The Unified Patent Court (UPC) will be in operation from 1 June 2023, opening up the possibility of (almost) EU-wide patent enforcement in a single set of proceedings (we say "almost" because, at least at the outset, Spain, Poland and Croatia will not be participating and some Member States are yet to ratify the UPC Agreement). Further information on the UPC system can be found at the Mishcon UPC hub here.
As one of the key European patent litigation jurisdictions, patentees and patent challengers will continue to look to the UK as a forum of importance for resolving patent disputes. Indeed, the UK's absence from the UPC creates some interesting strategic opportunities which we explore in this note.
The UPC: The Role of the UK Courts
The UPC will determine questions of infringement and validity of EPO issued European patents unless a patent is opted out of the UPC's jurisdiction during a transition period (the opt out transition period is seven years, although that period could be extended to 14 years, and opt-outs can be lodged from 1 March 2023, the start of the three month sunrise period). Whilst it is anticipated that many patent owners will opt out their key patents ("crown jewels") to avoid exposing them to a single revocation action or counterclaim in the UPC, it is equally likely that a large number of infringement and revocation actions will be pursued in the UPC as soon as it opens up its doors.
In the pre-UPC world, it was commonplace for both patentees and patent challengers to issue claims concerning European patents with multi-jurisdiction designations in certain key jurisdictions, notably Germany, the UK, The Netherlands and France. Whilst there was never a ‘one size fits all’ multi-jurisdiction approach, a key justification in many cases was to apply maximum pressure by optimising the scope for recovering damages (and in turn creating leverage for settlement).
With the advent of the UPC, a claim previously pursued in those four territories now need only be pursued in two – the UPC and the UK. Indeed, given the reach of the UPC (with up to 400 million citizens once all jurisdictions that say they intend to ratify in fact ratify) the question is whether a UK action is likely to have any ongoing utility – will the claim in the UPC alone suffice to create the necessary pressure and leverage?
In our view, it remains critical to any European patent litigation strategy that the option of suing in the UK is explored, whether complementary to or, in some cases, in the place of a UPC claim.
A UK Claim – Factors to Consider
In weighing up the benefits of bringing a claim in the UK as a complementary strategy to UPC proceedings, the following factors should be taken into account:
Decisions of the UK Patents Court are highly regarded by courts in other EPC jurisdictions and may have a persuasive effect before the UPC.
The UK, along with each EU Member State (together with a number of other European countries) are members of the European Patent Convention (EPC). Substantive patent law in EPC Member States has a common basis; the EPC itself governs issues of validity whilst the (never formally implemented) Community Patent Convention (CPC) deals with infringement. As a result of this common basis, the most active European patent courts (Germany, The Netherlands, the UK and France) have long considered and respected each other's judgments when considering issues of validity and/or infringement of the national designation of a common EPO issued patent. Although the UK is not a member of the UPC, patents issued by the EPO – whether 'classic' European patents or the new Unitary Patent - will in most cases have a UK designation or equivalent, meaning that the UK Patents Court and the UPC will inevitably consider the same validity and infringement issues. Decisions of the UK Patents Court, are handed down following a trial in which the parties will have thoroughly tested the fact and expert evidence via cross examination, are thorough, well-reasoned and fairly quick (see below). Therefore, a decision of the UK Patents Court may have significant 'export value'. This may be particularly significant in the early days of the UPC: whilst the aim is for UPC proceedings to be completed within 12 months, it remains to be seen if that objective will be realised.
The UK Patents Court aims to bring patent cases on for trial where possible within 12 months of the claim being issued. The Court will also be open to ordering an expedited trial where the parties can justify the need for a speedier decision. Expedited patent trials have been heard and decided in the UK Patents Court in as little as five months.
The UK Patents Court offers innovative and pragmatic solutions
The UK Patents Court has long been regarded as an innovative tribunal using the flexibility of the common law to develop novel remedies such as Arrow declarations or to assume a broad-based jurisdiction such as in its willingness to grant global FRAND licences in relation to patents declared essential to the ETSI standard (as in Unwired Planet v Huawei). Whilst the UPC may have jurisdiction to grant e.g., Arrow declarations, this is of course currently untested. Meantime, litigants before the UK Patents Court can proceed in the knowledge that such remedies will remains available to them.
A UK non-infringement action may operate as a as a 'Torpedo'.
The UK courts have demonstrated that they are willing to consider infringement of non-UK patents where the UK is the most convenient forum and where validity is not in issue (for example, in Actavis v Lilly). It is expected that the UK Courts will continue to be invited to assess whether they have jurisdiction to grant a declaration of non-infringement of ‘classic’ European patents designating both the UK and one or more UPC contracting Member States. That said, questions of comity will no doubt arise, and the UPC's approach to the limits of its own jurisdiction may be a relevant factor in the Patents Court's assessment. Anti-suit injunctions may also become even more prevalent in consequence of such possible ‘forum shopping’.
UK patent litigation has a number of useful dispute resolution features.
There are a number of features of UK patent litigation which provide a point of difference from the UPC framework, and which may present advantages to litigating parties. For example, pleadings in UK patent cases are not as detailed as provided for in the Rules of Procedure of the UPC, leading to greater flexibility and less front-loading of costs (see further below in relation to costs). In appropriate cases, parties may also welcome the UK's approach to disclosure (in particular, the availability of Product & Process Descriptions (PPDs)), and the forensic approach adopted by the UK Courts in relation to the assessment of evidence, with parties having the opportunity to undertake experiments (for example to test the claimed sufficiency of the patent in suit), and conduct extensive examination of both fact and expert evidence (which evidence can also then be deployed in overseas jurisdictions). Similarly, where disclosed documents have been referred to in public in Court, they may be used in aid of UPC proceedings, alongside other documents and materials made publicly available. Even in relation to documents that have not been used in public proceedings, it is possible to apply to Court to use those documents in other proceedings.
Interplay with EPO Opposition proceedings.
Another potential point of difference relates to the interplay with EPO opposition proceedings. Whilst it is possible that a UK Court may stay proceedings pending the outcome of central EPO opposition proceedings, in practice, the Patents Court rarely grants such stays. It remains to be seen how the UPC will approach the question of stays in similar circumstances.
Costs and funding considerations may favour UK proceedings.
The UPC regime involves some front-loading of costs given the relatively detailed nature of the pleadings. Further, court fees at the UPC can be sizeable (comprising a fixed fee element, and a value-based element for infringement actions), compared to the maximum court fee to issue a patent claim in the UK of £10,000. In relation to costs recovery, both regimes operate the 'loser pays' principle. In UK patent litigation, this typically means that a party that has been successful across the board (on validity and infringement), can typically expect to recover 60-80% of its total costs. In the UPC, a scale of recoverable costs will operate (the scale can be raised or lowered).
The UK system offers a number of attractive solutions for managing and reducing a party's exposure to legal costs with alternative funding options including conditional fee agreements, after the event (ATE) insurance, third party funding, and damages-based agreements. These arrangements are not options for the majority of lawyers operating in the UPC (due to restrictions imposed by local bar associations).
Many patent litigants will be considering taking early advantage of the opportunities presented by the UPC regime, whilst others will be taking a more cautious 'wait and see' approach to the implementation of the new framework. Both types of approach should also, for the reasons set out above, consider the strategic interplay with the UK courts.