Opt-out strategies and the UPC


Stéphane Speich, Dr. Massimo Galluppi and Dr. Mathieu Buchkremer

Opt-out strategies and the UPC

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Now is the time to consider what the Unified Patent Court means for your international patenting strategy, say Mr Stéphane Speich, Dr Massimo Galluppi and Dr Mathieu Buchkremer of Dennemeyer & Associates.

After many years of effort, the project of a patent with unitary effect across the European Union (EU) will soon become a reality, binding all participating states together in a single international jurisdiction: that of the Unified Patent Court (UPC).

The exact time the UPC will commence activities is still undecided, but it could be reasonably anticipated to start by late 2022 or early 2023. This means patent applicants in Europe should now finalise their decisions for both granted and pending European patent applications.

The UP framework

From the date the UPC begins operations, European patent owners will be able to choose to request unitary effect in the form of a Unitary Patent (UP). This request will have to be filed within one month from the date of publication of the mention of grant and, if accepted, will confer exclusive rights for the patent’s subject matter in all participating states of the UPC.

The first advantage of this new system is drastically reduced fees for meeting translation requirements. A second highlight of the UP is that a single annuity fee will be due, corresponding to the cumulated annual maintenance fees of a “classic” European patent (EP) in just four countries.

That being the case, unitary effect will not supersede the EP validation scheme due to the different territorial coverages of the European Patent Convention (EPC) and the UPC Agreement. Thus, combining unitary protection with national validation will become a frequent, if not preferred, route.

"It will also be possible to reverse opt-out requests unless an action has been brought before a national court." – Dr. Massimo Galluppi, Dr. Mathieu Buchkremer, Stéphane Speich

Centralising enforcement and litigation

The UPC will be a pan-European jurisdiction competent for ruling on the validity and infringement of patents uniformly throughout the majority of the EU. This competence will ultimately extend to cover all 24 UPC-participating states, ie, the current 27 states of the EU except Croatia, Poland and Spain.

European patent proprietors and applicants will be authorised to withdraw from the exclusive jurisdiction of the UPC during the transitional period (initially seven years, extendable to 14 years). This option to leave the UPC’s jurisdiction, known as an “opt-out”, will be effective for the entire life of the European patent.

The “sunrise period” of the UPC, the four months before the court opens its doors, marks the time when opt-out requests can first be made. These requests can be filed at any time from the beginning of the sunrise period to one month before the end of the seven (or 14) years transitional period—unless legal action has already been initiated before the UPC.

It will also be possible to reverse opt-out requests unless an action has been brought before a national court. It is worth noting that once a patent has been opted back into the UPC’s jurisdiction, this move cannot be undone.

When to opt out

Strategies depend on case-by-case assessments addressing several key factors:

  • The portfolio’s relative strength in markets of interest
  • The number of patents protecting key products
  • Use of the portfolio for differentiation, deterrence or licensing
  • The preferred litigative route

In light of these considerations, four broad responses can be drawn, mainly applicable to specific industry and company contexts.

  1. Opting-out priority assets: Pharmaceutical or biotechnological inventions are likely targets for litigation actions. Opting out is a logical strategy for companies in these industries as cost issues are often offset by the significant commercial value of the corresponding patents. Pharmaceutical products may also be eligible for supplementary protection certificates (SPCs), extending their patents beyond the usual 20-year lifetime. Decisively, no proposal for extensions on the basis of UPs has been agreed upon so far.
  2. Mixed approach: Whenever cost issues are relevant but litigation is less likely, applicants might wish to strike a balance of opted-out assets—for weaker patents — and UPC protections. Large companies in mechanics, electricity and electronics often protect their products with sizable, overlapping portfolios, so the individual value of a given European patent may be low.
  3. Deferred decision: In the case of software and / or telecommunications technologies, where development cycles are usually shorter, companies may wish to “wait and see”. It is possible to maximise forum-shopping opportunities by opting out by default and then opting back in whenever desirable.
  4. Cost-efficiency: One might expect small- to medium-sized enterprises (SMEs) to be more eager to take advantage of the savings offered by the UPC system.

Weighing the consequences of any decision to leave or remain in the UPC system should always be undertaken with the assistance of an experienced European patent attorney such as those at Dennemeyer & Associates.

Stéphane Speich is a European patent attorney with a European patent litigation certificate, a LU, FR, BE patent, trademark and design attorney, and a German patent assessor. He can be contacted at: sspeich@dennemeyer-law.com

Dr. Massimo Galluppi is a European patent attorney with a European patent litigation certificate and an Italian patent attorney. He can be contacted at: mgalluppi@dennemeyer-law.com

Dr. Mathieu Buchkremer is a patent engineer. He can be contacted at: mbuchkremer@dennemeyer-law.com

Dennemeyer, UPC, opt-out strategies, patenting, EPC, litigation, infringement, portfolio