Should I opt-out from the Unified Patent Court?

The Unitary Patent Court is planned to open on the 1st of June, 2023. The court will have jurisdiction over disputes concerning European patents with a unitary effect as well as validated European patents.

Unitary effect may be requested by the proprietor within one month of the grant of a European patent, replacing validation of the European patent in individual countries. That way, a unitary patent may be obtained. Unitary patents are always subject to the jurisdiction of the UPC and cannot be opted out. Unlike those of unitary patents, owners of validated European patents will still have an option to withdraw their patent from the jurisdiction of the UPC as a limitation to the functions of the UPC in the transitional period.

With that possibility of opting-out, the owners of validated European patents can remain under the jurisdictions of the same national courts instead of the newly operational unitary one. The opt-out clause ensures that litigation options remain the same. By default, all European patent applications and European patents will be subject to the jurisdiction of the UPC, unless a request for opting-out is filed.

The possibility of opting-out will be available from the beginning of the Sunrise Period to the end of the Transitional Period. The Sunrise Period is now projected to start on the 1st of March 2023. The Transitional Period will last for 7 years and is now projected to start on the 1st of June 2023. The Transitional Period may then be prolonged by an additional 7 years based on future consultations with users and an opinion of the Court. An opt-out will be valid for the remainder of the lifetime of the patent application and subsequent life span of the granted European patent or until the opt-out is withdrawn. A validated European patent that has been opted-out may only be litigated before the national court of the designated country.

An opt-out will not be permitted in case there is ongoing UPC litigation in connection with the European patent.

The opt-out may be withdrawn provided there is no ongoing national litigation in connection with the European patent. However, an opt-out may only be performed once, so when the opt-out is withdrawn, the European patent will fall definitively under the jurisdiction of the UPC.

Opt-out requests will be filed with the UPC Registry through an online case management system. There will be no official fee. The opt-out shall take effect upon its entry into the register. A list of all the patents that have been opted-out will be published on UPC’s website.

Co-owners will have to opt out in agreement. Licensees will not have the possibility to file such requests, they should consult the owner of the respective European patent. Independent owners of national parts of validated European patents will not be able to opt-out individually. Similarly, if an SPC exists, it will share the destiny of the European patent with regards to opting-out. Also, in case the European patent and the SPC are owned by different entities, they will have to opt-out unanimously.

Since the UPC is designed to be a unique and independent entity, it will bring about new juridical practice. That air of uncertainty may be the main reason for patent owners opting-out. Patent owners may choose to opt-out of their entire portfolio, or the patents of their choice. When an action has already been brought before the UPC in connection with the patent owner’s European patent, the owner will not be able to switch between jurisdictions until the process is concluded. That way, patent owners may as well be locked in either UPC’s or, similarly, in national jurisdictions by competitors, although the sunrise period will provide space for secure decision-making. In that sense, opting out as early as possible is a smart approach for those who decide to stay under the established national jurisdictions.

Given it was the legislator's intent with the opt-out to give an alternative to patent holders, opting out will not affect only the exclusivity of the jurisdiction of the UPC, but, rather, opted-out European patents will be removed entirely from any jurisdiction of the UPC and belong exclusively to national courts. Once the opt-out is registered it will take effect automatically in all countries of validation, and there is no need to notify the institutions of the countries concerned.

During the transitional period of this entirely new system, the opt-out option is expected to play a vital role in facilitating the implementation of the new structure.

There will be a possibility to lodge multiple and automatic opt-outs in one step to facilitate registration of the owner’s decision for a larger quantity of European patents.

It may be advisable to opt out for an owner’s most essential European patents. That way, a revocation of the pertaining patent rights can be made more complicated, and patent owners may have a better protection for their most important rights.

Leaving at least some patents under the UPC jurisdiction may produce the advantage of getting familiar with the court’s modus operandi through first-hand experience as well as potentially influence its case-law. The main risk to be considered is being exposed to the possibility of central revocation.

If the patent owner is not afraid of a counterclaim of invalidity, it will be advisable to choose the UPC over the various national courts, because that way, a single action of the court will be enforceable in several jurisdictions. The financial and operational burden of carrying out our parallel processes in different jurisdictions will thus be ousted. Although the costs of proceedings before the UPC are expected to be higher than many of its national counterparts, it is also clear that for patent owners with EPs validated in several countries, joining the UPC will actually result in a more economical solution.