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Everything you need to know about opting out of the jurisdiction of the Unified Patent Court
In preparation for the launch of the unitary patent system, patent holders will have the option to begin to opt some European titles out of the jurisdiction of the Unified Patent Court during a three-month ‘Sunrise’ period and during a set transitional period thereafter. With the system estimated to launch in early 2023, now is the time to start preparing your opt-out strategy.
In our recent webinar ‘All you need to know about opt-outs’, Dr Kate McNamara, Senior Patent Attorney at Novagraaf, and Viviane Chilton, Senior IP Services & Consulting Expert at Questel, shared strategies and advice for decision-making around opting out, including potential benefits and drawbacks, implications and practicalities, and the importance of timing. Here we summarize the key points from their discussion.
Getting ready for the Unified Patent Court system
The European patent with unitary effect (‘unitary patent’) is set to provide organizations with a valuable new route to European patent protection, but its progress to launch has been far from smooth. With the system finally due to come into effect early next year (according to current estimates), rights holders have some important decisions to make, not least whether they should make use of the planned Sunrise period to opt eligible rights out of the jurisdiction of the Unified Patent Court (UPC).
Questions about the unitary patent? Download our ‘Practical guide to the unitary patent’ for everything you need to know about this important new patent right.
What will be the jurisdiction of the Unified Patent Court?
The UPC is a newly created international court with jurisdiction for infringement and revocation actions relating to unitary patents and classical European patents that have not been opted out of the system.
The Court is designed to be highly efficient, with judgments in the first instance intended to be delivered within one year of the start of an action. Those decisions will be issued by internationally composed panels, comprising both legally and technically qualified patent judges, and will be binding in all countries that have ratified the UPC Agreement.
At the moment, that includes 17 EU member states, although that might change as more countries ratify the agreement. Notable exceptions include Spain and Poland (which are not signatories to the agreement) and Switzerland and the UK (which are not EU member states).
The UK left the unitary patent and UPC system after Brexit
Why do you need to opt out of the jurisdiction of the Unified Patent Court?
A further impact of the UPC Agreement coming into effect is that existing national validations of European patents in countries that have ratified the agreement will now fall under the joint jurisdiction of the UPC and the relevant national court. That is unless the patent owner proactively opts those rights out of the UPC system.
There is a time pressure to opt out granted national validated patents and Supplementary Patent Certificates (SPCs) derived from them; however opt-out declarations should also be considered for new and pending applications.
If an opt-out declaration is not filed, the UPC will share jurisdiction over your national validated patents and any associated SPCs with the national courts. What this means in practice is that enforcement or any third-party actions can take place at the UPC, or in one or more national courts.
To find out more about the jurisdiction of the UPC, download our eBook ‘Should you opt-out from the jurisdiction of the Unified Patent Court?’
What are the benefits of remaining within the jurisdiction of the Unified Patent Court?
There are several reasons why you might choose to request European patents with unitary effect (and thus fall under the jurisdiction of the UPC) and why you might choose to allow (some) existing European patent rights and applications to fall under the jurisdiction of that court.
European patent rights that fall under the jurisdiction of the UPC will also provide rights holders with the opportunity to enforce their patents across many jurisdictions in a single action, for example. This can be particularly advantageous in terms of cost if your patent family is large.
What are the risks of remaining within the jurisdiction of the Unified Patent Court?
Perhaps the biggest risk of remaining within the jurisdiction of the UPC is that of a centralized revocation action. In other words, a single action before the UPC could result in the revocation of that patent in all countries that have ratified the UPC Agreement.
As this is a new court, there is also the question of lack of case law and uncertainty around costs, timescales, and outcomes of litigation to consider. One option to mitigate some of these risks is to consider the use of divisional applications or related cases to balance the advantages and disadvantages of the new system. For example, you could have a parent patent under the jurisdiction of the Unified Patent Court jurisdiction and an EP divisional application that has been opted out and managed under the national system. Another option would be to manage coexisting national and European patents, provided that double patenting provisions are complied with.
What can you opt out of the Unified Patent Court system and when?
Applicants and patentees can opt out in force and expired European patents, European patent applications, and SPCs from the jurisdiction of the UPC during the three-month Sunrise period and the transitional period that follows. It will not be possible to opt unitary patents (i.e. European patents with unitary effect) out of this court’s jurisdiction.
The entry into force of the unitary patent and the beginning of the Sunrise period is linked to the date of the entry into force of the UPC Agreement. This exact date is still to be confirmed, as it depends on the completion of certain preparatory work to make the court operational, but is expected to be triggered once Germany deposits its instrument of ratification. This could be as early as September this year.
