When the Unified Patent Court finally opened its doors on June 1, 2023, a single multijurisdictional patent court for the assessment of both infringement and validity was established among the 18 European Union member states that have ratified the UPC Agreement, or UPCA.1
While the UPC naturally has exclusive jurisdiction over European patents, or EPs, with unitary effect, classic EPs fall for a transitional period of at least seven years, in principle, under the jurisdiction of the national courts and authorities as well as that of the UPC — i.e., they are subject to so-called parallel or competitive jurisdiction.
However, Article 83(3) of the UPCA provides patent proprietors and applicants with the option to opt out their classic EPs, or applications for such, from the new system in its entirety to preserve the status quo of exclusive jurisdiction of the national courts and authorities.
Under certain circumstances spelled out in Article 83(4) of the UPCA, such opt-out can be withdrawn later, which reestablishes parallel jurisdiction, allowing patent proprietors to regain access to the benefits of the new system, such as enjoining defendants from infringing with effect in the UPC member states' common territory in one sitting.
In a much-noticed Nov. 12, 2024, decision, the Court of Appeal of the UPC in AIM Sport Development AG v. Supponor OY has clarified the circumstances under which a withdrawal of an opt-out is possible.2 This provides helpful guidance for both patentees and potential defendants when assessing or reconsidering opt-out strategies.
Jurisdiction of the UPC
The UPC exercises exclusive jurisdiction over EPs with unitary effect, i.e., EPs that grant a single exclusive patent right uniformly enforceable within the common territory of all UPCA member states. In addition, the UPC has exclusive jurisdiction over classic EPs. A classic EP is one that granted a bundle of national patents solely enforceable in the European Patent Convention member states the EP is validated in.3
The UPC's jurisdiction over classic EPs, however, comes in two steps. During the transition period of at least seven years (i.e., until May 31, 2030, if not prolonged for another seven years upon evaluation), the UPC and the national courts and authorities of the UPCA member states both have jurisdiction, unless a classic EP is opted out from the jurisdiction of the UPC. After the transition period, the UPC will have exclusive jurisdiction for any classic EP not opted out by then.
Opt-Out and Withdrawal From Opt-Out
Starting with the so-called sunrise period (March 1, 2023, to May 31, 2023) and until the end of the transition period, a classic EP, or an application for such, can be opted-out from the jurisdiction of the UPC by lodging an application to opt out in accordance with Article 83(3) of the UPCA and Rule 5.1 of the Rules of Procedure of the UPC.4
Once the opt-out takes effect, the UPC no longer has jurisdiction over the opted out classic EP, either for the assessment of infringement or validity — throughout the transition period and beyond. The exclusive competence for the assessment of both infringement and validity rather vests with the national courts and authorities of the states the classic EP is validated in.
An opt-out can, however, be withdrawn later by lodging an application to withdraw in accordance with Article 83(4) of the UPCA and Rule 5.7 of the Rules of Procedure. Once the withdrawal takes effect, the UPC gains or regains jurisdiction over the once opted-out classic EP, reinstating the parallel or competitive jurisdiction with the national courts and authorities of the UPCA member states where the classic EP is validated. A classic EP, once opted out and then withdrawn from opt-out, may not be opted out again in the future.
Opt-out and withdrawal are only possible if no corresponding action has been brought before the UPC or a national court/authority, respectively.
The term "action" can include actions for infringement (including actions relating to the use of the invention prior to the grant and the right based on prior use of the invention), revocation (including declaration of invalidity of supplementary protection certificates5), declaration of noninfringement, and determination of damages and compensation.6 It can also include orders for evidence preservation and inspection, as well as for provisional measures.
The decisive point in time when the effectiveness of an opt-out or its withdrawal is determined is the respective date of entry of the corresponding application in the register.
It has actually never been debated that any national action filed after the UPC opened its doors on June 1, 2023, hinders the effectiveness of a withdrawal of an opt-out, irrespective of whether said action is still pending at or has been concluded prior to the date of entry of the application to withdraw the opt-out.
However, uncertainty existed in cases where the EP had been subject to an action brought before a national court prior to June 1, 2023. This has now been clarified in the recent decision from the Court of Appeal of the UPC.7
Court of Appeal Decision
In AIM Sport Development AG v. Supponor OY, a classic EP had been opted out on May 12, 2023 (i.e., during the sunrise period), which became effective with entry into the registry of the UPC on June 1, 2023. Later, on July 5, 2023, an application to withdraw was filed, along with an infringement action and a request for provisional measures.
Upon the defendants' objection, the UPC Helsinki Local Division held in the impugned orders that the UPC did not have competence over the patent at issue due to the opt-out on May 12, 2023. The withdrawal of the opt-out on July 5 that year was found to be ineffective due to there being proceedings before German national courts, which had commenced in 2020 and were still pending before the Federal Patent Court and the Munich Higher Regional Court on the dates of the opt-out and withdrawal.
The Court of Appeal set aside the impugned orders and referred the case back to the same panel of the Court of First Instance for further adjudication accepting the effectiveness of the withdrawal and thus assuming jurisdiction of the UPC.
The Court of Appeal concluded that Article 83(4) of the UPCA must be understood to mean that an earlier opt-out cannot effectively be withdrawn if an action was brought before the national court at any time during the transition period (i.e., from June 1, 2023, until at least May 31, 2030). Proceedings that were brought before national courts prior to the transitional period, whether still pending (as in this case) or not, did not hinder an effective withdrawal of an opt-out.
