The Unified Patent Court (UPC)

THE UNIFIED PATENT COURT - ESSENTIAL POINTS

The transitional provisions and the opt out

Those provisions are not applicable to Unitary patents for which the UPC has exclusive jurisdiction as from its entry into force. The transtional provisions and the opt out are only applicable to pending European patent applications and to European patents having national effects (so called “bundle patents”).

During a transitional period of 7 years, it is still possible, for a European patent, to choose either the UPC or the national courts. The choice is open to the patentee wishing to engage an infringement action and to third parties wishing to file a revocation action.

A patentee may wish to avoid that a third party files a revocation action before the UPC with the risk of a central revocation for all Contracting Member States.

The opt out procedure has been designed for this:

• - during the transitional period, it is possible to register, free of charge, for a specific European patent application or a specific European patent, a declaration that only national courts shall be competent for this European patent application or European patent.

An opt out may not be registered if an action has already been engaged before the UPC and is still pending or already terminated.

If an opt out has been registered, a revocation action can not be brought before the UPC. All actions, including infringement actions and revocation actions must be brought before the national courts of each designated country.

The effects of the opt out extend after the end of the transitional period, until expiry of the patent.

If an opt out has been registered for a European patent application or patent, it is generally considered that the entire UPC Agreement no longer applies. The National courts would then have to apply national law for enforcement of this European patent application or patent and not the provisions of the UPC Agreement on substantive law (For more information, see here).

An opt out may be withdrawn, free of charge, as long as no action has been engaged before any national court and is still pending or already terminated.

If an opt out has been withdrawn, it is not possible to file subsequently a new opt out.

Organization of the Unified Patent Court (UPC)

The Unified Patent Court includes:

• ● A first instance court,
• ● An appeal court located in Luxembourg.

The first instance court is constituted of:

• ● Local divisions (one or more in each Contracting Member State who decided to create such a division),
• ● Regional divisions if several Contracting Member States want to join their efforts and avoid the costs of a local division,
• ● And a central division seated in Paris with a section in Munich for certain technical fields.

The central division in Paris will decide the patent validity issues in the fields of transportation, textile, construction, physics, electricity, electronics and telecommunications.

The Munich section will handle issues of validity for patents in the mechanical field and probably in the fields of chemistry and metallurgy.

The judges of the Unified Patent Court

All the judges of the different panels of the Unified Patent Court, will have experience in the field of patents. Some judges will have an exclusively legal training, others will also have technical training and take part to the decisions of the court.

First instance - Local and Regional Divisions of the Unified Patent Court

The panels of the local and regional divisions will consist of three legally qualified judges of different nationalities.

In countries that have at present little litigation cases on patents, two judges of each panel will be chosen from a pool of international judges, the third judge having the nationality of the country where local division is located.

In countries with a higher number of patent litigation cases, such as France and Germany for example, the panels will consist of two judges having the nationality of the country where the local division is located, the third judges being chosen from the pool of judges.

In all cases, the panels of the local and regional divisions will consist of three legally qualified judges. A fourth judge with a technical background can be added to the composition of the panel at the request of either party or on the initiative of the panel.

The Central Division of the Unified Patent Court

The panels of the Central Division will always consist of one technically qualified judge and two legally qualified judges. The three judges will be of different nationalities.

The Court of Appeal of the Unified Patent Court

The panels of the Court of Appeal shall consist of five judges, two of whom will have a technical training and three a legal training.

This organization ensures the multinational character of the panels in the first instance and at the appeal level of the Unified Patent Court and so ensure to the extent possible consistent decisions, despite the proliferation of local divisions next to the central division.

Language of the procedure in the Unified Patent Court

The language of the procedure will normally be the national language of the country where the local division is seated. However, a country may decide that its local division may use as language of the proceedings, English, French or German.

On request of one of the parties and after hearing the other party, the panel may decide to adopt the language in which the patent was granted. If the panel refuses the unanimous choice of the parties to such a language of proceedings, the entire case may be referred to the central division.

Before the central division, the language of the procedure is the language in which the patent was issued, that is to say, English, French or German.

