HOFFMANN EITLE English

Diese Seite ist nicht auf Deutsch verfügbar. Hier gelangen Sie zur deutschen Homepage.

This page isn’t available in English. Here, you’ll get to the English homepage.

このページには日本語版がございません。

Esta página no está disponible en español - Aquí podrá acceder a la página web en español.

Questa pagina non è disponibile in italiano. Qui si accede alla homepage in italiano.

Cette page n’est pas disponible en français. Ce lien vous conduira à la page d'accueil en français.

해당 페이지는 한국어가 지원되지 않습니다. 이 곳을 클릭하시면 한국어 버전 홈페이지로 이동하게 됩니다.

Table of Contents

Quick read / executive summary:

Current status

What will be the most important changes for…

UPC

European Patent with Unitary Effect (EP-UE)

Opt out or stay in?

Quick read / executive summary:

What is the new patent system about, what do I have to do and when?

There is a strong likelihood that the Agreement on the Unified Patent Court (UPCA) will enter into force very soon, possibly even by the middle of 2022. Therefore, now would be a good time to consider how to proceed with this new legal system which is expected to bring the biggest changes to patent practice in Europe since the introduction of the EPC.

The main changes introduced by the UPCA (Agreement on the UPC) are:

  • The introduction of a European Patent with Unitary Effect (EP-UE), which can be requested from the EPO within 1 month after publication of mention of grant.
    The creation of a new court, the UPC, which has jurisdiction within the territory of the UPCA for infringement and validity actions concerning EP-UEs, but also traditional EP patents, if these are not “opted out”.
  • The request for a EP-UE will be available in addition to the traditional EP patent. However, after grant, traditional EP patents serve as independent national rights in those countries where the necessary steps for validation are taken (e.g. similar to a bundle falling apart). By contrast, the EP-UE will be a unitary IP right which can be enforced only in the entire territory thereby covered. Likewise, the EP-UE can only be abandoned or revoked in its entirety. At present, the territory of an EP-UE is likely to cover at least 16 EU Member States, i.e. AT, BE, BG, DE, DK, EE, FI, FR, IT, LV, LT, LU, MT, NL, PT and SE. As a consequence of Brexit, the UK will not participate in the UPC system.

Prior to the UPCA’s entry into force, a three-month “sunrise” period will allow European patent holders to “opt out” of the UPC jurisdiction. This is particularly important because, by default, the UPC will have jurisdiction within the territory of the member states of the UPC Agreement for all existing EP patents. National patents granted by national patent offices are not affected.

Against this background, EP applicants and patentees need to consider the following with a view to preparing themselves for the new system:

  • A strategic decision is to be made as to whether and, if so, to what extent use is to be made of EP-UEs and the new court system. Requesting a EP-UE will have major cost benefits over traditional EP patents if, after grant of an EP application, protection is sought for a greater number of EPC states. This cost benefit needs to be weighed against possible risks due to the exposure of valuable IP rights to a new court, which is operating for the first time as a court in the UPC under rules of procedure newly drafted for the UPC.
  • If the patent holder does not wish for a specific European patent to be exposed to a multi-national revocation attack before the UPC, it is important to actively remove this patent from the UPC jurisdiction (i.e. “opting out”) before the UPCA enters into force (i.e. during the “sunrise period”). By opting out, only national courts would have jurisdiction over the relevant European patent, in line with the present litigation system in Europe. To avoid the risk of a central revocation, we recommend review of existing portfolios of EP patents to determine, for each individual patent, whether it should be opted out or not. This review is urgent since the sunrise period may start to run as early as April 1, 2022.

Current status

What is the present status of the Unified Patent Court (UPC) and the European patent with unitary effect (EP-UE)?

In June 2021, the German Federal Constitutional Court (FCC) dismissed two applications for an interim injunction against the UPC agreement (UPCA) ratification bill. In the grounds of the decision, the FCC also eliminated any possible prospects of the petitioners to prevail in the main proceedings. Subsequently, the German President has signed the UPCA ratification bill clearing the way for Germany to ratify the UPCA. The UPC will enter into force three months after Germany formally deposits the ratification with the European Council. According to the UPC Preparatory Committee the UPC may start its operations as early as mid-2022, even though we think that this is an overly optimistic estimate and a start of the UPC in January 2023 or even later may be more realistic. The European patent with unitary effect (EP-UE, sometimes also referred to as “Unitary Patent” or “UP”) will be available when the UPC enters into force.

