Understanding the Unified Patent Court
The UPC complements the Unitary Patent (UP) system and shares its aims of improving and simplifying patent protection in the European Union.
Crucially, the UPC will be the forum for both UPs and classical European patents (and supplementary protection certificates based on them) in the participating states.
What will the UPC provide?
The UPC will provide parties with decisions, and remedies, that apply across all the participating member states.
When it comes to European patents in the participating countries, however, during the transitional period actions can still be brought before national courts.
European patents (but not UPs) can also be opted-out of the UPC during the transitional period.
The benefits promised by the UPC include simpler, cheaper resolution of patent disputes in Europe, without duplication of proceedings or the risk of conflicting judgments. The Court will have dedicated judges who will have (or develop) expertise in patent law. There are also some specific benefits in terms of reduced fees for small and medium-sized enterprises.
As with the UP, there are also a number of risks and unknowns that need to be factored in – both for patent proprietors and potential defendants. These include uncertainty about how a new court will operate, the risk of central revocation of a UP in the Court, the possibility of an injunction that covers all the participating states, and the possibility that damages awards will be more (or less) than anticipated.
In addition, the advantages of harmonisation and reduced duplication will be limited insofar as key jurisdictions – notably the United Kingdom – will be outside the system.
Opting-in or opting-out
Many European patent proprietors may feel that, at least in the short term, the risks outweigh the benefits. If that is the case, they can opt-out their European patents from the UPC. This will ensure that these patents will continue to be litigated before national courts, as they are today, unless the proprietor later chooses to opt back into the system. Opt-outs can be registered while an application is pending, as well as after the patent is granted.
Opting-out your European patents effectively protects them from central revocation at the UPC. Whether or not to opt-out is therefore the most important decision to take at this stage. As mentioned above, it is not possible to opt-out UPs.
Patents granted by the various national patent offices in Europe will remain within the jurisdiction of national courts and will not be affected by the UPC.
The UPC, like the UP, will start on 1 June 2023.
Preparations for the Court are already underway, during what is known as the Provisional Application Period – these include the appointment and training of judges, the setting up of the Court’s IT systems, and budget planning.
The Provisional Application Period started on 19 January 2022, following Austria’s ratification of the Protocol on the Provisional Application of the Agreement on a
Unified Patent Court and was initially expected to last for at least eight months.
Note that certain actions may need to be taken before the formal launch of the UPC. In particular, you can file requests to opt-out European patents during a sunrise period which will be in force for three months prior to the official start date of the system, so from 1 March 2023.
The possibility to opt-out European patents will continue until one month prior to the end of the transition period, which is separate to the sunrise period and is due to last seven years. The transition period may be extended for a further seven years.
Participating member states
There are currently 17 countries participating in the UPC: Austria, Belgium, Bulgaria, Denmark, Estonia, Finland, France, Germany, Italy, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Portugal, Slovenia, and Sweden.
If further EU member states ratify the UPC, the reach could extend to 24 countries covering a market of some 400 million people. Croatia, Poland, and Spain are not expected to be part of the new system for the foreseeable future. Non-EU countries cannot join it either.
In practice, therefore, a proprietor of a UP will be able to bring an action before the UPC and seek remedies for infringement (such as injunctions and damages) covering at least 17 and up to 24 countries, depending on the number of UPC ratifications at the time the patent was granted. A proprietor of a classical European patent in some or all of those countries may also bring a single action to enforce the patent at the UPC rather than going separately to different national courts.
Conversely, a third party can bring an action to revoke a patent in the same countries.
In either case, separate actions would have to be brought for any non-participating countries, such as Spain, the UK, Switzerland, and Norway.
Locations of divisions
Although the UPC is one Court, it is made up of a mix of local, regional, and central divisions, a Court of Appeal, Mediation and Arbitration Centre, and a Registry.
