UPC Update: Germany ratifies the UPC Agreement
The official start of the Unified Patent Court system will therefore be 1 June 2023.
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The Unitary Patent (UP) system will now come into effect on 1 June 2023 with the so-called ‘sunrise period’ beginning on 1 March 2023.
A UP is a new European patent right that has unitary effect in all states participating in the UP system when unitary effect is requested for a granted European patent. It will operate alongside the existing European patent system.
It will be possible to enforce a UP in a single action across all the countries that are in the UP system. Conversely, it will also be possible to centrally attack a UP across all of these states in a single action. This will be done before the Unified Patent Court (UPC).
The start date for the UPC will be 1 June 2023, after being delayed by two months following concerns over access to the court’s electronic Case Management System (CMS). This date became certain following Germany’s ratification of the UPC Agreement in February 2023. The sunrise period will therefore begin on 1 March 2023 and last for the three months leading up to the UPC start date.
The changes only affect what happens in the post-grant period. The UPC will make it possible to enforce European patents in a single action across all the countries within the UPC system. Conversely, it will also be possible to centrally attack a European patent across all of these states in a single action. However, the existing nine-month opposition period for oppositions at the EPO remains; and any pending opposition proceedings before the EPO do not protect patents from a second attack before the UPC.
As with European Community trade marks and designs, a UP will be a single right across all participating states. A UP cannot be owned by different parties in different UPC states, and it will not be possible to abandon the UP in some states only. However, the patent can be licensed for individual UP states and to different licensees.
It will be possible to validate and renew a UP in all states within the UPC system, by submitting one translation of the whole specification and paying a single fee to the EPO. For a patent granted in English, the translation can be into any other official EU language. If a patentee of a UP is also validating in e.g. Spain, which is not part of the UPC, a Spanish translation would be required, and this would suffice for the UPC translation also (and if the patent is granted in French or German, the translation must be into English).
The UP renewal fees are set at approximately the combined renewal fees due in the four UPC states where European patents were most often validated in 2015 (when the fee was set). This is a single fee paid to the EPO. This may make it attractive to patentees who validate in many states, but less so for those who only want to validate in e.g. UK, FR, DE, especially as the UP will not cover the UK.
To get a UP, the application procedure will be carried out by the EPO in the same way as at present, and after grant, a patentee can choose for the EP to become a UP to cover the participating states.
For the non-UPC states, a conventional EP patent will still be needed to cover those. Validation and renewals in non-UPC EU states (Spain, Poland, Croatia) and non-EU states (e.g. UK, Switzerland, Turkey) will continue as before.
IMPORTANTLY, however, existing conventional EP patents and patents granted in the next few years will fall under the dual jurisdiction of the UPC and national courts, unless the patentee opts out from the jurisdiction of the UPC for that patent. If a patent is not opted out, it would be possible to litigate the EP patent before the UPC or the national courts. This has its pros and cons, which is discussed in more detail below.
Not all European countries are involved.
Currently, the position is:
Ratified the UPC Agreement: 17 countries
Belgium, Bulgaria, Denmark, Estonia, France, Germany, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Austria, Portugal, Slovenia, Finland, Sweden.
Germany made this 17 when it ratified the UPCA in February 2023 and triggered the start of the UPC.
The UPC will have jurisdiction and UPs will have effect in these countries for all non-opted-out EPs.
Signed but not ratified the UPC Agreement: 7 countries
Cyprus, Czech Republic, Greece, Hungary, Ireland, Romania, Slovakia.
However, if these countries do not ratify before the UPC comes into effect, the UPC will have no jurisdiction until ratification and UPs granted before ratification will not have effect there.
As countries join the UPC, they will automatically be included in any UP pursued after they join, but (much as how at present you can only validate in countries that were designated on filing) the territory of a UP is set by the grant date, so individual UPs will not expand in territory as countries join.
NOT participating in the UPC
The EU Member States Spain, Poland, Croatia, as well as the non-EU EPC states: Iceland, Norway, Turkey, Switzerland, Serbia, Albania, Macedonia, and the UK.
Importantly, the UPC is not compulsory. However, all current European patents (i.e. so-called “bundle” patents) will automatically fall under UPC jurisdiction when it comes into force, unless they are opted out. The UPC would thus have jurisdiction to enforce and/or invalidate any EP patent with effect for all participating UPC states. This applies to all EP bundle patents, including those already granted and still in force.
UPs, however, CANNOT be opted out.