On appeal, the language of the procedure is the language used in the first instance. However, the parties may agree to use the language in which the patent was granted.

Competence of the Unified Patent Court

The Unified Patent Court has exclusive competence for European patents and Unitary patents regarding:

• ● Infringement actions,
• ● Actions for declaration of non-infringement,
• ● Provisional measures (preliminary injunctions),
• ● Orders for obtaining and preserving evidence,
• ● Permanent injunctions and determination of damages.

The Unified Patent Court has also exclusive jurisdiction regarding :

• ● Revocation actions,
• ● Counterclaims for revocation.

Acts of infringement of European patents and Unitary patents

Acts of infringement of a European patent or a Unitary patent are defined in the same way.

Those acts include the direct infringement namely the manufacture, sale, offering for sale or use of a patented product or a product directly obtained by a patented process or the use or offering to use of a patented process.

Indirect infringement is constituted by supplying the essential means of implementation of the patented invention.

Certain acts are excluded from infringement, such as private acts without commercial character, experiments, the extemporaneous preparation of medicines, the use by a farmer of the product of his harvest on his own holding.

Finally, in line with European competition law, the rights conferred by the patent are exhausted provided that the patented product has been placed on the market in the European Union by the patent proprietor or with his consent.

These provisions apply to Unitary patents and to all European patents designating a Contracting Member State of the Agreement. The provisions of the various national laws relating to infringement, no longer apply to these European patents.

Unpublished prior use exception

The interpretation of this prior use exception remains submitted to the national law of each Member State. The holder of a European patent or a Unitary patent can not therefore prevent a third party from reproducing or using the patented invention on the territory of a particular Member State if the third party benefits, under national law, of such an exception. Of course, infringhement remains prohibited and reparations can be obtained for the other Contracting Member States in which the third party does not benefit of such an exception.

The choice of the appropriate division of the Unified Patent Court

Infringement proceedings may be brought before a local or regional division located in a Member State in whose territory an act of infringement was committed (jurisdiction based on the place of infringement).

The action can also be brought before a local or regional division located in a Member State in whose territory one of the defendants is domiciled (jurisdiction based on the place of domicile of the defendant)

Infringement proceedings can also be brought before the central division if one of the defendants is domiciled outside the territory of the Contracting Member States. This can for instance be the case if an alleged infringing product is being imported into the territory of the Contracting Member States from Asia, America or Switzerland, Spain which are European countries not part of Agreement.

Finally the parties may agree to refer the dispute to any of the first instance divisions, including the central division.

How to bring an action for infringement before the central division of the Unified Patent Court?

The plaintiff in an infringement action may in some cases prefer the central division rather than any local division.

Indeed, the panels of the central division always include a technically qualified judge which can be an advantage when the invention is technically complex.

The language of proceedings before the central division is always the language in which the patent was granted so that discussions on the validity and scope of the patent are easier.

Infringement proceedings may be brought before the central division in the following cases:

• ● If one of the defendants is domiciled outside the territory of the Contracting Member States
• ● If the action is based on at least one act of infringement that occurred in the territory of a Contracting Member State that has not established a local division or who does not participate in any regional division (for example Malta or Luxembourg)
• ● If it is possible to provide evidence of infringements committed over a wide geographical area covering the territory of at least three regional divisions
• ● If both parties agree to choose the central division.

Counterclaim for revocation of the European patent or the Unitary patent

In case of a counterclaim for revocation, presented as a defense during an infringement action brought before a local or regional division of the Unified Patent Court, the panel of the local or regional division has the choice between three options:

• ● It may decide to simultaneously handle issues of infringement and validity of the patent, in which case it must appoint a judge who is technically qualified in the field of the patent in question;
• ● It can refer the question of validity of the patent to the central division and either decide without delay on the issue of infringement, or stay the proceedings pending the decision of the central division. This procedure is called "bifurcation";
• ● It may, with the agreement of the parties, refer the whole case (infringement and validity) to the central division.

How to establish evidence of patent infringement

The Unified Patent Court may issue an order, allowing an independent person, representing the applicant, to carry out an inspection in situ to perform a detailed description of an alleged infringing product or method, with or without the taking of samples and seize any document relating to the manufacture and distribution of the products. Such an order can be obtained even before engaging the action on the merits and without hearing the other party.

