The Opt-Out – is there basis for a fee?


Many users are unhappy at the prospect of paying a fee to avoid their patents being litigated in the UPC. It is argued that it is “unfair” to have to pay a fee to maintain the status quo, or (put another way) NOT to use the system. But is there a more substantial basis for these complaints?  Is there a legal basis for an opt-out fee?

On the face of it, the answer to this question seems straightforward. Rule 5 (5) of the Rules of Procedure (17th draft) states: “The applicant(s) for an opt-out shall pay the fixed fee in accordance with Part 6.  The Application shall not be entered in the register until the fixed fee has been paid.” The reference to Part 6 is to Rule 370 (“Court Fees”) where the opt-out fee will ultimately be quantified alongside fees for the various types of proceedings and actions before the UPC.According to the consultation document for the Rules on Court fees and recoverable costs published by the Preparatory Committee in May 2015, the opt-out fee will be €80.00.

While this may sound like a clear answer, upon closer inspection things are not that clear at all.

The Rules of Procedure are effectively on the lowest level of legislation in the hierarchy of legislation relating to the UPC. Unlike the UPC Agreement, they will not be ratified or otherwise directly approved of by the governments of the EU member states participating in the UPC and/or the respective parliaments. Instead, they will be adopted by the Administrative Committee, a group consisting of “representatives” of each contracting member state. This derogation of legislative power is set out in Art. 41(1), (2) UPCA which provide for the Administrative Committee adopting rules on “the details of the proceedings before the [UPC]”. Derogation as such is a common and generally accepted method for making legislative processes more effective. However, it is equally accepted that statutory provisions providing for derogation should, as a rule, be interpreted narrowly because they take legislative control away from the parliament. This is reflected in the Preamble to the Rules of Procedure stating that in the event of a conflict between the Rules and the UPC Agreement, the UPC Agreement shall prevail.

Notably, UPC Agreement does not mention a fee as a requirement for an opt-out from the exclusive jurisdiction of the UPC at all. As far as the UPC Agreement is concerned, if patentee(s) wish to opt out, all that is required is to “notify” the Registry as set out in Art. 83(3) UPCA. Nothing in the word “notify” implies that a fee might be payable.This raises the question whether the general provision of Art. 41(1) empowering the Administrative Committee to adopt rules on “the details of the proceedings” before the UPC might imply the right of the Administrative Committee to adopt the requirement of an opt-out fee. It is difficult to see why that should be the case.

As the term “details” in Art. 41(1) UPCA suggests, the rules to be laid down by the Administrative Committee should specify something that is at least generally provided for by the UPC Agreement. However, as shown above, there is nothing in the UPC Agreement suggesting an opt-out requirement in the form of a fee. To the extent that the UPC Agreement does refer to fees generally, those fees are expressly referred to as court fees – see, for example, Art. 36 and Art. 70 UPCA. It is clear from the wording and the context of these provisions that the term court fee relates a fee for bringing proceedings before the UPC. For example, Art. 70(1) UPCA states: “Parties to proceedings before the Court shall pay court fees,” (emphasis added). Similarly, Art. 70 (2) UPCA provides: “Any party which has not paid a prescribed court fee may be excluded from further participation in the proceedings,” (emphasis added). However, an opt-out fee is clearly not a court fee in that sense. It is not a fee for bringing proceedings before the Court or starting any kind of judicial action. A patentee wishing to opt-out is not a party to any proceeding before the UPC. On the contrary, the opt-out fee is entirely unrelated to proceedings before the UPC. It is a fee for avoiding any such proceedings for a given patent in the first place.

Against this background, one may well argue that Art. 41 UPCA cannot serve as a legal basis for stipulating an opt-out fee in the Rules of Procedure. Accordingly, there would be a conflict between the UPC Agreement and the Rules of Procedure in that the former does not require an opt-out fee while the latter does. The consequence of such a conflict would be that the requirement of an opt-out fee as currently provided for in Rules 5 (5) and 370 is inapplicable, and no fee is required in order to effectively opt-out from the exclusive competence of the UPC under Art. 83(3) UPCA.

While the above analysis may not be the last word in this matter, it at least suggests that it may be wise for the Preparatory and the Administrative Committee to (re-)visit the issue and possibly to raise the necessary fees from activities about which there is no doubt on the legality.

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