Local and regional divisions
The primary role of local and regional divisions will be to hear infringement disputes at first instance. Invalidity counterclaims will also therefore start at the local and regional divisions, although they will not always be heard in full there.
The following member states have stated that they intend to set up local divisions: Austria, Belgium, Denmark, Finland, France, Germany (which will have four local divisions), Italy, the Netherlands, Portugal, and Slovenia.Sweden will host a Nordic-Baltic regional division.
The central division will be split between Paris, France and Munich, Germany. It will have jurisdiction over declarations of non-infringement and revocation.
The central division in Munich will hear mechanical engineering cases with other technologies going to the central division in Paris. (London was to host a third branch of the central division, for cases involving human necessities, pharmaceuticals, and chemistry before the UK pulled out of the UPC – these cases will now go to Paris unless/until a third location is determined).
It will be possible to transfer cases between local and central divisions, for example where a revocation counterclaim is brought in the central division, where multiple actions have been brought before different panels of judges concerning the same patent, or where the parties agree to transfer.
Appeals against first instance decisions can be brought before the Court of Appeal, which will be in Luxembourg. Questions relating to EU law can be referred to the Court of Justice of the EU, although this is likely to be rare as very few provisions of EU law affect patents.
The Mediation and Arbitration Centre
The Mediation and Arbitration Centre will be split between Lisbon, Portugal and Ljubljana, Slovenia. There will be a Registry , responsible for administering cases, and sub-registries in each division.
In local and regional divisions, the language of proceedings will be one of the official languages of the hosting member state or one of the three official European Patent Office (EPO) languages or (subject to the parties’ agreement) the language of the patent.
In the central division, it will be the language of the patent. The Court of Appeal will use the language of first instance, or another language agreed by the parties.
In practice, English is expected to be used in the majority of cases.
Who will hear cases?
The UPC will comprise legally qualified and technically qualified judges from the participating states. Judges may be full-time or part-time. Legally qualified judges will be comparable to judges in participating member states and may also sit in national courts. Technically qualified judges will have technical expertise and are likely to be patent attorneys or other IP specialists.
Judges will sit in panels. At first instance, the panel at a local or regional division will normally comprise three legally qualified judges, plus (if required, for example if validity is in issue) a technically qualified judge. In the central division, there will be two legally qualified judges and one technically qualified judge.
The Court of Appeal will have panels of five judges (three legally qualified and two technically qualified).
In each case, the panel will be multinational. For example, a panel in the Munich local division may comprise two German judges and one from another country. The three legally qualified judges on a Court of Appeal panel will each come from a different country.
In first instance cases, if the parties agree, the case can be heard by a single judge.
Why is the system designed like this?
The system is designed to promote consistency and fairness, to provide a mix of legal and technical expertise, and to avoid “home advantage”, or the perception of it. The early cases brought, including any appeals, will demonstrate to what extent it achieves these aims.
Patent proprietors may therefore consider that having at least some of their patents inside the system will provide an opportunity to shape the Court’s jurisprudence and resolve issues that are of particular interest to them.
Proceedings and how to bring an action
As far as possible, UPC cases will be managed electronically. Statements or applications will be filed at a sub-registry of the Court and should include all relevant information.
There are detailed provisions regarding the division in which cases can be brought. Essentially, claimants should bring cases before the local or regional division where the alleged infringement occurred, or where the defendant has its residence or place of business. In certain cases, notably where the defendant has no presence in a UPC member state or where the parties agree, infringement actions can be brought before the central division.
If the alleged infringement takes place in more than one country, or there is more than one defendant, the claimant will be able to choose where to bring the case. This provides for the possibility of forum shopping – while the UPC website claims that forum shopping will be minimised by the equal competence of all divisions and the uniformity of rules and jurisprudence, it remains to be seen whether this laudable aim can be realistically achieved.
Actions for revocation or non-infringement will normally be brought before the central division. The exception is where an infringement action between the same parties and relating to the same patent has already been filed, in which case the revocation action may be brought before the relevant local/regional division.
