Decision making at the UPC: Life sciences sector
Companies in the life sciences sector show a healthy appetite to engage with the new court system as the Unified Patent Court opens its doors and Unitary Patents begin to grant – is it time for more companies to join them?

The announcement of a new, central, pan-EU forum in which to litigate European patents initially invoked mixed reactions from companies in the life sciences sector. On the one hand, many companies with active patent portfolios were thrilled at the prospect of finally having access to a fast and efficient route by which to enforce their most valuable patents across the majority of Europe in a single action. The benefits of the new UPC court system resonated in particular with those working in the pharmaceutical and biotechnology fields where patents are often validated widely across most, if not all, jurisdictions in Europe.

The potential to finally move away from the old system of expensive and protracted litigation proceedings having to be brought before individual national courts in each separate state, and the diverging decisions that would often result, along with the promise of speedy and efficient court proceedings culminating in a single decision enforceable across at least seventeen of the EU member states was music to the ears of the life sciences sector. But as with any new and unfamiliar system, the question on everyone’s mind was – would anyone actually make use of it?

As discussed in detail in our earlier article, a big draw of the new UPC system is the possibility for patentees to centrally enforce their patents, especially through preliminary injunctions and final injunctions which, if granted, would give patentees the power to close down markets across a large portion of Europe in one legal action. Another key benefit of the UPC’s wide reaching scope is that a single threat or act of infringement in just one of the UPC states will enable the UPC to grant a single injunction that can be enforced in all of the member states that have ratified the UPC agreement. Successful enforcement before the UPC can therefore apply significant pressure to any generic companies looking to enter the market, particularly given the wide geographical scope of the enforcement measures on offer and this will, in turn, place patentees in a much stronger position when it comes to any potential negotiations or settlement discussions.

However, all too familiar with the wide-reaching and significant impact of a revocation decision from established central forums like the EPO’s Opposition Divisions and Boards of Appeal, the life sciences sector was, understandably, hesitant to place any of its most important patents under the jurisdiction of another legal body having the power to issue a single revocation decision that would immediately remove its patents from such a large portion of the European market[1]. This was especially true of a new and unfamiliar multi-jurisdictional court forum like the UPC which brings together judges from a suite of different national courts across Europe, who might potentially be influenced by the local laws of their home country, especially in the early days of the court’s infancy, until a sufficient body of case law and precedent has developed.

As part of the transitional provisions afforded by the UPC, patent owners are given the power to decide whether they want to allow their patents to fall under the jurisdiction of the new UPC or whether to “opt out” of the whole process in favour of the old state-by-state litigation proceedings. Given the inevitable uncertainties that come from any new system, the presumption was that patentees, especially those in the life sciences sector, would pro-actively shield their most valuable patents from the jurisdiction of the new court system, especially in its early years to allow for a better understanding of the court’s systems and processes to develop. Related to this, initial assumptions were similarly that uptake of the new complimentary Unitary Patent offered by the EPO would be low in the life sciences sector, despite the large cost savings available where validation in most if not all the available territories is desired, because unitary patents automatically fall under the jurisdiction of the UPC and no “opt out” option would be available for such patents.

Surprisingly, while the above reflects commentators’ general assumptions regarding the life science sector’s (lack of) appetite to engage with the new UPC system, current statistics paint a very different picture. Of the cases that have been lodged on the UPC’s CMS system since the UPC opened its doors on 1st June 2023, around a quarter of those are cases involving companies in the life sciences sector. The cases represent a mix of infringement proceedings and revocation proceedings demonstrating that both patentees and those on the other side of the fence looking to clear the way and possibly launch competing products, are interested in making use of the new court system and taking advantage of the benefits it has to offer.

Current data provided by the EPO on its unitary patent dashboard[2] paints a similarly encouraging picture with respect to the new unitary patents. Since 1st June 2023, over ten thousand unitary patents have been granted and, of those, more than nineteen percent relate to “Health” (19.1%), beaten only by “Materials & Production” (19.8%) and “Infrastructure & Mechanics” (20.3%).