What further steps have to be concluded, and what are the expected timelines?

For the UPC to become operational, certain preparatory steps will be required, such as the employment of judges. Furthermore, the requirements for all necessary legal, financial and IT infrastructure preparations will have to be met. To allow the UPC to make the necessary preparations, the so-called Protocol for a Provisional Application (PPA) of the UPCA needs to enter into force. The PPA itself requires the ratification of 13 states that have agreed to the UPCA as well. Germany has just ratified the PPA, and Slovenia has completed its legislative process and thus will likely deposit its instrument of ratification very shortly. It will now be for one additional state to take the necessary steps for the PPA to enter into force. Austria has signaled that it will ratify the PPA in autumn, but it remains to be seen whether the recent change of government will somewhat delay this procedure. Among other states which might have an interest in early ratification of the PPA are Malta and Portugal. According to a communication (August 18, 2021) from the Preparatory Committee these ratifications are expected “to take place in a timely manner during autumn of this year.” Once the PPA is in force, it is expected that it will take at least about eight months before the UPC can start its operations. Furthermore, at least three months before legal proceedings can be initiated at the UPC, patentees will have the opportunity to opt out their EP patents from the jurisdiction of the UPC (see What exactly is the sunrise period?).

Consequently, based on an optimistic estimation of the Preparatory Committee, an ambitious yet possible timeline could be:

November 1, 2021: Entry into force of the PPA
March 2022: Germany deposits its ratification document
April 1, 2022: Start of the sunrise period
July 1, 2022: UPC opens its doors for legal proceedings, and EP-UEs can be registered.

Again, though, many involved in the preparations of the system rather expect a start of the UPC (and UP) not before the beginning of 2023.

What will be the most important changes for…

… a patentee with existing European patents

When the UPCA enters into force, the new court, the UPC, will have jurisdiction to enforce and also to invalidate any European patent with effect for all participating member states (see In which states will the EP-UE have effect?). This will apply to all European patents, including those which were granted years ago and are still in force.

A patentee can avoid the risk of having all national parts of its European patent invalidated in the participating member states by a single stroke. The UPCA allows the patentee to opt out from the jurisdiction of the UPC. However, to be effective, such an opt-out will have to be registered before a revocation action or any other action has been filed against the patent. Hence, a patentee who fears that a competitor could try to invalidate its patent(s) should start preparing for an opt-out regarding all or some of its existing European patents well in advance of the UPCA coming into force so as to ensure that the opt-out is registered before a revocation action is filed.
The patentee can again withdraw the opt-out (opt-in) if the patentee should later wish to make use of the central enforcement in infringement proceedings before the UPC, provided no national proceedings are pending at this time.

… an applicant whose European patent is about to be granted

If a European patent is granted after (or within the month before) the entering into force of the UPCA, the patentee can decide within one month from the date of publication of the mention of grant whether the patent shall have unitary effect in all participating member states (see In which states will the EP-UE have effect?). After expiry of this short term, the unitary effect cannot be retroactively obtained. Moreover, a translation of the entire patent will have to be filed together with the request. Thus, applicants for European patents should consider in good time before grant, whether, from a cost benefit perspective, unitary effect is desired.

If the European patent is about to be granted and the entering into force of the UPCA is in sight, applicants wishing to obtain unitary effect may delay the mention of grant, e.g. by filing minor claim amendments.

Applicants for a European patent should consider opting out in good time before grant of the patent, since it cannot be excluded that a competitor may file an action at the UPC even before grant of the patent (see When can I declare an opt-out?).

… a patentee with a European patent to be enforced

Upon entry into force of the UPCA, a patentee will have the choice of enforcing its European patent either in national court proceedings or in proceedings before the UPC. If the patentee opted out with regard to the patent to be enforced, the patentee must first withdraw the opt-out before filing an infringement suit at the UPC. The prospective defendant can prevent such a withdrawal of the opt-out by filing a national invalidation action. Thus, the patentee should consider withdrawing the opt-out before contacting the prospective defendant.

… a competitor wishing to cost-efficiently invalidate a European patent

Upon entry into force of the UPCA, the new court, the UPC, will have jurisdiction over the invalidation of European patents and this invalidation will have effect for all participating member states (see In which states will the EP-UE have effect?). This will provide third parties with an alternative to invalidate several national parts of a European patent (the national parts in the participating member states) in one central proceeding, unless the patentee opted out in time.