Therefore, you have three options for your existing “bundle” patent portfolios:
(i) Do nothing (and thus automatically fall under the UPC’s jurisdiction);
(ii) Opt everything out of the UPC (so only national courts have jurisdiction); or
(iii) Decide on a case-by-case basis.
Option (i) allows you to start European enforcement actions early and potentially shape early case law. However, this option could be risky for high value patents which would be open to central attack.
Option (ii) allows you to see how the system works initially before making any decisions to use it.
Option (iii) enables you to opt out any weaker or important patents, while leaving in stronger or less important ones to get some experience of the new system with low risk
There is no official fee for opting out. An opt-out will last for the lifetime of the patent, unless the opt-out is withdrawn. All opt-out requests will appear on the public register on the UPC website.
It will be possible to withdraw an opt-out and opt a patent back into the UPC (again no official fee), but only as long as there is no ongoing national litigation involving the patent. However, this is a one-way ticket; it will not be possible to opt back out a second time.
The opt-in may be a useful tool if you opted out but later were to want to try and enforce their patent across Europe in a single action.
However, if a non-opted-out European patent is litigated in the UPC system, then it cannot be opted out in the future.
Conversely, if any designation of an opted-out European patent is litigated in the national courts it cannot then be opted back into the UPC system.
The sunrise period is the 3 month period before the start of the UPC system. During the sunrise period, it will be possible for patent owners and applicants to opt out any granted European patents from the UPC system before it starts, before any central revocation proceedings can be started against them on day one of it coming into effect. Opting out a European patent during the sunrise period is the only way to guarantee that it will not be centrally attacked in the UPC system.
There will also be a transitional period of 7 years (which may be extended for a further 7 years) within which an opt-out can be filed. The opt-out will however not be possible if proceedings before the UPC have already begun against the patent. It is thus important to opt out any patents that you do not want to be part of the UPC court system as soon as possible to avoid being forced into UPC proceedings by a central revocation action.
Once the transitional period ends, the opt-out will no longer be available.
Additionally, during this transitional period, for ‘opted-in’ patents, there will be the choice of whether to bring an action relating to a European patent before a national court or before the UPC. If a patent is in the UPC system once the transitional period ends, any proceedings must be brought before the UPC.
For patents granted under the UPC as a unitary patent, the possibility of opting out or bringing an action before a national court during the transitional period will not be available.
After the transitional period, EP applications and conventional European patents which have not been opted out will be litigated exclusively before the UPC in the same way as EPs with unitary effect, as with all new applications filed after the transitional period ends. The only way then to avoid the UPC’s jurisdiction then would be to file national applications in Europe.
Therefore, being in the UPC system may be advantageous for some patents, but not for others. The latter will need to be opted out. Consideration thus needs to be given as to which patents should be in or out.
The default position is that everything is opted in. This is what would need to happen in relation to these different scenarios:
Current European Patents
Any European patent that has already been granted by the EPO can be opted out. A simple opt-out request can be filed in respect of each patent. The practicalities of this are discussed below.
EP patents that have already been granted and for which a request for unitary effect cannot be filed remain traditional European patents and will still be validated (and assigned, etc) in each state of interest. There is no way to convert currently granted European patents into Unitary Patents.
Pending European applications which will soon be granted
To opt out of the UPC’s jurisdiction completely, you must validate as a “bundle” as usual and again, an opt-out request can be filed in respect of each EP application. Upon grant, the application is validated as normal. Applicants should also consider opting out in good time before grant of the patent, as a competitor could potentially file an action at the UPC even while an application is pending but before the application has been opted out.
If an EP patent is granted after the UPC begins, or if it is granted within the month before, a patentee must request within one month from the publication of the mention of grant if the patent is to have unitary effect in all participating member states. A translation of the entire patent into another official EU language must be filed with the request.
After this one month deadline, the unitary effect cannot be retroactively obtained.
The EPO is helping applicants with this by introducing two transitional measures for applicants who want to have Unitary Patents. These will be available from the date of Germany’s ratification, and apply only to those applications on which a Notification of Intention to Grant has been issued.
If you want a UP, EP applications receiving a Notification of Intention to Grant leading up to the start of the UPC could be converted into a UP on grant if the grant is delayed until after the UPC comes into force. This applies to applications which have had a Notification of Intention to Grant issued on them, but the text has not yet been approved for grant.
A delay can be requested from the EPO who will postpone the publication of the mention of the grant until after the official start of the UPC. However, the use of such a delay does not itself mean that the patent will have unitary effect, as you would still need to file a request for unitary status within one month from the publication of the mention of grant for it to be a UP.
Additionally, this delay has no effect on the 4-month deadline for responding to the Notification of Intention to Grant.