While companies have the option for the next seven, and potentially 14 years of the transitional period(s) to ensure that their most valuable patents are opted out of the UPC’s jurisdiction and are therefore immune to a central revocation decision from the UPC, many will continue to make use of this option to shield their most important cases. However, it is important to remember that this strategy is not without its own disadvantages and risks. In particular, pursuing this approach comes at the cost of foregoing all the positive benefits that the UPC has to offer from an enforcement perspective, as described in detail in our earlier article.

Companies deploying the “opt out” strategy for the time being should also keep in mind that, although there is, by default, the option to reverse this strategic decision at a later date by withdrawing an opt out request i.e., to place patents back under the jurisdiction of the UPC if desired, third parties can take procedural steps to block patentees from doing so. By initiating legal proceedings against an opted-out patent before the national courts, third parties can essentially “pin” a patent outside the jurisdiction of the UPC and the patentee is then prevented from being able to enforce that same patent centrally at the UPC in the future (Article 83(4) UPCA), an outcome that could be desirable for generic companies looking to come on to the market. In a recent decision issued by the Helsinki local division last month[3], the judges interpreted Article 83(4) UPCA as also preventing the withdrawal of opt out requests on any patents for which earlier national proceedings were filed prior to the UPC openings its doors on 1st June 2023. If this interpretation of Article 83(4) is endorsed by the courts going forwards, it could potentially have an impact on a large number of the patents for which opt out requests have already been filed, especially commercially valuable ones for which there may well have already been earlier national litigation proceedings at some point prior to 1st June 2023.

In view of these strategic considerations, many companies in the life sciences sector have now started to re-evaluate their UPC opt out decisions and think more critically and strategically about the merits of each individual case in their portfolios to identify potential candidates for new Unitary Patents or classical EP patents that will not be opted out of the UPC in light of the first few steps that have been taken by this new court. Companies are now appreciating more that there might perhaps be strategic reasons in favour of converting certain categories of European applications to Unitary Patents upon grant rather than pursuing classical EPs, or in the case of already granted patents, leaving some of those patents within the jurisdiction of the UPC rather than opting them all out, to retain access to the benefits that the UPC has to offer patentees from an enforcement perspective.

If patentees do want to think again about their opt out strategy and perhaps consider a hybrid approach to their involvement with the UPC, which sorts of patents might we see the UPC having jurisdiction over in the coming years?

New Chemical Entity (NCE) Patents – Will we ever see such patents being litigated at the UPC while the option to “opt out” remains available?

In the vast majority of cases, new chemical entity (NCE) / product per se patents are going to be strong candidates for an opt out application. This is especially true if an application for a supplementary protection certificate (SPC) has been filed on the basis of the granted patent.

One potential caveat to that default strategy though might be situations where the patent has already successfully survived EPO opposition (and appeal) proceedings. The expectation is that the UPC will follow the EPO’s approach to validity. Therefore, if a patent has made it through validity challenges from one or more opponents at the EPO unscathed, this might give the patentee a sufficient level of confidence to enforce that patent centrally at the UPC, despite the risk of a counter claim for revocation. This is especially true in situations where there is a significant threat of infringement e.g., from the imminent launch of a competing generic product. In the pending UPC cases, the Court has demonstrated that it can be very reactive when faced with a threat of infringement by allowing patentees provisional measures ex parte (Milan and Dusseldorf local divisions) within 24-48 hours, and by hearing inter partes preliminary injunctions within 3 months of service (Vienna, Helsinki, and Munich local divisions).  Indeed, the current infringement cases pending before the UPC are cases where patentees thought that their infringement arguments were relatively strong. The same would be true for many NCE patents, where one would expect that proof of infringement should generally be quite easy to obtain. So, for those patents that have also had their validity reconfirmed previously by an opposition division or board of appeal, enforcing centrally at the UPC might be an attractive option.