UPC

What exactly is the UPC, and what makes it so special?

The UPC will be an international court common to the participating member states (currently AT, BE, BG, DE, DK, EE, FI, FR, IT, LT, LV, LU, MT, NL, PT, SE – expansion to further EU member states is possible, see below). It will have non-exclusive jurisdiction for all traditional European patents and exclusive jurisdiction over EP-UEs. After a transitional period of at least seven years, it will have exclusive jurisdiction also over traditional European patents. During the transitional period it will be possible for patentees to opt out from the UPC’s jurisdiction over traditional European patents. A decision by the UPC will have effect in all participating member states where the relevant EP-UE or traditional European patent is in force.

What is the transitional period?

There will be a transitional period of seven years (which can be extended up to 14 years) during which the UPC and national courts have shared jurisdiction in respect of traditional European patents. Parties will be able, however, to opt their European patents out of the UPC’s jurisdiction (see What does the opt-out do?).
As long as no opt-out has been declared in respect to a traditional European patent, parties can thus choose whether to bring a legal action before the UPC (with effect for the whole UPC territory) or before one or more national courts (with effect only in the relevant country or countries). During the transitional period it is even possible that parallel legal actions are pending before the UPC and national courts in respect of the same European patent. For example, provisional injunction proceedings can be filed before a national court based on a traditional European patent against which a revocation action is pending before the UPC. Likewise, without an opt-out declaration having been registered in advance, a revocation action can be filed before the UPC in response to an infringement action before a national court.
Once the transitional period expires, European patent applications and traditional European patents which have not been opted out will be litigated exclusively before the UPC in the same way as EP-UEs.

Where will the UPC be located?

The UPC will not be located at one single location but will include several divisions spread over the participating member states for political reasons. The court of first instance will encompass a central division in Paris and Munich. A further branch of the central division was foreseen for London. Since the withdrawal of the UK from the UPCA, it is currently still unclear where the originally foreseen London branch will be transferred to. Italy proposed Milan as a replacement, while a location in the Netherlands is a potential candidate as well. The German Ministry of Justice has suggested that the central division be provisionally divided between Paris and Munich, until the UPCA has been amended. If this suggestion is followed, it will still have to be decided how exactly the previous jurisdiction of the London central division will be allocated to Paris and Munich, respectively. These are political questions that still need to be resolved before the UPC can start operating.
Besides a central division, the court of first instance will also have several local and regional divisions which will allow, to a certain degree, forum shopping. Each participating state may apply for a local division (larger countries may establish up to four local divisions). Two or more member states of the UPCA can also establish one regional division together.
For example:

  • Germany will host four local divisions: Dusseldorf, Mannheim, Munich and Hamburg
  • Other participating states such as Austria, Belgium, France, Italy and the Netherlands are expected to host one local division
  • Sweden, Lithuania, Estonia and Latvia have agreed to have one joint Nordic-Baltic regional division in Stockholm

Generally, local and regional divisions will deal with infringement actions while the central division will have exclusive jurisdiction over declarations of non-infringement and revocation actions. The court of appeals will be in Luxembourg. For more information on the competence of the respective divisions, see “Are infringement and invalidity proceedings dealt with together or must invalidity actions be brought in separate proceedings?”

What is the official language of the proceedings held by the UPC?

The language of proceedings before any local division is any official language of the participating member state where the local division is situated, or any other language approved by the respective division. At least one of the German local divisions envisages that proceedings can also be conducted in English. For regional divisions one of the official languages of the EPO can be agreed upon (e.g. the Nordic-Baltic regional division designated English as the procedural language).

The language of proceedings at the central division are held in the language in which the patent was granted. The majority of EP patent applications are in English or German. Thus, even at the central division in Paris, the proceedings will typically be conducted in English or German.

Which cases can be litigated before the UPC?

Art. 32(1) UPCA provides an exhaustive list of cases for which the UPC will have exclusive competence. Generally, the UPC will have exclusive competence for infringement and validity actions concerning EP-UEs, and, on expiry of the transitional period, traditional European patents and applications. During the transitional period, actions regarding a European Patent may also be brought before national courts.

