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Q. When is the UPC system likely to start?

A. At any one time, unless the formal start-up period, the provisional application phase (PAP), has commenced, the UPC remains at least about eight months away. Hence at present, the most optimistic estimate is that the Court will open for business in late 2020. During the PAP, before the Court opens, there will also be a ‘sunrise period’ of about three months in which ‘opt-outs’ may be registered - see below. However, the commencement of the PAP and the entire timeline depends on the timing and nature of the decision of the German Federal Constitutional Court (Bundesverfassungsgericht - BVerfG) on the constitutional challenge to the UPC legislation, and also on Brexit.

Although the constitutional complaint was included in the list of cases the BVerfG intended to decide in 2018, it (and many other listed cases) was not, and it is now on the Court’s 2019 list. If a decision to reject the complaint is made, or if the complaint is upheld in some fashion but the problem is fixed relatively quickly, Germany will be able to ratify the UPC Agreement and consent to its provisional application (i.e. commencement of the PAP). Apart from Germany, one more state must consent to the PAP in order for it to start, and several states appear to be in, or almost in, a position to do so. The PAP, during which final preparations for the start of the UPC system, such as recruitment of judges, will be completed, is expected to last six to eight months (which is why at any one point in time the UPC remains at least about eight months away). Three months before the end of the PAP, Germany will deposit its instrument of ratification of the UPC Agreement to allow the Agreement to commence immediately after the PAP and the Court to open.

Regarding the effect of Brexit, the UK has ratified the UPC Agreement and the UK Government has consistently confirmed that it intends to seek to remain in the UPC system after Brexit. However, there are differing views on the legality of the participation of a non-EU member state. This question can only be answered by the CJEU, but there appears to be no mechanism to ask the CJEU until the system starts and its legality is challenged. If the PAP is able to start before Brexit, then the UK could be an initial participant and it is arguable that no changes to the Agreement would be required for it to come into effect after Brexit. If the PAP cannot start before Brexit but there is a Brexit transition period in which EU law will continue to apply in the UK, it is likely that the system would still be able to start in that period with the UK as a participant. If the system starts with the UK participating this should facilitate changes to allow it to continue. In the scenario of a no deal Brexit, there is more uncertainty.

Q.  Why do I need to understand the new system now? Can't it wait until the Court is nearly open for business?

A. There are a number of reasons why it is wise to prepare for the new regime now:

  • The new system will affect all existing European patents, these automatically coming under the exclusive jurisdiction of the UPC subject to complex transitional arrangements which allow for ‘opting out’.  You will need time to consider the full implications for opting your existing European patents out of the UPC, bearing in mind that if you do wish to take this step, it will best be done before the UPC opens and considerable due diligence may be required – see below.

  • You will also need to consider those patents which you license-in and discuss with the proprietor potentially opting those patents out.

  • You will need to take the UPC regime into account in drafting new licence and joint venture arrangements.

  • You will need to be aware of the possibility – which will be significant – of being sued in the new court by competitors and/or non-practising entities (to whom the UPC will probably be much more attractive than national EU courts).

  • The new system is not just about setting up a new court, but also about allowing patentees to apply for a single unitary patent covering a large part of the EU.  Any patents in the application stage now (except pre-March 2007 ones) which come to grant after the system starts can potentially benefit from unitary effect, and there are budgetary and litigation factors to take into account in deciding upon future patent filing strategies.

  • You may also wish to reassess EPO opposition filing strategies:  whilst the UPC does not cover all EPC countries, central UPC revocation actions may be an alternative and/or additional way to attack competitors’ patents.

  • You may even decide that long term investment decisions (such as where to site R&D and manufacturing facilities) may be influenced by the availability of injunctions having broad geographic effect.

Q. If I want to opt my patents out of the system, how would I do this?

A. As mentioned above, careful thought should be given to whether to opt existing European patents out of the UPC, and indeed any published applications (which can also be opted out).  If you decide to do this, it will be possible (and advisable) to do so during the ‘sunrise period’ expected to begin about three months before the Court opens. The filing is to be done on a per patent (not per patentee) basis, but it will be done electronically and bulk opt-outs will be possible. There will be no fee. You should note that all proprietors of the patent, including (if different) all those proprietors of all national parts of an EP in states which have signed the UPC Agreement must be included in the opt-out.  It is not what is on the register (neither EPO nor national registers) which determines who must opt out, but the ‘real’ proprietor(s). Checking the correct proprietors could involve significant due diligence internally in cases of large patent portfolios. Bristows can provide guidance on the procedure for opting out, as well as advice on the opt-out strategy itself.

