The Unified Patent Court (UPC) came into existence on 1 June 2023. The UPC will have jurisdiction over infringement, revocation, and certain other matters concerning Unitary patents and, for UPC participating countries, both pre-existing and new European patents. From 1 March 2023, patent proprietors became able to file an opt-out to remove their pre-existing European patents, new European patents, and pending European patent applications, from the jurisdiction of the UPC. It has been suggested that many patent proprietors will wish to opt their existing European patents out of the jurisdiction of the UPC in bulk, before 1 June 2023. However, in this article, we discuss whether this is really necessary and note that this choice does bring some risk. It has been suggested that those who are uncertain should file an opt-out "to preserve the status quo", but is it really the case that the default position should be to actively do something (file an opt-out), or is the more logical default position to do nothing and accept the jurisdiction of the UPC, jointly with national Courts, in the participating countries.
The main reason which has been given as to why European patents should be opted out is that the UPC might provide third parties with a convenient, relatively rapid, and (potentially) cost-effective route to revoke patents across a large number of countries with a single legal action. Another reason to file an opt-out is simply that the UPC will initially be untested.
It does seem likely that opting out will be an attractive option for high-value patents which are validated and in force in many European countries, in industries where patent disputes might take place in parallel in multiple national European courts, for example, in the pharmaceutical industry. Opting out will also be attractive for cases where there is a real risk of third parties wishing to file a revocation action and being likely to choose the UPC as the forum for that.
However, there are a number of reasons why some patent proprietors may decide not to bother:
Cost
Firstly, although there is no official fee to opt out of the UPC, attorneys and IP service providers make a charge to file an opt out and so there is a cost to opting out which can be avoided by taking no action. The cost per patent will depend on portfolio size as IP providers are offering bulk discounts for large opt-out programmes. Still, some money will need to be spent.
Some patents will be difficult or expensive to opt out because the opt-out must be filed by the proprietor, or on behalf of the joint proprietors, where there are joint proprietors. There will be circumstances where it will be difficult to prove who is the proprietor(s) and/or coordinate their actions by arranging the appointment of a joint representative for the purpose of the opt out.
Loss of flexibility
However, a significant risk associated with filing an opt-out is the risk of losing flexibility and losing the ability to use the UPC for enforcement. An opt-out may be filed only once - provided no legal proceedings are taking place before the national courts - and an opt-out may be withdrawn once - provided no legal proceedings are taking place before the UPC. A patent proprietor might opt a patent out of the UPC to prevent third parties from filing revocation actions before the UPC, on the understanding that, if they later decide that they would prefer to use the UPC for enforcement, they can withdraw the opt-out and immediately file an infringement action. However, it is worth thinking through what will happen when it comes to enforcement. If the patent proprietor sends a cease and desist letter or enters into other pre-action correspondence with a third party, then that third party is not prevented from filing some minor action in a national Court to force the matter into national Courts and prevent the patent proprietor from ever being able to use the UPC. This may be frustrating - the UPC may be a choice forum for an infringement proceeding due to its geographical coverage and the potential availability of provisional and protective measures (e.g. orders to prevent the destruction of evidence).
Patent proprietors with opted-out patents who would wish to use the UPC for enforcement may therefore feel a need to withdraw the opt-out before starting pre-action correspondence in which case they will have lost the ability to ever opt the patent out again. It is possible that mischievous third parties will try to temp patent proprietors to withdraw their opt-outs with apparent infringements which are not what they seem, or a proprietor who withdraws their opt-out due to a potential infringement action against one party, A, may find that another party, B, uses the opportunity to file a revocation action, or action for a declaration of non-infringement, before the UPC.
How big an area are we actually talking about?
The 17 countries participating in the UPC from day one, have a total population of just under half of the total population of countries covered by a European patent (excluding validation states). Here are the countries which are participating, with their population in brackets (source: Wikipedia):
Germany (83.2m), France (67.8m), Italy (58.9m), Netherlands (17.6m), Belgium (11.6m), Sweden (10.5m), Portugal (10.4m), Austria (9m), Bulgaria (6.8m), Denmark (5.9m), Finland (5.5m), Lithuania (2.8m), Latvia (1.9m), Estonia (1.3m), Luxembourg (0.6m), Malta (0.5m). (Total 296m).
The following countries are not participating, either because they are not in the EU and cannot participate (e.g. the UK, Switzerland) or because they choose not to (e.g. Spain) or have not yet signed up:
Türkiye (84.8m), United Kingdom (67.3m), Spain (47.5m), Poland (38.3m), Romania (19.3m), Czechia (10.5m), Greece (10.4m), Hungary (9.7m), Switzerland (8.7m), Serbia (7.3m), Norway (5.4m), Slovakia (5.4m), Ireland (5.0m), Croatia (4.1m), Bosnia & Herzegovina (3.3m), Albania (2.8m), North Macedonia (2.1m), Cyprus (1.2m), Montenegro (0.6m), Iceland (0.4m), Monaco (<100k), San Marino (<100k). (Total 334m).
Furthermore, most European patents are validated and in force in only some European Patent Convention states. A significant fraction of European patents are in force in just three territories, the UK (which is not in the UPC), and Germany and France (which are participating in the UPC). It will be important for any given patent to determine how significant the UPC participating countries will actually be and how likely it is that a third party will be interested in filing a revocation action covering the UPC countries. If a patent is validated in few UPC countries or if revocation actions are most likely to be brought in non-UPC states like the UK, Spain or Norway, there may be little motivation to avoid the jurisdiction of the UPC.
That being said, although the UPC countries represent less than half of the population of European Patent Convention countries, they do cover about 2/3 of the population of the European Union single market.