Patent owners not rushing out of the upcoming Unified Patent Court

The single most remarkable reform in the European patent landscape is imminent, as the Unified Patent Court (UPC) and the unitary patent (UP) system will come into force on June 1 2023.

The UPC will have jurisdiction not only over UPs but also over traditional European patents (EPs) unless they are opted out. Opt-outs may be filed already during the so-called sunrise period to ensure that the EP will not become subject to a day one central revocation action at the UPC, which could nullify the EP throughout all 17 European countries that will participate in the UPC system from its introduction.

While it was previously predicted that most of the EPs would be opted out due to the perceived uncertainty of the new court system and the risk of a central revocation action, the industry’s view has changed, and the number of opt-outs has been limited.

The UPC’s Rules of Procedure form a solid basis for litigation for patent owners. An important step was the appointment of legally qualified judges, whose views are known from the case law of their national courts. The UPC aims to issue judgments within a year, covering countries where national courts are less experienced in complex patent litigation.

While the risk of central revocation remains, the advantage of a central infringement action that covers a market of over 300 million consumers is compelling. Only just over approximately 30,000 opt-outs have been registered, whereas, for example, in Germany alone the total number of patents in force in 2022 was over 900,000.

Furthermore, some EP owners may be following a wait-and-see strategy, meaning that they opt out now but might opt back in to the UPC.

An application to withdraw an opted-out EP is possible at any time, provided that an action concerning the EP in question has not been brought before a national court and that all owners of the opted-out EP so agree. Accordingly, if the patent owner prefers to wait and see, it is equally important to discuss the question of opting back in with other co-owners before making the final decision of opting out.

Another issue that might have caused some patent owners to stay within the UPC is that opt-outs are publicly searchable at the UPC’s registry.

Accordingly, the act of opting out might disclose strategic information about the value or strength of the EP, or about the likely enforcement activities of the patent owner. Of course, any such speculation may turn out to be false, but the act of opting out (or not) might trigger third parties to initiate national actions to ensure that the EP in question cannot be litigated before the UPC, which leads to the failure of any wait-and-see strategy.

With the sunrise period drawing to a close, European patent owners would do well to ensure that their UPC strategies are well planned and executed, and account for the most recent developments.