Preparing for change

Can I opt-out of the UPC?

Yes, because the UPC represents a fundamental change to European patent litigation, a transitional period of at least 7 years (potentially extendable to 14 years) has been implemented.  During the transitional period, it will be possible to apply to opt-out all European patents, published patent applications and supplementary protection certificates (SPCs) from the UPC’s jurisdiction.

If it is important to your business that the UPC never has jurisdiction over your European patents, it will be possible to opt-out your European patents in the three-months before the UPC system comes into force.  This is referred to as the Opt-Out Sunrise period.  Published European patent applications can also be opted-out.  Applications to opt-out accepted by the UPC Registry during the Sunrise period and before the entry into force of the UPC Agreement, will be treated as entered on the Register on the date of entry into force of the UPC Agreement.

In addition to the three-month Sunrise period, the opt-out will be available for EPs in R-MS in the UPC’s Transitional phase, which will last the first 7 years (extendable to 14 years), provided that there has been no litigation filed before the UPC. The opt-out will last for the life of the patent.

The application to opt-out must be made in respect of all the states for which the European patent has been granted or which have been designated in the application.

For SPCs, all of the granted national SPCs and each of the underlying European patents on which they are based must be opted-out.  This may require opting-out expired European patents, which is expressly permitted under the transitional provisions.

The UPC Preparatory Committee has decided that there will be no official fee for filing a request for an opt-out. We do however anticipate that there will be costs associated with ensuring that opt-outs are made validly.

Who can exercise the opt-out?

The person or persons who are entitled to be the proprietor of the European patent or applicant for a European patent application can exercise the opt-out.  The question of who is entitled to be the proprietor or applicant is a substantive legal test.

If there is more than one proprietor (e.g., the patent is co-owned or the bundle of EP patents have been assigned to different companies), all of the proprietors must apply for the opt-out together. If any SPCs have been granted, all proprietors of the patent and all holders of SPCs must file the opt-out. Licensees (exclusive or otherwise) cannot file the opt-out – this should be discussed with the patent owner; in many cases,the interests of the licensee and patent owner will be aligned.

Identifying the proprietor or applicant may not be straightforward, particularly if the patents or patent applications are jointly owned, or where complex intra-group arrangement exist, for example, where different local entities have ownership rights in different countries.

The opt-out is only effective from the date of entry on to the Register. The UPC Registry must check that the requirements for an opt-out have been complied with and is expected to query applications for an opt-out where proprietorship is not clear. When the application is accepted, the opt-out will be entered onto the Register. The Register will be searchable and maintained by the Registry.  The EPO will also display data for European patents that have been opted-out and where that opt-out has been withdrawn.

If the opt-out is not made validly or does not include all of the person(s) entitled to be the proprietor(s), then it can be challenged before the UPC.

Who is the proprietor of a European patent? 

The person entitled to be registered as proprietor under the law of each Contracting Member State in which such European patent has been validated shall be treated as the proprietor irrespective of whether such person is in fact recorded in the relevant national patent register.

There is a rebuttable presumption that the person(s) shown in each national patent register is the proprietor(s).  It is possible, however, that a transfer of a patent has not been recorded, and the entity listed as the proprietor at the national patent office may not be entitled to exercise the opt-out.

To ensure that the opt-out is valid, it must be agreed by and authorised by all proprietors of the European patent.  Where the patent is jointly or co-owned (i.e., different national EPs are owned by different owners) then, absent an agreement that governs the decision to opt-out (or not) all of the current proprietors must agree.

If there is no agreement, then an application to opt-out cannot be filed.

Who is the applicant of a European patent application?

The person entitled to be registered as applicant shall be treated as applicant whether or not such person is in fact recorded in the European Patent Register.  There is a rebuttable presumption that the person shown in the European patent register is the applicant.

To ensure that the opt-out is valid, it must be agreed by and authorised by all applicants of the European patent application.  If there is no agreement, then an application to opt-out cannot be filed.

From a practical perspective, it is likely to be easier to identify the correct applicant(s) during the European phase of prosecution.  If an opt-out for an application for a European patent has been entered onto the Opt-Out Register, the opt-out continues to apply to the relevant bundle of national European patents, once granted.  If you decide to request grant of the unitary patent, this will withdraw the opt-out automatically.

The Opt-out Sunrise Period

The opt-out sunrise period is expected to start three months before the UPC Start Date. This allows the proprietor(s) of European patents and applicant(s) of European patent applications, to take those patents out of the non-exclusive jurisdiction of the UPC. The opt-out can last for the lifetime of the European patent and applies to all of the EP designations that are valid and in-force in the participating UPC countries.

Where a supplementary protection certificate (SPC) has been granted at the date of lodging of the opt-out, then both the European patent and any granted SPC must be opted-out together.  Where an SPC is granted subsequently, the opt-out will take effect automatically on grant of the SPC.

Applications to opt-out accepted by the UPC Registry during the Sunrise period and before the entry into force of the UPC Agreement, will be treated as entered on the Register on the first day of the UPC going live.

How do I opt-out

The application to opt-out must be made through the online court filing system and will be managed by the UPC’s Registry.  HGF’s UPC Representatives can file the opt-out on your behalf if you instruct us to do so.

Where the person lodging the application to opt-out is not recorded as proprietor or applicant in the national patent registers or European patent register respectively, then they need to lodge a Declaration of proprietorship.  The Declaration of proprietorship must confirm that the person lodging the application to opt-out is the proprietor / applicant and entitled to lodge the opt-out application.

