The 17th draft of the UPC Rules of Procedure was published on 31 October 2014 as a compare document that shows the changes in comparison to the 15th draft. Changes in red have been made by the drafting committee based on the submissions made in the public consultation that was held in 2013. This version was previously published as the 16th draft and has already been discussed widely. For this article I assume that the reader is familiar with the UPC system and with the 16th draft. Changes in blue have been made in that 16th draft by the Legal Group of the Preparatory Committee. These will be discussed here. A table explaining the Legal Group’s changes has been attached to the 17th draft; this is similar to the Digest published on the UPC website, which explains the changes included in the 16th draft. The last stage in the public consultation on these rules will be an oral hearing on 26 November in Trier, which will focus on these latest two sets of changes. According to the roadmap that was published on the UPC website in September, the plan is for the Preparatory Committee to agree on a final version of the Rules of Procedure in May 2015.
All previous drafts were the responsibility of the drafting committee, consisting of patent judges and patent litigators. This is the first time that the Preparatory Committee itself made the changes it deemed necessary, so this version now reflects the opinion of the Preparatory Committee and can thus be deemed to have the (at least provisional) support of the 25 participating Member States.
Rule 5.7 now provides that not only an action pending before the UPC blocks an opt-out of the UPC jurisdiction, but also actions that already have been concluded. According to the Legal Group, an action before the UPC should be an absolute bar to opt-out for the life of the patent in order to prevent conflicting judgments of the UPC and of national courts. Rule 5.9 provides that an opt-in is no longer possible once an action in a national court has been started, which also applies if it has been concluded in the meantime.
There is a new Rule 14 that deals with one of the major issues that remained unsolved so far: the language of the proceedings if the local or regional division addressed provides for litigation in several languages. The starting point remains that the claimant can choose. However, if a defendant is sued in his home division and the infringement is limited to that division, the defendant has to be sued in his national language. The Legal Group seems to have overlooked that litigation in the Nordic Division is only allowed in English, which is perfectly legal for Regional Divisions under Article 49 section 1 UPCA, so it is not possible to sue a local defendant in his national language in that division. If there are more national languages, the division may even provide that the defendant has to be sued in the language of the region within that country where he is based. If in that case there are various defendants from different regions, the claimant may choose one of those regional languages. In addition, under Rule 14.2(c) the division may adopt a rule that only part of the litigation can be done in an additional EPC language added under Article 49 section 2 UPCA, which may for instance mean that the judgment can be rendered in a national language in litigation that is otherwise conducted in English. This is called the “English limited clause” and is inter alia intended to accommodate the judges. This rule makes little sense. It is hard to imagine that someone who has insufficient understanding of the English language can handle international patent litigation, given the fact that the major part of the scientific literature, as well as the European patents is in English. The Registrar will maintain a list of the language rules that apply in each division, so it will be transparent which options apply in each division. Rule 14.4 provides that the Registrar will return pleadings which are in the wrong language. This poses a risk if a statute of limitations expires in the meantime. Rule 118.9 now provides that the claimant has to provide a translation into the official language of the country of enforcement before enforcing a court order.
Another major issue is the deletion of Rule 118.2 on decisions on the merits, especially since the explanation by the Legal Group reads: “Where the Court finds an infringement of a patent it will under Article 63 of the Agreement give order of injunctive relief. Only under very exceptional circumstances it will use its discretion and not give such an order. This follows from Article 25 of the Agreement which recognizes the right to prevent the use of the invention without the consent of the patent proprietor as the core right of the patentee.”Rule 118.2 reflected Article 12 of the Enforcement Directive, but the Legal Group points out that the latter is not a mandatory provision. This change and especially its explanation make it clear that a claimant is normally entitled to an injunction in case of infringement. Of course, exceptions may be developed in UPC case law or even in EU law (such as possibly new rules on standard essential patents). Obviously, the principle does not apply to provisional measures, such as preliminary injunctions. Those remain at the discretion of the court.
The majority of procedural orders can only be appealed upon leave from the Court of First Instance. Rule 220.2 now provides for leave from the Court of Appeal. According to the Legal Group, proceedings should not be paralyzed by systematic appeals, but on the other hand appeals might help to guarantee uniform proceedings, therefore the Court of Appeal should have the option to step in if requested. Orders by the judge-rapporteur must first be reviewed by the first instance panel before they are appealed.
There are new provisions on the service of documents in Rule 270 and 271. These include some technical improvements. Unfortunately there is also a major error: Rule 271.7 has been changed on the basis of the assumption that it would be sufficient that the Service Regulation applies. However, that is not the issue. Of course it applies (which is not for the Rules of Procedure to decide anyway), but it does not cover the situation at hand. The real issue is whether Articles 5 and 8 of the Service Regulation entitle the defendant to a translation. If the Statement of Claim, which is filed online, is printed by the sub-registry of the domicile of the defendant and then served on him by that sub-registry, it is not“transmitted from one Member State to another for service there” within the meaning of Article 1 of the Service Regulation, so Article 5 and 8 do not apply to such service. This was solved by the introduction of the words “where the defendant would be entitled to refuse service if Article 8 of the EU Service Regulation were applicable” in the 16th draft, but the latest change by the Legal Group has rendered this ineffective.
