Forum-shopping at the UPC
Article 1 of the Unified Patent Court (UPC) agreement declares the UPC to be a “court common to the contracting member states”. However, within the “common” court there will be numerous divisions, a number of which may be competent to hear any given dispute. Yet, each division will have its own particular characteristics. This article considers the scope for ‘division-shopping’ within the UPC and the factors that litigants should keep in mind when doing so.
There are currently three ways in which the owner of an invention can obtain pan-EU patent protection. The first is to file separate patent applications in each of the jurisdictions in which a patent is desired. The second is for the owner of the invention to make a single application under the Patent Cooperation Treaty (PCT). This process allows applicants to apply for patent protection in any number of the countries that are signatories to the PCT through one central application. The application is examined separately in each jurisdiction and, if successful, the applicant obtains rights in each jurisdiction which are equivalent to having a national patent in that jurisdiction.
The final option is the European patent route. Under this system the application process is fully centralised. The applicant applies to the European Patent Office (EPO), which examines the application on behalf of all the member countries of the European Patent Convention that the applicant has designated. If the application is successful, the applicant will have rights equivalent to a national patent in each designated jurisdiction.
Common to each of these existing methods is that the rights the applicant obtains are purely national, so they differ between the designated jurisdictions. In addition, patent owners must bring enforcement proceedings in national courts. This is where the European patent with unitary effect (the unitary patent) will significantly differ. EU law will govern the unitary patent and the UPC will hear disputes relating to it. The UPC will also have exclusive jurisdiction over European patents (subject to opt-outs, see below).
Structure of the UPC
The UPC will be made up of a Court of First Instance, a Court of Appeal, and a Registry. The Court of First Instance will have a central division (with its seat in Paris and sections in London and Munich), regional divisions and local divisions. Litigants will be keen to exploit flexibility within the system to ensure that their dispute is heard in their preferred division.
Every contracting member state is entitled to set up one local division and may be able to set up additional local divisions depending on the number of patent cases that are heard in that state. A large number of contracting states are expected to host local divisions, including the UK, Germany, the Netherlands, Austria, Italy, Belgium, and a number of others.
Contracting states can also club together to set up a regional division. Sweden, Estonia, Latvia and Lithuania have agreed to establish a ‘Nordic-Baltic’ regional division and Bulgaria, Romania, Slovenia, Greece and Cyprus are also expected to form a regional division.
Forum-shopping: the patentee
Article 33 of the UPC agreement establishes which divisions of the Court of First Instance have competence in relation to each kind of action over which the UPC has jurisdiction. Actions for actual or threatened infringement are to be brought before:
- The local or regional division for any state(s) in which the infringement is alleged to have occurred/been threatened or (if the relevant state does not have a local or regional division) the central division; or
- The local or regional division for the state in which the defendant (or any one of the defendants) is based or (if the defendant has no base in a contracting state or the relevant contracting state has no local or regional division) the central division.
So, there are a number of situations in which a patentee may have a choice of where to bring a claim for infringement, for example:
- When infringement is alleged to have occurred in a number of contracting states;
- When the defendant is based in one contracting state and infringement is alleged to have occurred in another; and
- When there are a number of defendants based in different contracting states.
In many cases the patentee will be able to choose between various local/regional divisions and the central division when bringing an infringement claim. This is of crucial importance as later claims between the same parties and relating to the same patent will generally be inadmissible if brought before a different division.
Forum-shopping: the alleged infringer
An alleged infringer’s options are perhaps best summarised as (i) acceding to the patentee’s choice of forum; or (ii) trying to force proceedings to take place before the central division.
To try to ensure the infringement proceedings are heard by the central division an alleged infringer can bring an action for a declaration of non-infringement. Such actions must be brought before the central division (unless the patentee has already brought the equivalent infringement claim in a local/regional division). However, the patentee can easily overcome this by bringing an equivalent claim for infringement before a local or regional division within three months which, according to article 33(6) of the UPC agreement, will cause the non-infringement action before the central division to be stayed.
According to the latest (18th) draft of the rules of procedure of the UPC, if the patentee brings a claim outside the three-month period, the judges hearing each claim are to consult and may stay either the central division or the local/regional division proceedings.
Another option is available to a defendant that has been sued for infringement when the infringement action has been brought before a regional division and the acts said to constitute infringement have occurred in the territories of three or more regional divisions. In such cases the defendant can request that the proceedings be transferred to the central division. However, it is not yet clear that there will actually be three regional divisions, so this may in reality not be an option at all.
