Overview of the UPC

The UPC is a new, international court for patent litigation in Europe.  The court is set to begin operating in 2023, as long as there are not further delays.  Together with the European Patent with Unitary effect (the unitary patent or UP), this is the biggest change to the European patent landscape for over 40 years.

When will the UPC and UP start?

It is not yet possible to be certain when the UPC and UP will come into effect.  It is currently expected that the UPC will come into force on 1 June 2023.

The start of the UPC's operations will be triggered by the entry into force of the UPC Agreement. The UPC Agreement will enter into force on the first day of the fourth month after the deposit of the German instrument of ratification.  The German deposit will also mark the start of the sunrise period during which it will be possible to opt out existing European patents from the jurisdiction of the Court.

The timing of the start of the Court still depends on the progress of preparatory work to make the Court operational, and may yet be subject to further delays.

Jurisdiction of the UPC

The UPC is established by the Agreement on a Unified Patent Court (the UPC Agreement or UPCA) which was signed on 19 February 2013 by 25 European countries.  Following Brexit, the UK withdrew from the UPCA.

The UPC will have jurisdiction for patent litigation for both unitary patents and traditional European “bundle” patents for states that are both members of the EU and the UPC Agreement.    The current list of states that have signed the UPCA can be found here, and includes many but not all EU members of the EPC.   The agreement excludes significant non-EU states like Switzerland, Turkey and Norway.  The UK, which was an original signatory of the UPC Agreement has since withdrawn its ratification of the UPC Agreement and withdrawn from the UP. This means the UK courts will continue to have exclusive jurisdiction over European patents designating the UK. 

Spain and Poland are member states of the EU, but they have not (yet) signed up to the UPC Agreement.

During at least the first seven years of operation of the court, there will be transitional provisions that allow patent owners to “opt out” of the UPC system for any traditional “bundle” European patents.  However, the UPC will always have sole jurisdiction for unitary patents.  During the transitional period, there will be a dual jurisdiction arrangement in relation to non-opted out European patents whereby cases can be brought in either the UPC or a national court. 

The UPC will also have jurisdiction over supplementary protection certificates (SPCs), unless the SPC has been opted out or the SPC originates from an opted out “bundle” European patent.

You will be able to bring actions for infringement, declarations of non-infringement, revocation, and related counterclaims concerning patents that fall within the jurisdiction of the Court.  The local and regional divisions will handle infringement suits and grant provisional and protective measures.  The central division will handle revocation actions and declarations for non-infringement. However, an invalidity action may also be brought before the local or regional divisions as a counterclaim to a pending infringement action.  The UPC system will therefore combine elements of Germany’s bifurcated procedure with the unified procedure using in the UK, France and The Netherlands.

Regardless of whether the patent is an EP or UP, the UPC will not be competent to hear ownership disputes or disputes relating to licencing agreements.  These disputes will remain the preserve of the relevant national courts even in signatory states of the UPCA.

Opting out of the UPC

Opting out only applies to traditional European “bundle” patents.  Unitary patents cannot be opted out of the jurisdiction of the UPC.  Any traditional European patent or European patent application can be opted out.  However, it is not possible to opt out after litigation has begun before the UPC.  All of the patents in a traditional “bundle” of European patents must be opted out together, and SPCs and their relevant base patent must also be opted out together. 

Only the proprietor (or applicant) can opt a patent out of the UPC, and where there are co-proprietors (or co-applicants), all must agree on the opt out.  If an SPC is owned by a different entity than the base patent, then both owners must agree to the opt out.  The Rules of Procedure also permit an authorised representative of the true owner to register the opt out.

Once opted out, it is possible to opt in again.  However, this can only be done once.  Opting in is also not possible if a patent has been litigated in a national court.

Opting out will only be available during the transition period, which will be at least seven years after the UPC comes into effect.  There are no official fees associated with opting out or opting back in.

Structure of the UPC

The UPC will have a Court of First Instance and a Court of Appeal.  The Court of First Instance will be divided into local, regional and central divisions.   The main seats of the central division will be in Paris and Munich.  Prior to the UK withdrawal from the UPCA, a further seat of the central division was due to open in London.  The location of this final seat is yet to be decided, and may possibly be in Milan.

Cases will commence in any one of these divisions according to the subject matter and the prescribed division set out in the UPC Agreement and the UPC Rules. 

Cases before the central division will be divided based on their subject matter, as determined by their IPC classification.  Munich will hear cases involving patents in IPC class F, concerning mechanical engineering.  The cases previously assigned to London will deal with patents falling into International Patent Classification of WIPO sections (A) and (C) covering chemical and biotechnological patents.  All other classifications will be assigned to the central division in Paris.  The interim arrangements for the “London” cases are still to be confirmed, but they are likely to be sent to Paris until a third set for the central division is agreed.

We are expecting local divisions to be set up in a large number of UPC states including Austria, Belgium, Denmark, France, Italy and the Netherlands.  Germany is planning local divisions in Düsseldorf, Mannheim, Munich and Hamburg.  Finland is also thought to be planning a local division.

Sweden, Estonia, Latvia and Lithuania will set up a Nordic-Baltic regional division located in Stockholm. Portugal intends to participate in a regional division, and Bulgaria, Greece, Cyprus, Romania and Slovenia are planning a further regional division.

