Could the CJEU kill the “for the life of the patent” UPC opt out regime?


We have raised in a previous article the issue as to the jurisdictional confusion caused by the wording of transitional provisions of the Agreement on a Unified Patent Court (“UPC Treaty”), especially Article 83(1).  In this article we consider how this confusion might be resolved, and conclude that it is possible – even probable – that this will come before the CJEU. This in turn raises the prospect of the CJEU making a decision which could have a wholly unexpected effect on the future enforcement of every single European patent which exists after the end of the seven year transitional period and effectively terminate the national jurisdiction of opted out European patents at the end of the seven year transitional period.

Let us first remind ourselves of the transitional provisions and their background.

A political decision was taken a very long time ago that existing European patents would be litigated in the UPC as well as unitary patents. However, this caused a furore as it meant a retrospective change to the litigation system that applicants had “bought into” when applying. The solution was a transitional period of change. Many lobbied for that period to be the whole life of the patent. What was agreed was at first a five year period, later extended to seven years with the option to extend by up to a further seven years. What was (at least at one stage) contemplated was a simple in/out system: one could opt out of the system entirely, or leave a patent in it entirely, but this would be for a fixed period and not for the full life of the patent. When the Commission first published its FAQs, this is what it appears to have thought had been agreed.

The 11 December 2012 version read as follows:

“During a transitional period of 7 years, actions concerning ‘classical’ European patents without unitary effect can still be brought before the national court if those patents have been opted-out before an action has been brought before the UPC.”

That, however, is not what Article 83 says – at least when read through the eyes of an English lawyer – and after this was pointed out to the Commission, it changed its FAQs to read:

“During a transitional period of 7 years, actions for infringement or for revocation concerning ‘classical’ European patents without unitary effect can still be brought before national courts. A proprietor of or an applicant for a European patent granted or applied for prior to the end of the transitional period will also have the possibility to opt out from the exclusive competence of the Court”

The separate sentences of the new version reflect the two parts of Article 83, namely sub-paragraphs (1) and (3), which create the possibility of an opt out in sub-paragraph (3) but, even if the European patent in question is left in the UPC system, the possibility of national infringement and revocation proceedings by virtue of sub-paragraph (1). How, though, does Article 83(1) operate at a practical level when there is no opt-out, because effectively it gives the UPC and national courts concurrent jurisdiction? Individual national designations can continue to be litigated in the relevant nations, whilst the UPC can deal with all designations.

Let us consider an example.

Suppose that a patentee has not opted its patent out of the UPC and owns a UK designation. Although the UPC now has “exclusive competence” over all designations of contracting / ratifying states, including the UK designation, Article 83(1) allows national suits. Let us then suppose that the patentee discovers a small scale infringer in the UK. It is a relatively urgent matter, however. The patentee has a choice. It could go in the UK in the Patents County Court (“PCC”) for a preliminary injunction, knowing that this is the only state in which it is needed, and could be obtained cheaply in a matter of days, or hours if necessary. Alternatively, it could go in the London division of the UPC, but it is unclear how efficient or expensive the UPC would be in this urgent case. Suppose the patentee goes in the PCC and that the infringer pleads invalidity as a defence and counterclaims for revocation. The UK Court is properly seised of the case insofar as it concerns the validity of the EP(UK). In this case, what is the remaining jurisdiction of the UPC? Can the infringer also start a UPC central division revocation case? What about a revocation action started by another party? Can two revocation cases run in different courts side by side, both concerning the UK designation? Under general Brussels Convention principles, the answer should be “no”, and under general UPC Treaty principles there should no longer be fragmented litigation. But how does one square this with the wording of Article 83?