Q.  What are the factors I should be considering when deciding whether or not to elect for unitary protection for my newly granting patents?

A.  The main consideration for most patentees will be budgetary. There will be no validation fees for unitary patents, only one translation will be required, and the renewal (maintenance) fees will be the equivalent of the national fees for Germany, France, UK and the Netherlands. For that, the coverage will be all those countries which had ratified the UPC by the date of grant. We know that this number will be at least 17 and more probably 19 or 20. If you validate in fewer than four states, it is unlikely that the unitary patent will be attractive despite the extra geographic coverage of the unitary patent if, as is usually the case, budget is a decisive factor. 

If the budgetary aspect makes the unitary patent attractive, there are two other matters to consider. 

  • First, the uncertainty at present about the UK’s long-term participation in the unitary patent system.  If the UK leaves the system, the most probable result would be that in respect of the UK territory, the unitary right would convert to an EP(UK) pursuant to a transitional arrangement.  If so, it is to be expected that renewal fees would then be required to maintain the EP(UK) without any reduction in the unitary patent fees.

  • Second, the litigation regime applying to unitary patents.  These are mandatorily litigated in the UPC, and cannot be opted out.  This has upsides and downsides.  The upsides are not only the principal advantage of central enforcement in a single action, but also that there is no transitional period (with its dual UPC/national jurisdiction) for these patents.  On the downside, some teething problems are possible with the UPC meaning that enforcement may not be as straightforward as hoped, and of course, the flip-side of central enforcement is central revocation, including by proactive actions begun in the UPC central division. 

Q.  If I am sued, will it always be in my home state?

A. No. The rules state that actions can be commenced taking into account where defendants are domiciled and where infringing acts take place.  In the case of groups of companies, often many different subsidiaries may be involved in alleged infringing activities, and infringement may be widespread.  The first instance organisation of the UPC is complex with multiple divisions, and there are likely to be over a dozen potential venues in which most actions may be commenced, with the choice lying with the patentee.  Hence, you might potentially be sued in almost any division of the UPC, but whichever division is used, its decisions have the same pan-European effect.

Q.  If I am sued, will the proceedings be in my language?

A. Sometimes, but not always. The usual rule is that the case will be heard in a local language of local and regional divisions, and in the case of the central division in the language of the patent. Most (and possibly all) divisions will offer English as an option, and the use of English is likely to dominate for practical reasons, most notably because every panel in the UPC will include different nationalities and the most likely common language between these judges will be English.

Q.   I am a licensee under a patent. Can I sue in the UPC, or do I have to own the patent?

A. If your licence allows this, then yes you can sue. This is so even if the licence is non-exclusive. The patentee will then have a choice as to whether to join in the proceedings or not. 

Q.  I have heard that the UPC allows French-style saisies where a bailiff knocks on the door unannounced demanding samples of products.  Is that right?

A. Yes. It is open to a claimant to conduct a saisie anywhere in the UPC territory and then decide if it wants to sue. Hence you should be aware of this possibility if you have aggressive competitors.

Q.  I understand that the UPC will be able to grant preliminary injunctions even without notice. Is that right?  Can I do anything to prevent that happening to me? 

A. It is right that the UPC will have wide powers to grant preliminary injunctions. Those applications made without notice should be rare, but you can try to prevent this happening to you by filing a ‘Protective Letter’ with the UPC Registry in Luxembourg (as is currently possible in Germany). This procedure effectively asks the Court to inform you of any applications for injunctions. Hence this is another thing you should consider before the UPC comes into operation.

Q.  Will my ongoing EPO oppositions be affected by the introduction of the UPC?

A. No. The two jurisdictions are parallel and complementary, and the start of the UPC will have no effect on existing oppositions or ones to be started in the future.  However, it is possible to foresee oppositions becoming somewhat less common in the long term as the UPC will eventually be able to revoke patents designating most important territories and is not subject to the 9 month post-grant window of the EPO.

Q.  If I want to sue or am sued in the UPC, will I need to instruct lawyers local to the relevant division?

A. No. Bristows can handle your cases in any division, central, local or regional.

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