If a counterclaim for revocation is filed, there are various possibilities – the case could stay in the local/regional division, the revocation claim only could be referred to the central division, or the whole case could go to the central division. The second option raises the possibility of bifurcation, something which is familiar from
German patent litigation – the Court will have discretion to stay proceedings in such cases.
The proceedings will comprise written submissions from both parties, followed by interim conferences with the parties (if required). The judge rapporteur may order parties to produce further information or evidence at the interim conference, but there will be no cross-examination of witnesses at this stage.
The oral part of the proceedings is expected to be limited and should normally be completed within one day. Witnesses can be heard during the oral procedure – they will be questioned by the panel and, at the presiding judge’s discretion, by the parties.
The UPC aims to issue written decisions in cases within six weeks of the oral hearing.
Certain matters will be outside the jurisdiction of the UPC and will still be determined by national courts under national law. These include disputes over ownership of patents and the terms of licences.
Those familiar with litigation in Europe will recognise that the UPC is a hybrid system, incorporating elements of both continental-style written procedures and UK-style hearings, with a tilt toward the former approach. Familiarity with written procedures (such as EPO opposition proceedings) may be particularly useful for parties and their representatives in actions before the UPC.
Despite the detailed rules, judges will have some discretion over issues such as time limits, witnesses, and remedies. Only once the first cases have been completed will we have a better understanding of how the Court will work in practice.
Moreover, it is likely that many of the early cases will be appealed, and the Court of Appeal will play a significant role in harmonising procedures between divisions.
The UPC will be able to grant interim measures, including: to preserve evidence and inspect premises (akin to the saisie-contrefaçon found in many European countries), to order the production of evidence, to make freezing orders, to grant interim injunctions, and to order seizure or delivery up of suspected infringing products.
If seeking interim measures, claimants will need to satisfy the Court that their rights are being infringed, or that infringement is imminent.
The Court will ordinarily hear from the defendant before granting interim measures, unless the delay will harm the patent proprietor or there is a risk of evidence being destroyed.
There are fixed and value-based fees for UPC proceedings, the levels of which were set in 2016 and may be subject to revision in the near future.
Fixed fees (for example, €11,000 for an infringement action or counterclaim and up to €20,000 for a revocation action) apply to all cases. There is a full and detailed list of fees for all the possible actions.
Value-based fees apply to infringement, non-infringement, and damages actions. They range from €0 for cases with an estimated value of €500,000 and under, up to €325,000 for actions of more than €50 million.
Small and micro-entities will get a 40% reduction in court fees. There will also be discounts where a single judge is used instead of a panel, and where cases are withdrawn or settled early. Natural persons may be able to obtain legal aid.
The fees will be reviewed on a regular basis once the UPC is up and running.
In principle, court costs and representation costs can be recovered by the winning party. However, there are limits on the amount that can be recovered and judges have some discretion regarding recovery of costs.
What happens now?
For most patent proprietors, the most pressing action relating to the UPC will be to decide whether to opt-out some or all of their existing European patents. We are now in the sunrise period during which opt-outs are possible before the Court opens its doors on 1 June 2023.
During the sunrise period, many companies will want to monitor what actions their competitors are taking regarding opt-outs, particularly if there is the possibility of filing a revocation action at some point.
Up and running
Once the Court is properly up and running, parties will be able to bring cases either to enforce UPs and European patents in the participating states or to seek central revocation. If seeking revocation, there may be strategic decisions to be made about the UPC action and EPO opposition proceedings (or indeed both) if the patent is still within the nine-month opposition window.
In all cases, careful preparation should be undertaken before action is taken. The advantages of bringing an early action before the UPC include the opportunity to shape the system and establish precedents. The disadvantages include the unpredictability of a new system and with that the potentially significant effect of an adverse decision having such broad territorial coverage.
The following resources provide more information: