UPC draft rules – the big issues


The 15th draft Rules of Procedure were put out for public consultation at the end of last month with a deadline for responses of 1 October. Here we consider the main issues on the draft rules and will, over the coming weeks, be offering our thoughts on various of the issues in more detail.

Opt outs

There is a welcome provision in R.5 to ensure that opt outs are registered with immediate effect through the use of a sunrise period. The Rules Committee has also taken the opportunity to note (perhaps controversially) as follows:

“ … that the provisions of Article 83 of the Agreement for opting out are clear and provide for:

(i) a complete ousting of the jurisdiction of the UPC;

(ii) such ouster is, subject to Rule 5.6, for the life of the relevant patent/application and

(iii) covers all designations owned by the proprietor(s) in question.”

In the author’s view there is considerable room for dispute as to the interpretation of Art 83 and this will be the subject of the first article in the series on the rules. In particular there is ambiguity caused by the statements of the Preparatory Committee in its Q&As on the opt out provisions which reads as follows

“Where a European patent application or a European patent has several applicants or patent proprietors, must all applicants or patent proprietors agree to lodge the application for opt-out?

The unity of an application and of the patent in case of several applicants or several proprietors is a basic principle of patent law, as reflected in particular in Article 118 of the European Patent Convention. This means that applicants or proprietors of one single application for a European patent or one single European patent will have to act in common to exercise the opt-out.”

In fact, it is only multiple applicants for pending patent applications who must act in common. Once granted, the individual designations can be assigned and those different proprietors can act independently. This possibility is clear enough from R.5 and especially point (iii) of the note quoted above. The issue has been drawn to the attention of the Chairman of the Preparatory Committee by the author, and hopefully the Q&As will be amended to reflect the true position. In any event, however, some clarification in R.5 itself would be useful to put the point beyond doubt.

A separate point arises from this, of course, which is the possibility of patentees assigning individual designations to related entities (different group companies) before the UPC comes into existence in order to use the UPC for enforcement in countries with slow or otherwise unfavourable litigation systems, whilst opting out for countries such as the UK, the Netherlands and Germany with efficient systems, and thus avoiding also the “eggs in one basket” concern with the UPC.


As anticipated, the Rules Committee proposes a fee to opt existing European patents out of the UPC jurisdiction – and to opt back in (see R.5.3). This is controversial in as far as the former is a fee not to use the UPC, and seems mainly designed to raise revenue for the EPO and the UPC. It potentially raises a human rights issue, save that neither the EPO nor the UPC is a signatory to the ECHR, such that there is no obvious route of complaint. However, lobbying to ensure that any fee is very modest is essential.

Another issue arises in relation to fees for counterclaim for revocation. If validity is challenged by way of defence, then it is mandatory to counterclaim for revocation and pay a fee – see Rr. 25 & 26. This will be (in part) value based. Is it right that a Court fee should be payable in order to defend oneself?

Licensee actions

The fees point also arises in the defence of licensee actions brought under Art 47 (5) and when the patentee does not join in. In such cases an independent (responsive) claim for revocation is required to be brought in the central division, because Art 47(5) says that, in such licensee actions, the validity of the patent may not be contested, but rather this responsive action must be brought. Again a fee will be required, and to the extent that the fees are different as between initiating a central division revocation claim or a revocation counterclaim in an infringement action, then defendants are in danger if being treated differently according to the tactics of the claimant.

A new R.25(3) has been introduced which appears to contemplate that patentees are joined into licensee proceedings if there is a counterclaim for revocation in an Art 47(5) action. It says:
“Where the claimant is not the proprietor … of the patent … concerned the Registry shall … serve a copy of the Counterclaim for revocation on the … proprietor…”

Given that Art 47(5) explicitly prohibits challenging validity, this aspect of the rule appears ultra vires or at least redundant and inapplicable.

Competing actions in local/regional and central divisions

One of the features of the UPC is the priority given to infringement actions over “clearing the way” actions in the central division. This arises from Arts 33(5) & (6) of the Agreement itself, which provide that when “clearing the way” actions are brought, subsequent infringement actions may be brought in any division and not merely by way of counterclaim in the central division. Naturally, this requires rules as to how to deal with such situations, which will inevitably be common. In the case of declarations of non-infringement, Art 33(6) is prescriptive in requiring the DNI action to be stayed under certain circumstances, whereas this is not the case in respect of revocation actions. Nonetheless, the Rules Committee has included a rule (R.70.3) requiring the central division to be stayed upon the commencement of local or regional division infringement proceedings between the same parties whilst the local / regional division decides what to do with the revocation counterclaim. This pre-supposes, however, that there will be a revocation counterclaim by the alleged infringer. Of course a revocation claim already exists, suggesting that rarely if ever will a defendant in such a situation lodge such a counterclaim. In the new draft, the Rules Committee has taken on board this point to some extent by adding a new R.70.4 which provides that the stay will be lifted if there is no revocation counterclaim. However, it would appear that a better approach (to avoid delays to the central division action caused by unnecessary stays) would be to stay the central division case only if and when a counterclaim is made in the subsequent infringement action – which will usually be never.

Preliminary injunctions

No significant modifications have been made to the draft rules since the last draft. It remains the case that:

  • the merits are important, and more so than under the UK Cyanamid test – this seems entirely sensible
  • there is no general requirement for urgency – this is surely something which would be appropriate
  • in the case of injunctions granted ex parte, the injuncted defendant may request a review (R.212.3) rather than being obliged to appeal in the event of wishing to challenge the decision – a highly commendable arrangement
  • there are no eBay type provisions – users’ points of view will vary on their reaction to this.

