After many years of speculation, it finally looks like the
UPC will become a reality. All that stands in the way is
ratification by the UK and Germany, both of whom have indicated
that they want to ratify, and will do so soon. It is expected
that the UPC Agreement will come into force still in 2017. The
UPC will hear actions for infringement or revocation not only
of European patents with unitary effect, but also of
traditional European patents.
A key decision for owners of European patents is whether to
opt out of the new litigation system, and if so for which
patents. Opting out removes jurisdiction from the UPC and
effectively maintains the status quo –
litigation in national courts. This has certain advantages and
The opt out decision is an important one for companies with
valuable patents in Europe. If patents are to be opted out,
this should ideally be done before the new system comes into
effect. After that, it may be too late. Decisions need to be
made this summer.
The following answers to frequently asked questions are
aimed to inform users of the patent system what the opt out
procedure is, how it works, why it matters and which factors to
take into account when deciding.
Q&A on opting out
What does the opt out do? Opting out removes the
UPC's jurisdiction over a given European patent so that the
national courts retain sole jurisdiction over it. In other
words: compared to today, the litigation options for that
patent remain the same.
What happens if I do not opt out? The UPC will
acquire joint jurisdiction over your European patent, together
with the national courts. This means that the patentee can
choose whether to enforce its patent in the UPC or in one or
more national courts. Such forum shopping can be very valuable.
Third parties have the same flexibility and similar forum
shopping opportunities for (for example) revocation actions and
declarations of non-infringement.
What can be opted out
Can I opt out any existing European patent? Yes,
you can opt out any European patent that has already been
granted by the EPO.
Can I opt out European patents granted in future, after
the UPC system comes into force? Yes, except if you select
to have a European patent with unitary effect. Unitary Patents
cannot be opted-out. If in future you choose to validate your
European patent in the current way, country-by-country, then an
opt out will be possible.
Can I also opt out European patent applications?
Yes, this is possible. When a patent application is opted out,
this will continue to apply also when the patent is
Can I opt out a supplementary protection certificate
(SPC)? An SPC can be opted out if the patent on which is
it based is opted out. If the patent has expired, it is still
possible to opt it out for example in order to be able to opt
out the SPC.
Change Of mind
If I opt out, is this a final and permanent
decision? The opt out will be effective for the lifetime
of the patent – that is, even after the end of the
transitional period – if you take no further
If you opt out and later change your mind (for example
because you wish to use the UPC for patent enforcement), then
you can withdraw the opt out. Withdrawing the opt out restores
joint jurisdiction of the UPC and national courts. However:
once the opt out is withdrawn, no further changes regarding
jurisdiction can be made – a second opt out is not
A withdrawal of the opt out is not possible if there is
ongoing national litigation. So if you opt a patent out, you
run the risk that a competitor starts a national revocation
action, thereby locking your patent into a national enforcement
Opt out practicalities
When can a patent be opted out? At any time as long
as there is no ongoing UPC litigation at the time the opt out
application is registered.
Before the UPC enters into force, there will be a sunrise
period during which patents can be opted out. The sunrise
period offers patentees a head start to opt out a European
patent before any competitors have a chance to initiate UPC
litigation in respect of that patent.
When will the sunrise period start and end? The
sunrise period is a three-month period between the final
ratification needed to bring the system into force, and the
actual coming into force of the new system. The sunrise period
is predicted to fall in the second half of 2017.
Will I always be able to opt out my European
patents? No. The opt out provisions are transitional, and
will only be available for the first seven years in which the
new litigation system is in operation, optionally extensible by
a further seven years.
Where and how is the application for an opt out
submitted and registered? Opt out applications are
submitted to the UPC registry using an online procedure. A beta
test site of the UPC case management system has been made
available which, after creating a personal account, allows a
user to see how the procedure will work.
Who can perform an opt out declaration? The
proprietor of a European patent or the applicant for a
published European patent application is entitled to opt out.
In practice, the person preparing and submitting the opt out
application, for instance a European patent attorney, needs to
submit a so-called mandate proving that he is authorised to act
on behalf of the proprietor/applicant.
What documentation will I need for an opt out
application? Since the opt out can be validly performed
only at the request of the owner(s) of the patent or
application, a signed mandate form needs to be submitted along
with the application. According to the template for a mandate
available on the beta test site, it is required to list not
only the patent/application number but also the
proprietor/applicant. This is not necessarily the owner
registered before the EPO or the national patent offices but
the person entitled to be registered as proprietor under the
law of each contracting member state. Accordingly, it would
appear that this mandate will also serve as basis for the
declaration of proprietorship required according to the Rules
of Procedure. The preparation of a correct mandate will be
decisive for the acceptance of the opt out application and the
validity of the opt out declaration after its registration.
