Home > Insights > (2) The Unified Patent Court (UPC)

Author: Alex Frost
1 February, 2013

On 17th December 2012, two European Union Regulations were published. Regulation EU 1257/2012 creates Unitary Patent protection (EUP) (let’s call it the EUP Reg), and Regulation EU 1260/2012 sets out the translation arrangements for the EUP (let’s call it the Translations Reg).
The two Regulations are made under the Enhanced Cooperation provisions of the European Union (EU) allowing fewer than all EU states to adopt provisions affecting only participating states.

At the same time a Draft Agreement setting up a Unified Patent Court (UPC) was approved and has now been published in final form as Agreement 1635/12 dated 11 Jan 2013 (let’s call it the UPC Agreement). It will be available for signature and subsequent ratification by all EU states and a signing ceremony is planned for 18 February 2013.

This second Bulletin is companion to our first Bulletin also published today entitled The European Patent with Unitary Effect, and provides, in the form of questions and answers, basic information on the proposed Unified Patent Court (UPC).

1)    What is the UPC?

The Unified Patent Court (UPC) is to be set up to provide a single court forum to have (eventually) exclusive competence over all disputes relating to European Patents (EPs) and in particular those with Unitary Effect (EUPs).  The UPC will have a Court of First Instance (CFI) and a Court of Appeal (CA).

2)    When is the UPC going to start?

The draft Agreement stipulates a start date of 1st January 2014 or, if later, the beginning of the fourth month after thirteen EU states including Germany (DE), France (FR) and United Kingdom (GB) have ratified the Agreement.
At present, it seems unlikely the UK will ratify the UPC before mid/late 2014, and the start date is therefore unlikely before early 2015.

The UPC Agreement also states that it will not enter force until four months after necessary amendments are made to another EU Regulation (EU 1215/2012) on jurisdiction and recognition and enforcement of judgements in civil and commercial matters. It remains to be seen if the EU bureaucracy can process this regulation amendment quickly enough to avoid further delay, or indeed if, in fact, amendment to that Regulation proves necessary.

Importantly, the Regulation setting up the EUP cannot start until the UPC Agreement is in force.

3)    Will the UPC have exclusive competence for disputes relating to all EUPs and EP National Patents?

The UPC will have exclusive competence in relation to EUPs from the outset.  Note that an EUP can cover only EU states that have ratified and acceded to the UPC Agreement.

In relation to EP National patents (that is, patents granted by the EPO and validated in individual designated states), the UPC can have exclusive competence for EU states that have ratified and acceded to the UPC Agreement (the UPC states), but subject to opt-outs available on an EP case-by-case basis for a transitional period. Thus, in theory, the UPC could have exclusive competence for disputes relating to EP patents validated in Italy and/or Spain, even while Italy and Spain remain non-participants in the EUP Regulations, if one or both of these countries ratifies and accedes to the UPC Agreement.

The UPC will have no competence or jurisdiction in EPC states that are not EU members, e.g. Switzerland and Norway, or in EU states that have not yet ratified the UPC Agreement, or for EP National patents in UPC states that are subject to an opt-out.

4)    Will the UPC have jurisdiction over all Member States of the EU and in particular, all Participating States under the EUP Regulation?

The UPC will have effective jurisdiction for cases within its exclusive competence over all EU Member States that have ratified the Agreement (UPC states).  Again these could in theory include the two Member States (Italy and Spain) that have not yet joined the EUP Regulations. There are signs that Italy may accede to the UPC agreement.

This means that, if EP National patents validated from a granted European Patent fall within the competence of the UPC (no opt-out, or opt-out no longer effective), a single action in the UPC can result in a judgement effecting the EP National patents in all UPC states. For example, they could all be revoked in such states, or an infringer could be injuncted in all these states.

5)    What is the opt-out provision?

The Agreement provides that a proprietor of a European Patent (or applicant of a pending EP application) can chose to opt-out of the exclusive competence of the UPC over EP National Patents (but not over an EUP). This opt-out is available during an initial opt-out period of seven years following the start date.  This seven year opt-out period may be extended for a further seven years, following consultation by the Administration Committee of the UPC.  An opt-out can be exercised at any time following the start date for either a granted EP patent or a pending EP application, so long as no action has already started before the UPC.  The opt-out lasts for the duration of the opt-out period (as extended), but the proprietor may opt back in again at any time before then, so long as no action has already started in a national court.

The opt-out is relevant only in relation to EP National patents in EU states that have ratified the UPC Agreement (UPC states) which would otherwise come under the exclusive competence of the UPC. It is then effective for all such EP National patents validated from a particular EP case. You can’t opt out for some UPC states and not for others for the same EP case!

