IP Cases & Articles

Unified Patent Court - Rules of Procedure Consultation

​By the time this newsletter is published, the consultation on the draft Rules of Procedure of the Unified Patents Court (UPC), launched by the Preparatory Committee at the end of May, will have closed. Numerous companies, industry bodies, practitioner and professional organisations, firms and individuals have participated and it will be interesting to see just how many submissions there are. Indeed, there were apparently 1,800 hits on the webinar that accompanied a recent consultation event held by the UK Intellectual Property Office (UKIPO), Chartered Institute of Patent Attorneys (CIPA) and the IP Federation in early September 2013, so there is no doubt participation has been very significant.

While there is a huge number of areas of comment, a few common themes are appearing which go to big picture points that the Unified Patent Court Agreement didn’t address as well as it might.

It is to be remembered that the purpose of the Unified Patent Court (UPC) is to reduce the cost and complexity of European patent litigation, and provide certainty by avoiding inconsistent judgments. It is also supposed to do away with the significant ‘forum shopping’ opportunities that currently exist. Unfortunately, the system set out in the Unified Patent Court Agreement raises significant cost issues of its own (associated with the language regime and funding of the court), and also leaves open real possibilities for forum shopping.

It seems that many submissions to the consultation are aimed at trying to address these issues through the Rules of Procedure, to the extent possible. We must wait and see whether the Preparatory Committee, which is the ultimate audience for the consultation, takes note and tries to do something about it. A brief summary of these big points follows.

Opt outs for European bundle patents

The default position in the system is that existing and future European bundle patents are to be litigated in the UPC. Certain industry sectors in particular were uncomfortable with that and the result was an opt out period. Unfortunately, the Unified Patent Court Agreement did not address what happens before the UPC comes into operation. One could envisage thousands of opt outs being applied for on day one but under the agreement opt outs are not effective on filing. This leaves the relevant patent vulnerable to a pre-emptive challenge. The draft Rules of Procedure attempt to provide a kind of sunrise provision, with the EPO administering pre-commencement opt outs that are effective on commencement. Legally however, this is tricky. Regardless, a way simply must be found to enable an effective pre-commencement opt out and hopefully the Preparatory Committee will take note and one will be found.

Another big issue on opt outs is whether a fee should be payable and if so, what should it be?

There are forceful arguments against any fee – why should a proprietor pay to opt out of a system they didn’t choose to join? On the other hand, there will clearly be an administrative cost, which has to be covered somehow.

Court fees

The draft Rules of Procedure envisage both fixed court fees as well as value based ones. The latter can be very problematic because they raise satellite debates as to the value of a case, and can be very significant costs in for example multi-patent litigation. No particular basis for assessing these fees is suggested in the draft Rules of Procedure and no doubt there will be some debate when one ultimately is proposed. However, the draft Rules of Procedure do suggest that not only is a fee payable by a claimant but, if a defendant raises a counterclaim for revocation (and invalidity cannot be raised as a pure defence), a value based fee may also be payable. The question is: why? Is it right that a defendant should have to pay what could be a substantial court fee to defend itself? This seems rather unfair.

Forum shopping

Perhaps the biggest issue of all that has led to comments is forum shopping. This is a multi faceted issue, and has threads in many different parts of the draft Rules of Procedure. Ostensibly however it all arises from the patentee’s choice of forum being very wide. With that choice comes, potentially, a favourable or inconvenient language regime; the possibility to bifurcate infringement and validity; different approaches to evidence and witness hearings; and different approaches to assessing value based fees, for example. The whole area is very complex and a close study of the draft Rules of Procedure suggests a real possibility for there to be multiple but related cases in different divisions, for example. There is also the possibility to bring a case in a division which is actually not very well connected with the dispute but is tactically advantageous to the patentee.

So what seem to be the comments on this?

Well, first it seems there is a need to beef up the powers of the court to join together related cases, and to broaden the meaning of related cases. This is very important if the system really is going to provide cost savings and consistency, as well as minimize forum shopping.

Secondly, and related to this, it would seem fair to have some kind of transfer provision, empowering the Court to transfer cases commenced in an obviously inconvenient forum. Game playing was not supposed to be allowed in the UPC.

Thirdly, to alleviate the risk for defendants in a bifurcated case (and there are mixed views on whether such cases will be common or rare), more guidance is needed on when an injunction might be granted to a claimant who succeeds on infringement before validity is determined. Such injunctions are really interim injunctions and ought to be awarded on a similar basis.

Fourthly, if the Rules of Procedure don’t prescribe guidelines for courts in exercising discretion and making procedural decisions, and that is difficult to do exhaustively, there are very likely to be differing approaches, at least to begin with. It is imperative therefore that procedural decisions can be appealed to the Court of Appeal, and that that court can give permission to appeal if necessary.

Next steps

There are many other aspects of the Rules of Procedure which have attracted comment and some submissions are likely to have been very detailed indeed. It is naturally going to take several months for these to be waded through, themes to be divined and suggestions for revisions made. The expectation is that this will take place during the rest of this year and that there will be a public hearing early in 2014. That may be a pretty lively affair.

Useful Links

Preliminary set of provisions for the Rules of Procedure for the Unifi ed Patent Court

Unified Patent Court website