Another factor that will play into these strategic considerations is the status of the wider patent portfolio. For example, if there are other cases in the wider portfolio offering parallel layers of protection should the NCE patent fall, this might give patentees more comfort in enforcing the NCE patent at the UPC. Similarly, if there are divisional applications pending/granted that sit alongside the patent in question, there is potentially less risk in enforcing the NCE patent centrally at the UPC, especially where there is scope to claim subject-matter in those divisional applications which differs significantly enough from that in the parent patent, such that any negative decision on the parent would not have a detrimental impact on at least the perceived validity of the divisional(s). These are all additional considerations that patentees need to weigh up when deciding on their opt out strategy and could perhaps tip the balance in favour of placing an NCE patent within the jurisdiction of the UPC, for the upside of having access to a broader suite of potential enforcement tools with wider-reaching effects across a large portion of Europe.

Other considerations that might sway a patentee in favour of placing an NCE patent within the jurisdiction of the UPC include whether the patent in question is close to expiry and/or whether the threat of infringement is very high/real. If the patent is close to expiry (and does not have an SPC) then the potential downsides of any central revocation decision at that point in time are reduced and may point in favour of using the UPC for the beneficial enforcement tools it provides, especially when, in some key EU jurisdictions, it would not be possible to obtain a decision on infringement prior to patent expiry. Likewise, if the threat of infringement is very high/real patentees might decide to prioritise the chance to retain market exclusivity quickly and efficiently across a larger percentage of the EU through a single enforcement action and place even an NCE patent under the jurisdiction of the UPC, rather than awaiting decisions from the EPO’s Opposition Divisions and/or Boards of Appeal to confirm the validity of the patents before seeking to enforce them.

Pharmaceutical composition and formulation patents – Are these perhaps now of greater value than previously recognised?

Later filed patents to pharmaceutical compositions or formulations are often harder to enforce and may be easier for other companies to “work-around”. This can mean that there is often a reduced appetite to try and enforce such patents across the different national courts in Europe, especially given the huge litigation costs involved with running parallel cases. A particular difficulty with enforcing this category of patents can be obtaining sufficient evidence of infringement, and this can be a significant barrier to enforcing such patents in certain national courts, depending on the evidence gathering tools available in a given jurisdiction. Another important factor to consider when deciding whether (and where) to enforce this category of patents is the different approaches that the national courts themselves take with respect to the patentability of such composition/formulation inventions, and the divergent decisions that can result. All in all, these considerations can lead companies to take the decision that it is simply not cost-effective or otherwise worthwhile to try and enforce composition or formulation patents across each of the various jurisdictions in Europe.

It is for exactly these reasons though that such patents might be ideal candidates to be enforced at the UPC; especially if there is clear evidence of infringement and the risk of revocation might perhaps be less of a concern. If the wider patent portfolio can tolerate any such revocation e.g., because the portfolio also contains one or more of the other categories of patent discussed here and/or related divisional applications to help mitigate the risks, this might bolster the patentee’s confidence in seeking to enforce such composition/formulation patents centrally at the UPC. The cost considerations might also point in favour of converting such patents to UPs upon grant to take advantage of the significant cost savings on validation and renewals that UPs offer.

Medical use patents – are there any situations where it would be beneficial to place these under the jurisdiction of the UPC?

As those familiar with litigating medical use patents will be aware, there can be significant variations in national law when it comes to validity and enforcement of second medical use claims. To date there has been a lack of harmonisation across Europe with respect to the tests used to assess infringement. Even if patents withstand validity challenges and can be enforced in the courts, issues such as “skinny labelling” can make it difficult to enforce medical use patents consistently across the various jurisdictions in Europe. The UPC may address some or all of these concerns, although it is currently too early to see the direction of travel.

