Litigation Before The Unified Patent Court: What Will It Look Like?

By: Francesca Giovannini


As is known, the UK and Germany have still to ratify the Unified Patent Court (UPC) Agreement before it can enter into force. Germany is expected to ratify after the UK has completed the ratification process. If the UK’s intention to ratify the UPC Agreement declared last November is maintained, the UK could ratify it after the elections called for June 8, presumably between August and September 2017. If this is the case, the Court may start operation between December 2017-January 2018, making the sunrise period for opting European patents and applications out of its exclusive jurisdiction start as early as September 2017-October 2017.

The UPC will have exclusive jurisdiction over any European patent having a unitary effect. These can be obtained upon the owner’s request, within one month from the publication of the mention of the grant of a European patent, and upon submission of a translation into English if the patent is in French or German, or into any of the official languages of the member states of the European Union if the patent is in English. This translation will be required only during a six-year transitional period (extendable up to twelve years) and may be the same text prepared for the purpose of validating the European patent in an EU non-participating member state. European patents having a unitary effect, unlike classical European patents, will offer unitary protection for the whole UPC territory, i.e., for all of the countries which have ratified the UPC Agreement. There will be a concurrent jurisdiction of the UPC and national Courts for non opted-out European patents, during a seven-years transition period (extendable up to fourteen), for lodging, at the claimant’s choice, infringement actions enforcing these patents, revocation actions challenging the validity thereof, non-infringement actions, as well as actions for provisional and protective measures and injunctions. The UPC, however, will have jurisdiction only for infringement facts subsequent to the entry into force of the UPC Agreement.

In addition to patent owners, exclusive licensees will also be entitled to bring infringement actions before the Court, unless the licensing agreement provides otherwise and provided that the patent owner is given prior notice. Non-exclusive licensees will be also entitled, provided the patent owner is given prior notice and the license agreement expressly permits it. The official fees of an infringement action may amount to €11,000 (fixed fee) plus €2,500 (additional value-based fee) where the value of the case, in respect of all patents in issue, is from €500,000 to €750,000. The value of the case should be determined by a reasonable royalty calculation. The official fees of an infringement action may be higher, up to €11,000 plus €325,000, if the value of the case is more than €50 million. The same fee system based on a fixed fee and an additional value-based fee, but with different fee amounts, is provided also for counterclaims for revocation, revocation actions and declarations for non-infringement. A 60% reduction is provided for small and micro-enterprises as defined in Title I of the Annex of the Recommendation of the European Commission n° 2003/361 of 6 May 2003.

First-instance proceedings will be composed of three phases: a written procedure requiring the parties to state their full cases in detail in writing, an interim procedure managed by a judge-rapporteur, and an oral hearing including some possibilities for cross-examination and hearing witnesses. These three phases are expected to be faster than in most of the national proceedings in Europe because a decision should be issued within twelve months of the pleading. A separate proceeding will, however, be necessary to determine the damages. Appeal proceedings are also provided by the law to appeal against first-instance decisions, essentially based on the evidence already on file. In fact, little room is expected to be available for submitting new evidence at the appeal stage. Following the appeal, the Court of appeal can only refer EU points of law to the European Court of Justice. There is no right of appeal from a decision of the Court of Appeal. All pleadings and documents will have to be electronically filed and will be immediately accessible to the public, unless a specific request not to disclose confidential information is filed.

Since the first-instance Court is structured in local/regional divisions and a central division, having a seat in Paris and two branches in Munich and London competent for different types of technology, there will be substantial room for forum shopping. However, some actions can be brought before specific divisions only. In particular, claimants may choose a local/regional division based on the place where the actual or threatened infringement has occurred or may occur and on the place where the defendant is resident. The central division will be competent whenever the defendant is domiciled outside the European Union, but also if the relevant member state does not participate in any local/regional division, and for all revocation proceedings or declarations of non-infringement. However, the parties may agree to bring an action before a division of their choice, including the central division.