What about co-owners and licensees? Licensees will
not be able to apply for an opt out. This applies even to
exclusive licensees. Therefore, if a licensee has a preference
for opting out, he should take this issue up with the patentee
in good time. Also, licence agreements should be checked as to
whether a right of the licensee to enforce a patent or similar
rights may result in a contractual obligation for the patentee
to respect the licensee's preference with respect to whether or
not to opt out.
Co-owners must opt out jointly/in agreement. This applies
also where different designations in UPC signatory states are
owned by different legal entities.
As a result, it is crucial to approach other co-owners in
time to seek their approval if an opt out is desired, to
collect relevant documentation, and to prepare a jointly signed
mandate for the person submitting the opt out application.
If an SPC and a patent on which it is based are owned by
different entities, then the opt out must be done by both
entities together in order for it to apply to the SPC.
When is the opt out effective? The opt out is in
principle effective from the date of entry in the UPC register
– provided that all requirements are duly observed, in
particular that the person performing the opt out is authorised
to do so. In case of doubt, the UPC decides for itself whether
an opt out has effect for the patent concerned.
Can a list of patents or all of my patents be opted out
in one go? The UPC only accepts opt out declarations for
individual patents that have been identified by means of their
publication number. Therefore, the patents have to be opted out
one at a time. However, the mandate form can refer to multiple
patents, and that mandate form used for multiple opt outs.
Is there an official fee for opting out? No, but
your attorney may charge a fee for performing the opt out
Deciding what to do
What are the main advantages of opting out? The
main advantage of opting out is that your patent is protected
from central UPC revocation actions.
Why might I want to avoid a UPC revocation action
against my patent? The UPC revocation action will
constitute a new and powerful tool, and a basic understanding
of this is certainly important when you come to make your opt
The UPC revocation action is the first procedure whereby a
third party can request revocation of a European patent (for
all of the UPC-participating countries) at any time during the
lifetime of the patent.
Without going into too much detail about UPC revocation
actions, it is useful to look at some of its key
characteristics. They will be fast, effective over a large and
commercially valuable territory. The UPC revocation action can
be filed at any time, and reimbursement of the patentee's legal
costs in case of an unsuccessful attack is capped, albeit at a
relatively high level. It may be possible to initiate a UPC
revocation action with moderate costs (as compared to for
example multiple national revocation actions).
Thus, the UPC revocation action will share some traits with
US inter partes review (IPR) proceedings. On this basis, it is
possible that the impact of the UPC revocation action in Europe
will be similar to that of the IPR proceedings in the US when
they were introduced some years ago.
At present, central revocation of a European patent is only
possible via the EPO opposition procedure; however, this
procedure must be initiated within nine months of grant of the
The only procedure available after the expiry of the
nine-month opposition period is to initiate national revocation
actions. However, these are only effective for one country, and
these procedures are generally time-consuming and expensive if
several revocation actions are to be run in different
Patentees must expect that individual patents which have
become highly valuable may well be targeted by competitors
through UPC revocation actions and should give serious thought
to opting out such patents.
What are the main downsides of opting out? If the
patentee is the one initiating litigation, there is no downside
because the patentee can withdraw the opt out if he wants to
use the UPC as a litigation venue.
If the adverse third party initiates litigation, he can
effectively trap the patent in its opted out state, so that the
patentee is prevented from using the UPC.
Thus, in relation to an individual patent, the downside is
that it is possible that a competitor can block this patent
from UPC enforcement. How much of a loss that is depends on how
useful UPC enforcement is in the individual case. UPC
enforcement will be a very useful and powerful tool for some
patents in certain scenarios, opening up new avenues for forum
shopping and for cross-border litigation. On the other hand,
litigation in the national courts has been working now for many
decades, so the worst-case scenario of being forced to use
national courts to enforce patents is perhaps not so bad.
Why might I opt out some of my patents? On what basis
will I decide? This is a complex question. By opting out,
you make sure that your competitors cannot centrally attack
your European patent before the UPC. At the same time, you risk
being excluded from making use of UPC enforcement. So, you need
to assess and balance the risks of a central attack against the
advantages of UPC enforcement availability – ideally
for each individual patent. This depends on many factors
including structure and strength of the portfolio, nature and
characteristics of products concerned, market and competition,
logistics and budget. Many questions have to be considered: How
vulnerable am I to a central attack? Could I deal with several
revocation actions at once under a new regime with strict and
short deadlines? How useful is cross-border enforcement,
including the new inspection proceedings? Where do the
competitors manufacture, where do they sell? How adequate is
the alternative to UPC enforcement, to how many and which
courts would I have to go to achieve my commercial objectives?
In some industries, an injunction in one important market (such
as Germany) will effectively block competition Europe-wide; in
other industries an injunction in multiple countries is needed.
In situations where it is difficult to prove infringement,
patentees will like the idea of a local division ordering the
inspection of a foreign factory. Patentees relying on indirect
infringement will benefit from the larger territory. An
overview of some criteria to be taken into account is given in
the figure above.
