Did you know that in the Unified Patent Court (UPC) a patentee will be able to get an injunction covering a market much bigger than the entire USA, in a procedure that lasts no longer than a year, at a hearing which lasts a day, by Judges who will largely be without the benefit of expert testimony or discovery? And if it all goes badly wrong a patentee could lose its patent for almost the whole of Europe all at once?
If this sounds scary, then you probably haven't paid enough attention to the new patent litigation system which will be shortly coming into effect in Europe. Current estimates suggest that the new Unified Patent Court will be open for business in the first half of 2017, and whilst there is provision for a transitional period for at least the first seven years of its existence, crucially, if owners of European Patents do nothing before the system comes into effect, their existing and pending European Patents automatically become part of the system.
During the transitional period and for a short time before the UPC comes into existence (known as the sunrise period), a proprietor of a granted European patent and all future European patents can choose to register an opt out of the UPC for the patent. There is a fee payable for doing so and each patent must be opted out individually by the proprietor (or proprietors if applicable). It is understood that the opt-out could last for the life of the patent.
So why might a patentee choose to opt out its European Patent? For many patentees the reason is simple: the system is just too untried and untested to risk putting the crown jewels at its mercy. Whilst the governing Treaty and the latest draft of the rules provide some comfort as to how future patent litigation is intended to be carried out in the new court system, until the court starts rendering decisions, and those decisions are considered by the new Court of Appeal in Luxemburg, a patentee simply does not know what stance the Judges of the UPC will take on weighty issues such as claim construction, preliminary injunctions or final relief. There is also the issue of opening up your patent to the possibility of a pan European revocation action. With this in mind and recognising that a patentee has the ability to opt its patent back in (although a patentee can only opt out and back in again once), some patentees have indicated that they intend to opt out their patents, wait and see how the system beds down and opt back in, only when it would be beneficial for obtaining pan European relief.
Sounds sensible. So what's the downside to opting out? Well, there is a school of thought that thinks that the wording of the transitional provision provides that, if during the period of the opt out, a third party starts a revocation or declaration of non-infringement proceedings under the patent in a national court for which the patent is designated, then this will block the patentee's ability to opt back into the UPC system when it chooses. As a result, a patentee may find that as a result of its opting out decision and the subsequent action of a third party, it is permanently excluded from the UPC system for the life of the patent. Further a decision not to opt out of the system does not necessarily mean that the UPC has exclusive jurisdiction over the opted out patent. The wording of the transitional provision appears to explicitly provide for national proceedings to take place in relation to a non-opted out patent during the transitional period arguably providing competitors with many more options as to where and how to challenge a patent that has not been opted out. Finally, those more seasoned litigators, who are used to creating law and testing legal systems, can see the downside of not having an opportunity to stress test the UPC system in those early years. Surely, they say, that unless the system is used, we will never know whether it is any good and a viable option for us in the future?
Despite many years of doubt about whether a pan European Patent Litigation Court would ever come to fruition, the reality is that it is coming and soon. The transitional provisions, introduced in recognition of the fact that the system was not even in contemplation when many patent proprietors chose to apply for patents in Europe provides some options for patentees and challengers of patents in the immediate future. However, once the transitional period has ended, this will be the only system in Europe for litigation of European Patents. Whatever your view as to whether the new Court achieves its aims or not, the new Court is coming, and you can't afford to ignore it.
This article first appeared on Patent Docs