In more detail, the actions in respect of which the UPC has exclusive competence include:

  • Actions for actual or threatened infringements of patents and supplementary protection certificates (SPCs) and related defences, including counterclaims concerning licences;
  • Actions for a declaration of non-infringement concerning patents and SPCs;
  • Actions for injunctions and provisional and protective measures;
  • Actions for revocation of patents and for declaration of invalidity of SPCs;
  • Counterclaims for revocation of patents and for declaration of invalidity of SPCs;
  • Actions for damages or compensation derived from the provisional protection conferred by a published European patent application;
  • Actions relating to the use of the invention prior to the grant of the patent or to the right based on prior use of the invention;
  • Actions for compensation for licences under Article 8 of Regulation (EU) 1257/2012; and
  • Actions concerning decisions of the European Patent Office in carrying out its administrative tasks referred to in Article 9 of the EP-UE Regulation.

Are infringement and invalidity proceedings dealt with together or will must invalidity actions be brought in separate proceedings?

Typically, revocation actions and declarations of non-infringement will be heard before the central division, if an infringement action is not already pending. Local and regional divisions will generally deal with infringement actions and counterclaims for revocation in the same proceeding. However, bifurcation is not prohibited. If a defendant brings a counterclaim for revocation in infringement proceedings, the respective local or regional division has the following options:

    • Hearing the infringement and revocation action together;
    • Referring the counterclaim for revocation to the central division, resulting in bifurcation of the two proceedings. The infringement proceedings may be suspended or proceeded; and
    • With the agreement of the parties, the entire case (infringement and revocation action) may be referred to the central division.

Thus, bifurcation may occur, if and when the local or regional division decides to refer the counterclaim for revocation to the central division. But, bifurcation can also occur if a claim is pending in the central division and a subsequent claim for infringement is brought at a local or regional division. However, it is expected that, in most cases, the courts will try to avoid bifurcation and decide on infringement and validity in one and the same proceedings.

What provisional measures are available under the new system?

The UPC can issue the following measures:

      • Seizure of evidence (Art. 60(2) UPCA)
      • Inspections (Art. 60(3) UPCA)
      • Interim injunctions (Art. 62 UPCA)
      • Order to produce evidence (Art. 59 UPCA)

A party has the possibility to submit a protective brief to avoid decisions without notice.

How are damages for infringement calculated at the UPC?

There are two ways of assessing damages according to the UPCA. The first method under Art. 68(3)(a) UPCA considers “all appropriate aspects”. In this regard it is noteworthy that the infringer's profit is no longer considered as an independent, separate type of calculation method but rather as a further calculation factor in addition to other factors stated in Art. 68 (3)(a) UPCA. These include lost profits or non-economic factors such as moral prejudice. It is to be expected that the UPC will develop case law and provide more specific guidance on the application of this rather vague provision.

Alternatively, damages may be determined under the co-called “licensing analogy” method. The damages are assessed as a lump sum based on the amount of royalties or fees which would have been due if the infringer had requested authorisation to use the patent in question.

Is there anything similar to the US discovery?

There will be nothing comparable to discovery as known in US proceedings. Thus, the parties must establish their arguments and evidence by themselves and submit them in written briefs prior to the oral hearing. However, an application for preserving evidence and/or inspection may be lodged (called a saisie) pursuant to Art. 60 UPCA in cases where the injured party fears that the evidence might be destroyed. Such provisional measures by the court are subject to the protection of confidential information and they include for instance the physical seizure of evidence.

Additionally, the UPC may, at the request of the applicant, order an inspection of premises which will be conducted by a person appointed by the court. The applicant will not be present at this inspection but may be represented by an independent professional practitioner. Such measures may be ordered without notice.

Will compulsory licensing be possible at the UPC?

The UPCA does not provide a provision concerning compulsory licensing. Instead the national laws of the participating member states should deal with compulsory licences for EP-UEs.

What are the procedural fees for litigating a patent under the UPC?

UPC fees will consist of a fixed fee, with an additional value-based fee applicable to higher value infringement actions (those exceeding €500,000). The claimant must put forward the estimated value of the case. The court may, in particular, take into account the guidelines for determining the court fees. Any disagreement regarding the fees among the parties will be resolved at an interim conference. In case the court fees threaten the economic existence of a party, the court may, upon request of that party, wholly or partially reimburse the fixed and value-based fee.

