The UPC will offer to patentees the opportunity to obtain pan-European injunctions. However, it will also be able to order pan-European revocations and pan-European declarations of non-infringement. Furthermore, it is going to be a completely untried and untested court, with a completely new hybrid civil law/common law procedure. As a consequence, stakeholders have been reticent about entrusting their patents to this new court, and parties are well advised to consider their strategy carefully in the lead-up to its introduction, having regard to the transitional provisions.
There are two aspects to the UPC transitional period, which will last, initially, for seven years (it is extendable by a further seven years). First, European patents (not unitary patents) will be subject to a dual jurisdiction, whereby proceedings may be brought in either the UPC or in national courts (as they are now). Second, up to one month before the end of the transitional period, it will be possible to opt out “classic” European patents (that is to say, those without unitary effect) from the UPC's jurisdiction. This would shelter them from being revoked by the UPC across all designations. On the other hand, if a European patent is opted out, it will not be possible to obtain a pan-European injunction. If a patent has been opted out, the opt-out can be withdrawn, unless national proceedings have been brought in the meantime (a likely defense tactic, and therefore it should not be assumed that an opt-out will be able to be withdrawn). Similarly, if proceedings in the UPC have been brought against a patent which has not been opted out, it cannot thereafter ever be opted out.
The decision as to whether or not to opt out is an important one. Patentees need to give this consideration, and also must decide whether to seek a unitary patent designation upon grant (which cannot be opted out). Each patentee needs to develop its own opt-out strategy, however our recommendation is to consider leaving at least some patents in the UPC system. This is in order to benefit from the possibility of obtaining a pan-European injunction (which, once it becomes available, may become increasingly important if the influence of national courts diminishes), and also so as to help shape the jurisprudence of the UPC in its early years (and not, for example, leave the case law to be overly influenced by one particular sector or business model). One possibility, in the case of key inventions where there are still applications under prosecution, is to make use of divisional applications, leaving in some patents (including designating some future applications as unitary patents), and opting out others that are for almost the same invention. National patents could also be used to hedge in this way.
The level of the fee for opting out European patents had previously been thought to be a relevant factor in the formulation of an opt-out strategy, particularly for patentees with large portfolios. However, the Preparatory Committee of the UPC announced that there will be no fee. While it might be thought that patent holders with extensive portfolios will thereby be encouraged to opt out a large number of European patents, it should be noted that significant due diligence will be required prior to opting out.
For a given European patent or patent application, it will be necessary for all proprietors or applicants, and all holders of any Supplementary Protection Certificates (SPCs), to join the application for an opt-out. Furthermore, it is all those “entitled to be registered” as proprietors (or applicants) who must be specified on the application, whether or not they have been registered as such. Therefore, due diligence will have to be conducted to establish the identity of all of the actual proprietors of each patent/application/SPC that is to be opted out, and their agreement to opt out will need to be obtained. To the extent that it is found that the proprietorship needs to be changed, assignments will have to be executed before the opt-out application is made. If the proprietorship details entered on the opt-out application form are incorrect, the rules state that the opt-out will be invalid. (Note that, as a practical matter, a party seeking to revoke a European patent may be unable to tell that the stated proprietor is incorrect and so may, on the presumption that the opt-out is valid, bring a revocation action in a national court, which may then bar it from later bringing a pan-European revocation action in the UPC—although it may not bar another party from doing so.)
We would also recommend checking license agreements to establish whether consultation with licensees about opting out, or their consent, is required. In addition, going forward, future license and collaboration agreements, and agreements transferring SPCs, should provide for who decides whether or not an application is to be made.
The UPC will be operating a “sunrise period” in order to allow opt-out applications to be made. It is currently estimated that this will start in September 2017. The opt-outs would take effect on the first day and so shelter patents from revocation actions issued on that day. If opt-out applications are not made during the sunrise period, European patents risk being challenged in the UPC from the first day.