The UPC Opt-out for European Patents – Should I Stay or Should I Go?

February.01.2022

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Proprietors of European Patents will have the opportunity to avoid jurisdiction of the Unified Patent Court by filing so-called opt-out applications during an initial Transitional Period of at least seven years. An opt-out will remove the jurisdiction of the UPC for the opted-out European Patent and effectively maintain the judicial status quo: Opted-out European Patents can only be enforced or invalidated by national courts in the same way they can now.

However, a European Patent can only be opted out so long as it has not yet been the subject of UPC proceedings. For example, once a revocation action has been filed against a European Patent with the UPC, opting out will be impossible. Accordingly, the decision of whether or not to opt-out can be time critical.

This Insight will guide you through the key questions about the Opt-out, its requirements and pros & cons.

1.       What can be opted out?

In principle, it will be possible to opt-out any European Patent that has been granted or applied for before the end of the Transitional Period. However, once a European Patent has become the subject of an action before the UPC (e.g., a revocation action), an opt-out will no longer be possible. Timing will thus be of essence for those looking to opt-out.

Unitary Patents and Supplementary Protection Certificates (SPC) based on Unitary Patents cannot bet opted out.

2.       Is it possible to opt-out only for some jurisdictions?

No, a European Patent can only be opted out as whole—i.e., with respect to all jurisdictions for which it is validated—or not at all.

3.       Can I opt-out a European Patent without opting out a related SPC and vice versa?

No, a European Patent and any granted SPC based thereon must be opted out together. If an SPC is granted after the opt-out application for the relevant European Patent has been filed, the opt-out will apply automatically to the SPC. Similarly, any action brought in respect of an SPC will block an opt-out for the underlying patent.

4.       When can I opt-out?

Opting out will be possible at any time during the Transitional Period so long as the relevant European Patent has not yet been the subject of any action before the UPC.

There also will be a three-month sunrise period right before the UPC goes live, i.e., before any action can be filed. Patentees can already file their opt-out applications during that sunrise period to avoid being pre-empted by, for example, a UPC revocation action filed against the European patent on the go-live date. 

5.       What is the Opt-out Procedure?

5.1.   Who can file an opt-out application?

Only the actual patent proprietor and her representative can file an opt-out application. The proprietor may be different from the registered applicant / owner, i.e., it will be sufficient to be entitled to be registered as the owner / applicant – for example because of a patent assignment—without actually having to be registered.

At the time of writing, the person submitting the opt-out will have to file a signed mandate from the proprietor as a proof of authority to opt-out. No further proof will be required. This has raised some concerns about potential abuse in the form of unauthorized opt-outs. Reportedly, the UPC's Rules of Procedure are in the process of being revised to address these concerns.

If a European Patent is co-owned, all co-owners will have to mandate the opt-out. The same will apply in cases where the national validations of a European Patent are owned by different parties or where the proprietor of the patent differs from the proprietor of an SPC based thereon.

Accordingly, if you co-own a European Patent or if you do not own all national validations of a European Patent and consider opting out, you might want to start reaching out to your co-owners to align on a common position and prepare the formalities. 

5.2.   How to file an opt-out application

Opt-out applications must be filed electronically with the Registry of the Unified Patent Court via its Case Management System. A beta test version can be accessed here upon (free) registration of a personal account.

The opt-out must be in relation to specifically designated European Patents. At the time of writing, it will not be possible to file a blanket opt-out, e.g., for all European Patents registered in the name of a particular patentee.

The opt-out will become effective upon entry in the UPC register. Any actions filed with the UPC prior to registration will take precedence and prevent the opt-out from becoming effective. Therefore, if you have already decided to opt-out a particular patent, you should do so during the Sunrise Period, i.e., in the three months before the UPC goes live and any actions can be filed. Otherwise, you might be blocked from opting out if someone files a timely revocation or other action regarding that patent with the UPC. 

6.       Is the opt-out permanent?

Once a European Patent has been opted out, the UPC loses jurisdiction permanently. In particular, it will regain jurisdiction at the end of the Transitional Period either. However, so long as no national action has been filed in respect to the opted-out European Patent (i.e., any of its national validations), it can be opted back in at any point in time during or even after the Transition Period, thus reinstating the UPC's jurisdiction.

7.       Should I opt-out or not?

This is a complex question and there is no one size fits all answer.

In principle, the main advantage of the UPC for patentees is the possibility of enforcing a European Patent with effect for all Contracting Member States for which the patent is validated through one single action. The main disadvantage is the risk of central revocation with equally broad effect.

Which one is more important may depend on highly individual factors such as the following:

  • (Perceived) strength of the patent: How likely is it that the patent could actually be revoked? Is it known to be a "borderline case" or has the validity already survived national challenges?
  • Business relevance of the patent: Is the patent a key asset keeping competitors at bay, or is it one of several and only covering a relatively minor technical feature? Are there any national counterparts (possible, e.g., in Germany) that would still offer some fall-back protection if the European Patent were centrally revoked?
  • Likelihood of multi-jurisdictional enforcement: How likely is it that the patent will have to be enforced in more than one Contracting Member State? For example, if the patent is regularly enforced against counter-fitters in multiple Contracting Member States, the possibility of central enforcement at the UPC might be a real asset saving time and cost. If, however, enforcement action is generally unlikely to occur, or if successful enforcement in one Contracting Member State is likely sufficient, central enforcement would offer little benefit and might be more expensive as well as less predictable (at least in the early days of the UPC).
  • Predictability: How relevant is predictability with respect to the enforcement or validity of the respective patent? Are there any national judicial precedents you could safely and favourably rely on in national proceedings? This might speak in favour of opting out since their relevance and impact may not be as clear at the UPC. Conversely, the UPC might offer a chance of overcoming unfavourable national precedents and thus offer new enforcement perspectives.
  • Licensing and Co-ownership: Is the patent owned by or licensed to different entities in different Contracting Member States? If so, opting out would help avoid a situation where enforcement by, e.g., one licensee in its limited licensed territory could provoke a central revocation action at the UPC with negative effect also for the other licensees and their licensed territories.

Incidentally, it will generally be possible to withdraw an opt-out at any time. One could hence make a case for simply opting out all of one's European Patents thus effectively maintaining the status quo, and then make a conscious decision to opt individual patents back in later if clearly beneficial in a specific situation. However, anyone considering such a "wait and see" strategy should bear in mind that opting back in will be impossible once the opted-out patent has been the subject of national infringement of revocation proceedings in a Contracting Member State. Accordingly, a well-time national revocation action or action for declaration of non-infringement could permanently prevent future central enforcement at the UPC.