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MIP Innovation Summit: UPC ready to take off despite initial caution

Maria Mellgren (L), Shohta Ueno, Jeroen Gaasbeek

Business is quiet so far but the UPC has everything it needs to attract patentees, panellists at Managing IP’s IP & Innovation Summit argued yesterday, June 7

Patent lawyers were full of optimism for the new Unified Patent Court at Managing IP’s Intellectual Property & Innovation Summit in London yesterday, June 7 – so why has the court been relatively quiet so far?

More than 500,000 opt-outs have been filed so far, much higher than UPC officials initially expected.

There have been 19 cases filed at the court as of yesterday morning. These include a couple of eye-catching disputes involving Amgen and Sanofi.

But there has not yet been the flood of activity that maybe some lawyers expected, even though most observers agree the new court is a friendly terrain for patentees.

Risky business

Each company will have its own specific reasons for opting in or out.

But lawyers are generally risk-averse and a new system such as the UPC is rife with uncertainty, panellists agreed.

Sean Alexander, head of global IP strategy and portfolio at Danish biotech firm Chr Hansen, said his company had opted out roughly 30% of its patents, more than even he expected.

Chr Hansen followed the advice of its attorneys, who felt it was better not to take the risk, Alexander added.

More generally, US clients and SMEs have been noticeably cautious of the new system, said Rachel Fetches, partner at HGF.

Shohta Ueno, senior director at Regeneron in the UK, commented on the particular risks facing pharmaceutical patent owners, especially those covering composition of matter.

“Pharma patents can be worth quite a lot, especially towards the end of their life.

“If you don’t opt out, you expose yourself to revocation actions at the very moment when the patent is most valuable,” he said.

Pharmaceutical owners’ reluctance to put their most valuable assets at risk is broadly in line with expectations.

Perhaps more surprising is the lack of activity from standard essential patent (SEP) owners so far, suggested Alexander Haertel, cluster lead patents at Deutsche Telekom.

Analysis from law firm Bird & Bird suggested that European cellular SEPs were two to three times more likely to be opted out than other patents.

Haertel put the lack of SEP owner activity directly to his co-panellist – Clemens Heusch, global head of dispute resolution at Nokia – during another session on how the UPC will reshape patent litigation in Europe.

Heusch suggested we could see more activity from SEP owners in the near future, but not in the Nokia cases already in the news.

“We are prepared and could file at any time.

“At the moment, we are in active litigation against two very big handset makers, Vivo and Oppo, and both are already enjoined in Germany.

“We [will] also hopefully get injunctions in other key markets very soon, so the UPC would not add so much in these disputes.

“But if we have to start a new campaign against the next defendant, we have patents ready to assert,” the Nokia litigation chief said.

Patentee positivity

There are plenty of reasons why patent owners would find the UPC attractive.

Maria Mellgren, IP director at Essity Hygiene and Health in Sweden, said she was most excited by the prospect of a quick decision.

“Litigations that drag on and on generate so much uncertainty, so we want decisions on the merits quickly,” she said.

Jeroen Gaasbeek, director of IP at dairy company FrieslandCampina, said he looked forward to more predictable decisions.

“We expect a better quality of decisions and to have a better sense of what the outcome will be – that’s the main advantage,” he said.

Such are the benefits of the UPC for patentees that Alexander said he thought it would eventually replace the US as the world’s premier patent litigation venue.

Olivier Corticchiato, owner and European patent attorney at Corti IP, agreed the UPC has everything it takes to overtake the US.

“It will be the perfect jurisdiction to get a first-instance decision relatively quickly and inexpensively compared to the US,” he said.

Ken Seddon, CEO of the LOT Network, said during a separate talk on non-practising entities that the UPC’s pro-patentee outlook was likely to attract ‘patent trolls’.

It could even become the “Eastern District of Europe,” he said, referencing the notorious patent troll hotspot in Texas.

“Judges will want to attract attention to their courtroom, so we expect the UPC to be very pro-plaintiff.

“We’ve already seen patent trolls trying to buy any German patent they can get their hands on,” he said.

Judicial conflicts

Several panellists highlighted the quality of the judges who had been appointed to the UPC as a source of reassurance for patent owners.

A desire to instil confidence in patentees may have been behind the decision to appoint technically qualified, part-time judges recruited from law firms and industry.

But this move has sparked a row over potential conflicts of interest that has reportedly led to several judicial resignations.

The UPC has published a code of conduct to address potential conflicts, but it did not cover any specific issues raised by the presence of in-house counsel on the bench.

When asked by Managing IP whether it was appropriate for in-house counsel to sit as judges, most panellists said it was not, even if it led to decisions in their favour.

Alexander said he thought the decision to appoint part-time judges was a mistake and that the UPC knew it.

“The court has recognised its mistake and is trying to correct it in the code of conduct.

“I’d be very unhappy to have an in-house counsel on the panel, even if it’s in my favour,” he said.

But Heusch of Nokia – which employs a part-time UPC judge – said the judges were good people and would be “very careful” with conflicts.

“It is not fair to say a judge will rule in favour of patent owners just because their company owns some patents,” he said.

Whether the position of in-house judges is tenable or not, the message counsel have taken from the UPC is clear – the court is open for business.

So while it may be quiet for now, it won’t stay that way for long.

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