The position of licensees

All licensees of European patents (EPs) will be affected by the introduction of the UPC. If no action is taken, all existing EPs will be subject to the jurisdiction of the UPC so decisions need to be made as to whether it is appropriate to opt-out existing EPs from the jurisdiction of the new court. Unfortunately, licensees (even those who operate under an exclusive licence) will have no automatic right to be involved in the decision of whether an EP they have licenced should be opted out. Absent any agreement to the contrary, the patent owner could therefore make its own decision on exercising the opt-out without reference to its licensee(s). So, what can licensees do to protect their position? Early dialogue with the patent owner is key. The licensee should decide upon its preferred opt-out strategy and communicate this to the patent owner. There will be a short period of time to opt-out EPs before the UPC comes into existence (sunrise period) and this period could begin as soon as late 2016 so action needs to be taken now. If EPs are not opted out during the sunrise period, a third party could initiate a central revocation action as soon as the UPC comes into existence, effectively trapping the patent in the UPC system. In many cases the interests of the licensee and patent owner will be aligned. However there may be disagreement; perhaps a genuine difference of opinion or even an opportunistic attempt by the patent owner to renegotiate the terms of the licence. The patent owner may also find itself in a difficult position if it has multiple licensees who have different views as to whether the licensed patents should be opted out. In the event of disagreement it is unlikely that existing licence agreements will help to resolve the issue, although a detailed review of licence terms would still be worthwhile.

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