The Unitary Patent and UPC: key themes from the first year

One of the considerable advantages of the UPC is being able to obtain injunctive relief across up to 17 EU Member States on an interim basis. The first preliminary injunction (PI) was granted by the Munich Local Division in September 2023 (albeit overturned on appeal) in 10x Genomics v Nanostring and there have been a number of such applications made across various sectors (as well as applications for other forms of provisional relief such as preservation of evidence – see further below).

To date, PIs have been granted by the Court of First Instance in:

• 10x Genomics v Nanostring (overturned on appeal)
• MyStromer v RevoltZycling
• Ortovox v Mammat
• 10x Genomics v Curio (subject to €2million security)

However, the Court of Appeal's subsequent decision overturning the PI in 10x Genomics v Nanostring suggests that the bar for obtaining a PI is higher than had perhaps been first anticipated from the early decisions on PIs: in addition to being persuaded of the urgency of the matter, the Court must consider on the balance of probabilities that at least more likely than not the applicant is entitled to initiate proceedings and that the patent is infringed (the burden of which is on the applicant). The sufficient degree of certainty will not be established where the Court considers it on the balance of probabilities to be more likely than not that the patent is not valid (the burden of which is on the defendant).

Meanwhile, in a recent high profile decision, the Hamburg Local Division rejected a PI application against UEFA relating to its use of VAR technology at the European Championships (Ballinno v UEFA). The reasons for the decision are yet to be published but it has been reported that the judges were not persuaded by the urgency of the application, nor as to infringement of Ballinno's patent.

When approaching the question of interpretation of patent claims, one key question is the extent to which the Court may consult the 'file wrapper' i.e., statements made by the patentee during the patent prosecution process. The approach to this question is currently uncertain. The Düsseldorf Local Division has said that such statements are not admissible for interpretation and are not generally taken into account (10x Genomics v Curio and Ortovox v Mammut). However, in SES-Imagotag v Hanshow, the Munich Local Division decided that the wording of an application as filed could be considered when interpreting the claims of the granted patent. On appeal, the Court of Appeal upheld the Court of First Instance's decision not to grant a PI on the basis that it was not satisfied, following the approach set out in Nanostring, with a sufficient degree of certainty that the defendant's products infringed the patent. However, as it concluded that the EPO prosecution file did not shed any new light on the interpretation, it decided it did not need to address whether it was appropriate to consult the file wrapper when interpreting the claims.

Another area likely to develop further is the impact of protective letters. Parties concerned about the possibility of a without notice application for a PI (or other provisional applications such as for preservation of evidence) being made against them have one important tool to mitigate against that risk – they can file a protective letter with the UPC Registry. The aim of a protective letter is to ensure that the potential defendant's arguments are before the relevant UPC panel if an application is made in relation to the relevant patent for provisional measures on a without notice basis. In exercising its discretion, the panel will take the protective letter into account and, in particular, should consider whether to summon the parties to an oral hearing.

Whilst a number of protective letters have been filed, and they are undoubtedly a valuable tool in freedom to operate strategies (the cost for filing is relatively low, and they are not notified to the patentee unless and until an application for a PI is filed), cases to date demonstrate that they must be very carefully crafted. In MyStromer v RevoltZycling, for example, the Düsseldorf Local Division disregarded the content of the defendant's protective letter and granted the PI sought. In particular, the defendant had failed to address the validity of the patent in its protective letter. However, it is not always straightforward to do this to a sufficient degree in advance of the claim being issued.

A further important provisional measure available in the UPC is an application to preserve evidence and to inspect premises, including on a without notice basis. An applicant for such an order must provide reasonable evidence to support the claim that the patent has been infringed or is about to be infringed. For applications made on a without notice basis, the Court must take into account the urgency (will delay be likely to cause irreparable damage?), and risk of destruction of the evidence.

Orders to preserve evidence have been made in a number of cases, notably in countries which already had a tradition of such applications (e.g., France and Italy). These decisions, to date, suggest a fairly low bar for applicants, including in terms of demonstrating infringement. In C-Kore v Novawell, the Paris Local Division granted a without notice application to secure evidence of infringement by a previous customer (and now direct competitor) of the claimant, subject to a security deposit in the sum of €20,000 (a subsequent application for review of the order was dismissed). In Progress Maschinen v AWM, the Milan Local Division granted without notice applications for preserving evidence and inspection of the defendant's premises, subject to a security deposit of €50,000 (an application was also granted in Oerlikon v Bhagat).