If the 4-month response date for the Notification of Intention to Grant falls on/after the date of the start of the UPC, an applicant can also file an early request for unitary effect as soon as the German ratification occurs.
Any other EP patents granted before this will still need to be validated as normal. However, for any application on which a Notification of Intention to Grant has recently been issued, and if you would like the patent to be a UP, then grant could alternatively be delayed by e.g. filing minor claim amendments.
Other Pending European Applications
To opt out of the UPC’s jurisdiction completely, again, a simple opt-out request can be filed in respect of each EP application. The opt-out will automatically apply to the patent once granted. Upon grant, the application is validated as normal.
To obtain a UP – once currently pending EP applications are granted, patentees have one month from the publication of the mention of grant to request that the patent has unitary effect in all participating member states. A translation of the entire patent into another official EU language must be filed with the request.
If no such request is filed within this month, it will become a regular EP patent, with the normal validation pathway, but can still fall under the UPC’s jurisdiction if no opt-out has been filed.
You will need to decide whether or not to have your European patents and applications within the UPC system or not. For any patents and applications which are to be opted out of the UPC, it would be ideal to be able to do this during the sunrise period.
Strategically, some patents and applications may be better off in the UPC system, while others may be better served staying out. Therefore, we have compiled a list of the key advantages and disadvantages of the UPC which may factor into any decision-making.
What are the factors to consider about using the UPC system?
Potential advantages of the UPC
Black applies in all cases; red applies only if you are in the UPC with a Unitary patent (not a bundle patent that’s not opted out).
Potential disadvantages of the UPC
Black applies in all cases; red applies only if you are in the UPC with a Unitary patent (not a bundle patent that’s not opted out).
It should also be considered that while a patentee can initiate infringement proceedings before the UPC, this also opens the patent to a central invalidity attack and noninfringement counterclaims in that court.
Also, competitors could potentially trap opted out patents permanently outside the UPC’s jurisdiction by initiating a lawsuit in a national jurisdiction, which could effectively decrease the value of those patents.
The main issues to consider in relation to potentially opting-out and avoiding the UP system altogether are:
(i) The strength of the patents
A weaker patent will obviously be more vulnerable to challenge. Not having it exposed to potential central revocation across all states in one action would therefore be preferable. This could apply, for example, to patents where the granted claims are rather broad, especially if they are broader than other related cases due to prior art which was not considered by the EPO. Such patents may be better off opted-out.
Conversely, a patent perceived to be stronger should be more robust under challenge, so the UPC system would be less of a threat, and the ability to enforce it Europe-wide in a single action may be preferable.
(ii) The value of the technology covered by each patent to the business
It may be preferable to shield patents which are highly valuable to your business from any UPC central attack, so any challenge and potential revocation would have to be individually before the national courts in each of the validated states. Also, in some cases, it may also be worth assessing how your various patents may interact to protect their commercial products.
You should link your patents to their products and assess the importance of those products to the business. For example, if any particular patent covers a successful product, or is bringing in money via Patent Box, then you may wish to opt it out.
(iii) The likelihood of enforcement in different countries
If you were anticipating enforcing a patent in different countries, then central proceedings would be more cost effective. Remaining opted in (or opting back in) may be a preferable option here. Bear in mind, of course, that often matters are settled in pre-action correspondence, without action at any court, let alone several.
(iv) The likelihood that a third party will attack the validity of the patents
If the likelihood of a challenge to the patent is perceived to be high, then you may wish to opt out to avoid central attack.
If the likelihood of a challenge is perceived to be low, and the patent is considered low risk, then you may not be as inclined to opt out.
(v) Costs
Where do you want to validate your patents? If it would be in only a low number of states – e.g. UK, FR, DE – then the UPC would not be cost-effective, especially as the UP will not cover the UK. However, if validation in many states would be desired, then the UPC would be more cost-effective.
Alternatively, the relatively low cost of getting protection in all UPC states rather than 3 or 4 for not much more money may make the UPC more appealing.
In terms of potential cost effectiveness or otherwise of the UP system, the estimated cost differences between validating in different countries separately and having a UP, over different durations of the patent and for validation in different states could be approximately:
The opt-out must be filed either by the actual owner of the patent or their representative. The person submitting the opt-out will have to file a signed authorisation from the patent owner. We will therefore need you to grant us this permission if Wilson Gunn is to file the opt-out request. Where there is more than one proprietor, authorisation will be required from ALL the proprietors.
