This article was first published in the Journal of Intellectual Property Law & Practice, 2022; jpac099, https://doi.org/10.1093/jiplp/jpac099
- The Unified Patent Court is expected to open its doors officially in early 2023, with the promise of almost pan-European patent enforcement. Patent litigation professionals worldwide will be looking at various factors – including the speed of procedure, costs, and the quality of decisions – before they can determine whether the UPC ultimately lives up to its potential.
- Assuming the UPC lives up to its promise, though, will the new court become a one-stop shop for litigants? Will there be any benefit in litigating outside of the UPC – and in particular, in the UK?
- Matthew Raynor explores the strategic considerations in using the UK Patents Court in a new world of UPC litigation: from the influence of parallel decisions to the availability of creative decisions, from cross-border DNIs (and torpedo actions), to the availability of PPDs in the UK, as well as costs and how easy – or difficult – it is to start a claim.
The UPC is coming and it is difficult not to be excited by the promise of almost pan-European patent enforcement. A number of factors will determine whether the UPC ultimately lives up to its potential, including speed of procedure, cost and quality of decisions. Assuming the UPC lives up to its promise, though, one question in many people’s mind is: what will be the benefit going forward in litigating outside of the UPC?
National litigation is, of course, likely to continue for some time in respect of patents opted out of the UPC system. But for non-opted out patents which are subject to the dual jurisdiction of national courts and the UPC, will it still be desirable to litigate nationally if the prospect of wider single-stop European enforcement is available? In this article, we explore why parties may still look to the UK Courts for pragmatic solutions to their disputes even after the UPC opens its doors in early 2023.
Influence of parallel decisions
It is a well-established strategy for a claimant to commence parallel litigation in multiple territories to increase the pressure on a defendant. The reasons for this are twofold. First it creates a spread of pressure points across the proceedings which may increase the opportunities for settlement. Second, it avoids a claimant placing all their eggs in one basket, thus mitigating against the risk of an unfavourable decision. This is likely to remain the case with the arrival of the UPC, particularly in its early stages where the procedure and case law of the court are still being settled, and there is greater uncertainty about one’s prospects of success.
For a defendant facing an actual or threatened infringement action, a common tactic deployed is to launch a revocation action in a territory with a fast court procedure (such as the UK) in the hope of securing a favourable decision on invalidity which can be used to influence the foreign court hearing the claimant’s infringement claim. The same strategy is likely to continue being deployed in the context of UPC actions, particularly at the outset where the UPC procedure may well be delayed as a result of the numerous jurisdiction and procedural challenges, and possible referrals to the CJEU likely to be seen whilst the Court establishes its working parameters.
A question naturally arises as to whether the UPC would be influenced by a decision of the UK Court, and if so, to what extent. UK decisions have historically been well respected in the international patent community for being detailed and well-reasoned and therefore, have historically been reasonably influential on other European Courts. The law pertaining to patent validity in the UPC and the UK are both derived from the same provisions of the EPC. There is therefore no reason to think that UK decisions will cease to be influential in the UPC at least as far as validity is concerned. Decisions on infringement are also likely to be of interest to some degree, particularly as the UK statutory provisions on infringement and the UPC Agreement (UPCA) provisions on infringement are both ultimately derived from the same provisions of the Community Patent Convention. However, there is perhaps greater scope for differences in approach here as the UPC develops its own body of case law, for example on the doctrine of equivalents and as to what constitutes an infringing act.
An attractive aspect of the UK Court system is its willingness to find creative solutions to parties’ legal disputes. An example of this, more commonly observed in the life sciences sector, is the Arrow Declaration – i.e. a declaration by a UK court that a specific commercial product or process would have been obvious at a specific date. This is potentially useful as a means of clearing the way in circumstances where there are a number of patent applications covering a product or process which are not likely to grant for a number of years. The first Arrow declaration was granted by the UK Court on 3 March 2017 (FujiFilm v AbbVie  EWHC 395 (Pat)).
Another example in the technology sector is a FRAND declaration and the UK Court’s willingness to determine the FRAND licence terms between two parties. On 5 April 2017, the UK Court made history when it became the first court in the world to determine global FRAND licensing terms between two parties (Unwired Planet v Huawei  EWHC 2988 (Pat)).
The power of the UK Court to grant declaratory relief is statutory, primarily based on section 19 of the Senior Courts Act 1981.
By comparison, the UPC’s ability to resolve disputes appears to be somewhat limited by Article 32(1) UPCA, which sets out a defined list of actions which the UPC is said to be exclusively competent to hear. Whilst there is some debate amongst practitioners as to whether the Court may have non-exclusive competence in respect of other matters not listed in Art 32(1), the prevailing view seems to be that the list is exhaustive. That is not to say litigants won’t attempt to seek creative remedies under the guise of the matters listed; for example, it has been argued that the UPC might consider an Arrow Declaration under Art 32(1)(g) as an “action[..] relating to the use of the invention prior to the granting of the patent or to the right based on prior use of the invention“. But whether the UPC would have the power to entertain these sorts of argument is far from clear (a natural counter argument in the present example being that an Arrow Declaration is not really a declaration in relation to a patent at all).