The Court of First Instance had, therefore, been wrong when it considered the withdrawal of the opt-out of the patent at issue to be ineffective and dismissed the case for lack of competence to hear it. In its reasoning, the Court of Appeal essentially relied on two arguments.
First, the Court of Appeal emphasized that the phrase "[u]nless an action has already been brought before a national court" in Article 83(4) must systematically be read in the context of Article 83 as a whole, which is titled "Transitional regime."
For the transition period, Article 83(1) stipulates parallel jurisdiction of the UPC and the national courts. Once the transitional period lapses, the UPC has exclusive jurisdiction. However, the lapse does not affect any action then pending before national courts as stipulated by Article 83(2).
The Court of Appeal underscored that Article 83(2) did not directly cover actions brought before national courts prior to the start of the transitional period on June 1, 2023. Rather, such actions naturally remained unaffected by the start of the UPC as they commenced during the time the national courts were exclusively competent.
With respect to Article 83(3), the Court of Appeal pointed out that it indeed allowed to lodge opt-outs before the start of the transition period, but such an opt-out would only be in effect after the transition period started. The court further stipulated that all opt-outs will need to be lodged one month before the transition period lapses.
Since, according to the Court of Appeal, Articles 83(1), (2) and (3) all referred to actions, either brought before the UPC or a national court, during the transition period, the term "action" in Article 83(4) concerning the withdrawal of an opt-out could not be understood any differently.
Second, the Court of Appeal pointed out that this result was also supported by the object and the purpose of Article 83: putting limitations on the ability to opt out and to withdraw an opt-out serves to prevent abuse of the system.
The logic behind the limitation on opt-outs, according to Article 83(3), is that once a patentee either himself used the UPC system already or allowed a third party to do so by not opting out, a subsequent opt-out to prevent further use of the UPC system would be improper and lead to legal uncertainty for third parties.
According to the Court of Appeal, the rationale behind the withdrawal of an opt-out, as provided by Article 83(4), was similar. Since an abuse of the system was not possible prior to the time the UPC existed, the term "action" in Article 83(4) concerning the withdrawal of an opt-out could only mean actions brought before national courts during the transition period.
Legal Consequences
To sum, the consequences of the decision are as follows.
If an action has already been brought before the UPC after the court opened its doors on June 1, 2023, and prior to the date of entry of the application to opt out, an opt-out is ineffective, and the concerned classic EP stays under the jurisdiction of the UPC forever, with parallel national jurisdiction until the end of the transition period.
If an action has already been brought before a national court after June 1, 2023, and prior to the date of entry of the application to withdraw the opt-out, a withdrawal of an effective opt-out is ineffective, and the concerned classic EP stays under the jurisdiction of the national court forever, with no chance to establish jurisdiction from the UPC later, neither parallel nor exclusive.
Strategic Considerations
Prior to this decision, proprietors of classic EPs that had already been involved in national proceedings had to carefully consider an opt-out, because it was not entirely clear if an opt-out could be withdrawn later due to the national litigation history of the concerned patent. This uncertainty no longer exists as the Court of Appeal has now clarified that only national actions that commenced after the start of the UPC can hinder a withdrawal of the opt-out.
This broadens the scope of the withdrawal, allowing proprietors easier reentry into the new UPC system. Proprietors should in any case consider reassessing their opt-out strategy as the expectations the strategy was based on might no longer be valid now.
The decision also affects the strategies of potential defendants that face opted-out patents. Since national actions prior to the start of the UPC do not block the withdrawal of an opt-out, potential defendants still should consider both national and UPC defensive measures. In case national proceedings had already commenced before the start of the UPC to trap an opted-out EP in the national system, such attempts may now be considered as failed.
More generally, this decision shows that the Court of Appeal provides clear guidance for UPC users and stakeholders, thus further sharpening the future of the system.
Footnotes
1 Online available: https://www.unified-patent-court.org/sites/default/files/upc_documents/agreement-on-a-unified-patent-court.pdf (last retrieved 01/30/2025).
2 Order of the Court of Appeal issued 11/12/2024 (UPC_CoA_489/2023, APL_596007/2023, UPC_CoA_500/2023, APL_596892/2023).
3 Recital 7 of UPCA: "[...] the Unified Patent Court should be a court common to the Contracting Member States and thus part of their judicial system, with exclusive competence in respect of European patents with unitary effect and European patents granted under the provisions of the EPC."
4 Online available: https://www.unified-patent-court.org/sites/default/files/upc_documents/rop_en_25_july_2022_final_consolidated_published_on_website.pdf (last retrieved 01/27/2025).
5 Applications to opt out and to withdraw an opt-out both extend to any supplementary protection certificate based on the EP (R.5.2RoP).
6 Including separate actions for determination of damages after a national court has established the existence of an infringement of a European patent and an obligation in principle for the infringer to pay damages, see Court of Appeal, Order issued on January 16, 2025, UPC_CoA_30/2024; APL_4000/2024, online available: https://www.unified-patent-court.org/sites/default/files/files/api_order/EN%20Final%20order%204000%202024%20%281%29.pdf (last retrieved 01/28/2025).
7 Order issued 11/12/2024, docket nos. UPC_CoA_489/2023, APL_596007/2023, UPC_CoA_500/2023, APL_596892/2023, online available: https://www.unified-patent-court.org/sites/default/files/files/api_order/12B21CBC1FBCB93A97568A538CAA390D_en.pdf (last retrieved 01/27/2025).
Originally published by Law360
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