So, the UPC is coming in 2017. Patent owners have considered which of their crown-jewel European patents to opt-out of the system during the transitional period to avoid its unitary effect (a single action may revoke the patent in all designated states that are participating in the UPC). What next? Sit back and wait for the sunrise period to do this, right? Wrong. There are some things that may need to be done now, ahead of the UPC and its sunrise period. This article describes the top three things to consider now to get ready for the UPC.

  1. Existing patent licences and negotiating amendments

Existing licences are unlikely to cover UPC scenarios. Once the UPC is up and running, any European patents that have not been opted out will automatically fall within its jurisdiction. Two key things to consider with existing licence agreements are:

Standing to sue – The Unified Patent Court Agreement (UPCA) provides that the exclusive licensee may bring an action subject to:

  1. giving notice to the proprietor; and
  2. unless the licence provides otherwise.

Therefore if the licensor wants to avoid the right for the exclusive licensee to bring an action, it needs to ensure that the licence provides for it. Further, the UPCA provides that non-exclusive licensees are not entitled to bring an action, so from a non-exclusive licensee’s perspective; a clause that obliges the exclusive licensee/proprietor to bring an action if requested may be required. Further, the UPCA provides that non-exclusive licensees are not entitled to bring an action unless there is a clause that expressly permits a non-exclusive licensee to do so.

Who can opt-outUnder the UPCA the licensee is not permitted to opt out; only the patent owner or applicant can opt-out. If the licensee wants to ensure that the European patent is/is not opted out a clause in the licence providing as such will be required. If there are co- owners then, since an opt-out/opt-back must be declared jointly, there should be an agreement between the co-owners on opt-out and opt-back.

  1. The outcome of the proposed Brexit

On 23 June this year there will be a referendum to decide whether Britain should exit (so called “Brexit”) the EU. The outcome of this will impact on the timing of the UPC. Currently, the UK must ratify the UPCA for it to come into force. In the event of a decision to Brexit, the actual withdrawal from the EU is likely to take years. However, since only EU member states can participate in the UPC system, it is likely that the UK could not be part of it. If the UK has not ratified the UPCA before its exit from the EU then it is probable that there would be negotiations for an alternative country to ratify the UPCA (most likely the country with the fourth highest number of European patents). All this could put off the proposed 2017 start date for the UPC system.

If there is a Brexit, then depending on how important the UK market is to patent holders, this could also impact on strategy for opt- out/in/back as well as patent filing strategies. A Brexit would mean that the UK designations of a European patent would not fall within the jurisdiction of the UPC, so if the UK is the patent holder’s most important market, perhaps opt-out will not be required. Further, in terms of patent filing strategies, there may be less incentive to apply for a unitary patent.

  1. Patent filing strategies

The UPC system is a converging one which aims to suck in all European patents in due course. If the UPC/unitary effect is to be avoided altogether then patent holders need to file national patents. This may be what some companies are doing already, but for others this will be a change in strategy that needs to be considered now.

Factors which may impact on this decision include:

  1. What are the litigation risks of the UPC to patent holders?
  2. How important is the flexibility provided by a European patent of being able to participate in the UPC system?
  3. What are the costs of a unitary patent (UP) versus a European or national patent? (the 20 year renewal fees for a UP will be approximately euro 38K – equivalent to having a European patent that designates the top 4 states)
  4. Applicable law – under the UPC system the revocation of a European patent will be determined by the European Patent Convention.
  5. Perception – what does filing nationally say to others about the strength of patents?

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