UPC: Should pending patent applications be opted-out?

Now that there is a definite start date for the Unified Patent Court (UPC) of 1 June 2023, and the sunrise period began on 1 March 2023, Appleyard Lees clients are deciding whether or not to opt out their existing European patents from the jurisdiction of the UPC.

To date, most of the discussion has centred around opting out existing granted European patents. However, some of our clients have also been considering whether they should opt out their pending European patent applications. We, therefore, consider below some of the issues that should be considered in this regard.

Information on the UPC and the opt out process can be found in our FAQs  here.

Can any European patent application be opted out?

A European patent application must have been published for an opt out to be filed.

Any opt out request must be filed by the true owner (as is the case for a European patent).

Why opt out a European patent application?

Filing an opt out for a European patent enables a patent owner to avoid infringement or validity actions before the UPC (for any such patent that is effective in one or more UPC member states). Such actions should not apply to pending European patent applications, so it could be concluded that there is no need to opt these out, at least before allowance.

However, some patent owners are choosing to opt out their European patent applications in case of any actions at the UPC.

It is, at present, not entirely clear what actions could be taken at the UPC against a pending European patent application. One possibility is an action relating to the grant of an Arrow declaration.

An Arrow declaration is a declaration by a court that a specific intended commercial product or process would have been obvious at a specific date. Such declarations have been granted by the UK courts and it is possible (but not certain) that the UPC will grant these too.

Once an action is taken at the UPC, this prevents an opt out being filed. Thus, a third party may take an action against an application in order to block a later opt out and lock the application (and eventual patent) into the jurisdiction of the UPC.

By doing this, the third party could ensure that they can file a revocation action at the UPC. Cautious patent owners may therefore decide to opt out their European patent applications to avoid this possibility.

This scenario may however seem less likely when considering that a patent can be revoked in all EPC contracting states through the EPO opposition procedure at a lower cost (the UPC fees currently being set at €20,000 ($21,408) for a revocation action). Should an action be taken against a pending application, there is always the chance to file a divisional application too.

As it is unusual for actions to be taken in respect of pending European patent applications, the risk associated with not opting out these seems to be low and in most cases it is likely that there is little to be gained by opting out a pending application.

It may however be prudent to file opt outs upon issuance of a notice of allowance, eg, at around the same time as responding to the Rule 71(3) EPC communication. Of course, if a UP is requested, then this will fall under the jurisdiction of the UPC and no opt out can be requested.

However, if the patent is validated by the traditional route in one or more UPC member states, then opt outs may be desired. If opt outs are filed before grant, this would ensure that the patent is opted out at grant and prevent an action at the UPC immediately upon grant.

Are there any disadvantages to opting out a European patent application?

Whilst an opt out can be withdrawn, it is not then possible to file a second opt out. If a European patent application is opted out early in its lifetime, then this could limit the options for the owner(s) going forward.

For example, if there is a change of strategy or a change of ownership, whereby an opt out is withdrawn, this would prevent a further opt out in future. Thus, it is worthwhile considering the likely future of an application (and eventual patent) when considering opting out an application.

Also, if an early opt out of a pending European patent application is filed, an action may be later taken at a national court which would block the withdrawal of the opt out in the case that the patent owner wanted to enforce the patent.

Thus, filing an early opt out in relation to a pending European patent application may unnecessarily limit the options of the patentee going forward.

If a European application has been opted out can the applicant then obtain a Unitary Patent (UP)?

If a European patent application has been opted out of the UPC, it is still possible to obtain a UP after grant. The opt out could be withdrawn prior to requesting a UP, but it is understood that this is not essential because, in this case, a request for a UP would be deemed as an automatic withdrawal of the opt out request. Of course, the UP would be under the jurisdiction of the UPC.

Summary

We recommend considering whether opt outs should be filed at the Rule 71(3) EPC communication stage unless there are commercial reasons and/or concerns about pre-grant action that would warrant a cautious approach and an earlier opt out.

We recommend discussing the options with your European patent attorney if necessary.

Kate Hickinson is a partner at Appleyard Lees. She can be contacted at:  kate.hickinson@appleyardlees.com