Unified Patent Court Opt-Out Procedure
Steps to navigate for a successful opt-out
From full entry into force of the Unified Patent Court (UPC), which is currently expected to be on 1 April 2023, during an initial transitional period, the UPC and the national courts of the UPC-ratified countries share jurisdiction over European patents and patent applications. The initial transitional period is set to last seven years from the full entry into force and may be extended to a maximum of 14 years. After the transitional period ends, the national courts in UPC-ratified countries cease to have jurisdiction over European patents and patent applications. From that point onwards, the UPC has exclusive jurisdiction over European patents and patent applications.
Nevertheless, the increasing exclusivity of the UPC’s jurisdiction can be avoided. While some will consider the new forum the UPC will provide to be of significant value, the countries that agreed to participate in the UPC also recognised that the UPC will be a new, untested, multinational European court. For those who consider this too big a risk, an opt-out from the default coverage of the jurisdiction of the UPC is being made available. This removes any right opted out of the UPC jurisdiction so that the relevant national courts have exclusive jurisdiction over the right.
Once the Sunrise Period starts, it is planned that from 1 January 2023 to the end of the transition period, it will be possible to opt out European patents from the jurisdiction of the UPC. During the same period, any published European patent applications will also be able to be opted out of the UPC jurisdiction.
When considering an opt-out, there are a number of commercial points to decide on and procedural steps to complete. The commercial points are nuanced and are best discussed one to one to make sure the appropriate approach is taken. Ultimately, these fall to a balance of risk or effect of loss of a European patent by a central attack at the UPC against expanded geographic enforceability and the effect this may have on how a patent may be put to use. However, there are procedural steps that all those considering an opt-out will need to address to be able to proceed with an opt-out. Without being able to complete those steps, any opt-out would not be able to proceed. These steps also apply when trying to withdraw an opt-out to return a right to the UPC jurisdiction, an action that can be taken at any time, not just during the time period laid out above.
These procedural steps are outlined below.
1. Identifying every true legal owner
The most important of the procedural steps is securing agreement for the opt-out from all the legal owners of a right. To do this, all legal owners need to be identified.
While one party may be named as proprietor or applicant on the relevant official office register, often, the legal owner of the right is a different party. This can be due to a transfer of ownership not having been registered, internal company agreements transferring ownership, an acquisition or merger, or simply company structures and where intellectual property is held within a company or group of companies.
Some ownership structures will be complicated and may take some effort to unwind, to follow the paper trail to its end or to fill in the gaps. Other ownership structures will be considerably simpler, but it will likely be best to start assessing this early, especially because once all the legal owners are identified, some ownership matters may need adjusting, or a legal owner may need persuading to agree to an opt-out.
2. Status of the right
If a European patent is, was or will be in force or a European patent application is, was or will be pending once the UPC fully enters into force, the UPC will have jurisdiction over that right unless the right has been opted out of the UPC jurisdiction. As such, it is worth confirming that a European patent or patent application has not or will not irretrievably expire or lapse before the full entry into force of the UPC.
Sometimes, remedial action will be possible to keep a right alive. However, if a right is no longer wanted, it may simplify matters to allow the right to die before the full entry into force of the UPC to avoid a decision needing to be made regarding whether to opt out an expired right.
For any right for which a decision has been made to opt out, every owner is required to provide a declaration that they are the true owner of the right. Such owners are those entitled to be named as an owner of the right on a relevant national patent register, a status that will be determined by national law in one or more countries. It will also be necessary for any representative who is to file an opt-out request on behalf of the owner(s) to be authorised by the owner(s). This means that each owner will be required and must have the (legal) ability to sign at least one form.
4. Pending or prior litigation or withdrawn opt-out
One block to opting out a right or withdrawing an opt-out is pending or prior litigation on the right. Should there have been litigation at the UPC, this will prohibit a right from being opted out of the UPC jurisdiction. Equally, should there have been litigation at a national court of a UPC member state on an opted out right, it will not be possible to withdraw the opt-out.
Should a right have been opted out previously and that opt-out withdrawn, it will not be possible to opt out the right a second time. This is therefore a check worth performing, especially if more than one round of opt-outs of a portfolio of rights is being carried out.
(5. Supplementary Protection Certificates)
When a Supplementary Protection Certificate (SPC) is based on a European patent, if the European patent is to be opted out, all the same details and requirements apply to the SPC. Should an SPC exist, then the above details will need to be worked through for the SPC and the European patent.
One point to consider in addition to the procedural points is that, while opt-outs are controlled by the owner(s) of a right, often, a right has been licenced to a third party. By their very nature, licensees do not gain any ownership over the rights. However, licensees do have the ability under the law governing the UPC, the Agreement on a Unified Patent Court (UPCA), to litigate or join litigation on a patent, depending on the type of licensee that party is. Also, licensees will have their own view in relation to the value and usefulness of any patent or patent application on which they hold a licence that is inside the UPC’s jurisdiction or that has been opted out. Consulting with licensees when deciding on an opt-out is, therefore, advisable and, for some licences, will be a requirement.
If you would like assistance navigating the nuances affecting a decision on whether an opt-out is right for a European patent and patent applications you oversee, or if you have questions about the opt-out process, please contact your usual attorney at Gill Jennings & Every. Alternatively, you can contact us via firstname.lastname@example.org.