The language regime of R.14 has changed in the latest draft.  R.14.2 now provides that:

“Where a Contracting Member State hosting a local division or Contracting Member State sharing a regional division has/have designated two or more languages of proceedings pursuant to Article 49(1) and/or Article 49(2) of the Agreement the Statement of claim shall be drawn up in the language in which the defendant normally conducts its business in its Contracting Member State.”

The author understands that the reason behind this change is a constitutional concern raised by Belgium which enshrines the principle of being sued in a language one can understand. If this is correct, the right to a translation would surely be a better compromise than a requirement to determine the language of the proceedings by reference to the unclear test of the final, italicised, words. It is also noteworthy that the previous wording of R.14.1(b)(ii) of the 14thdraft (though still cross-referred to in R.321.5(a)) permitting the Statement of Claim to be submitted in the language of the patent has been deleted. This is unfortunate and will only serve to make forum shopping by language more prevalent.

Another language issue worthy of note arises from the Preparatory Committee statement (although its basis is unclear) that in the case of appeals in bifurcated cases which involve the use of different languages:

The language of proceedings before the Court of Appeal will however be the language of proceedings of the main action, namely the infringement action heard by the local or regional division.

It is counterintuitive to regard the infringement action as the “main action”, and it is suggested that the rules should specify the opposite.

Bifurcation and procedural appeals

Finally the thorny question arises as to how bifurcation will work in practice. How will local and regional divisions exercise their discretion to bifurcate? Under what circumstances will relief be granted in bifurcated cases? Another related question is how (if at all) the Court of Appeal will supervise the exercise of that discretion by procedural appeals? This topic will be considered in greater detail at a later stage. At this stage it is worth highlighting some issues.

First, the motivation for patentees to bifurcate derives from the potential to receive a quick decision in an infringement case without validity being challenged more than superficially. Under the German system bifurcation arises constitutionally, and the District infringement courts are much quicker than the Federal validity court. This is at the heart of Germany’s popularity as a jurisdiction in which to assert patents. In the UPC, the option to bifurcate has been enshrined, and the Rules Committee has acknowledged this. However, it has, at the same time almost completely negated the point of bifurcation from the perspective of a patentee seeking a German-style procedural advantage. It has done so by providing a vitally important rule (R.41(c)) that the dates set in infringement actions under R.28, which include the date of the oral haring (the trial), should be “confirmed wherever possible”. Although R.40(b) from the 14th draft requiring the Central Division to accelerate bifurcated proceedings has been deleted, R.41(c) will mean that there should be no gap between the two trials. If this is indeed the practice, any question of relief in infringement cases pending validity decisions should be academic.

R.118.3(b) is the crucial rule on the decision of the local or regional division as to how to proceed in a bifurcated case. It was, it is understood the result of long discussions and compromise. It provides a clear discretion to stay the infringement proceedings pending the validity decision in the central division (or indeed pending an EPO opposition) as well as a German-style provision requiring a stay if there is a high likelihood of revocation, and unlike in Germany, this high likelihood may arise from any ground of invalidity. Whilst users will no doubt wish to lobby in relation to this provision, a better compromise seems unlikely. Indeed, having been forced under the rules to plead fully in response to a revocation counterclaim before the bifurcation decision is made; with the greater possibility of a stay of the infringement case if a case is bifurcated; and with no real prospect of an infringement decision before the validity decision, what patentee would want to request bifurcation? Would they not instead simply arrange their affairs such that a licensee could bring an action under Art 47(5)? The focus on bifurcation needs to shift from conventional infringement proceedings by patentees to these “hard wired1” bifurcated licensee actions.

If the local or regional division decides to bifurcate and proceed with the infringement case, then under R.118.3(a) relief may be given at the end of the process on the condition subsequent that the patent is found valid, or on any other terms. Hence, if for any reason an infringement decision is rendered significantly earlier than a validity decision, then this rule is problematic for defendants in as far as it would permit, in particular, the grant of an injunction. As explained above, this seems an unlikely scenario.

Can then the Court of Appeal supervise procedural decisions such as bifurcation decisions? This is a point on which the Rules Committee was split. The point turns on a matter of interpretation of the meaning of “Court” in Art 73(2)(b)(ii). Clearly the first instance court can give leave to appeal, and a broad definition of “Court” would enable the Court of Appeal to do so also. A narrow definition, however, would exclude seeking leave from the Court of Appeal. The author is puzzled that there is any dispute within the Rules Committee given the clarity of the definitions of “Court” in the UPC agreement2, but which view is correct will ultimately be for the Court of Appeal to decide when it receives its first application for leave in a procedural case. Further, whilst as a matter of general principle, procedural appeals cause delay, the need for the Court of Appeal to harmonise procedure in the early life of the Court seems overwhelming if forum shopping is to be mitigated, whereas procedural appeals and any resulting delays will only be prevalent whilst the system is new. Hence, it is to be hoped that the Court of Appeal will accept procedural appeals, and that harmonisation will occur quickly in consequence.

1 The author would like to acknowledge Mark Richardson of Kelties as the author of the phrase “hard-wired bifurcation”
1 Art 2(a) – “Court” means the Unified Patent Court created by this Agreement; Art 6(1) – The Court shall comprise a Court of First Instance, a Court of Appeal and a Registry”

Other commentary