Rule 286 on legal representatives as defined in Article 48 UPCA has been amended to include lawyers who do not fall within the scope of Directive 88/5/EC, namely to include “a person with equivalent legal professional qualifications who, owing to national rules, is permitted to practice in patent infringement and invalidity litigation but not under such title”. This is an interesting definition. The Legal Group is confident that it does not cover European Patent Attorneys, but I am not so sure. The fact that it is so difficult to come up with watertight definitions and distinctions confirms my personal opinion that we should not overcomplicate the issue. All representatives should have at least the level of education and training that is required of the judges, the market will do the rest; most parties are perfectly able to select proper representation.
The UPC Agreement is not an instrument of EU law. Article 8 of the Directive 2008/52/EC on certain aspects of mediation in civil and commercial matters does not apply directly. Therefore, Rule 11.1 now provides that the statute of limitations is suspended during mediation under Article 35 UPCA, to achieve the same effect. Rule 11.2 now contains a very strange provision; an arbitral award reached through an arbitration under Article 35 UPCA by way of settlement can only be confirmed by the UPC – and subsequently enforced – if the parties consent to that. This seems to disregard the nature of arbitration, but may be a consequence of a similar error in Article 52 section 2 UPCA. The note on Rule 11.2 adds that “Other arbitral awards are enforced by way of the New York Convention of 1958”. That “other situation” would actually be the normal form of arbitration, which in general results in an enforceable decision without a settlement.
Some new provisions were introduced to ensure coordination, such as between the local or regional division and the central division in case of bifurcation (Rule 37.5 and 40). This a good first step, but much more coordination will be needed, also between the Court of First Instance and the Court of Appeal, especially in case of bifurcation, even though bifurcation is not likely to happen too often.
The deadlines for appealing a refusal to grant unitary effect, to decide such appeal and to launch a further appeal have been extended to 3 weeks instead of 10 days (Rule 97).
Rule 105 now says even more clearly that interim conferences should preferably be held by telephone or video conference, saving parties the need to travel. However, it remains for the judge-rapporteur to decide, so this may be a matter of couleur locale.
Rules 109.5 and 150 provide that the costs of simultaneous translation in the end have to be borne by the parties (by way of a cost order), unless such translation is necessary for the judges if they have insufficient knowledge of the language of the proceedings. Similarly, Rule 180 now provides that a party who wants to rely on a witness should always make a deposit for the expenses and loss of income of such witness.
If new submissions are allowed at the oral hearing where a party is absent, that party is no longer deemed not to have contested such new submission under Rule 116. This is now at the discretion of the Court.
There is just one additional improvement to the provisions on orders to preserve evidence, which is in the deletion of the words “if available” from Rule 192.2(d), on which the Legal Group comments: “The deletion of the words “if available” clarifies that a party must provide the Court with facts and evidence in support of an Application to preserve evidence, leaving it to the Court in the particular case to assess whether the requirement of Article 60(1) UPC (“reasonably available evidence”) has been complied with.” This change is somewhat strange, because now both facts and evidence are always required. So what if the facts indicate that there most likely is an infringement, but there is no concrete evidence, which is why the order is sought? Checks and balances in the Rules are not as good as in some national laws. Unfortunately, no further checks and balances have been introduced.
A new procedure has been introduced in Rule 262 for confidentiality of parts of the court files, for which specific reasons must be provided. The documents will be confidential pending a decision on the request by the Registrar. If someone subsequently requests access to such documents, this will have to be decided by the Court, which will have to balance the interests. Different from a freedom of information request, the information does not become publicly available, but only available to the applicant. However, a provision on imposing confidentiality on the applicant (through a protective order) is missing. It would be logical in the light of the new system to add that.
Rule 287 on legal privilege has been further improved and now treats lawyers and patent attorneys completely equally. It is the first provision on legal privilege in infringement proceedings with international effect and may provide guidance for the improvement of national laws and further support the work at WIPO to achieve a world-wide solution.
Assignment of cases and issues is done by the Registrar under Rule 345, on the basis of an action-distribution-scheme established by the presiding judge of the division or section for the duration of one calendar year. This was already in the 16th draft, but now a large number of rules have been brought in line with this provision, which certainly makes the role of the Registrar much more important.
Rule 355 provides new rules on decisions by default, which are now included throughout the rules for various situations where a party does not make an appearance. The court still has to check ex officio whether the facts put forward by the claimant justify the remedy sought. A first decision by default will be set aside on application by the defaulting party, but Rule 356.3 enables the Court to decide, in the decision setting aside the default decision, that a further decision by default shall be final. In such cases, subsequent applications to set aside a decision by default shall not be allowed. This is of course done to prevent cases from being paralyzed by strategic defaults.
There are some further changes of a more technical nature. Some of those stress that orders as a principle are dependent on party disposition and cannot be granted ex officio.
A massive task has almost been completed and the result is impressive. A completely new, autonomous procedural law has been developed for 25 countries, which needed to integrate many different concepts, both from civil and common law. Of course, there is still room for improvement, but that is far less important than the achievement as such.
The Rules of Procedure allow for flexibility on important issues such as the duration of the oral hearing, cross-examination of experts and witnesses and yes, even bifurcation – though that is more likely to happen in some regional divisions than in Germany. That will lead to many options to consider, and over time to best practices set by the Court of Appeal.
Overall we now have a very good toolbox to start with, which is more than likely to help in achieving good judgments on the merits in full proceedings in just around one year, and provisional measures as required at much shorter notice. From a legal perspective the UPC seems ready to start. It’s a challenge for lawyers around Europe, but also an opportunity to anticipate with impatience!