Once the Unitary Patent and UPC system is live, the Sunrise period will end and a seven-year transitional period is due to come into effect (during which opt-outs can continue to be filed), which can be extended by another seven years. This will happen in early 2023, according to current estimates.
Why do you need to file Unified Patent Court opt-out declarations now?
It’s important to note that opt-out declarations can’t be filed if an action has already been bought before the UPC. Therefore, to guarantee that a third party cannot start a centralized revocation action before the UPC on the first day that the Court is operational, opt-out declarations should be filed as soon as possible, i.e. during the Sunrise period.
What should you opt out of the UPC system?
This is the big question for rights holders. However, it is generally held that opting out existing validated national patents and published applications is the less risky option at this point, compared to taking no action.
Existing validated national patents, in particular, are already locked into the existing system of renewal fees, and the translations required to effect validation in those countries have already been paid for. In other words, the potential benefits of the unitary patent can’t be realized in those areas, while choosing not to opt out will potentially expose those patents to the jurisdiction of the UPC.
How will the opt-out process work?
Opt-out declarations must be filed online at the UPC registry and this can be done either directly using the UPC case management system or by asking your authorized representative to perform the opt-out on your behalf. This option will be particularly useful if you have multiple opt-outs to declare.
It will be possible to include several rights in the same opt-out declaration, and there is no official filing fee.
Please note the following important points:
- If a European patent is opted out, any associated SPC must also be opted out. If the SPC and the patent are owned by different entities, all owners must agree to opt out.
→ It’s worth getting in touch with SPC owners if they are different now to coordinate.
- Opt-out declarations must be filed by the person that’s entitled to be registered as the patent proprietor/applicant (or by their representative on their behalf). This might be different from the name listed on the register, so it’s important to be careful and check the records.
→ While it’s not necessary to update the register if there’s a difference, it is recommended, as we do think it will simplify things. Discover Questel’s Unitary Patent data check service
- When a European title is held by multiple owners, and all by different holders in the member states party to the UPC Agreement, these holders will have to act jointly to opt out.
→ We recommend checking with any co-proprietors or representatives as to whether they want to opt out, and if they’ve already prepared the opt-out declaration for the Sunrise period.
We suggest you start thinking about preparing your opt-out declarations as soon as possible because you need enough time to make sure that all checks have been taken in time to file the opt-out during the Sunrise period (if required).
While there will be a procedure in place to allow corrections, no checks will be carried out by the registry on the opt-out declarations at the time of their filing, so it is very important to get it right. If an opt-out declaration is challenged later on and it’s found to be invalid, an action can still be brought at the UPC, which is of course what you’re trying to avoid.
Can you track and manage opt-outs?
All opt-out declarations will appear on the publicly available register, with the register set to be updated within a few minutes of a completed opt-out application. It will be possible to set up an alert to be notified of instances where your patents, or maybe even your company name, appear. Find out about Questel’s UPC opt-out and competitor monitoring service
Once a patent has been opted out, that opt-out lasts for the life of the patent, and this is beyond even the transitional seven-year period. However, an opt-out can be withdrawn if you decide that you do want a patent application to fall under the jurisdiction of the UPC.
If the opt-out is withdrawn, the patent will be placed under the shared jurisdiction of the UPC and the national court, if the withdrawal is filed during the transitional period or under the sole jurisdiction of the UPC, if the withdrawal is filed after the end of the transitional period.
Once an opt-out has been withdrawn, it will not be possible to file a second opt-out. It should also be noted that withdrawal of an opt-out is not possible if an action has been launched before a national court.
How should you prepare for opt-outs?
Preparing for the Unified Patent Court
We recommend taking the following steps:
- Start by identifying the patents that you might want to opt out of the UPC. You can do this with a landscape analysis of your patents.
- Take advice on opting out of the UPC for existing rights and on recommended filing routes for your European patent portfolio, i.e. should you continue with national validations or unitary effect or a combination.
- Perform a data check of your EP rights against EPO/national registers, to check that the registered patent owners are correct.
- Consider using a streamlined, UPC opt-out service, including bulk opt-outs for larger portfolios. You might also want to consider organizing a UPC register watch alert and competitive intelligence reports.
Questions about the unitary patent? Download our ‘Practical guide to the unitary patent’ and ‘Opting out of the UPC’ eBooks for everything you need to know about this important new patent right or schedule a call with an expert.