Momentum is clearly building towards the day when the UPC will open for business. Therefore, it is imperative that patentees and their competitors now begin to assess the approach they wish to take to unitary patents in their businesses and how to deal with European patents ("classicals", to distinguish them from unitary patents) in the UPC. In particular, this means addressing the issue of opt-out. To assist, we have prepared four articles this month addressing different aspects of opt-out.
This article explains the meaning and effect of opt-out.
When the Unified Patent Court (UPC) first opens its door for business its competence to deal with disputes concerning classical European patents will be subject to important limitations for a seven year transitional period. One such limitation is that proprietors of classical European patents and European patent applications will be able to opt-out those patents from the jurisdiction of the UPC. The opt-out is expected to have effect for the entire life of the patent1. Whilst an opt-out may be withdrawn at any time, once the seven year period has expired it may not be opted-out again.
This regime is set out in Article 83 UPC Agreement. Article 83 is supplemented by a number of provisions in Rule 5 of the Rules of Procedure, which stipulate how an opt-out and the withdrawal of an opt-out is it to be effected (see the procedure for opting-out and withdrawal).
During the transitional period (currently set to be seven years) Article 83(1) permits disputes concerning classical European patents2 to be litigated in either the UPC or the national courts of the Member States who have contracted to the UPC Agreement3. However, all classical European patents designated for Member States that have ratified the UPC Agreement, become subject to the exclusive competence of the UPC after the transitional period,unless they opt out. An opt-out removes a classical European patent from the exclusive jurisdiction of the UPC that would otherwise apply to it after expiry of the seven year transitional period. Whether an opted-out European patent would be subject to the application of the respective national law of its designation or the UPC Agreement, in particular its provisions on substantive patent law4, is disputed. Last January, the Preparatory Committee issued an Explanatory Note explaining that only the relevant national law should be applied to opted-out patents.
A classical European patent that has been opted-out can only be litigated in the national court of its respective designation for its entire duration, subject to a later withdrawal of the opt-out (see below*).
All newly granted classical European patents applied for after the transitional period will be automatically subject to the exclusive jurisdiction of the UPC.
Limitations to opt-out
There is an important limitation on the right to opt-out. If, before an application to opt-out a classical European patent has appeared on the register, the Unified Patent Court is seized with an action concerning that patent that action must continue in the Unified Patent Court5 and the opt-out cannot be applied.
This has the practical effect that patent proprietors or the party responsible for opting out (see responsibility for opting-out in the UPC) must ensure they opt-out as soon as possible those patents that they would like to take out of the UPC court system (see the procedure for opting-out and withdrawal) in particular in order to avoid the risk of being forced into the UPC by an earlier filed central revocation action initiated by a competitor.
Relevance of ratification to opt-out
Rule 5 refers to opt-out being made for all Contracting Member States, without reference to whether they have ratified. Decoupling opt-out from ratification has the advantage that it avoids the need to make subsequent opt-out Applications each time a new Contracting Member State in which a classical European patent is designated ratifies.
Withdrawal of opt-out
Classical European patents, which have been opted-out of the UPC system, may have the opt-out withdrawn, under Article 83(4) UPC Agreement. Withdrawal of an opt-out for a classical European patent places all the designations of that patent into the exclusive jurisdiction of the UPC, if it is exercised after the transitional period expires.
Much like the opt-out, the withdrawal of an opt-out is barred if an action relating to one of the patent designations in question, has already been brought before a national court*.