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UPC Preparatory Committee Gives View on Opt Out

It was a crucial part of the Unified Patent Court (UPC) package for many users, especially those from the pharmaceuticals sector, that conventional European patents could be opted out of the jurisdiction of the UPC, at least for a transitional period. Their concern was that to do otherwise would bring highly valuable patents within the jurisdiction of a new, untried court, which could have the power to invalidate the patent protection for a hugely important product across the whole of the European Union (EU).

To meet that concern, the Agreement on a Unified Patent Court includes in Article 83 the following provisions:

During a transitional period of seven years after the date of entry into force of this Agreement, an action for infringement or revocation of a European patent or an action for infringement or for a declaration of invalidity of a supplementary protection certificate issued for a product protected by a European patent may still be brought before national courts or other competent national authorities.
Unless an action has already been brought before the Court, a proprietor of or an applicant for a European patent granted or applied for prior to the end of the transitional period under paragraph 1 and, where applicable paragraph 5, as well as the holder of a supplementary protection certificate issued for a product protected by a European patent, shall have the possibility to opt out from the exclusive competence of the Court. To this end they shall notify their opt-out to the Registry by the latest one month before expiry of the transitional period. The opt-out shall take effect upon its entry into the register.

In addition, Article 3 of the agreement provides that the agreement applies to European patents or patent applications without prejudice to Article 83. Note that no similar proviso is made here in relation to the agreement’s application to supplementary protection certificates (SPCs), which would appear to be an unintended omission.

Questions arising from the opt out

Many people reviewing these and other provisions of the agreement expressed concerns that they could be interpreted in a way that did not achieve the objective that the opt out was understood, by most at least, to have been meant to achieve. Namely, the possibility to opt out conventional European patents from the jurisdiction of the UPC completely for their entire life, provided that opt out was exercised during the relevant period. The difficulties in interpretation arose because of the language used in both Article 83(1) – which provides for jurisdiction in both the national courts and UPC during the transitional period - and 83(3) which provides an opt out from the exclusive competence of the court. Depending on how you do it, reading them together these two provisions can be hard to reconcile. Further, serious questions remain as to how the opt out will be effected and administered prior to commencement of the UPC.

These questions remain unanswered but the Preparatory Committee has considered an additional question concerning the law that should be applied to opted out patents. In particular, should the national courts apply the law of the agreement to opted out patents, or should they continue to apply their national law? And indeed, what law should those courts apply during the shared jurisdiction period contemplated by Article 81(1), having regard to the somewhat ambiguous proviso in Article 3?

Preparatory Committee says the Agreement on a Unified Patent Court does not apply to opted out patents or litigation in national courts.

In summary, the Preparatory Committee has expressed the view that the agreement should be interpreted such that it does not apply to opted out patents or SPCs, or to European patents or SPCs litigated before national courts during the transitional period. Thus the answer, in its view, to the question of applicable law in these circumstances is that national courts should not apply the provisions of the agreement but should instead continue to apply national law.

While the Preparatory Committee did not express a view on the other important issue of the effectiveness and extent of the opt out, its reasoning would suggest that in its view an opt out is complete. In its conclusion, the Preparatory Committee says:

It is the Preparatory Committee’s view that if an application for a European patent, a European patent or a Supplementary Protection Certificate that has been issued for a product protected by a European patent is opted out (or during the transitional period the case is brought before a national court), the Agreement no longer applies...

The apparent distinction here between opted out patents on the one hand and those litigated during the transitional period on the other, and the indication that the agreement does not apply in such situations, suggest the Preparatory Committee considers the opt out to be both for the life of the patent and from the entire jurisdiction of the UPC. If so, that would be welcome news to patentees.

Of course, this is just the opinion of the Preparatory Committee and both it and inferences that can be drawn from it need to be treated with caution. But the approach the Preparatory Committee, which comprises representatives of the contracting states, to this question, which is very much to look consider the intention of the contracting states, does indeed suggest that the opt-out should do what it was always contemplated to do.

We still await further news on how the opt out will work, in particular how to ensure key patents are opted out before commencement.

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The opinion of the Preparatory Committee