Appropriate measures may also be provided to ensure the confidentiality of information gathered during this operation.

This procedure is similar to the infringement-seizure procedure, widely used in France for obtaining evidence of alleged patent infringement.

The Unified Patent Court may also, upon request of a party, order the other party to produce additional evidence in his possession.

The procedure before the Unified Patent Court

The proceedings in the first instance and on appeal, has three phases.

• ● A first phase consists of a written procedure during which the parties exchange arguments, facts and evidence to sustain their requests. Each party has the opportunity to file only three written submissions (a first submission, a response and a rejoinder), the defendant having the last word. The deadlines imposed by the court are very short (1-3 months) and not easily extendable.
• ● A second phase, which begins at the closure of the written procedure consists of a so-called interim procedure. During this interim procedure, a judge rapporteur may convene the parties to at least one conference to determine the main issues under debate, to clarify the position of the parties, to order if relevant, technical experiments or the production of new evidence, to hold preparatory discussions with potential witnesses or experts and, in general, to prepare the oral hearing.
• ● The third phase consists of the oral hearing, during which the parties may present their technical and legal arguments. It is expected that this oral hearing will last a maximum of one day, except in exceptional cases. Experts committed by the parties or by the court as well as witnesses, may possibly be heard during the hearing but only if their written statement or reportneed to be explained.

The entire procedure in the first instance should have a duration of about one year.

The preliminary injunction

It is possible to request a quick decision for preliminary injunction to stop an alleged infringement of a patent, even before engaging the proceedings on the merits and, in some cases without hearing the other party.

A third party that fears of being submitted to such a provisional injunction without a hearing, may file at the Registry of the Unified Patent Court, a protective letter stating the name of the person who may may require a preliminary injunction and the number of the patent. The letter may provide arguments against a claim for infringement and challenging the patentability of the invention claimed in the patent. This letter (which is valid only 6 months) will be subsequently transmitted by the Registry of the Court to first instance division where a request for prliminary injunction is filed.

The remedies and damages

The decision on the merits of the Unified Court may include reparations for the damage suffered by the plaintiff, including the determination of damages and costs to be paid to the plaintiff by the loosing party.

Alternatively, and in more complex cases, the determination of damages will be done during a subsequent separate procedure.

According to EU Regulation N° 1215/2012 (recast), in force since January 2015, the Unified Patent Court is also capable of deciding on damages resulting from infringement acts which occurred in countries of the EU, not part of the UPC Agreement, covered by a European patent. This could be the case for Switzerland or Spain for example.

Court fees of the Unified Patent Court

The Unified Patent Court must ultimately cover all of its costs through the collection of fees, to be paid for all main acts of the proceedings. Some of these fees include a fixed part to be paid together with the filing of an act and a value based part depending on the "value of the dispute" as determined during the interim procedure by the judge rapporteur after study of the proposals of the parties.

Advantages and disadvantages of the Unified Patent Court

The Unified Patent Court increases the risk for a European patent owner to see his patent canceled simultaneously for all Contracting Member States. This risk is clearly accepted if the choice is made of a Unitary patent. It may not be the case for a European patent having national effects in the designated countries (so called “bundle patent”). This could encourage many holders of European patents to use the temporary opt out provided for in the Agreement in order to continue to use the different national courts. Of course the possibility to opt-out will not stand forever and there will come a time when it will no longer be possible to bypass the exclusive jurisdiction of the Unified Patent Court, except for purely national patents.

On the other hand, the Unified Patent Court has many advantages.

It makes it possible to get through a single decision, made by a panel of highly specialized patent judges, usually including at least one technically qualified judge, a permanent injunction effective in a large number of European states as well as damages in compensation for infringements committed in all these countries.

The procedure should be reasonably fast, with a strict case management and only a few exchange of written arguments

The costs of the procedure seem higher than the costs of an infringement action in France but approximately similar to an infringement action together with a revocation in Germany.They will certainly be lower than an infringement action in the United Kingdom.

For more information from the Preparatory Committee of the Unified Patent Court, please click here.