6)    Where will the UPC be geographically?

Many Places.

There will be a Central Division of the CFI of the UPC with a main “seat” in Paris and “sections” in Munich and London.  There can also be Local Divisions of the CFI set up in those EU states that would envisage a substantial number of litigation cases involving infringement in or involving parties resident or having a business in their own territory.  UPC states may instead band together to form Regional Divisions of the CFI.

The Court of Appeal (CA) will have its seat in Luxembourg.

7)    Where should a UPC case be started?

Originating actions for revocation or declarations of non-infringement must be brought before the Central Division, unless there is already an action between the parties involving the patent before a Local or Regional Division.

Such actions should be started in the Paris seat or the Munich or London sections according to International Classification Heading of the subject matter as follows:

 LONDON section  PARIS seat MUNICH section 
 (A) Human necessities      (B) Performing operations,
transporting    
 (F) Mechanical engineering,
lighting, heating, weapons, blasting
 (C) Chemistry, metallurgy      (D) Textiles, paper    
   (E) Fixed constructions      
   (G) Physics      
   (H) Electricity    

All other originating actions including for infringement, damages and injunctions, must be started in the Local (or Regional) Division of the territory where

a)    the infringement is alleged to have taken place, or
b)    where the defendant has either its residence or principal place of business, or
c)    if the defendant has no residence or principal place of business in a UPC state, the Local or Regional Division where the defendant has a place of business.

However, actions against a defendant which is not resident and has no place of business in a UPC state, may be started in the Local or Regional Division where the alleged infringement is located, or may be started in the Central Division according to subject matter classification as set out in the table above.

Once an action has been started as above (for infringement etc.) and is pending before a Local or Regional Division, subsequent actions (including counter-claims) between the same parties on the same patent must be brought before the same Division, even where there is a newly alleged infringement in the territory of a different UPC state!

If there is no Local or Regional Division for the relevant territory of the infringement (or the infringer), the action must be started in the Central Division according to subject matter as above.

If an action for revocation etc. is already pending before the Central Division, an action for infringement etc. between the same parties relating to the same patent may be brought either before the Central Division or the Local or Regional Division as above.

8)    Will both infringement and validity be determined by the same Division or can they be bifurcated?

It depends.

If an invalidity action is the first to be originated in the Central Division, the patentee may chose subsequently to initiate an infringement action in a Local or Regional Division as above and the Local or Regional Division may chose to proceed with it or to suspend it pending the validity decision of the Central Division.  However, the patentee can alternatively start the subsequent infringement action also in the Central Division, so that the Central Division then deals with both infringement and validity.

If invalidity is raised in a counter-claim in an infringement action originated in a Local or Regional Division, the Local or Regional Division has discretion to deal with both issues, or to refer the counter-claim to the Central Division, while either proceeding with or suspending the infringement case.

So, a Local Division in London, for example, might chose to deal with both issues, but a Local Division in Germany, for example, might chose to refer invalidity to the Central Division, especially if the subject matter is in Class F (Engineering) so that it is the Munich Section of the Central Division!

An action for a declaration of non-infringement will be stayed if within three months an infringement action between the same parties is brought, before a Local or Regional Division.

9)    What is the language of the proceedings in the UPC?

The language of the proceedings in a Local or a Regional Division will be an official language of the host state (or region) of the Division.  So, it will be German for the German Local Division, English for the UK Local Division, etc.

However a host state (or region) may designate one (or more) of the EPC languages (English, French, German) as the language of its Local or Regional Division. It is not clear if this could be in addition to the official language of the host state, but this would seem sensible. For example, the Netherlands might then allow Dutch or English to be used.

In any case, the Local or Regional Division Court can agree with the parties to use instead the language of the patent as the language, of the procedure.  If the parties both want to use the language of the patent and the Local or Regional Division does not approve this, the parties can request to transfer the case to the competent Central Division.

A single party may ask the President of the Court of First Instance (the elected senior judge of the CFI part of the UPC) to rule that for fairness and particularly considering the defendant, the court proceedings should be in the language of the patent.

The language of the Central Division will always be the language of the patent.

Interpretation facilities will be provided, on request, where appropriate.

When an infringement action ends up with the Central Division, the Court may provide translations of relevant documents into the language of a defendant that is a resident or has its place of business in a Member State that has not acceded to the UPC Agreement or which has no Local or Regional Division.

10)    What law will govern the UPC and what will be the effect of the UPC?

