Many owners of classic European Patents (and SPCs based on those patents) have decided to opt those patents/SPCs out of the UPC’s jurisdiction during the transitional period, so that issues of validity/infringement can only be dealt with by the relevant national court/s.
If a classic European Patent is not opted out of the UPC, it is at risk of a validity challenge in the UPC which could see it being invalidated across all participating Member States.
Opt-outs can continue to be filed during the remaining transitional period. There is no fee to opt patents out of the UPC (though there are, of course, administrative costs). Many businesses have submitted blanket opt-outs across their portfolio, but others have taken a more nuanced approach, depending upon their assessment of individual patents. Key considerations include: the strength of the relevant patents, the potential benefit of pan-EU injunctions/financial remedies in a single court action vs. the risk of pan-EU revocation; cost; and considerations relating to levels of trust in the new regime. The decision to opt out involves a consideration of the following issues:
Who can file the opt-out? The opt-out must be filed by the owner of the relevant classic European Patent. Co-owners (and separate owners of different designations of the patent) must all agree to opting out a patent. Where there are unrelated separate owners of different designations, it is likely to be preferable to opt out the patent to ensure that they can continue to manage their enforcement activities separately.
An exclusive licensee cannot file an opt-out, but its interests should be taken into account when deciding whether or not to do so (there may be provisions in the licence agreement which impact upon the patentee’s ability to opt out without reference to the licensee).
When can the opt-out be filed? The opt-out can be filed at any time during the transitional period but it must be registered, at the latest, one month before the transitional period expires. After the end of the transitional period, it will not be possible to opt out a classic European Patent and it will be subject to the exclusive jurisdiction of the UPC from that point.
How long does the opt-out last for? The opt-out will have effect for the rest of the life of the patent. What makes the opt-out even more attractive for patentees is that it need not have permanent effect. Having opted their classic European Patent out of the UPC, they can decide to opt it back in again. This means that a patentee may opt a classic European Patent out of the UPC to avoid the risk of a pan-EU revocation, but opt it back in again if it later wishes to enforce the patent on a pan-EU basis.
However, once litigation has been commenced in respect of a classic European Patent, this will ‘fix’ jurisdiction going forward. Proceedings brought by an exclusive licensee would also ‘fix’ jurisdiction in this way. Similarly, the actions of the patent owner in opting out a patent will impact on the exclusive licensee’s ability to commence litigation in its potentially preferred jurisdiction.
This means that, where an action has already been brought before the UPC (whether pending or concluded) in respect of a classic European Patent, that patent cannot be opted out of the UPC, i.e., an action before the UPC is an absolute bar to opting out. Further, where an action has been brought before a national court (whether pending or concluded) in respect of a classic European Patent, it will not be possible to withdraw an opt-out in relation to that patent.
Once an opt-out has been withdrawn, it will not be possible to opt that patent back out again.