The Unified Patent Court: Implications for European patent owners

In our article of 1 June 2022, we discussed the UPC along with the forthcoming new European Unitary Patent. While the Unitary Patent will affect newly granted European patents once the system comes into effect, the UPC will affect almost all European patent owners, both existing and future. In this article we focus on the UPC and its implications to existing and future European patent owners.

European patent owners should consider whether or not they want their European patents to fall under the jurisdiction of the UPC, particularly because there is an option to ‘opt out’ of this new court system. If no action is taken to opt out an existing European patent from this new court system, the UPC will have automatic jurisdiction over enforcement and revocation actions for that patent (and any supplementary protection certificates (SPCs)* granted on that patent) in all participating EU countries. Although there are pros and cons to the new system, some patent owners are expected to opt out patents from the system to make it harder for their competitors to centrally challenge and revoke their European patent rights. It should be noted, however, that central opposition of a granted patent at the European Patent Office in the nine month period following grant will still be possible regardless of whether action is taken to opt out of the new court system.

Refresher: Traditionally validated European Patents

European patents applications are filed, examined and granted at the European patent office. Soon after grant, it is necessary for a patent owner to choose the individual European countries in which the European patent is to take effect as part of a validation process. During the traditional validation process (applicable to all European patents granted prior to the upcoming introduction of the Unitary Patent), fees are paid to the respective national offices and translations are filed where necessary.

As a result, a traditionally validated European patent effectively becomes a bundle of national patents covering a select group of European countries. At present, European patent litigation such as enforcement and revocation actions must take place in each relevant national court.

Why is the Unified Patent Court important?

The UPC will provide a centralised forum for the enforcement and revocation of European patents, including traditionally validated patents across all participating EU countries (see participating countries below) and Unitary Patents.

A centralised litigation forum presents both advantages and risks to European patent owners.

The new system allows a single enforcement process, across all participating EU countries where the European patent has been validated, to be carried out before the UPC. However, the new system also allows a third party or competitor to centrally challenge and revoke a patent before the UPC. If a European patent is considered of particularly high value, the risk that it might be revoked centrally (in a single action) across participating EU countries may be significant. Given also that a patent owner has one opportunity to opt their European patent back in to the new system after opting out (unless a national litigation action has already commenced before opting back in), many patent owners, unless they are already considering launching a centralised infringement action, are expected to opt out their European patents from the UPC.

Advantage to patent owners	Disadvantage to patent owners
The UPC is expected to provide a streamlined and cost effective central litigation forum for the owner to enforce a European patent across participating EU countries. Enforcement could therefore occur in a single relatively swift action, without an owner needing to pursue parallel actions across multiple participating EU countries.	The UPC is expected to provide a streamlined and cost effective central litigation forum for a competitor to revoke a European patent across participating countries. Revocation could therefore occur in a single relatively swift action, without a competitor needing to pursue parallel actions across multiple participating EU countries.

The UPC is currently untested and may or may not be as favourable as some national courts to patent owners.

Sunrise period to opt out

A ‘sunrise period’ will start on 1 March 2023 that provides a period of three months during which owners of existing European patents (including expired or lapsed European patents) can opt out of the UPC prior to its commencement on 1 June 2023. This will ensure that court proceedings, such as a patent revocation action, can only be brought about by a competitor or other third party in the national courts. Although there can be opportunities to opt out European patents after commencement of the UPC, the sunrise period allows patent owners to opt out from the UPC without the risk that opt out is too late. Patents that are subject to proceedings in the UPC, which may be launched at any time after the commencement of the UPC, cannot be subsequently opted out.

Opt out - what do European patent owners need to do and by when?

Well before the end of the sunrise period, European patent owners should consider whether to allow their European patents to fall under the jurisdiction of the UPC, or whether to opt out some or all of their European patents from its jurisdiction. If opt out is required, patent owners should advise their patent attorney as soon as possible so that the appropriate action may be taken. We recommend taking action sooner rather than later to ensure opt out requests are processed in due time, as a heavy volume of opt out requests is expected towards the latter half of the sunrise period.

Opt out requests must be made on behalf of the actual owner or joint owners. If a change of ownership has taken place that is not recorded in the relevant patent office registers, this should be identified before opt out. Where a European patent is licensed, although the licensees have no automatic right to be involved in a decision regarding opt out, it may be preferable to ensure that interests of owners and licensees are aligned.

There is no official fee for opting out a European patent or patent application, and opt outs may be requested ‘in bulk’. Patent attorney fees for handling the opt out process will depend on factors including the size of portfolio (i.e. economies of scale), and any complexities arising around transferred or joint ownership.

Which EU countries are participating in the Unified Patent Court system?

17 EU countries are expected to participate in the new UPC system from its commencement, and a number of other EU countries are expected to participate later. However, many European countries are not intending to participate, either through choice or because they are not part of the EU. Notable absentees from the new system include the UK and Spain.

Participating on commencement	Intending to participate in future	Not intending to participate/non-EU* countries
Austria, Belgium, Bulgaria, Denmark, Estonia, Finland, France, Germany, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Portugal, Slovenia, Sweden.	Cyprus, Czech Republic, Greece, Hungary, Ireland, Romania, Slovakia.	Albania*, Switzerland*, Spain, United Kingdom*, Croatia, Iceland*, Liechtenstein, Monaco*, North Macedonia*, Norway*, Poland, Serbia*, San Marino*, Turkey*.

10 largest European countries by GDP highlighted in bold.

Need more information?

If you wish to discuss the relevance of the new Unified Patent Court system to your European patent properties, or require more general information, please contact your usual FB Rice representative.

^{*Exactly how centralised litigation will work when enforcing SPCs, which are nationally limited rights extending the term of a patent in a particular country due to delays in approving a drug for sale in that country, is still unclear.}