Applicable law in the UPC will be:
Law of the EU including the UPC Agreement itself;
The European Patent Convention ;
Any other International Agreements binding in all states that have acceded to the UPC Agreement; and
National Law

With regard to “indirect” infringement, the UPC Agreement appears not to require double territoriality, so that the indirectly infringing act should be in a territory of a UPC member state, and the final infringement might be elsewhere.

A prior secret use right (to continue using) will be effective only in the UPC state in which the prior secret use occurred.

Supplementary Protection Certificate will confer the same rights as under National Law.

11)    Who will be the Judges?

All judges of the UPC are to be appointed by a (central) Advisory Committee comprising existing patent judges and practitioners “with the highest recognised competence”.  They will comprise both legally and technically qualified judges, and some may be part-time.  The legally qualified must have the qualifications for judicial appointment in a UPC state.  The technically qualified (to degree level) must have a proven knowledge of civil law and patent litigation procedure.

In the Local or Regional Divisions of the CFI, judges sit in a panel of three legally qualified judges, with the addition sometimes of a fourth technically qualified judge.

In the Local Divisions, two of the legally qualified judges may be from the host state, if there were on average 50 or more patent cases heard in that state in the three years before the UPC Agreement came into force, but only one if fewer than 50.  The other legally qualified judge or judges and any fourth technically qualified judge will be allocated from a central Pool of judges.

In the Regional Divisions in all cases, two may be from any of the states of the relevant region, and one from the Pool.

In the Central Division of the CFI, there are normally always two legally qualified judges from different states, plus one technically qualified judge allocated from the Pool.

The parties can agree in all Divisions of the CFI to have a case heard by just one legally qualified judge.

The CA of the UPC sits in a panel of five judges, three legally qualified from different UPC states, plus two technically qualified and allocated from the Pool.

A training framework for judges is to be established, based in Budapest.

12)    What about appeals?

Only a single stage of appeal from the CFI is provided to the Court of Appeal (CA) of the UPC.

The language of any appeal should be the language in the CFI.

Simply lodging an appeal does not generally have suspensive effect on the decision appealed, unless the CA so orders at the request of the Appellant.  However, appeals against a decision in a revocation action or a counter-claim for revocation always have suspensive effect.

Appeals may be based on points of law or matters of fact, but new facts and new evidence are not normally admissible unless they could not reasonably have been put to the CFI.

A matter may be referred by the UPC to the Court of Justice of the European Union, as for other matters where the law of the EU is concerned.  The parties in actions before the CA of the UPC do not themselves have the right to appeal or refer questions to the CJEU, the decision to refer rests solely with the CA itself. Current opinion is that such referrals will occur only on matters of interpretation or application of relevant EU Law, including the UPC Agreement. The legislators have attempted to keep questions of patent law as such outside the scope of EU law to avoid having the ECJ rule on such matters. It remains to be seen if they have been successful.

13)    Can legal costs (in the action) be awarded?

Yes they can, but “up to a ceiling set in accordance with the Rules of Procedure” of the UPC, which are still awaited.

14)    Who can represent parties at the UPC?

In general, lawyers who are authorised to practice before the Court of a UPC State can act before the UPC.

Additionally, a European Patent Attorney, who has “appropriate qualifications such as a European Patent Litigation Certificate” may act.  This qualification will be established by the Administrative Committee of the UPC. We may expect UK Patent attorneys who have a UK Litigation Certificate will qualify automatically.

In addition, Patent Attorneys (both EPA and national) can speak in the UPC when accompanying a lawyer or qualified litigator.

15)    What is the procedure before the UPC?

Rules of Procedure are to be produced and adopted after “broad consultations with stakeholders”.

We know the procedure will include a written procedure, followed by an “interim procedure” which may include an interim hearing, at which mediation can be discussed, and there will be a final oral procedure.

Further general requirements and provisions of the procedure are set out in the UPC Agreement, but these will presumably be further determined in the Rules of Procedure.

16)    How are decisions and rulings of the UPC to be enforced?

All decisions and ruling of the UPC are enforceable in any UPC state according to the procedures of the state in which enforcement action is required, as though made by a local court.

17)    How is the UPC funded?

There will be Court fees payable by litigants which will be set at a rate so that eventually the UPC can be self funded from these fees.  The Court fees will be set at a fixed rate plus a value-based fee above a preset ceiling.

At least initially, the Court will be funded additionally by contributions from the UPC states.

In particular, the contribution to initial set-up costs from each state will be (somehow) based on the numbers of EP cases validated in respective states as well as the numbers of EP cases litigated in the states in the preceding three years.

Host states are to provide premises and administrative staff for the courts (divisions or sections) in their states or regions.

Author

Alex Frost

Alex Frost
Partner

Phone this number +44 (0)20 7430 7500

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