As discussed in our earlier article, at this early stage in the court’s timeline and with no relevant cases having yet been brought before the court to set any precedent, it is not yet known how the UPC will approach issues relating to infringement of medical use claims. It will also have to be seen whether the location of the courts in which the first infringement proceedings are commenced will have an impact on the way in which the judges (who may be influenced by their own national law) determine infringement. Unfortunately, due to differing approaches to labelling of medicinal products across the EU states, there may not be just one consistent “infringement” across the EU states, and this will only further complicate any enforcement decisions issued by the UPC. Only time will tell how the UPC approaches assessment of infringement and enforcement of such patents across the various states. In the meantime, we are likely to see many of the medical use patents, especially those covering commercial products, being opted out of the UPC’s jurisdiction.

Method of Synthesis / Process Patents – Can patentees now more easily gather the necessary evidence of infringement to bring an enforcement action in Europe?

Many of the considerations discussed above for composition/formulation patents apply also to method of synthesis/process patents. This is another category of patent which, quite often, is considered as being of lower commercial value than the NCE and medical use patents in a patent portfolio. Two main reasons for this are often (1) the high risk of third parties finding work-arounds to avoid infringement and (2) the significant difficulty in gathering sufficient evidence of a suspected infringement before trying to enforce such patents before the national courts.

Once again, this is a situation where the UPC might offer patentees real advantages and the opportunity to maximise the value of these types of patents where previously they might have been undervalued and underutilised. Enforcement through the UPC is expected to provide patentees with a much broader suite of options for gathering evidence of infringement. As discussed in more detail in our recent article there is a much greater choice of provisional measures available before the UPC than before many of the national courts such as seizing goods, freezing assets, issuing orders to produce documents, and discovery, all of which can be incredibly valuable to a patentee when they may otherwise be lacking definitive proof of infringement.

The evidence gathered by patentees can then be used at the UPC to enforce the patent centrally across all the participating EU member states whereas before, enforcement in many of those jurisdictions would have been a lot more difficult because the specific evidence gathering tools needed would not have been available and evidence of infringement would need to be obtained in each separate jurisdiction in which the patent was to be enforced. In contrast, the UPC can act on evidence of infringement in just one of the UPC member states but then make a ruling that takes effect in all the member states that have ratified the UPC agreement. A product that results directly from a patented method can be an infringement of the patented method, even if the method is used outside the UPC’s territory. Therefore, using the UPC’s evidence gathering tools to determine whether the patented method of synthesis was indeed used may allow patentees to block even competitor’s products that are being produced outside of the UPC.

The UPC is therefore potentially a valuable forum in which to enforce method of synthesis/process patents.

And what about parties on the other side looking to clear the way, what options are available to them to make the most of the UPC?

Obviously, through the opt-out decision, the patentee is largely in control of whether a given patent may fall under the jurisdiction of the UPC and whether third parties are therefore able to centrally challenge the validity of a patent before the UPC rather than in the individual national courts. While many commentators have discussed whether the validity of an opt out request might be challenged at the UPC, we are not aware of any such challenges to date. Of course, once the transitional period ends in seven (or potentially as long as 14 years), patentees will no longer have the ability to withdraw patents from the UPC’s jurisdiction and this will hugely open up the number of options available to parties who are looking to challenge a patent centrally at the UPC.

Until that time, there are a limited number of steps that third parties can take if they are interested in seeking to revoke a patent before the UPC. One of these involves much closer monitoring of competitor’s patent portfolios, especially as cases approach grant to see if opt outs or unitary patents are requested. Companies might also consider monitoring cases of interest for any withdrawal of opt out requests, as this could be a clear indicator that the patentee is seeking to be more proactive with their patent rights and potentially enforce them centrally at the UPC. Indeed, in most of the pending UPC cases, the patents were initially opted out but the opt out was then withdrawn to allow the patentee to assert the patent in infringement proceedings. Third parties will also likely keep a closer eye on their competitor’s patent portfolios for any new UP filings, which of course then automatically fall under the jurisdiction of the UPC and are open to central revocation actions being filed at the UPC.


[1] The 17 member states in which a UPC decision would currently take effect account for 80% of the EU’s GDP
[3] AIM Sport vs. Supponor