Should I not just opt out everything (at least at
first)? Some of our clients are concerned about UPC
revocation actions and consider simply opting out all their
patents. At first sight, this looks attractive – it
maintains the status quo, which is usually considered
a safe option. The UPC revocation actions are avoided. And by
opting everything out, one can side-step the potentially
burdensome exercise of deciding which patents to opt out.
Taking this approach however has some drawbacks too, both in
the short term and the long term.
Short term, you risk being prevented from using the UPC for
exactly those patents where UPC enforcement will put you in a
stronger position. If you opt everything out, then it is
possible that competitors will lock those patents out that
would have been most suitable for UPC enforcement. This will
effectively decrease the value of those patents. For this
reason, it is likely that there will be some who regret their
decision when they are stuck enforcing patents in national
courts in cases when they would have had a better chance in the
Long-term, it may be a problem that companies who opt
everything out give up the opportunity to influence UPC case
law. This could in particular become a problem if the majority
of big players in certain industry sectors all opt out all
Can the old and the new system be combined? Yes, in
many ways. If a patent has not been opted out, it can be
enforced in the UPC against one defendant and in national
courts against other defendants. Also, the patentee can file
divisional applications and opt out some of the resulting
patents to make sure that it can choose the right venue in any
event, while having at least one part which is protected from
the UPC revocation action. Negative precedents can be avoided
by waiving patents under attack if need be. Another option is
to have co-existing national and European patents. In Germany,
the new rule on double-protection will be that double
protection of a European and a German patent is normally
possible, unless the applicant or proprietor of the European
patent has opted out from UPC jurisdiction. If so, the previous
rules prohibiting double protection continue to apply. If the
patentee does not opt out, he has the choice to either enforce
his German national patent or his European patent or both (but
not against the same defendant).
Does Brexit influence my decision whether to opt
out? In principle, only EU members can be part of the new
system. For this reason, no one seriously expected that the UK
would ratify the UPCA even though it will leave the EU on March
29 2019. However, the UK would not do so if it did not intend
to stay within the UPC system even after having left the EU.
While it is at present uncertain whether this plan will
actually materialise, there is a strong political will to do
so. The uniform enforcement is far less attractive without the
UK, where patent litigation is very expensive. Also, as the UK
hosts a part of the central division, it is not an easy member
to exclude. Still, there is the possibility that the UK is only
a temporary member. This makes no difference for those who want
to opt out anyhow. However, those that consider staying in the
new system in particular for using it for the UK market need to
factor in the possibility that this strategic consideration may
turn out to be moot.
Will availability of the UPC revocation action lead to
increased troll activity in Europe? It has been speculated
that the UPC system and its effective enforcement mechanisms
may increase the activity of non-practising entities (patent
trolls). The larger territory and the greater number of users
potentially affected by one action with a lower budget seems
attractive to NPEs relying on a strong impact and seeking high
damages or settlements , even though the possibility of central
revocation actions and counterclaims may, depending on the
nature and structure of their portfolio, in some cases weaken
their position. This will be interesting to follow –
but of course the opt out procedure cannot afford protection
from conventional patent trolls.
However, an opt out may offer some protection from so-called
reverse patent trolls. A reverse troll is a non-practising
entity who attacks important patents belonging to large
corporations for a direct or indirect financial gain. So far,
there has been little or no reverse troll activity in Europe
and for European IP attorneys, it is a phenomenon which we have
only observed from across the Atlantic.
Leaving aside the question of whether reverse trolling
practices would be legal in Europe (as this requires analysis
of issues not related to IP law), it is believed that this
business model came about in the US as a consequence of the IPR
action becoming available. The basic features of the IPR action
that make it so attractive for reverse trolls (including
limited cost recovery, large & commercially valuable
territorial scope, fast decisions) are ones which largely apply
also the UPC revocation action.
attorney at law and certified IP specialist lawyer, is a
partner in Hoffmann Eitle’s patent
litigation group. He holds an LL.M in intellectual
property (Exeter/Dresden) and earned his doctoral degree
in the field of cross-border patent enforcement. For many
years, he has been representing and advising clients in
international patent disputes in all fields of technology
with a focus on medical devices and biotechnology. Before
joining Hoffmann Eitle in 2008, Niels worked in the
litigation and IP practice groups of an international law
firm in Berlin, Frankfurt, London and Chicago. He has
published numerous articles in the field of intellectual
property and regularly gives lectures on patent and civil
||Morten Garberg graduated
from Oxford University with a master’s
degree in Chemistry in 2002. After qualifying as a
British and European patent attorney while working in the
firm’s London office, he transferred to the
Munich office in 2006, where he is now a partner. Morten
advises clients in the areas of patent prosecution and
litigation, and has particular expertise with EPO
opposition practice, frequently presenting cases at oral
proceedings. Technically versatile, he has experience not
only in the field of pharmaceuticals, but also food
science, materials science and polymers to name but a
few. He frequently presents on topics related to European
patent law at international conferences, especially in
the US and in his native Scandinavia.