Since the unsuccessful party shall bear the reasonable legal costs and expenses of the successful party (Art. 69 UPCA), the value of the lawsuit has an impact on the amount of recoverable costs the winning party may claim. However, there will be a ceiling for recoverable costs at €38,000 for proceedings valued up to and including €250,000 and up to 2 million Euros for proceedings with a value of more than 50 million euros.
The fixed fees provided for the respective proceedings are as follows:

Infringement proceedings: 11,000 EUR

Interim injunctions: 11,000 EUR

Invalidity proceedings: 20,000 EUR

For more information on court fees please see the Rules on Court fees and recoverable costs of the UPC.

European Patent with Unitary Effect (EP-UE)

What is the European patent with Unitary Effect, and how does it differ from the traditional European patent?

The EP-UE is a new IP right providing protection in the participating member states. Contrary to the traditional European patent the EP-UE has unitary effect in all states that are already a member to the UPC system at the time the unitary effect is requested for a granted European patent. It will no longer be possible to drop certain country designations over the lifetime of the patent.

Annuities for EP-UEs will have to be paid centrally at the EPO as there will not be fees payable to national patent offices, nor will there be any need for national validation.

In which states will the EP-UE have effect?

The current (October 2021) 16 participating member states are:

      • Portugal
      • France
      • Belgium
      • Netherlands
      • Germany
      • Austria
      • Italy
      • Denmark
      • Sweden
      • Finland
      • Estonia
      • Latvia
      • Lithuania
      • Bulgaria
      • Malta
      • Luxembourg

It is expected that further EU member states may later join the UPC system. In this case and from the date of their ratification onwards, any newly requested EP-UE will also extend to these states. Currently, only three member states, i.e. Poland, Spain, and Hungary, have positively indicated that they do not intend to join the UPCA. Other EU member states seem to have taken a wait-and-see attitude.

How do I apply for an EP-UE?

The EP-UE will be obtained using the existing European patent application procedure via the EPO. Once the mention of grant has been published by the EPO, the applicant has one month to request unitary effect and to submit a complete translation of the patent specification into another official language of the EU (if the patent was in English), in which case the relevant European patent will automatically become effective in all states participating in the UPC system at the time the request is filed. Additionally, the patentee can obtain protection in all other EPC member states (or extension states) by way of national validation, in the same manner as in the past. In other words, one and the same granted European patent can have unitary effect in all UPC participating states and be validated in some or even all remaining EPC member states by way of national validation.

If no request for unitary effect is filed within one month of grant of the European patent, the European patent will be a mere traditional European (bundle) patent, which becomes effective only in those EPC countries where the requirements for validation, if any, have been fulfilled.

What happens when further states join the new system after I have already obtained an EP-UE?

Those states who ratify the UPCA at a later point in time will not be added subsequently to the geographical scope of protection of an existing European patent with unitary effect. In other words: different “generations” of EP-UEs will have a different scope of geographical protection.

The following example illustrates this:

Patentee P obtained an EP-UE right after the start of the UPC system. At the time of registration of the EP-UE, 16 states were officially participating in the new system. Within a year thereafter, 3 further states ratify the UPCA and join. However, P’s EP-UE will only cover the 16 states that were participating in the UPC system from the beginning. The 3 states that joined within the following year, i.e. after the request for and registration of the unitary effect of P’s EP, will not be added to the coverage of that EP-UE. To obtain protection in any countries other than these 16 participating states, P would have to validate its patent nationally in such EPC member states in the same manner as for any other European patent for which no unitary effect has been requested.

When can I obtain an EP-UE?

The EP-UE will be available once the Unified Patent Court Agreement (UPCA) has been ratified by the required number of member states and comes into force. That is expected to happen on the first day of the fourth month after Germany formally deposits its ratification bill, which, in turn will happen when the preparations for the start of the UPC have been sufficiently progressed. The unitary effect can be requested for any European patent within one month from the date on which the mention of grant has been published. Consequently, if a European patent is granted, e.g., four weeks before the UPCA enters into force, the patentee can still request unitary effect for the relevant patent, but such request would have to be filed within one month of the publication of the mention of grant. (see also How do I apply for an EP-UE?)

Is the EP-UE more expensive than the traditional European patent?

