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THE UNIFIED PATENT COURT, the new court for European Patents THE OPT-OUT OPTION

The new Unified Patent Court (UPC)

Created by an international agreement (the Agreement on a Unified Patent Court, hereinafter referred to as the “UPCA”) , the UPC will be a patent court, whose decisions on e.g. validity of and infringement on patents will be enforceable in any of  EU Member States having ratified the UPCA (called the Contracting Member States).

UPC Jurisdiction

The UPC will co-exist with national courts, but ultimately they will only keep jurisdiction over national patents, while the UPC will acquire exclusive competence over all European Patents and Applications.

Such exclusivity will be immediate for European Patents having unitary effect (Unitary Patents) while for conventional European Patents, i.e. European Patents that are validated country per country, the UPC will share jurisdiction with national courts for a transitional period of 7 years from entry into effect of the UPC, said period being potentially renewable once for up to 7 years.

Entry into effect

Thanks to progress in its ratification, the UPCA  is approaching its entry into force in the following 17 EU Contracting Member States: Austria, Belgium, Bulgaria, Denmark, Estonia, Finland, France, Germany, Italy, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Portugal, Slovenia and Sweden.

The Provisional Application Phase (PAP) of the UPCA has already started. Once the preparations are sufficiently completed, Germany will ratify the UPCA, which will trigger the start of the 3 to 4 month sunrise period, preceding actual entry into effect of the UPC, which will likely occur early 2023.

The Opt-out option

The UPCA allows proprietors of conventional European Patents, as well as applicants of European Patent Applications, to formally remove the European Patent or Application from exclusive competence of the UPC, through an opt-out application.

The option for opt-out will be available as of start of the sunrise period and remain open throughout the transitional period of 7 years mentioned above.

Importantly, the opt-out option will no longer be available if an action relative to the same patent or application has already been brought before the UPC.

Opt-out applications

Opt-out applications will need to be lodged online through the UPC case management system.

Several important characteristics must be noted, some of them being:

  • Where the patent or application is owned by two or more parties, all proprietors or applicants must participate in the opt-out application.
  • Licensees (both exclusive and non-exclusive) will not be allowed to lodge opt-out applications, but should be involved in the decision process where appropriate.
  • Representatives will be allowed to file opt-out applications on behalf of the proprietor or applicant, provided some conditions are met.
  • Opt-out applications may only be made in respect of all of the Contracting Member States for which the European patent has been granted or which have been designated in the application.
  • Opt-out applications will extend to any existing supplementary protection certificate (SPC) based on the European patent.
  • Opt-out applications may be withdrawn at any time. However, if an action relative to the same patent has already been brought in a national court, opt-out withdrawal will no longer be possible. Also important to note, once a opt-out application is withdrawn, lodging of new opt-out application will not be allowed for the same patent.
Importance of the sunrise period

The sunrise period will represent not only an early, but also a safe opportunity to lodge opt-out applications. Indeed, opt-out applications filed during the sunrise period will avoid the risk that opt-out applications can no longer be filed due to an earlier action filed before the UPC, as the UPC will not have started to operate.

The start of the sunrise period therefore represents a milestone which should not be missed, and the full extent of the sunrise period should be exploited to ensure that:

  • Proprietors reach a decision whether not to opt-out for each European Patent, and opt-out applications are actually lodged before expiration of the sunrise period.
  • Proprietors verify all formal conditions are met.
  • Licensees, including exclusive licensees, reach-out to the patent proprietor and negotiate a position as regards opt-out of the patents upon which their license is based.
Preparatory work

 In order to reach opt-out decisions in time, i.e. before expiry of the sunrise period, it is strongly recommended to start portfolio reviews without delay, as a variety of factors should be taken into account for each European Patent in the portfolio.

Indeed, a prima facie objective may be to avoid a nullity action before the UPC, with effect throughout the Contracting Member States in which the European Patent has been validated. But such a concern should be balanced with the lost opportunities resulting from UPC avoidance, such as the missed opportunity of an enforcement ruling from the UPC with effect throughout the same Contacting Member States.

Each  European Patent in the portfolio will thus need to be carefully reviewed, to ensure an informed and effective decision as to opt-out is reached, taking into account the business strategy and individual impact of such patents.

Jean-Jacques Canonici

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