Similarly FRAND declarations/determinations are not listed in Art 32(1), though it is expected that the Court will be able to consider a claimant’s FRAND undertaking in its decision on whether to award an injunction if infringement of a standard essential patent is established (the Court does expressly have the power to consider licence based defences). As the UPC must respect the primacy of EU law, it is required to apply the CJEU’s guidelines set out in the Huawei v ZTE decision (Case C-170/13). But will the UPC be able to do anything more than determine whether a claimant’s offer was FRAND compliant or not in deciding whether to award an injunction?
In contrast, the UK Court’s already established ability and willingness to set FRAND rates on behalf of the parties means it is likely to remain an attractive venue for FRAND cases for some time to come. Furthermore, whilst not yet tested in the UK Courts, the UK Court’s powers to grant declaratory relief makes it possible, in principle, for an implementer to seek a declaration as to FRAND terms. This seems very unlikely to be possible in the UPC.
The above examples demonstrate the UK Court’s willingness to give the parties decisions which are commercially useful.
Declarations of non-infringement and torpedo actions
Declarations of non-infringement (DNIs) are a useful means of establishing commercial certainty in circumstances where a party is faced with allegations of infringement or threats of infringement proceedings. DNIs are available in both the UPC and the UK Court, but their scope is potentially different.
In Actavis v Eli Lilly  Bus LR 154, a case decided when the UK was still part of the EU and subject to the Brussels Regulation rules on jurisdiction, the UK Court confirmed that it had the power to issue a declaration of non-infringement for UK, French, German, Italian and Spanish designations of a European patent in circumstances where the applicant undertook not to challenge the validity of the foreign patent designations. This has made the UK an attractive venue for litigants seeking commercial certainty via a DNI, in circumstances where they are prepared not to challenge validity abroad. It was confirmed in a later case (Chugai v UCB Pharma  EWHC 1216 (Pat)) – in which the UK Court was asked to consider whether a product fell within the scope of the claims of a US patent and therefore covered by a patent licence – that the UK Courts continue to be open to considering questions of infringement of foreign patents following Brexit in circumstances where validity is not put in issue.
Whether the UK Courts would be prepared to grant a DNI covering a European patent with designations in UPC contracting states remains to be seen. In considering infringement issues relating to foreign patents, the UK Courts have always been particularly mindful of comity considerations, which will inevitably become more complex once an alternative forum exists which has been specifically created to resolve issues concerning multiple EP designations in a single action.
An additional factor likely to be relevant to the debate is the approach which the UPC takes vis-à-vis its own jurisdiction. At least until recently, it had been thought that UPC DNIs would cover all contracting states. Now that the Court’s Rules of Procedure have been finalised, a lively debate has emerged about whether the UPC’s jurisdiction extends beyond that to all EPC territories including countries such as the UK. This debate has largely been triggered as a result of a last minute change to the Rules. Previously Rule 5.1(b) provided than an “application to opt out shall be made in respect of all of the Contracting Member States for which the European patent has been granted or which have been designated in the application” (emphasis added). The amended wording, however, requires an application to opt out a European patent to be made in respect of all designated states, not just Contracting Member States. The controversial explanatory notes to the change state: “This wording is inconsistent with the indivisibility of the application to opt out. It implies that the UPC solely has jurisdiction over UPCA Contracting Member States, which is not the case”. This explanatory note notwithstanding, any legal basis for UPC jurisdiction over non-contracting member states’ EPs is far from clear. Some may see the note as a reference to the so called “long arm jurisdiction” of the UPC derived from Article 71(b) of the amended Recast Brussels Regulation. But the effect of those provisions have also been subject to much academic debate and it is far from clear that they give the UPC jurisdiction over the substance of disputes concerning EPs of non UPC states. Even if the UPC decides it does have jurisdiction in relation to all EPC member states, any order from the UPC concerning UK entities would not be enforceable before the UK Court, which may also be sympathetic to an anti-suit injunction application seeking to restrain UPC proceedings, certainly if the validity of a UK patent is put in issue.
It is therefore too early to say how the UK Courts will approach questions of infringement where patents in UPC contracting states are concerned, as much will depend on the approach which the UPC takes to its own jurisdiction and its consideration of the principles of international comity. In an extreme case (for example, if the UPC adopts the expansionist approach mentioned above), we could see parties making a dash to the UK Courts to try and seize jurisdiction over European patents and filing anti-suit injunction applications to prevent proceedings being brought in the UPC (i.e. a UK “torpedo” action).
Threshold for starting a claim
A factor relevant to forum choice is the relative ease with which a party can prepare an infringement claim.