The opt-out requests will not be checked to ascertain whether all the true owners have agreed to the opt out, so incorrect opt-outs will not be visible and opt-outs may be challenged later. Invalid opt-outs can be challenged.
The opt-out request must also be filed in the name of the correct proprietor. If not done correctly, an opt-out could be deemed invalid, leaving the patent still open to challenge under the UPC system.
If the actual owner (or owners) in respect of any of the UP states differs from the registered proprietor as listed on the EPO register, the parties filing the request will need to be able to demonstrate chain of title from the original/registered rights holder to themselves, so any challenge to the validity of the opt out can be rebutted.
Filing an opt-out request must be done using a UPC Case Management System.
The opt-out must be in relation to specifically named EP patents. It is not currently possible to file a broad opt-out, e.g., for all EPs in the name of a particular patentee, though it is said that a single request opting out more than one patent will be possible.
It will be possible to view the database of opted out European patents to check the opted in/out status of individual patents. Presumably in time it will become possible to be able to view entire portfolios of competitors like this. Being able to see competitors’ opting in/out strategies may provide you with some understanding of their priorities.
There are also other issues to consider in relation to the UPC:
(i) What happens when your patents have joint ownership?
Who has the right to opt a jointly owned patent out of (or into) the UPC system?
While any existing collaboration agreements may define which party has the right to direct patent prosecution and commence infringement proceedings, it is unlikely that existing agreements will include any clauses relating the UPC.
In such cases, the owners will need to be in agreement to file an opt-out request. Patentees with joint-owned cases will thus need to seek the consent of the other co-owner(s), and time would need to be allowed to obtain this.
Also, it is suggested that all future such collaboration agreements should include clauses relating to the UPC.
(ii) Does it matter which co-owner is named first on the patent?
Yes, if they are of different European nationalities or have different places of business within the participating UP states. The nationality or place of business of the patentee determines which national law applies to the patent as an item of property. If a UP has joint owners with different European nationalities within the participating UP states, the law of the country of the owner named first on the application as filed will apply.
If there are no owners within the participating UP states, German law applies.
(iii) What happens when a patent has an exclusive licensee?
Exclusive (and non-exclusive) licensees will not be able to apply for an opt-out of any patent they license.
However, a patentee may want to consider the wishes of the licensee when deciding whether to opt-out or not, or even allow the licensee to make the decision. If the former, it would have to be determined who decides if they don’t agree. If the latter, should a licensee be able to do so without the licensor’s consent, given that the licensor may not want to have proceedings in the national courts? It would also have to be determined who was responsible for any extra costs incurred in opting in or out; or for defending against invalidity attacks in the national courts following any opt-out.
Additionally, if a patent is exclusively licensed to different companies in different countries, each licensee would likely be able to bring infringement proceedings in their respective countries under the terms of the license agreements. If the patent is not opted-out, one licensee could initiate infringement proceedings before the UPC and thus block the opt-out before any opt-out is registered, as well as potentially provoke a central revocation action at the UPC, which could potentially lead to the loss of patent rights for the other licensees in their countries.
Conversely, if the patent is opted-out, one licensee could initiate infringement proceedings before the national courts, and thus prevent the patent from ever being opted in. Some central control of the licensees’ ability to litigate would thus be required.
These are the sort of issues which a licensor would need to address with their licensees. New licences should be drafted so that they make clear who has the right to opt out, and who has control of any potential litigation strategies.
(iv) Future filing strategies
You may want to have a different filing strategy going forward, potentially filing a mixture of EPs and national applications to give the potential for different modes of enforcement. However, this is a longer-term issue, only becoming relevant after the transitional period ends.
Essentially, going forward, you will need to decide what to do when future patents grant, namely when to choose:
(i) UP;
(ii) Opted out bundle; or
(iii) Opted in bundle.
Which option best suits you will need to be determined on a case-by-case basis, unless you were to establish a policy to treat every case the same way.
Overall, for many UK based patentees, the UK’s withdrawal may be the best of both worlds, allowing them to have a UK patent in their home market and a single patent for the rest of the UP states. Formerly, having the patent in your home market subject to the decisions of a brand new court elsewhere was a large downside; now, at least the UK is safe from central attack at the UPC, so the UP may be much more attractive than it was – after all, wherever it would have been litigated would have been outside your home market.
(v) Monitoring competitor patents
If a relevant patent of a competitor’ is part of the UPC system and has not been opted out, then it should be considered whether to initiate central revocation proceedings.
For advice on your options regarding the UPC, please get in touch with us or speak to your usual Wilson Gunn contact.
Further information can also be found in the FAQs on the European Patent Office website.