An Overview of the UPC
The UPC is a new, international court for patent litigation in Europe. The court began operating as of 1 June 2023. 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.
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 The UK, which was an original signatory of the UPC Agreement has since withdrawn its ratification of the UPC Agreement and withdrawn from the UP.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
It is possible to lodge opt-outs in respect of European patents and published European patent applications, in order to prevent them from being subject to the UPC’s jurisdiction.
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 has a Court of First Instance and a Court of Appeal. The Court of First Instance is divided into local, regional and central divisions. The main seats of the central division are in Paris, Milan and Munich.
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) and C (concerning chemistry and metallurgy). Milan will hear cases involving patents in IPC class A (Human necessities without SPCs). All other classifications will be assigned to the central division in Paris.
Local divisions will be set up in a large number of UPC states including Austria, Belgium, Denmark, France, Italy, the Netherlands and Portugal. The locations of the local and regional divisions of the Unified Patent Court are set out here. The Court of Appeal will be located in Luxembourg.
Language Arrangements
Local and regional divisions can set their own language regimes. Details can be found here. 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 initial language of the patent will be the language of proceedings, but this can also be changed at the request of the parties.
At present, English language proceedings will be an option for the majority of UPC local and regional divisions. English is becoming the dominant language of proceedings.
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. See here for further information about representatives at Elkington and Fife that can act before the UPC.
The Rules of Procedure can be found here. These came into force on 1 September 2022.
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 Fiist Instance divisions.
Interaction with Opposition Proceedings
Opposition Proceedings before the EPO have not changed since the introduction 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. Opposition proceedings will be accelerated at the request of the parties if parallel UPC proceedings are ongoing. This is different from many national courts, which may stay proceedings pending the outcome of EPO opposition and limitation.
Oppositions 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 has 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
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)