Contrary to the traditional European patent, only one annual renewal fee must be paid centrally to the EPO for an EP-UE. A list of the annual fees can be viewed here. The total costs of an EP-UE for 20 years are about 45,000 EUR.

The EP-UE is more expensive than a traditional European patent that has been nationally validated in Germany, France and Italy (currently the most popular validation states in the EU) and is approximately as expensive as a classic European patent validated in Germany, France, Italy and the Netherlands (4 member states). Naturally, the cost advantages of the unitary patent become more prominent, according to the number of states in which protection is sought.

It is noteworthy that the renewal fees were calculated still in the expectation that the UK would join the UPC system. Despite the withdrawal of the UK from the new system, renewal fees will not be reduced, even though the value of the EP-UE has become lower, given that protection in the UK will now have to be sought (and paid) for separately by way of national validation of the European patent in the UK.
A composition of costs shall illustrate this:

cost-components

Will the new system replace the existing European patent system?

No, the existing European patent system governed by the European Patent Convention (EPC) will remain in force. Once the transitional period has expired, any European patent (application) that has not been opted out will be under the exclusive jurisdiction of the UPC.

However, it will be possible to combine both systems. An EP-UE can be chosen for the participating states and the regular European patent can be selected to cover the EPC contracting states that are not part of the new system (e.g. Spain or Switzerland). But, patentees have to bear in mind that traditional European patents will fall under dual jurisdiction of the UPC and national courts, unless the patent owner declares an opt-out from the jurisdiction of the UPC for that patent. In such a case, it would be possible to litigate the relevant European patent before the national courts even in the states participating in the UPC system.

Are there any rules on the prohibition of double protection?

The UPCA does not mention the issue of “double protection” by a EP-UE and a national patent for the same invention. For both traditional European patents and EP-UEs it is a matter of national law to allow or reject double protection.

In Germany, for instance, amendments to the patent law will permit, in principle, double protection for national patents and European patents, including both traditional and EP-UEs.

What happens to pending European patent applications and already existing European patents?

Pending European patent applications can result in an EP-UE. Once the pending application has been granted, patentees have one month to request unitary effect and to submit a translation of the entire patent specification (for more information see How do I apply for an EP-UE?).

In contrast, traditional European patents that have already been granted and for which a request for unitary effect can no longer be filed remain traditional European patents and need to be validated in each state of interest.

Notwithstanding the above, once the UPCA transitional period (at least seven years) has expired without an opt-out having been declared for a given European patent or patent application, this European patent or pending application will be subject to the exclusive jurisdiction of the UPC within the UPC territory. As no opt-out will be possible after expiry of the transition period, gradually all European patents will come under the exclusive jurisdiction of the UPC (but only within the UPC territory).

Will the possibility of obtaining traditional European (bundle) patents and validating them in the EPC member states permanently remain under the new system?

Yes, because the existing European patent system governed by the EPC will remain in force, and even after the transitional period a patentee will have the choice to request an EP-UE or to validate the European patent as a traditional bundle patent. For all EU member states that do not participate in the new system (e.g. Spain, Poland), or where the UPCA has not yet entered into force (e.g. Ireland, Greece), the European patent can only be validated nationally. The same applies for all EPC member states (e.g. the UK, Switzerland or Turkey) that are not EU member states as these countries cannot participate in the new system.

Of course, it will still be possible to obtain national patents in each European country separately, but not necessarily in parallel to an EP-UE (see Are there any rules on the prohibition of double protection?).

Opt out or stay in?

What does the opt-out do?

Opting out removes the UPC’s jurisdiction over a given European patent so that the national courts retain sole jurisdiction over it. In other words, compared to today, the litigation options for that patent remain the same. The opt-out declaration is effective from the day of entry into the UPC register if all requirements are observed. The current set up of the UPC Case Management System (unified-patent-court.org) requires that each patent, to be opted out, is identified individually by its application or publication number, i.e. an opt-out has to be declared for each and every European patent separately.

What exactly can be opted out?

Any European patent that has already been granted by the EPO can be opted out. This applies also to any pending European patent application. Once the application has been opted out, the opt-out declaration will continue to apply also for the granted patent.
Unitary patents, however, cannot be opted out.

What about supplementary protection certificates (SPCs)?

An SPC will automatically be opted out if the patent on which it is based is opted out. Even if the patent has expired, it is still possible to opt it out, e.g. in order to make sure that the relevant SPCs are opted out.

