In brief

After years, indeed decades, of uncertainty, the Unified Patents Court (UPC) and Unitary Patent (UP) look to finally be in the home straight. Austria deposited its instrument of ratification in January 2022, triggering the commencement of the Provisional Application Phase (PAP) and allowing the administrative measures required to enable the UPC to be set up to be begun. In this article we summarise the current status and activities; discuss when and in which countries the UPC and UP might come into effect and highlight the areas companies need to be considering now in relation to prosecution, licensing and enforcement of their patents portfolio.

Recommended actions

With the UPC and UP potentially coming into effect as early as Autumn 2022, we recommend in the coming months:

  • Reviewing your patents portfolio in conjunction with your litigation strategy and risks to identify which patents you want to opt-out during the sunrise period, e.g., to prevent third parties from having the opportunity to challenge centrally. In doing so it is important to note that opt-outs can be withdrawn provided that national proceedings have not been commenced, and also to consider the impact of the jurisdictional scope of the UPC and the ongoing potential for parallel proceedings in countries that are not participating in the UPC.
  • Considering the potential impact of the UPC/UP on patent licence agreements and engaging in discussions between proprietors and licensees in good time to agree whether licensed patents should be opted out, and to make any amendments required to jurisdiction and enforcement clauses that may be affected by the new UPC structure.
  • Re-assessing your patent prosecution strategies to take account of the impact of the UPC's potential jurisdiction on the relative benefits and risks of applying for UPs, European patents and national patents.

For more information or to discuss the potential impact of the UPC and UP on your business, please reach out to the authors or your usual BM IP contact.

In more detail

What is happening?

The UPC is an international court set up to deal on a pan-European basis with the infringement and validity of certain patents and supplementary protection certificates (SPCs) in Europe. Its rulings will apply to all European patents (current and future) designated to participating EU Member States that have ratified the Agreement on a Unified Patent Court ("UPC Agreement") - unless they have been opted out of the UPC's jurisdiction (on which see below) - and to the forthcoming Unitary Patent, plus SPCs relating to such patents in those jurisdictions.

Austria was the thirteenth member state to submit its instrument of ratification; thirteen is the minimum number of ratifications required, and so this triggered the Provisional Application Phase (PAP) of the UPC Agreement. The PAP commenced on 19 January 2022, and this has marked the beginning of the UPC as an international organisation.

What is the purpose of the PAP?

The PAP is required to allow the necessary administrative arrangements to be put in place prior to the start of the UPC, including recruitment and training of the judges, finalising the court facilities and IT systems, and finalising the UPC Rules of Procedure. Notably, it also means that the governing bodies of the UPC could be set up, and their inaugural meetings held:

  • Administrative Committee: the Administrative Committee held its first meeting on 22 February, where it adopted the Rules of Procedure, which set the legal framework for the Committee, and secondary legislation required for the UPC to function, such as the Rules on the European Patent Litigation Certificate, the Court's Service and Staff Regulations, as well as its Financial Regulations.
  • This Committee will also later appoint judges to form the panels at each local division. A number of member states have already officially confirmed their intention of setting up a local division of the UPC, including: Austria, Belgium, Denmark, Finland, France, Germany, Italy, Netherlands, Slovenia, Sweden and Portugal.
  • Advisory Committee: the members of the Advisory Committee were decided at the Administrative Committee's meeting. This Committee will have the key task of interviewing candidate judges for the Court. The interviewing process is expected to start at the end of March.
  • Budget Committee: the Budget Committee held its first meeting at the end of February, at which it adopted its Rules of Procedure and the Court's budget for the PAP and its work plan for the coming months. As a next step, the participating Member States will be called to make their first financial contributions in the coming weeks and these will be due to be paid within six weeks after the call.

What happens next?

The UPC itself will come into effect on the first day of the fourth month after the deposit of the last required ratification - which is that of Germany. Germany has passed the legislation enabling it to ratify and must only now deposit its instrument of ratification with the EU Council for the three-to-four month run-up period to be triggered. For practical reasons, Germany is likely to hold off on this action until it is clear all the necessary preparations are underway and that the member states are satisfied that the UPC is functional (or could definitely be functional by the end of that period). There is no prescribed time frame for the PAP; however, the UPC Preparatory Committee has said they expect to last at least eight months. The UPC is therefore expected to become operational towards the end of 2022 or early in 2023.

The legislation governing the UP (also known as a European patent with unitary effect) has already been established and is in force - but includes a provision that no UPs can be granted by the European Patent Office until the UPC has become operational (as without the UPC there is no means to enforce a UP). Therefore the new UP will also become available as soon as the UPC comes into effect. Note UPs will not cover Spain or Croatia (as they chose not to participate in the UP) and will also exclude Poland (as it has not signed the UPC Agreement) and any other EU Member States that have not ratified the UPC Agreement at the time of grant of the UP.

Which countries are participating?

At the time of writing:

  • Belgium, Bulgaria, Denmark, Estonia, France, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Austria, Portugal, Slovenia, Finland, Sweden, Germany have signed and ratified the UPC Agreement (or will have done by the time it becomes operational) and so will be participating in the UPC.
  • Cyprus, Czech Republic, Greece, Hungary, Ireland, Romania, Slovakia have signed but not ratified and so will not be in the system unless they ratify in the meantime.
  • Spain, Poland and Croatia are not currently participating in the UPC, although they could as EU Member States.
  • Iceland, Norway, Turkey, Switzerland, Serbia, Albania, Macedonia and the UK, as non-EU European Patent Convention member states, are not permitted to participate in the UPC/UP system.

Key periods to be aware of:

  • Sunrise period: during this three-month period prior to the UPC coming into force, patentees will be able to opt existing European patents out of the jurisdiction of the UPC by notifying the Registry of the Court of their opt-out decision. This will prevent central revocation actions from being brought straight after the UPC has come into operation. Note that licensees (including exclusive licensees) will not be able to opt-out of the UPC structure; this must be done by the proprietor(s) of the patents. The sunrise period will begin when Germany deposits its instrument of ratification (expected around September 2022).
  • Transitional period: there will be a transitional period of at least seven years following the entry into force of the UPC Agreement. During this period, patentees can opt-out of the jurisdiction of the UPC for European patents; or choose to litigate European patents in national courts even if the opt-out has not been filed (note that this option is not available for UPs). Conflicts between the UPC and national courts will be subject to normal jurisdictional rules. Once the transitional period expires, national courts will cease to have jurisdiction over any existing European patents for which the proprietor has not filed an explicit request to opt-out of the UPC prior to the end of the transitional period.

How should your business prepare?

As we look ahead to the start of the sunrise period, it is key for your business to be well informed and prepared for the action required once the sunrise period and UPC/UP begin. In particular, we would recommend:

  • Review your patents portfolio in conjunction with your litigation strategy and risks to identify which patents you want to opt-out during the sunrise period, e.g., prevent third parties from having the opportunity to challenge centrally. In doing so it is important to note that opt-outs can be withdrawn provided that national proceedings have not been commenced, and also to consider the impact of the jurisdictional scope of the UPC and the ongoing potential for parallel proceedings in countries that are not participating in the UPC.
  • Considering the potential impact of the UPC/UP on patent licence agreements and engaging in discussions between proprietors and licensees in good time to agree whether licensed patents should be opted out, and to make any amendments required to jurisdiction and enforcement clauses that may be affected by the new UPC structure.
  • Re-assessing your patent prosecution strategies to take account of the impact of the UPC's potential jurisdiction on the relative benefits and risks of applying for UPs, European patents and national patents.