Protective Letters at the UPC – Better Safe Than Sorry
With the UPC set to reshape European patent enforcement, parties should consider filing Protective Letters at the UPC as a routine part of their freedom-to-operate strategy

Imagine this: After many years of R&D and many millions, your company’s new flagship product has just been launched. The marketing team has swung into action, and initial sales are going well. Then, out of the blue, you are hit with a preliminary injunction banning all sales of that product across the major European markets – a competitor has started proceedings at the UPC alleging that your product infringes their patent. Your CEO is knocking on your door asking: “What is the UPC, and how did we allow this to happen?”. But that competitor’s patent is probably invalid –  or so you thought –  and you had a good argument that your product does not infringe anyway. You had even noticed that the patent was opted-out of the UPC. Turns out the opt-out had been withdrawn the day before the proceedings were started. You are now faced with a protracted legal battle to even get your product back on the market. Your competitor has been preparing for months; deadlines are very tight, proceedings are frontloaded – and you’re starting from scratch.

This might sound like the plotline of a low-budget horror movie aimed at the niche audience of in-house IP counsel, but it is a realistic scenario once the sun rises on the UPC – Europe’s new Unified Patent Court – bringing with it new options for patent enforcement across Europe. The UPC Agreement allows the Court to grant preliminary injunctions (PIs) against merely an alleged infringer, and, moreover, to grant such injunctions without the alleged infringer being given the right to present their case. So, the first an alleged infringer may hear of a matter is when the Court serves notice of the PI decision.

This is not to say that the UPC is a one-sided, patentee-friendly forum, as the UPC Agreement also provides a mechanism for preventing that horror-movie plotline from taking place. Were the alleged infringer to have filed a Protective Letter (PL) at the UPC, that PI would almost certainly not have been granted without the infringer being given the right to argue their case before the Court. The PL should convince the Court that due process of law requires that the defendant be heard.

A PL is filed by a party who is concerned that they might be accused of infringement, and who wants to avoid the risk of a PI being granted without having an opportunity to argue their case. Thus, it should explain why a product does not infringe a problematic patent, and why that patent is invalid, as well as why it would be disproportionate to grant a PI. Once filed, the PL is kept in secret by the Court, only to be opened if a PI is requested by a competitor – it is effectively a pre-emptive statement of defence according to the official UPC FAQs. If a PI is requested, the Court will forward the PL to the applicant (the patentee or its licensee). The Court is then strongly encouraged to summon the parties to an oral hearing before any PI may be granted. Here, the alleged infringer can expand on the arguments already made in the PL, and, importantly, would have bought more time in which to prepare their defence. Contrast this to the plotline without the PL, when the PI is granted without warning.

It should be noted that PLs are already part of the patent practice in some European jurisdictions which will soon fall under the remit of the UPC. However, there are a number of key differences between PLs at the UPC and those before the traditional national Courts. These include urgency requirements and validity thresholds, as well as possible publication of the PL, such that a one-size-fits-all approach does not seem appropriate.

In view of the above, we believe that parties should consider filing PLs at the UPC as part of their routine freedom-to-operate strategy. This is also the view of the President of the Court of Appeal of the UPC, Judge Grabinski, which he expressed at a conference in April 2023. Indeed, he mentioned that judges dealing with PI requests (including inter partes) would take a look at any PL on file and this would be an important step early in the PI proceedings. Parties will already be considering their competitor’s patents, and this work can be used as the basis for a PL. Perhaps a decision was taken not to oppose a certain patent. The EPO might have missed some key prior art, but the technical team thought there was a good argument that the planned product would not infringe anyway, so the opposition was not worth the hassle. That work already done considering the patent could be used as the basis for a PL, potentially for little additional cost. Certainly worth it, in our view, to avoid the catastrophic risk of being on the wrong end of a PI from the UPC. Better safe than sorry.