In each of the cases, the Court concluded that the application was urgent given imminent launches/trade fair presence, and was also satisfied of the risk of destruction of evidence.

It is possible for patents to be the subject of both opposition proceedings before the EPO, and a revocation action before the UPC, and for those cases to run in parallel. In such circumstances, the UPC may decide to stay the revocation proceedings where a 'rapid' decision from the EPO may be expected. The EPO meanwhile has said that it will accelerate its processing where there are parallel opposition proceedings. However, whilst the decision whether to stay UPC proceedings will of course be dependent upon a number of factors, it seems likely that this will be exceptional, given that UPC proceedings are to be dealt with within a year of being commenced. 

For example, in Carrier v Bitzer, the Court of Appeal rejected an application seeking to stay UPC proceedings pending the outcome of an EPO opposition. Bitzer had filed opposition proceedings against the relevant patent at the EPO and, the following day, also filed a revocation action against the patent at the Paris Central Division. The Court of First Instance rejected Carrier's request for a stay of the UPC revocation action, and this was upheld by the Court of Appeal. The Court of Appeal noted that UPC proceedings will normally be completed within a year and so, as a general principle, the UPC would not stay proceedings. Whilst the EPO had, in accordance with its commitment, granted Bitzer's request to accelerate the opposition proceedings, the outcome in the UPC case (which was far advanced with the oral hearing scheduled for 21 June 2024) would be expected well before the EPO decision (oral hearing scheduled for 25 October 2024).

Given this stance of the UPC, it will likely now only be a matter of time before the UPC and/or the EPO will have to deal with the conundrum of conflicting decisions being reached on the same patents and/or the same patents being upheld for grant in different forms by different forums.

During a transitional period (initially of 7 years), it remains possible to opt standard European Patents out of the jurisdiction of the UPC, and a significant number have been opted out. The opt-out mechanism is particularly attractive as, provided no proceedings have begun before a national court in relation to the relevant European patent, a patentee may decide to withdraw the opt-out to bring proceedings in the UPC for pan-EU relief. However, the opt-out does bring with it the risk of being 'pinned' outside the UPC jurisdiction, if a patent challenger begins revocation or non-infringement proceedings against the European Patent at a national level.

Withdrawal of an opt-out is under the spotlight in AIM Sport v Supponor. Having opted its European Patent out of the UPC, AIM Sport subsequently withdrew its opt-out to issue UPC proceedings against Supponor. However, the Helsinki Regional Division ruled that AIM Sport's opt-out was not valid, because there was pending litigation before a national court, and so the dispute was 'pinned' outside of the UPC. The Court concluded that it was irrelevant that the national litigation had been filed before the UPC entered into force (note that the Court did not deal with another scenario, e.g., where the relevant national action had already been concluded).

Another potential hazard in relation to opt-outs is the requirement that all proprietors of all national parts of a European patent must file an opt-out for it to be valid. In Neo Wireless v Toyota, an opt-out had been file by Neo's US parent company for 'all EPC states'. However, the German part of the pending application was owned by its German subsidiary which had not filed an opt-out (and there was no evidence it had agreed to the opt-out by the US parent). As a result, the opt-out in relation to Germany was found to be invalid (a decision upheld on appeal). That meant that the UPC had jurisdiction to deal with a revocation action launched by Toyota against the granted patent in the UPC Central Division.

One of the early important issues for the Court of Appeal to resolve concerned the balance between transparency and open justice, with Local / Regional Divisions adopting conflicting approaches to applications by non-parties for access to pleadings. The Rules of Procedure require that these are made available to the public upon 'reasoned request'. In Ocado v Autostore, the Court of Appeal dismissed Ocado's appeal against the Nordic-Baltic Regional Division's decision granting access to its statement of claim to a member of the public.

The Court concluded that the public's general interest in having access to written pleadings and evidence usually arises after a decision is passed. However, access to pleadings whilst proceedings are ongoing may also be appropriate, provided that the applicant has a 'direct legitimate interest' in the subject matter of the proceedings – e.g., for commercial reasons related to validity, potential infringement, licensing etc (subject to any appropriate confidentiality measures).