Not all states have communicated yet whether they intend to establish a local division or participate with further states in a common regional division. Based on the current status, for example, an alleged infringer domiciled in Portugal may be sued before the central division in London if the patent is directed to a chemical composition, in Paris if the patent is directed to a process pertaining to optics, and in Munich if the patent is directed to a mechanical device. This is because Portugal, which has already ratified the UPC Agreement, has neither established any local division nor has communicated yet the intention of participating in a regional division. The choice of the division will impact the language of the proceedings because cases may be heard in a local language or in at least one EPO language before local/regional divisions, and in the language of the patent, i.e., English, French or German, before the central division. For example, the local divisions in Italy and in Finland, which have also already ratified the UPC Agreement, will not only use English, but also Italian on the one side and Finnish and Swedish on the other side.

An alleged infringer sued before a local/regional division may challenge the validity of the patent by way of counterclaim before the same local/regional division chosen by the claimant. In such cases, the Court has the discretion to either proceed with both infringement and validity issues before the same local/regional division (with a technically qualified judge) or refer the invalidity counterclaim to the central division and, in the latter case, either stay the infringement proceedings or proceed with the infringement proceedings. If the parties agree, however, the Court may refer the whole case to the central division.

Before an action on the merits, a claimant may request a French-style seizure (“saisie” is the word used by the UPC Agreement) anywhere in the territory of the UPC with the aim of collecting evidence before deciding to proceed with the action. In the French seizure, a bailiff accompanied by an expert may enter the premises of the alleged infringer unannounced and describe and seize the allegedly infringing products, devices used or products obtained in the allegedly-infringing processes as well as with the seizure of related documents attesting the infringement. However, only the case law will determine the extent of the use of ex parte “saisies” pre-actions.

Provisional measures will be available but it will be in the Court’s discretion to grant them, subject to factors such as reasonable evidence, weighing up the interests of the parties, and the promptness of a claimant’s initiative. In order to prevent being subjected to provisional measures without being heard, a protective letter should be filed with the UPC Registry to request to be informed of any requests for injunctions. Also, permanent injunctions will be available, although it is still unclear under which conditions.

Although only the case law will provide useful indications as to the way the Court may exercise its discretion in this and other circumstances, it is not difficult to imagine that a certain role will at least partially be played by the previous experience gathered at the national level by the judges composing the panel, and thus ultimately by their nationalities. Since German judges are the judges mostly familiar with the bifurcation procedure, it is possible that panels having two German judges might be more inclined to refer the invalidity counterclaim to the central division and not to stay infringement proceedings.

The first-instance judicial panels will be composed of three judges of different nationalities, namely, one national judge and two non-national judges in local divisions having less than 50 cases per year in three successive years, two national judges and one non-national judge in local divisions having more than 50 cases per year in three successive years (such as in Germany, France, UK, Italy and the Netherlands) as well as in all regional divisions. An additional technical judge will make up part of the panel when a counterclaim for revocation is brought, upon request by one of the parties or on the panel’s initiative. The central division will have two legal judges and one technical judge, while the Court of Appeal will have three legal judges and two technical judges.

As to patents as an object of property, it is important to know that the applicable law will be determined by the place of residence or principal place of business on the filing date, and that, in case of co-owned inventions, the place of residence or principal place of business of the firstly-named applicant will determine the applicable law. While, in case of entities having no residence or business place in Europe, German law will be applied.

In view of the above, patent owners of non-opted out European patents and patent owners of European patent applications that will be eligible for unitary protection because granted after the entry into force of the UPC Agreement should be prepared and review a number of details of their established patent practice. Relevant factors include, among others, the language in which European or Euro-PCT patent applications should be drafted, the identification of the cases for which classical European patents will still be convenient or desirable and of the cases for which European patents with unitary effect might be preferable instead, the contents of joint research agreements, the contents of the licensing agreements of already existing and of future patent rights, for example in terms of territories and entitlement to bring infringement actions by the licensees.

All entities doing business in any of the states making part of the UPC by producing, offering, selling or using products or processes which are the subject-matter of the above-mentioned patents should also be prepared, and should in particular monitor the contents and status of third parties rights and consider the possibility of filing protective letters.