UPC Primer for Businesses

If you do business in Europe in a field in which there exist patented technologies, and especially if you own one or more European patents in even a single European country, you should continue reading.

The European patent world is about to change in a way which will cause potentially massive disruption to your business, or at least, to the role of patent rights in business. This applies to Europe generally, but more specifically to the following countries: Austria, Belgium, Bulgaria, Denmark, Estonia, Finland, France, Germany, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Portugal, Slovenia, Sweden.

What’s changing?
The current situation is that if you want to sue a third party for infringement in any one of the above 17 countries, or to challenge the validity of someone else’s patent, this must be handled on a country by country basis. Currently, the “European” aspect of your European patent simply means that your local, country by country patent rights were obtained in a relatively cheap and efficient way, namely, by filing a single patent application in the European Patent Office. However, once registered,  your European patent would then take effect in countries selected by you, and become a local right, essentially no different than if you had filed separate patent applications in individual countries. And this means that all legal proceedings for that patent in that country would be conducted in front of a court in that country.

The above-listed countries have now become part of a new centralized European court – the Unified Patent Court or UPC – which, from June 1, 2023, will become THE court for adjudicating all legal proceedings which relate to European patents, including yours and those of your competitors. To be included you do not need to do anything as this will happen automatically.

However, you do have a choice. You can do nothing, in which case the UPC will be the default venue as mentioned, or you can inform the European Patent Office that you wish to “opt out”, namely, that regarding your own patent, you are not interested in the UPC taking charge and that you still wish to use national courts in the above 17 countries.

Risk Management
It is at this point that you ask yourself: “What should I do? Will it be better for me to opt out, or to do nothing and have my European patents handled by the UPC?” There is no single answer for any single business or any single patent. That depends on various factors, none of which can be decided for you. Once you know the pros and cons, you have to weigh which choice presents the better risk for your business.

The following is a short guide to help you reach the conclusions that are right for you and your company.

Caution: This will only be of interest if you wish to be in control of the destiny of your European patent assets. If you do not make a choice, then choices will be made for you on one, possibly two levels:

#1:          By default, your Assets will fall under the jurisdiction of the UPC[1] as of June 1, 2023. Unless you OPT OUT, an act which will remove your European patents from the jurisdiction of the UPC, and return them to the jurisdiction of the national courts of the countries in which you have or will ratify your Assets.

#2:          If you do not opt out, an action against your European Patent, such as revocation, can be initiated by a third party in the UPC. If successful, this will take effect in all of the countries in which your patent is registered, if they are members of the UPC. The only way to avoid this is to OPT OUT before such an action can be taken. Once it has started, it is too late and you will no longer be able to OPT OUT.

THEREFORE, in order to properly manage your risk by retaining control of the destiny of your European patent assets, you should consider the following when deciding to OPT OUT or STAY IN:

A. What would be the DAMAGE to your BUSINESS of losing any specific patent?
If your business relies on the existence of any or many specific patents, and you cannot afford the risk of losing all of your European patents which have become or will be separately registered in different countries (of the UPC) possibly revoked in one central proceeding before the UPC, you should consider OPTING OUT.

B. Do you have a concern as to the strength of any of your patents?
If you are concerned that a specific patent may not stand up to a challenge in Court, and you would rather keep a potentially weak patent in separate European jurisdictions rather than risk losing it in a single revocation action before the UPC, you should consider OPTING OUT.
NB          We are currently in the so-called “sunrise” period which finishes on June 1, 2023. During this period, you have the luxury of being able to opt out before your patent is exposed to the risk of a central revocation action before the UPC. So if you want to opt out, try and do it before June 1.

C. How much will it COST to sue for infringement in multiple countries?
If you wish to potentially take advantage of the lower cost of suing an infringer of your European patent in a single proceeding at the UPC, rather than suing them individually in separate countries, you should consider STAYING IN.

D. How much time will it take to sue for infringement in multiple countries?
According to the rules, cases in the UPC are to be resolved within one year, which compares very favorably with most separate country jurisdictions. If you wish to potentially take advantage of this, you should consider STAYING IN.

E. Do you wish to benefit from the expertise and patent friendliness of the UPC Judges?
The judges selected for the UPC are expected to have both the expertise and the pro-patent stance which for which German courts have become known. These positive attributes represent a vast improvement over litigation before some of the less experienced individual country judges, and who may be less favorable towards patent owners. If you wish to potentially take advantage of this, you should consider doing nothing and STAYING IN. 

In Summary

As mentioned, when weighing whether to opt out or stay in, you must consider various factors; you must ask yourself various business related questions, the answers to which only you know.

The above information is not, should not, and indeed cannot be interpreted as what you should do with your European patents. However, if you wish to discuss further, or to receive assistance should you decide to opt out, please do contact us.

[1] Current member countries are: Austria, Belgium, Bulgaria, Denmark, Estonia, Finland, France, Germany, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Portugal, Slovenia, Sweden.

The following additional are expected to become ratified members in the near future: Cyprus, Czech Republic, Greece, Hungary, Ireland, Romania, Slovakia.

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