The Court's decision has now been applied in revocation proceedings in the Paris Central Division (NJOY Netherlands v Juul Labs), where the Court had stayed its decision pending the guidance in Ocado v Autostore. Nicoventures Trading (which has opposed the patent before the EPO but is not a party to the UPC proceedings) applied for access to various documents on the UPC court file. Applying the Court of Appeal's guidance, the Court concluded that Nicoventures had a direct interest given its involvement in the EPO opposition proceedings, with the Court also noting the greater public interest in revocation proceedings in transparency, as well as the fact that EPO files are of course public. However, Nicoventures was not granted access to court documents from the file as relevant decisions and order would be published in any event.

A related issue concerns confidentiality of documents in proceedings. In Panasonic v Xiaomi, part of a series of standard essential patent (SEP)-related litigation between the parties, the Mannheim Local Division, in response to its own application by Panasonic, ordered Panasonic to disclose its licences with third parties (with appropriate redactions). The Court concluded this was appropriate given its broad case management powers and the primacy of EU competition law.

A further significant contentious issue in the planning for the UPC has been around the language of proceedings. Under the Rules of Procedure, proceedings before the Central Division will be conducted in the language of the patent. Meanwhile, before Local and Regional Divisions, the patentee can select the language of proceedings from one of the official languages of the country or another designated official language of the EPO. All relevant member states have designated English as an available language. 

As noted above, some 50% of proceedings are now being conducted in English. This figure may be expected to rise further following the Court of Appeal's decision in 10x Genomics v Curio, where the defendant in infringement proceedings in the Düsseldorf Court applied to change from German to English. Both parties were US companies, and the language of the underlying technology was English, as was most of the infringement and defence evidence.

According to the Court of Appeal, relevant factors include: the language mostly used in the technology, the language of the evidence, how a change in language will affect or delay the proceedings, the nationality/domicile of the parties, and their relative size. Where the balance of interests between the parties is equal, the defendant's position will be decisive. A party's representative's language skills and the nationality of the judges will be irrelevant.  

The Court of Appeal's decision was recently applied in Samsung v Headwater, with the Düsseldorf Local Division granting Samsung's request to change the language of infringement proceedings from German to English (the language of the patent). The Court concluded that using German would impact both parties (Headwater is a US company) but was more detrimental to Samsung which did not choose the language in which it was being sued and needed to organise its defence in English before the submissions are translated.

In contrast, however, in Seoul Viosys v Laser Components, the Paris Local Division rejected an application by an intervenor (a Korean company) to change the language of infringement proceedings from French to English. Whilst the patent is in English, the claimant Korean company had chosen to bring its claim in French against the defendant, a French company.

Security for costs may be ordered in the Court's discretion where there is a concern over enforcing a costs order in a particular jurisdiction (i.e., in relation to a territory outside of the EU), or an insolvency risk in relation to one of the parties. Relevant factors include the financial position of the other party and/or the likelihood that a possible UPC court order may not be enforceable or it may be unduly burdensome to do so.

In relation to potential enforcement risks, the Paris Central Division refused to grant security in Edwards v Meril where the claimant is a US company. A US-based claimant was also not a determining factor in ARM v ARM in the Paris Local Division but the Court in that case did grant security because of a lack of information about the claimant's financial position. However, in Harvard v Nanostring (Nanostring is the claimant having brought revocation proceedings), the Munich Central Division ordered Nanostring to pay €300,000 as security. This was because of an identified additional procedural burden and uncertainty in seeking to enforce a UPC costs order in the UK compared to other European jurisdictions (whilst recognising that the UK was not a 'distant jurisdiction'), and also because of what the Court identified as legitimate concerns that Nanostring would not have adequate financial means to meet a costs order.    

Security was also ordered in Ballinno v UEFA, where the Hamburg Local Division ordered Ballinno to provide security in the sum of €56,000. It had failed to provide any evidence as to its financial position and also appeared to have no other assets, apart from its patent. In contrast, in AIM v Supponor, the Helsinki Regional Division was satisfied that the claimant had sufficient financial means and rejected an application for security.

Meanwhile, whilst security for costs can be ordered against a defendant as well as a claimant, it cannot be awarded in a PI application. In 10x Genomics v Curio, the Düsseldorf Local Division granted 10x Genomics its application for a PI but refused its application for security for costs against the defendant on this basis.