The UPC Preparatory Committee has now produced the long-awaited 17th draft Rules of Procedure here with an explanatory memorandum here. The main changes are as follows:
Bifurcation – following concerns expressed about the so-called “injunction gap”, a rule change has been introduced which should effectively close this gap. The previous two drafts of the Rules left open the possibility of local or regional divisions sending validity for determination in the central division several months into their proceedings, and at a time when the oral hearing date for the infringement determination had already been set, meaning that if the bifurcated validity proceedings took their ordinary course, they would likely be decided some months after the infringement decision. However, the concerns expressed by users have been heeded, and a provision which was in the 14th draft Rules (Rule 40(b)) but deleted in the 15th draft, has been reinstated in modified form. This requires the central division to endeavour to hear bifurcated validity proceedings referred to it before the infringement hearing in the local or regional division, rather than potentially much later. Although this will be a blow to patentees in general, and NPEs in particular, this is clearly good news for potential defendants manufacturing and selling in Europe who might otherwise have been threatened with a pan-European injunction before validity of a potentially weak patent had been tested.
Procedural appeals – in the 16th draft, the Rules Committee noted that it could not agree as to whether the UPC Agreement allowed the Court of Appeal or just the first instance divisions to give permission to appeal from procedural decisions of the first instance court. This matter is vital in reducing forum shopping between local and regional divisions because if only the first instance division could give permission to appeal procedural issues, different local interpretations of the rules would emerge in an unfettered way on important procedural issues such as whether party experts will be permitted (with or without cross-examination) or discovery ordered. Harmonisation by the Court of Appeal on such points would inevitably take much longer if only the first instance division could decide if a point was worthy of appeal, and different local and regional divisions would hence be targeted by patentees for their infringement actions according to local practices. Happily, the new draft of the relevant rule (220.2) clarifies that the Court of Appeal may give permission to hear procedural appeals.
Languages – in the 16th draft, the Rules Committee suggested two alternative formulations of Rule 14 covering situations where the local or regional division in which the proceedings were to be heard offered a choice of languages. The new Rule 14 sets out a regime which allows the Claimant to choose in such situations, subject to certain safeguards, notably the “small local operator” clause, which should also satisfy Belgian constitutional concerns.
Three other changes of less significance, but worthy of mention, are:
- in the rule on opting out (Rule 5) where there is some finessing;
- the deletion of Rule 118(2) of the 16th draft (which relates to a form of the innocent infringement defence to damages); and
- in Rule 211.5, a strengthening of the requirement to provide security for damages in the case of ex parte injunctions.
What is unchanged?
Of the possible changes pressed for by many users, the most significant was for an eBay type rule, that is one which would lessen the chances of an injunction being granted where the patentee did not itself practise the invention. However, no relevant changes have been made, either in respect of interim or final injunctions.
The new draft rules are scheduled for public consultation in Trier, Germany, on 26 November. Attendance appears to be by invitation only, but a video link may be made available. We will provide further details when available and report on the hearing itself.