Bringing a counterclaim for revocation may also affect the division in which an infringement claim is heard. If an alleged infringer brings such a counterclaim in proceedings before a regional or local office, the regional or local office has the discretion to:
i. Hear the infringement and revocation actions together—that is, keep both claims in that local/regional division;
ii. Refer both the revocation and infringement action to the central division; or
iii. Bifurcate—that is, to refer the revocation action only to the central division but keep the infringement action in the local/regional division. Although for the infringement part of the claim to be transferred to the central division the parties (as well as the local/regional division) must agree, the patentee may well capitulate if faced with a strong indication from the court.
For most actions it is also open to the parties to agree between themselves which division will hear the dispute.
Transitional provisions
In addition, the UPC agreement provides for a seven-year transitional period (which may be extended by a further seven years). During this period, in addition to the UPC, national courts will continue to have jurisdiction over certain claims relating to European patents (including infringement and revocation actions).
“In many cases the patentee will be able to choose between various local/regional divisions and the central division when bringing an infringement claim.”
Owners of existing European patents will also be able to opt out of the UPC regime, in which case it will be possible to litigate those patents only in national courts. Litigants (and European patent owners generally) should keep these options in mind. An important consideration in this respect is the greater likelihood of obtaining a cross-border injunction before the UPC than in national courts.
Judges
The UPC will choose from a pool of legally and technically qualified judges from different contracting states. Nevertheless the location of a division will have a bearing on the composition of the panel of three judges hearing each case. This composition is likely to be a key factor when weighing up the merits of each available forum.
Where a local division is based in a state in which an average of 50 or more patent cases per year have been started, two of the panel must be nationals of that state, with one judge allocated from the pool. In states that hear fewer patent cases, only one of the panel must be a national of that state. For regional divisions, two judges on the panel will be nationals of a state in that region.
In the central division there is no requirement for judges of a particular nationality, but the panel will include a technically qualified judge. So, in certain divisions there will be some certainty on the backgrounds of the panel, whereas in others it may be more the luck of the draw.
While the law applied by each panel of judges will be the same, and the rules of procedure will be consistent across all divisions, the background of the judges will inevitably have a bearing on how they interpret the relevant law and procedure, as well as on their attitudes towards case management.
Although some of these differences may diminish over time as the body of jurisprudence from the UPC Court of Appeal develops and serves to iron out inconsistencies, once the UPC is up and running certain divisions may develop reputations for having particular attitudes in relation to, for example, bifurcation, the appointment of technical expert judges, transfer to the central division, making references to the Court of Justice of the European Union, and remedies (both interim and final). Some divisions may also become known more generally as being pro- or anti-patentee.
On top of this, judges from states that have historically been home to large amounts of patent litigation (such as France, the UK, Germany and the Netherlands) may have a greater depth of patent litigation experience than others. Therefore, certain divisions may gain a reputation for delivering particularly ‘appeal-proof’ judgments—offering greater certainty to the parties.
Language
Litigants may also be influenced by the language regimes of the various divisions. Article 51 of the UPC agreement provides that the UPC will provide interpretation facilities, but if you want a top senior counsel to present your case it is clearly preferable for their words to hit the judges directly; interpretation inevitably moderates their impact. Similarly, a patentee may choose a division with a language regime which it expects to cause difficulty for the defendant.
The UPC agreement and rules of procedure do, however, include a number of mechanisms for the language of proceedings to be switched to the language in which the patent was granted.
Speed of proceedings
The caseload of the UPC will vary from division to division. This will affect the time it takes for cases to progress and come to a conclusion. Litigants may therefore be influenced by a desire to speed up or slow down proceedings. However, with uniform rules of procedure, timing is likely to vary less between divisions of the UPC than between national courts in the current system.
While we will have to wait until the UPC is up and running for some of the characteristics of each division to become apparent, certain ways in which the divisions of the UPC will differ are already clear (and some are, perhaps, predictable). During the transitional period in particular, patentees are likely to have an array of options when forum-shopping and a full analysis of each option may empower them to tip proceedings in their favour. Litigants will still be jostling for position within the UPC.
Paul Kavanagh is a partner at Dechert. He can be contacted at: paul.kavanagh@dechert.com
Dylan Balbirnie is an associate at Dechert. He can be contacted at: dylan.balbirnie@dechert.com