Malta and Luxembourg plan to go directly to a central division, without participating in a local or regional division.

The Court of Appeal will be located in Luxembourg.

Language Arrangements

Local and regional divisions can set their own language regimes.  Most details are still to be confirmed.  Local divisions may use their official national language, and may also choose to designate one of the official languages of the EPO (English, French and/or German) as a further official language of that local division.  Regional divisions may choose to specify that proceedings take place in the official language(es) of the member states sharing the regional division, or an official language of the EPO.  For example, the Danish local division will allow proceedings in Danish and English. The Belgian local division will operate in Dutch, English, French and German.

In situations where the parties and the division agree, the language of the patent may also be used in local and regional division proceedings.  At the central divisions, the language of the patent will be the language of proceedings.

At present, we expect that English language proceedings will be an option for the majority of UPC local and regional divisions.

The language of proceedings in the Court of Appeal will be the language used at the First Instance.  However, the parties can make alternative language arrangements for the appeal, including using the language of the patent, if all parties agree.

Procedure before the UPC

Parties must be represented, and cannot appear in person before the UPC at any level. Any lawyer authorised to practise before a court of a contracting member state will be able to represent parties before the UPC, as will European Patent Attorneys who have the appropriate qualifications. 

UK based European patent attorneys will be able to act as representatives before the UPC, and it has recently been confirmed that the UK “Intellectual Property Litigation Certificate” and “Certificate of Intellectual Property” administered by Queen Mary University, qualifications that are held by the vast majority of Chartered Patent Attorneys will be accepted as a qualification to act as a representative before the UPC for UK-based European Patent Attorneys.   However, UK qualifications will only be accepted if they were gained before the end of the Brexit transition period, i.e. before 20 December 2020. See here for further information about representatives at Elkington and Fife that can act before the UPC.

The latest version of the draft Rules of Procedure can be found here. This is a draft set of rules last amended before the end of the Brexit transition period, and therefore further amendments are likely to be needed.  The European Commission will scrutinise the rules during the Provisional Application period before they are amended and adopted by the UPC Administrative Council.

Like many proceedings before the national courts and before the EPO, substantive proceedings before the UPC comprise three stages: written, interim and oral procedures. At any stage of the procedure, the UPC may propose that the parties use Mediation or Arbitration or any other appropriate alternative dispute resolution service or process in order to explore the possibility of settlement.  There will be a Mediation and Arbitration Centre as part of the Court set up.

After the outcome of the First Instance proceedings, the parties will have the opportunity to appeal to the UPC Court of Appeal if they are adversely affected by the decision of the first instance division.  Appeals can relate to procedural decisions as well as substantive decisions.  Procedural appeals will be a useful mechanism to harmonise proceedings across the many local and regional Frist Instance divisions.

Interaction with Opposition Proceedings

Opposition Proceedings before the EPO will not change with the coming of the UPC.  Opposition Proceedings will remain for traditional “bundle” patents and are also available for Unitary patents.   Opposition Proceedings will be able to run in parallel to UPC proceedings, which will not be stayed when there are Opposition or Limitation proceedings.  This is different from many national courts, which may stay proceedings pending the outcome of EPO opposition and limitation. 

Oppositions will remain a much cheaper option for attacking a European patent centrally, and will also apply to all EPC contracting states including those that are not under the jurisdiction of the UPC. However, central proceedings before the UPC remain available for the entire lifespan of a patent, not just nine months of the opposition period.  Action before the UPC also allows for a greater diversity of remedies and also include infringement actions, not just challenges to the validity of a patent.

Remedies Available

The UPC will have a number of remedies at its disposal, including the power to obtain evidence, issue interim injunctions across the entire jurisdiction of the UPC, asset freezing orders, security for costs, and following the final judgement also damages or account of profits, injunctions, delivery up of destruction of infringing articles, recall from channels of commerce, orders for revocation and cost recovery.

Costs

Costs before the UPC are significantly higher than before the EPO, with basic fees for a revocation actions set at €20,000.  Infringement actions and declarations of non-infringement will have fixed court fees of €11,000.

In addition to these fees, there are also additional value-based court fees.  The additional value-based fees start at nothing (for actions of value up to and including €500,000) and go up to €325,000 euros (for actions of a value of more than €50 million).  The value of an action is assessed by the claimant.  However, if there is a disagreement over the value of the action, this can be resolved at an interim conference.  All fees are due at the start of the action, and are paid when filing.

The UPC operates on the principle that the loser pays the costs of the other party.  However, cost must be reasonable and proportionate and recoverable cost are subject to a ceiling. 

There are fee reductions schemes for small and micro entities. Early settlement or withdrawal of the case can also trigger a partial fee refund.

Links:

The Agreement on a Unified Patent Court

Rules of Procedure of the Unified Patent Court (latest draft)

The Unitary Patent Regulation (1257/2012)

The Unitary Patent Translations Regulation (1260/2012)

Rules relating to Unitary Patent Protection (OJ EPO 2016, A39)

Rules relating to Fees for Unitary Patent Protection (OJ EPO 2016, A40)

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