Can I change my mind once I have declared an opt out?

Yes, during the transitional period a declaration to opt out can be withdrawn. This restores joint jurisdiction of the UPC and national courts. However, once the declaration to opt out has been withdrawn, no further changes regarding jurisdiction can be made. In other words: a second opt-out is no longer possible.

Patentees also have to bear in mind that the declaration to opt out cannot be withdrawn if the patent has been litigated in a national court. In other words, past or pending litigation before a national court irrevocably blocks the path to the UPC for the duration of the patent.

Can I opt out at any time?

An opt-out is possible at any time during the transitional period (seven years which can be extended to 14 years).

However, an opt-out is no longer possible if an action has been filed in respect of the relevant European patent before the UPC. In such a case, the UPC retains exclusive jurisdiction with effect for the participating member states for the entire term of the relevant patent.

Likewise, if a national action is filed after an opt-out has been declared, the opt-out cannot be withdrawn, irrespective of whether the national action is still pending or has already been concluded.

When can I declare an opt-out?

Before the UPC enters into force, there will be a sunrise period (3 months) during which patents can be opted out.

Once the UPC enters into force, the opt-out can be declared at any time during the transitional period (seven years, possibly extended to 14 years) provided the opt-out declaration is still possible (see Can I opt out at any time?)

Once the transitional period has expired, an opt-out cannot be declared any longer.

What exactly is the sunrise period?

An opt-out is excluded if an action has been commenced before the UPC. Thus, competitors may pre-empt an opt-out by filing revocation actions on the same day when the UPC enters into force. To prevent this (before such an action can be filed) a sunrise period will commence three months before the start of the UPC. During this period, opt-outs can be declared at the UPC and will be registered instantly once the UPC enters into force. Thus, the sunrise period offers patentees a head start before competitors have a chance to initiate a revocation action before the UPC.

What preparatory actions are required?

The patent portfolio should be analysed in order to identify those patents to be opted out from the exclusive jurisdiction of the UPC (see On what basis will I decide whether to opt out some or all my patents? for more information). This also applies to- pending European patent applications. Additionally, ownership issues with existing European patents should be assessed since co-owners must opt out jointly (see Who can opt out?)

Even before the official start of the UPC, European patents and patent applications may be opted out during the sunrise period (see also What exactly is the sunrise period?)

Why should I consider opting out?

Opting out means that your patent is protected from central UPC revocation actions. If a third party prevails in the request of a UPC revocation action, the patent in suit will be revoked in all UPC participating countries at once. The UPC revocation action can be filed any time during the lifetime of a patent.

At present, central revocation of a European patent is only possible via the EPO opposition procedure; however, this procedure must be initiated within nine months of grant of the patent. After the expiry of the nine-month period, revocation actions for a European patent can only be pursued in national proceedings. These are effective for one country.

Patentees should expect that their very valuable patents may well be targeted by competitors through UPC revocation actions and give serious consideration to opting out such patents.

What are the main downsides of opting out?

Although the opt-out decision can be withdrawn (only once!) a third party can trap the patent in its opted-out state by initiating national litigation. If many national proceedings are started, litigation costs may be increased. On the one hand, the door to the UPC is shut for good once national proceedings have been initiated, and the opportunity to test and influence the UPC is missed. How much of a loss that is depends on how useful UPC enforcement is in the individual case. On the other hand, patent litigation in national courts has been working now for decades and the procedures are well known.

Why might I want to avoid a UPC revocation action against my patent?

The UPC revocation action is the first procedure whereby a third party can request revocation of a European patent (for all of the UPC-participating countries) at any time during the lifetime of the patent.

Without going into too much detail of a UPC revocation action, it is useful to look at some of its key characteristics. The proceedings will be fast, effective over a large and commercially valuable territory. The UPC revocation action can be filed at any time, and reimbursement of patentee’s legal costs in case of an unsuccessful attack is capped, albeit at a relatively high level. It may be possible to initiate a UPC revocation action with moderate costs (as compared to e.g. multiple national revocation actions).

Thus, the UPC revocation action will share some traits with US IPR proceedings. On this basis, it is possible that the impact of the UPC revocation action in Europe will be similar to that of the IPR proceedings in the US when they were introduced some years ago.

At present, central revocation of a European patent is only possible via the EPO opposition procedure; however, this procedure must be initiated within nine months of grant of the patent.

The only procedure available after the expiry of the nine-month opposition period is to initiate national revocation actions. However, these are only effective for one country, and these procedures are generally time-consuming and expensive if several revocation actions are to be run in different countries.

Patentees must expect that individual patents which have become highly valuable may well be targeted by competitors through UPC revocation actions and should give serious thought to opting out such patents. In this connection, patentees should consider as well that pending opposition proceedings before the EPO do not protect valuable patents from a second attack before the UPC.

On what basis will I decide whether to opt out none, some or all of my patents?

First, you need to assess and balance the risks of a central attack against the advantages of UPC enforcement– ideally for each individual patent. This depends on many factors including significance and strength of the individual patent, nature and characteristics of products concerned, market and competition, logistics and budget:

  • Which of my patents are so valuable that I cannot risk a central revocation action?
  • Can I deal with possibly several central revocation actions at once under a new regime with strict and very short deadlines?
  • How useful is cross-border enforcement, including the new inspection proceedings, for my case?
  • Are the new and enhanced inspection proceedings before the UPC useful for my case?
  • Where do the competitors manufacture, and where do they sell? If this is the case in countries where currently no effective or fast legal protection exists, this may speak for litigating before the UPC.
  • How adequate is the alternative to UPC enforcement (e.g. to how many and which courts would I have to go to achieve my commercial objectives)?

Should I not just opt out everything (at least at first)?

Opting out everything at first maintains the status quo and could be considered a safe option. The biggest risk – the UPC revocation actions – are avoided. One can also withdraw the decision for each patent and opt back in to the UPC system, provided that no national litigation has been initiated with respect to that patent in the meantime.

However, this approach has some drawbacks, both in the short term und long term.

Short term, you risk being prevented from using the UPC for exactly those patents where UPC enforcement will put you in a stronger position. Competitors can trap opted out patents permanently in national litigation by initiating a lawsuit in a national jurisdiction. This may effectively decrease the value of those patents.
Long-term, companies who opt everything out may lose the opportunity to shape the UPC case law by having fairly strong patents litigated before the UPC. If most big players in certain industry sectors opt out all of their strong patents, this could jeopardize the acceptance and attractiveness of the UPC. Good cases make good law, bad cases make bad law.

Who can declare an opt-out?

The proprietor of a European patent or the applicant of a published EP application is entitled to opt out. They can also entrust another person, such as a European Patent Attorney, to prepare and submit the opt-out declaration.

Can co-owners and licensees opt out as well?

Licensees will not be able to apply for an opt-out. This applies even to exclusive licensees. Therefore, if a licensee has a preference for opting out, they should take this issue up with the patentee in good time. Also, license agreements should be checked as to whether a right of the licensee to enforce a patent or similar rights may result in a contractual obligation for the patentee to respect the licensee’s preference with respect to whether or not to opt out.

Co-owners must opt out jointly or in agreement. This applies also where different designations in UPC signatory states are owned by different legal entities.
As a result, it is crucial to approach other co-owners in time to seek their approval if an opt-out is desired, to collect relevant documentation, and to prepare a jointly signed authorization for the person submitting the opt-out application.

If a SPC and a patent on which it is based are owned by different entities, then the opt-out must be performed by both entities, together, in order for it to apply to the SPC.

How can I declare an opt out?

Opt-out declarations are submitted to the UPC registry using an online procedure. A beta test site of the UPC case management system has been made available which, after creating a personal account, allows users to see how the procedure will work (see here).

What happens if I make a mistake during the opt out declaration procedure?

The acknowledgement of receipt and registration of the opt-out declaration does not result in the opt-out having been validly declared. The application to opt out can be corrected, but this will only apply as of the date of the registration thereof.
The validity of an opt-out declaration can be challenged before the UPC.

Is there an official fee for opting out?

No, but your attorney may charge a fee for performing the opt-out process.

What happens if I do not opt out?

During that transitional period (at least seven years) the UPC will acquire joint jurisdiction over your European patent, together with the national courts, The patentee can enforce its patent in the UPC or in one or more national courts, and an invalidation action or action for declaration of non-infringement can be initiated either at the UPC or before the competent national courts with respect to that European patent.

After the expiry of the transitional period, the UPC will acquire exclusive jurisdiction (in the UPCA territory) over all European patents and pending applications that have not been opted out.