Do you want to opt out?

How to choose whether to stay in or opt out of the UPC’s jurisdiction for existing patents

Once in force, the UPC will have jurisdiction over all existing patents granted by the EPO (EPs), allowing both central enforcement and revocation across the participating Member States, unless the EP is opted out of the new system. Once UPC litigation starts, it is no longer possible to request an opt-out.  Therefore, the opt-out decision for EPs should be made during a “sunrise period” which will last a minimum of three months before the UPC opens its doors for business.  The current estimate is that the “sunrise period” may start in 2019, but it could be further delayed. There is no official fee for requesting an opt-out.

Where patents cover valuable products, the threat of infringement is in a few major markets whose courts are experienced in patent litigation, and the budget is not a constraint, we anticipate that patentees will be likely to opt-out their patents to escape the risk of central revocation in an untested court.

However, where the threat of infringement is outside the UK, Germany, France, The Netherlands and Italy, the patentee may well consider the UPC as an attractive option, since confidence in an untested UPC may be greater than current confidence in a national court. Although the UPC is an untested court, we can expect at least some influence on the UPC from participating judges from the established patent litigation countries.

Opt-outs can be requested only by the patentee, so all licensees should be actively engaging with the patentee to decide whether or not to opt an EP out of the jurisdiction of the UPC. Co-owners must all agree in order for an opt-out to be effective, so extensive discussions may be required before the decision can be made.

It will be possible to withdraw the opt-out if national court proceedings have not already been initiated and the transitional period is still pending. Withdrawing the opt-out will place the patent back within the UPC’s jurisdiction, so that the patentee can commence central infringement proceedings. A risk of opting out of the new system is that a competitor may ‘pin’ the EP outside of the UPC system by commencing litigation in a national court so that enforcement via the UPC will then not be possible. Once an opt-out has been withdrawn, it is not possible to opt back out again.

A big attraction of keeping the EP in the new system is the possibility of pan-European preliminary injunctions and final injunctions, where it will be possible to close down the market across all of the participating Member States in one sitting. There is also an obvious cost driver for carrying out pan-EU enforcement of a single patent via a single court and/or selecting EPs over UPs. Finally, the first cases heard by the UPC will likely be highly influential on practice and development of the case law. Therefore, users may decide to not file an opt-out so that they can shape the early case law developed by the UPC.