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21 September 2023

Protective letters at the UPC

The UPC allows for the filing of protective letters, which can be a useful strategy if there is a risk of a competitor applying for a preliminary injunction or other provisional measures.

Picture the situation in which your company is launching a new product onto the European market. You conducted a Freedom to Operate (FTO) analysis before the launch and are aware of a competitor’s patent but are not too concerned since there are reasonable arguments that the patent is invalid and that the new product does not infringe. Moreover, you checked and the patent was opted-out of the UPC.

However, the competitor becomes aware of the launch, opts the patent back into the UPC, and makes an Application for provisional measures. The competitor is successful in seeking an injunction, and the launch of the new product is on hold. At the UPC, the Court can exercise its discretion on inviting the defendant to object to the Application, and could potentially order the provisional relief without the defendant having been heard.

Is there anything you could have done differently? Yes, you could have improved your position by filing a protective letter at the UPC Registry shortly before the launch of the product or before the competitor had chance to file the Application for provisional measures.

A protective letter sets out why a product does not infringe a particular patent, and any assertion that the patent is invalid. The protective letter essentially explains why an Application for provisional measures should be rejected, were it to be filed. If the competitor then files the Application for provisional measures, the Court still has discretion over how to proceed but it will take the protective letter into account and will consider summoning the parties to an oral hearing in view of the letter having been filed (Rule 209 of the Rules of Procedure).

The protective letter will not be publicly available unless an Application for provisional measures is filed.

If no Application for provisional measures is filed then the protective letter is kept on file for six months and after that it will be removed, unless an application is made for an extension of six months (further extensions are available).

It is early days in the UPC and there is limited case law on provisional measures and protective letters.  However, we do have an example case in MyStromer AG v Revolt Zycling AG (UPC_CFI_177/2023). In this case, the protective letter was not successful in stopping the preliminary injunction, but this is perhaps understandable, given the facts of the case. When you consider the case from the other perspective of trying to obtain an interim injunction, the case illustrates how quickly the UPC can act, and that protective letters are not a blank cheque to stopping preliminary injunctions.

MyStromer has a European patent to part of an electric bicycle, and applied for a preliminary injunction to stop Revolt from exhibiting its product at a tradeshow in Germany. Revolt filed a protective letter, arguing that there was no infringement, and that there had been an exhaustion of rights. The argument as to non-infringement was not considered to be a serious challenge, and the argument regarding the exhaustion of rights had been previously heard and dismissed by a Swiss court. Revolt did not challenge the validity of the patent.

The UPC issued the injunction within 3 days, without hearing the parties. This timescale shows how quickly the court can act in urgent cases. However, by way of a caveat, the timescale may also reflect the relatively low case load of the court at present. As mentioned, the case also shows that protective letters are not a blank cheque for stopping a preliminary injunction, although the outcome might have been different if Revolt had challenged the validity of the patent.

On another note, the UPC will follow the guidance of the Court of Justice of the European Union, which issued a patentee-friendly decision in July 2022, that interim measures cannot be denied in case the validity of the patent in question has not yet been confirmed in first instance proceedings (C-44/21). We are monitoring how the case law on provisional measures and protective letters develops in the UPC.

To conclude, a protective letter is a pre-emptive statement of defence which aims to ward off provisional measures and provoke a hearing before an ex-parte decision is taken. It is a relatively low-cost measure, particularly where an FTO analysis has already taken place, and certainly in comparison with the costs of clearing up the mess of adverse provisional measures.

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