What of the flip side to this? If a new infringer emerges, operating on a pan-European basis, can infringement actions be brought both nationally and in the UPC? Does the fact that there is an existing unrelated infringement / revocation action progressing in the UK mean that the patentee has to bring separate proceedings in the UK? If the patentee only brings an infringement claim centrally in the UPC, and that defendant counterclaims for revocation, can the UPC deal with that counterclaim insofar as it relates to the UK designation when there is a UK revocation action pending brought by another party?
Suppose the UK Court holds the patent valid, but the first infringer (perhaps acting through a “straw man” or related company), despite leading exactly the same case, persuades the UPC to accept jurisdiction over a central revocation claim, which then comes to a different conclusion on validity and revokes the European patent, including the EP(UK). Here one also has to consider Article 34 of the UPC Treaty which says that decisions of the UPC shall “cover” in the case of a European patent, the territory of those contracting member states for which the European patent has effect. Does this then mean that an applicant for revocation now has three chances to knock out a patent which is not opted out of the UPC:  one in the EPO, one in national courts and one in the UPC? Would the UK recognise a decision of the UPC to revoke the UK designation in these circumstances if the UPC decided its decision must “cover” the UK in the light of Article 34?

These are easy questions to ask, but not easy to answer. At the very least, reasonable people may differ, and so too may the judges of the UPC and national courts. These are new issues which the current, recast, version of the Brussels 1 Regulation does not address. It must therefore be amended in order to address them. Indeed, this appears to be the only way in which the mess created by the wording of Article 83(1) can be cleared up before the UPC comes into existence. A “non-paper” from the Commission Services dated 30 November 2011 (here) considered the interplay between the then draft UPC Treaty and the Brussels 1 Regulation, and the amendments required. The non-paper acknowledges that the amendments to the Brussels 1 Regulation will need set out how the jurisdiction and lis pendens rules of the Regulation apply in combination with the UPC Treaty. Otherwise, the non-paper proposes only simple amendments. Unfortunately, there is no indication that the particular problems discussed in this paper have been appreciated or that they will be sufficiently addressed.

If these issues are not sufficiently addressed by amendment to the Brussels 1 Regulation, then the CJEU will surely end up having to deal with this.  Someone will have to refer to the CJEU the interpretation of that in the light of the Article 83 issue. If so, it raises the possibility – indeed probability – that the CJEU will construe Article 83 of the UPC Treaty in the process. If it does so, one possible result is that it will decide that Articles 83(1) and 83(3) mean what the Commission thought they meant in their 11 December 2012 FAQs: that they are to be read, not separately, but together (holistically) to mean that there is a “clean” opt out – that only if a patentee opts out of the system under 83(3) does national litigation remain possible. If so, then this could mean that the opt out should be read as effective for only seven years, and after that European patents are subject to the exclusive competence of the UPC. After all, nowhere in Article 83(3) does the wording say that the opt out has effect for the life of the patent:  this is merely to be inferred, despite the view of the Rules Committee that the language of Article 83 for opting out is:

“clear and provide[s] for: a complete ousting of the jurisdiction of the UPC; [and that]  such ousting is … for the life of the relevant patent/application1.”

If the CJEU were to come to the conclusion that a holistic interpretation of Article 83 is the correct one, then the effects are enormous. Every European patent (and SPC) in force at the end of the transitional period would have to be litigated in the UPC. Any attempt at national enforcement would be met with a defence that the CJEU had ruled that the national court had no jurisdiction despite the opt out. The national court in question would have to accept the jurisprudence of the CJEU even if the UPC Court of Appeal thought it the wrong interpretation, because it would be binding as a decision in relation to a piece of
European legislation, namely the Brussels 1 Regulation.

It may be that the CJEU would not construe Article 83 this way, or that the Brussels 1 Regulation will sort out the problem in advance. However, this nightmare scenario for patentees is far from being beyond the realms of possibility. All those companies considering their patent filing strategies now, and who are assuming that they will be able to opt out the European patents being filed now, and to do so for the life of those patents, should consider this possibility, and should lobby for the issue to be addressed in the amended Brussels 1  Regulation. As and when the draft amendments to the Regulation become available, we shall conduct an analysis and provide an update.

1 Note to Rule 5, 15th (unofficial) draft Rules of Procedure

Richard Pinckney


Alan Johnson


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