a further reason in support of ensuring that the record is correct. Where different national patents within a “bundle” have been assigned to different parties, this may be especially important. If an opt out is subsequently found to have been requested by the “wrong” party, this could be a reason for the opt out to be considered invalid. A central revocation attack might then be allowed.
If you’re a licensee, even an exclusive licensee, you do not have the right to opt a patent out. If you are in this position, you will need to negotiate with the patentee as to whether to go ahead and opt out. We discuss issues for licensees to consider in more detail here.
Check the status of your patents
It is important to keep the opt out status of your patents under review. If you would like support to assess the pros and cons of using the opt out for each of your patents, or to discuss any other aspect of the UPC, please contact us.
This article should not be taken as legal advice, it is for guidance only.