In a typical patent action in the UK High Court, the initial pleadings are generally less detailed than other European court systems such as Germany. They have to contain sufficient information about the claim such that the claimant can sign a statement of truth, but there is not usually any requirement at the outset to go into detail about the infringement case, for example, by including a claim chart addressing infringement on an integer by integer basis or by setting out a lengthy exposition of the claimant’s proposed claim construction.
By contrast, in the UPC, the pleadings are required to be much more front loaded. Rule 13 says the statement of claim has to include not just the facts relied on, but the evidence relied on (and an indication of any further evidence which will be offered in support), the reasons why the facts relied on constitute an infringement of the patent claims, including arguments of law and, where appropriate, an explanation of the proposed claim construction.
The impact of these pleading requirements is significant. First it means that claimants in the UK are afforded a greater degree of flexibility in how they ultimately present their case to the Court – for example, they can wait until they see the Defendant’s prior art before going into print on their proposed claim construction. Second, for infringement claims where the claimant has not bottomed out all aspects of its case because, for example, some of the relevant functionality is buried deep in the internals of a product, the claimant may take advantage of the less detailed pleadings requirements to state their case at a higher level of generality.
Availability of PPDs and other differences in procedure
A distinguishing feature of UK patent litigation is the availability of the so called “Product and Process Description” or PPD. This is a unique feature of UK litigation which allows a defendant to provide a full written description of their product or process alleged to infringe in lieu of documentary disclosure. A PPD is also often particularly useful for a claimant in infringement claims where some of the relevant functionality cannot be examined easily because, for example, it is hidden inside the product, or is not reverse engineerable (as for software), or concerns a privately run process not open to public inspection.
Whilst there are mechanisms in the UPC Rules of Procedure for obtaining evidence of infringement such as saisies and documentary disclosure, it is likely that none of these are going to be as useful as a full PPD. Furthermore, once an action has been commenced, there is very little time after the interim conference to accommodate significant disclosure if the UPC is going to meet the goal stated in the preamble to the Rules of Procedure, of cases reaching an oral hearing within one year. Once an action has started, disclosure in the UPC on the issue of how the defendant’s product or process works, is likely going to be limited. Further, such disclosure may be of less use since the claimant will have already been required to provide its claim construction position through the full details of the alleged infringement set out in its Statement of Claim. By contrast, in a UK High Court action, parties typically only provide details of their proposed claim construction once they’ve had the benefit of seeing how the infringing product or process works through the disclosure mechanisms available to the Court.
Other differences in procedure may also appeal to litigants depending on the facts of the case. For example, in a case where a key line of defence depends on points of very fine detail, a litigant may prefer the UK’s more thorough procedure, which allows more detailed evidence, fuller trials and cross examination of experts to ensure that such points of detail are more comprehensively scrutinised and understood by the Court. By contrast, where it is believed the battle may be better fought at a higher level of generality, a forum such as the UPC, where the oral hearing is limited to a day and there is less opportunity for detailed expert cross examination, may be preferred.
As both the UK and the UPC implement some form of costs recovery, we have to consider the comparative costs of an action in the two fora. Whilst there is no data yet on the total cost of a UPC action, the costs expenditure is likely to be distributed quite differently, compared with an action in the UK Patents Court. There are two reasons for this:
- First, the court fees in the UPC can be quite high. The UPC employs a fixed issue fee and, in respect of certain actions such as infringement, an additional value-based fee. In an infringement action, whilst the fixed fee is set at 11,000 EUR, the value-based fee for the highest value actions (worth more than 50 million Euros) is 325,000 Euros. By contrast, the UK court fee for an action worth more than 50 million Euros is £10,000.
- Second, because of the front loaded nature of the UPC procedure, more of the costs are likely to be incurred earlier in the proceedings. By contrast, under the UK procedure in the Patents Court, expenditure tends to ramp up as the parties move closer to trial; expert evidence and the trial itself tend to be the two key points with the greatest costs.
These differences are likely to have an obvious impact with regard to clients’ litigation budgets, and they may also serve to create different pressure points for settlement, where parallel proceedings are instigated.
A role for the UK Court in a UPC World?
Assuming the UPC establishes itself, as it hopes, as an attractive venue for quick, cost efficient pan-European patent enforcement, there are a multitude of reasons why litigants are likely to continue to seek relief from the UK Court. Parallel proceedings are likely to continue to be an important strategy in any multi-jurisdictional dispute, particularly as differences in procedure will create different pressure points and opportunities for settlement as the respective proceedings progress.
Differences in procedure may lead to one forum being preferred over another. Jurisdictional issues may come into play, for example, if a claimant wants to avoid being sued in the UPC, or if a claimant seeks relief in respect of EP patents pertaining to non UPC contracting states.
As technology and parties’ commercial objectives become increasingly complex, litigants are likely to seek increasingly creative and pragmatic solutions to their global disputes, and the UK Courts have a proven track record in this regard.
We are not, therefore, likely to see national actions outside of the UPC territory, particularly in the UK, disappear any time soon. We expect instead that the UPC will add a new layer to the global litigation landscape which will make life even more interesting – and complex – for patent practitioners.