The Registry will enter the application to opt-out on the Opt-Out Register as soon as practicable after receipt.

If the Registry determines that there are errors or missing information, it can request that these be corrected.  If a correction is lodged, the opt-out is effective from the date the correction is noted in the Opt-Out Register.  If the opt-out is challenged (i.e., by way of a revocation action before the UPC) and held to be invalid, you will not be able to correct this as the litigation before the UPC will take precedence.

Applications to opt-out made during the Transitional Phase will only be accepted if no litigation has been started against the patent before the UPC.

What information do I need to consider to opt-out my European patent?

The opt-out must be done as a bundle and must include all proprietor(s) or applicant(s) who are entitled to be registered as the owner under the national law.  At present there are 17 EU Member States participating in the UPC (expected to increase to 24 EU MS over time) and the position regarding ownership will need to be checked in each country.

  • First you will need to identify which European patents or patent applications you want to leave in the UPC system and which to opt-out(See Factors to consider).
  • For each granted European patent, you will need to check the identity and provide details (name and postal address) for the proprietor(s) of each national EP that has been validated and is in force.
  • For each European patent application, you will need to check the identity and provide details (name and postal address) for all of the applicant(s).
  • Where there are granted SPCs, the holders of all SPCs will also need to be checked and details (name and postal address) provided.
  • If the European patent or patent application is solely owned, the checks required are likely to be more straightforward.
  • If the European patent or patent applications are jointly owned, or where complex intra-group arrangement exist, for example, where different local entities have ownership rights in different countries,identifying the proprietor may not be straightforward. It might be necessary to check existing agreements (e.g., collaboration agreements,joint venture agreements) to determine whether one proprietor has control of the decision-making process for the opt-out (or withdrawing it at a later date).
  • While the starting point for check for the identity of the owner(s) is likely to be the EPO Patent Register and/or national patent registers, it needs to be borne in mind that these are not always updated regularly or at all. We would advise cross-checking against your own records, particularly for earlier transfers.
  • Where there are multiple proprietors or applicants, it will be necessary to all agree to file the opt-out.
  • As the UPC will have jurisdiction over European patents in R-MS, this has the potential to affect the patent rights that have been licensed. Licensees, even exclusive licensees, have no automatic right to be involved in the decision of whether the patent rights should be opted-out.  Absent any agreement to the contrary, patent owners, could make their own decision on whether or not to opt-out.
  • In many cases, the interests of the licensee and patent owner will be aligned. Many patent owners, particularly those with exclusive licensee(s) will seek the views of their licensees.  Licensees should review the terms of the licence, and where they have a preferred opt-out strategy,communicate this to the patent owner as early as possible.  If agreement can be reached, this should be recorded and possibly formally agreed as a side-letter or amendment.
  • Patentees should also be aware that other types of agreements might create ownership interests or licences. This includes material transfer agreements, research and contract services agreements, manufacturing agreements or development and commercialisation agreements.  Where such agreements exist, patentees’ UPC strategy should include a review to determine whether action needs to be taken.

How can opt-outs be challenged before the UPC?

One of the primary reasons for exercising an opt-out for a European patent, is to avoid an action for a central revocation before the UPC.  If a third party considers it likely that an opt-out has not been exercised validly, then it may initiate central revocation proceedings before the UPC’s Central Division.

Patentees have a very short time (less than three months) to put in their defence to a revocation action.  They also have one-month to file a preliminary objection against a revocation action being filed.  One of the reasons for raising a preliminary objection is that an opt-out was validly made by all person(s) entitled to be the proprietor.  The preliminary objection proceedings would have to be supported by detailed submissions and evidence demonstrating that the person(s) entitled to be the proprietor(s) applied to opt-out.  If the supporting documentation and analysis of chain of title has not been done during the process of deciding to opt-out the EP, there will be significant time and costs pressure on the business and/or legal team to do this exercise quickly but thoroughly.

If the UPC’s Central Division holds that the opt-out was not validly executed and proceedings are ongoing before the UPC, it is not possible to rectify the error(s) to effect a new opt-out.  The revocation proceedings before the UPC will continue through to resolution for the European patents valid and in force in participating EU Member States.

Can I withdraw my opt-out at a later date?

Yes, the opt-out can be withdrawn by the proprietor(s) or applicant(s) as appropriate.  There are no official fees for withdrawing the opt-out.

Any application to withdraw the opt-out will be ineffective if an action has been commenced against the European patent before the national patent court of a participating EU Member State before the application to withdraw is entered into the Register.

This is referred to as a national “lock out” and has this effect, irrespective of whether the national court action is pending or has been concluded.

Where a European patent application has been opted-out, that opt-out will be deemed withdrawn automatically if the patentee decides to validate a UP.

The Unified Patent Court

How will it come into force?

As the UPC is an entirely new court system, there is significant work involved in ensuring that it is ready to accept cases on day-one.

What is a UP?

The prosecution of European Patents will continue as before. At grant a European Patent (“EP”) will create a bundle of national rights but a new UP “designation” will become available.

What is the Unified Patent Court?

The UPC is a new common patents court with exclusive jurisdiction in respect of litigation (validity and infringement) for all EP(UPs) and non-exclusive jurisdiction over EPs validated in R-MS.

Preparing for change

The Unified Patent Court (UPC) and a new “unitary patent” or “European patent with unitary effect” (UP) are likely to become a reality in the second half of 2022.

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