Opt out of the UPC and opt back in later – a low-risk choice

The Unified Patent Court (UPC) Administrative Committee roadmap envisages that the new Court will begin operation on 1 June 2023. The timing is under the control of the German government, which can start the sunrise period as soon as the UPC Administrative Committee indicates the Court will be ready.  (The schedule has been delayed 2 months owing to difficulties in finding eIDAS-compliant smart card providers to comply with the very high UPC case management system (CMS) security requirements.)

In an initial transitional period of at least seven years after the system enters into force, “traditional” European patents (and indeed patent applications) will fall under the joint jurisdiction of the UPC and relevant national courts. This will be the default situation not just for newly granted patents, but to all existing European patents, unless they are actively “opted out” of the Court’s jurisdiction.

Accordingly it will be possible, until the end of the transition period, to “opt out” an EP patent or, pre-emptively, a patent application from the jurisdiction of the UPC. This requires the active step of filing a request through the online case management system of the Court Registry. There is no official charge.

This option will become available in a "sunrise period" of three months before the start of the transitional period. It is expected that vast numbers of patents will be opted out during this period. If not opted out, there is a risk that a third party could launch a revocation action (or other action), after which the jurisdiction of the UPC will have been invoked and opting out thereafter is not permitted.

Once opted out, the patent will by default remain "out" for the rest of its lifetime, even beyond the end of the transition period. But it is possible to withdraw the request and thus "opt back in", unless an action has begun before a relevant national court. No further change of mind is allowed.

Opt out or stay in?

The major concern about falling under the jurisdiction of the UPC is that of central revocation. Whereas a European patent is subject to central opposition for just nine months after grant, at relatively low cost, a patent subject to UPC jurisdiction is vulnerable to attack throughout its lifetime and the cost is not very much greater. (The Court fee is €20,000, which is much higher than the fee for opposition, and it is a “loser pays” system, so a failed attack can be quite costly, but the procedure is designed to not be much more expensive than an opposition.)

Any third party may apply to revoke a patent - not just a defendant in infringement proceedings.

In choosing to opt out, a patent owner is choosing the status quo i.e. a nine-month period for opposition and familiar options for enforcement before national courts. The UPC is untested and many patent proprietors will prefer to sit back and wait to see how patentee friendly the UPC will be. If an infringement comes to light and the UPC is an attractive forum, the patentee can simply withdraw the opt-out.

Infringement may occur or be imminent in one of the states in which the patent is validated, and the patentee may at that time prefer the national or regional division of the UPC over the local court. Or the UPC may have more accessible powers of discovery, inspection and seizure than the local court. Or infringement may occur across a number of states, such that the broad jurisdiction of the UPC is attractive. These questions can be considered at the time.

The only risk is that a competitor pre-empts the withdrawal of the opt-out by some action in a local court to “clear the way” by initiating revocation proceedings or non-infringement proceedings. This is probably a low risk, because such proceedings are rare without there first being some contact from the patentee drawing attention to the alleged infringement.

EPC Applications

Is it necessary to opt pending EPC applications out? On the whole, “no”, because proceedings under pending applications (such as applications for declaration of non-infringement - so-called “Arrow” declarations) are extremely rare and generally only necessary in relation to divisional applications where uncertainty hangs on after a parent patent has been granted.

If an EPC application is opted out, it can still be declared as unitary when it is granted, which then cancels the opt-out.

EP(UK) Patents are outside the system

The United Kingdom will be outside the Unitary Patent system and European patents will still need to be validated in the UK, just like Spain, Switzerland, Poland, Turkey and other EPC states that are not participating in the Unitary Patent system. Opting out is of no relevance to UK patents obtained by the EPO route, and neither is it of relevance who sues whom first under a UK patent.

Conclusion

Joint jurisdiction under the UPC and national courts is not for everyone. Some will jump at new options in litigation and negotiation strategy and enhanced forum shopping, and some will shy away from the centralised approach.

Rather than expending effort weighing the relative legal and cost implications, many applicants will simply opt out, with the option to opt back in later.

But don’t leave it to the last minute. Patentees (and patent applicants) wishing to opt out should instruct their European Patent Attorneys in good time. There may not be time before the end of the sunrise period to answer all the many questions that will arise, and the online systems will be busy as that time approaches. It may not be critical to file the opt-out before the system starts, but without doubt there will be parties and lawyers keen to file revocation proceedings on the first day for key patents that may not be opted out.