The Unitary Patent and Unified Patent Court

Patentees have the following options in relation to their portfolio in the EU and in EPC states:

• A Unitary Patent (covering all participating EU Member States)

• A classic European Patent validated in individual EPC states

• A Unitary Patent, together with a classic European patent with separate validations in non-ratifying Member States and non-EU EPC states

• National patents in individual states (subject to national rules on double patenting)

When deciding on a patent strategy, relevant factors include the pan-EU effect of the Unitary Patent (and related cost savings under the new regime). However, until the UPC regime is fully bedded in and its judiciary are perceived to be making sensible decisions, it is likely that many businesses will continue to focus on classic European Patents and even national patents in some cases. 

Whilst it is possible to obtain a supplementary protection certificate (SPC) based on a Unitary Patent, there will not be, at least for the time being, a ‘unitary SPC’, though this is under current consideration. National applications for SPC protection can be based on the Unitary Patent, in the same way as for classic European Patents. However, any such SPCs based on a Unitary Patent are, like the Unitary Patent upon which they are based, subject to the exclusive jurisdiction of the UPC - i.e., they cannot be opted out of the UPC regime. 

Structure of the UPC

The UPC is made up of a Court of Appeal, Court of First Instance, and Registry. There is also a Mediation and Arbitration Centre in Ljubljana and Lisbon. 

The Court of First Instance comprises a Central Division as well as Local and Regional Divisions.
 

The Rules of Procedure govern how UPC proceedings are conducted, comprising written, interim and oral stages. 

The rules provide for a decision on validity and/or infringement within one year. This is achieved by a fixed and compressed timetable during the written stage of proceedings. The written stage will likely require some ‘front-loading’ for patentees as their pleadings must set out their proposed claim interpretation. 

The procedural framework is a mixture of both common law and civil law traditions. In particular, an extensive range of evidential tools are available including: hearing the parties, requests for information, production of documents, hearing witnesses, expert opinions, inspections, experiments and affidavits. However, there is no general disclosure obligation, and cross-examination of witnesses and experts will be limited. A particularly interesting aspect is the availability of orders preserving evidence (saisie) which may be available against an alleged infringer even before an action is launched, and potentially on a without notice basis. 

In addition to bifurcation and the resulting ‘injunction gap’, many are concerned about how different panels may approach the award of final injunctions. Whilst an injunction is a discretionary remedy, the UPC Preparatory Committee has suggested that only in “very exceptional circumstances” will the Court decide not to order an injunction.   

A patentee may also seek a provisional injunction which, given the potential geographical scope, will have significant consequences. The grant of a provisional injunction is also discretionary and judges are given very limited guidance in the Rules. It is inevitable that, even once the Court of Appeal begins to issue clarificatory decisions, there will be variations of approach between different panels in the exercise of their discretion, based on existing practices before national courts.

A party that is concerned that provisional remedies may be sought against it may lodge centrally at the UPC Registry a protective letter in which it can set out its arguments on infringement and /or validity. The aim is to ensure that these arguments are before the panel on any subsequent application. If a provisional injunction is granted, the UPC may order security for any injury caused as a result, which may be a significant amount given the potentially broad geographical scope of the injunction (however it appears that security will not be granted in favour of third parties).

Court fees comprise a fixed fee, together with a value-based fee above a pre-defined ceiling, based on the German fees model. 

In relation to costs recovery, the Rules set out a scale based on the value of the dispute. It is possible for the Court to raise or lower the ceiling of recoverable costs in certain circumstances.

Guidance has been issued in relation to the scale of ceilings for recoverable costs (including as to the basis for raising/lowering the ceilings) and for assessing the value of a case (both for the purposes of setting the Court fee, and for recoverable costs). The guidance notes that the method of determining a value-based fee should be as simple as practically possible and that, in most cases, the most practicable method will be a valuation based on an appropriate licence fee, though a valuation based on the claimant's loss of profits, or the defendant's profits may be applied (though usually these other options would be too complex to be determined at the beginning of proceedings). The valuation will relate to the summed up values of the main remedies sought (injunction for the future, damages for the past), with specific guidance provided for calculating the value of the various types of claims.

Scale of Ceilings for Recoverable Costs

Owners of classic European Patents (and SPCs based on those patents) have been giving careful consideration to opting out of the UPC’s jurisdiction during the transitional period, so that issues of validity/infringement can only be dealt with by the relevant national court/s. 

A three month sunrise period to opt-out classic European Patents before the UPC was in operation began on 1 March 2023 (opt-outs can continue to be filed during the transitional period). If a classic European Patent is not opted out of the UPC, it is at risk of a validity challenge in the UPC which could see it being invalidated across all participating Member States. 

There is no fee to opt patents out of the UPC (though there will be administrative costs for doing so). Many businesses have submitted blanket opt-outs across their portfolio, but others may take a more nuanced approach, depending upon their assessment of individual patents. Key considerations include the strength of the relevant patents, the potential benefit of pan-EU injunctions/financial remedies in a single court action vs. the risk of pan-EU revocation, cost, and considerations relating to levels of trust in the new, untested (and therefore uncertain) regime. The decision to opt out will involve a consideration of the following issues:

Who can file the opt-out? The opt-out must be filed by the owner of the relevant classic European Patent. Co-owners (and separate owners of different designations of the patent) must all agree to opting out a patent. Where there are unrelated separate owners of different designations, it is likely to be preferable to opt out the patent to ensure that they can continue to manage their enforcement activities separately. 

An exclusive licensee cannot file an opt-out, but its interests should be taken into account when deciding whether or not to do so (there may be provisions in the licence agreement which impact upon the patentee’s ability to opt out without reference to the licensee).  

When can the opt-out be filed? The opt-out can be filed at any time during the transitional period but it must be registered, at the latest, one month before the transitional period expires. After the end of the transitional period, it will not be possible to opt out a classic European Patent and it will be subject to the exclusive jurisdiction of the UPC from that point. 

How long does the opt-out last for? The opt-out will have effect for the rest of the life of the patent. What makes the opt-out even more attractive for patentees is that it need not have permanent effect. Having opted their classic European Patent out of the UPC, they can decide to opt it back in again. This means that a patentee may opt a classic European Patent out of the UPC to avoid the risk of a pan-EU revocation, but opt it back in again if it later wishes to enforce the patent on a pan-EU basis.

However, once litigation has been commenced in respect of a classic European Patent, this will ‘fix’ jurisdiction going forward. Proceedings brought by an exclusive licensee would also ‘fix’ jurisdiction in this way. Similarly, the actions of the patent owner in opting out a patent will impact on the exclusive licensee’s ability to commence litigation in its potentially preferred jurisdiction.  

This means that, where an action has already been brought before the UPC (whether pending or concluded) in respect of a classic European Patent, that patent cannot be opted out of the UPC, i.e., an action before the UPC is an absolute bar to opting out. Further, where an action has been brought before a national court (whether pending or concluded) in respect of a classic European Patent, it will not be possible to withdraw an opt-out in relation to that patent.

Once an opt-out has been withdrawn, it will not be possible to opt that patent back out again.