UPC update: recent developments and a look ahead

With the start of the new year bringing the opportunity to 'horizon scan', we are tracking developments relating to the Unified Patent Court (UPC) and Unitary Patent, as the new regime continues to bed in. As we move further into 2024, we will start to see the first UPC decisions on substantive issues but, for now, key issues being considered are as follows.

Numbers (and locations) of cases

On 21 December 2023, the UPC issued details of the number of cases since it opened its doors on 1 June 2023. It has not been straightforward to conduct this analysis by reference to the Case Management System itself but the UPC itself has confirmed that, at that point, there were 160 cases before it, including 67 infringement actions and 24 revocation actions, as well as 48 counterclaims for revocation (albeit in 18 infringement actions). Whilst there has not been a huge swathe of cases so far, the number is expected to rise as the divisions of the Court continue to develop their decision making, and as parties incorporate the UPC into their assessment of their strategic options when litigating in Europe.

The geographical breakdown of where the 160 cases have been brought is not hugely surprising with the Munich Local Division leading the way on infringement actions (and the Paris Central Division receiving the bulk of the revocation actions). However, some Divisions are yet to receive their first case:

Infringement actions and applications for provisional measures

Revocation actions

Again, as would be expected, German is the main language, having been adopted in 49% of the proceedings, but English is not far behind at 40%, and it may not be long until English surpasses German as the dominant language, given that it was only relatively lately adopted as a permissible language in the French, German and Italian local divisions.

The Court of Appeal has also started to receive, and hear, procedural appeals and appeals concerning provisional measures (see further below). On 18 December 2023, it heard its first appeal, with President, Klaus Grabinsky, sitting alongside four other judges (two legally qualified, two technically qualified) describing this as a 'landmark moment'. The appeal follows the grant of a preliminary injunction against Nanostring (in favour of 10x Genomics), with the decision expected imminently, with the substantive action expected to take place in Summer 2024.

Meanwhile, the numbers of applicants before the European Patent Office (EPO) opting for unitary effect is also worth monitoring. The unitary patent dashboard indicates that, as at 11 January 2024, some 17,388 unitary patents had been registered, with companies such as Johnson & Johnson (267), Siemens (261), Qualcomm (195), Samsung (192), LM Ericsson (182) and Volvo (162) leading the way as applicants.

Transparency and access to pleadings

One of the most hotly contested issues for the Court in its early days has been access by non-parties to pleadings and orders. As we reported in our last edition, whilst the Nordic Baltic Regional Division has granted access to pleadings by a third party, the Munich Central Division has refused such a request. This issue of access, and what constitutes an appropriate 'reasoned request' for a non-party to be given such access, together with the procedure to be adopted when considering such requests, will be resolved by the UPC Court of Appeal.

This decision will be significant as it will require the Court of Appeal to strike a balance between competing national traditions as the approach to transparency within patent litigation, reflecting the mix of traditions that underpin the Court's rules. Though the cases brought on this issue have been instituted in part to test the issue, this is not a purely theoretical issue, but one that has particular resonance for third party companies who may find themselves also brought before the UPC. Its resolution is also crucial for the purposes of understanding how the Court is operating and reaching its decisions. The Court has recently rejected as inadmissible attempts by two UK law firms to intervene in the appeal.

Acceleration at EPO to align with UPC/national proceedings

In November, the European Patent Office issued a practice notice that it would accelerate its processing of parallel opposition proceedings where it is informed by the UPC or a national court or competent authority of a contracting EPC state that an infringement or revocation action relating to a European or Unitary Patent has been brought before it. The notice also advised that a party to the parallel proceedings may request accelerated processing at any time. Whilst the aim is to speed up EPO proceedings, which remain notoriously slow, some are sceptical as to whether it is likely to make much practical difference given the backlogs of the Opposition Divisions of the EPO. On the other hand, the EPO handles an exceptionally large number of patent disputes as compared to typical national European forums and so accelerating the (likely) relatively small number of Oppositions that have parallel UPC proceedings may be nothing more than a simple point of scheduling for the EPO.

On the other side of this issue, the UPC has a discretion under Article 33(1) UPCA to stay revocation proceedings pending a "rapid decision" in parallel EPO proceedings.

In Astellas vs Helios, however, the Munich Central Division rejected Helios' request for a stay of the revocation proceedings because, even though a decision from the EPO was expected on 04 March 2024, a decision on appeal would not be expected until mid-2028 and this was not considered "rapid".

Security for costs

The Court has a discretion, in response to a 'reasoned request', to order security for a party's legal costs and other expenses. Relevant factors include the financial position of the relevant party that may give rise to a legitimate and reason concern that costs may not be recoverable and/or the likelihood that a cost order may not be enforceable (or only in an unduly burdensome way). However, this has to be balanced against the burden in requiring a claimant to provide security.

Whilst the Munich Local Division refused security for costs in Edwards Lifesciences v Meril, as did the Helsinki Local Division in AIM Support v Supponor, the Munich Central Division has recently made an order against Nanostring in its revocation action against the Fellows of Harvard College. In particular, the Court relied upon the fact that the Claimant, Nanostring, is based in the UK. Whilst this was not a 'distant' jurisdiction, it did undoubtedly add an additional procedural burden, and uncertainty, in seeking to enforce a costs judgment compared to EU jurisdictions (though note that in Edwards v Meril, the Claimant was based in the US). The Court also accepted that there was a legitimate concern that the Claimant would not have adequate financial means to cover any legal expenses it may be liable for, not least because of statements made in other UPC proceedings, and the information provided by Nanostring. The Court went on to require it to provide security in the form of a deposit on the UPC account or by bank guarantee to the amount of EUR 300,000 (the maximum could have been EUR 600,000). Permission to appeal was granted.

If you would like more information on UPC / Unitary Patent matters, please get in touch with a member of our Patents team.