Factors to consider

There is no one-size-fits all when deciding on whether or not to opt-out some or all of your European patents.

• What is the strength of the assessment of the validity of the patent?
• What is the value of the patent to the business?
• How widely have you validated the patent? Have you maintained a broad territorial scope of protection?
• Does the patent protect a key commercial product or is it defensive?
• What size patent portfolio do you have, are their multiple layers of protection for your technology or a single “key” patent
• Does the patent cover core product, platform or method technology or secondary patents?
• Does the company rely on the patent(s) to attract investment or licensing revenue?
• What is the nature of the licensing arrangements – exclusive licence versus lots of non-exclusive licences
• Is there any complexity around the ownership of the patent?
• Would the effort of identifying the correct ownership (or getting the owners to agree) of the patent be disproportionate to the value of the patent?
• Do you operate in a litigious industry or are disputes in the patents court rare?
• Are you aware of any third parties seeking to challenge the patent? For example, has the patent been opposed?
• Do you have infringements or infringers across multiple UPC countries?

We are seeing a different industries having different approaches.  This in part depends on how litigious (or not) their industry is, the company’s appetite for risk and willingness to spend time and money on diligence around establishing ownership.

What are the benefits of leaving your European patents within the UPC system?

• When the UPC goes live, it will have non-exclusive jurisdiction over European patents that are in force in participating EU Member States. This means that both the UPC and competent national courts will have jurisdiction over those EPs that have not been opted-out.  This allows patentees some flexibility to choose whether to enforce in the national courts (as now) or to enforce the bundle of EP national patents in a single infringement action before the UPC.
• If you do not file an application to opt-out then the time and costs required to manage any due diligence exercise to determine the ownership position and file the opt-out are minimised.
• Some patentees are choosing to leave at least some of their European patents within the UPC’s jurisdiction in order to gain some experience with the UPC system and influence the development of its case law.
• An action before the UPC is heard by a panel of UPC Judges in a specified division but the Judgment has effect across all UPC countries where the patent is in force. This common, supranational court addresses the complaint that the current European patent system is fragmented.
• It is the intention that actions filed with the UPC will be docketed strictly with the court rendering its Judgment within 12 months of issue. This is significantly faster for infringement proceedings than many of the national patent courts in EU Member States.
• The UPC system means that it should be possible to prevent infringement across multiple jurisdictions in a single action.
• The UPC may also allow patentees to capture infringement where parties working together infringe different elements of the claim in different jurisdictions
• Depending on the development of the UPC’s case law, it may offer more favourable judicial interpretation on certain legal issues, e.g., selection inventions or the doctrine of equivalents.

What are the reasons for filing an opt-out to exclude the jurisdiction of the UPC?

• The primary reason for filing an opt-out is to avoid the risk of the central revocation of the patent before the UPC. This is particularly the case where the Court is untried and untested so it is not possible to predict the outcome of actions reliably.
• It is the intention that actions filed with the UPC will be docketed strictly with the court rendering its Judgment within 12 months of issue. This is significantly faster for revocation proceedings than many of the national patent courts in EU Member States and the central post-grant opposition proceedings available before the EPO.
• Although more expensive and not as far reaching as EPO opposition proceeding, the central revocation can be brought at any time during the lifetime of the patent, including before or after the expiry of the 9-month opposition deadline, while the EPO opposition is ongoing and after it has concluded.
• Opting-out maintains the status quo and a challenger would need to pursue a central opposition and/or bring multiple revocation actions before the national courts.
• Provided that there have been no national proceedings relating to the patent before the courts of the participating EU Member States (referred to as “lock in”) then the patentee can file an application to withdraw the opt-out.
• Where the ownership position is relatively straightforward, the time and costs associated with filing an opt-out are relatively minimal.