News from the UPC – How to validly opt-out your European Patent?

UPC CFI 361/2023, Final Order from 9 February 2024

For the first time, the UPC has had to decide the question whether a single patent owner can opt out a European Patent (EP) if the national validations of the EP are held by different patent owners. While the parties agreed that an opt-out can only be declared for the EP as a whole rather than for individual validations, they disagreed whether Art. 83 (3) UPCA required all patent owners of all the different national validations to jointly file the opt-out application or whether this could be done by just one of the owners.

Our Partner, Constanze Krenz and Senior Associate, David Kleß, who represented the claimant in the revocation action, successfully argued that an opt-out which is only declared by one of multiple patent owners is indeed invalid. Thus, in this case, the patent in suit had not been validly opted out and was subject to the jurisdiction of the UPC. This meant that validity could be challenged in the pending revocation action.

Facts of the case

The claimant in the revocation action, represented by DLA Piper, decided to lodge a stand-alone revocation action before the Central Division (CD) Paris even though an opt-out had been registered for the patent in suit. Mistakes had been made during the patent’s prosecution since although only the German national portion had been assigned to the German affiliate of the applicant, the EPO registered the German affiliate for all national validations of the EP. Only the applicant of the patent, who was the legal owner of all other national validations, filed an opt-out before the UPC but the German affiliate, who owned the German national validation, did not. Nevertheless, the defendant in the revocation action filed a preliminary objection pursuant to R. 19 of the Rules of Procedure since it believed the applicant alone could successfully opt-out the EP from the jurisdiction of the UPC.

Grounds of the order

In a nutshell, the CD Paris concluded that if the national validations of an EP are held by different patent owners, all patent owners need to jointly file an opt-out application. It is not possible for a single patent owner to opt-out the patent without the consent of the other patent owners.

The CD did not accept the patent owner’s argument that being locked in the UPC system would be an undue impairment of its property rights which is why it should be possible for a single patent owner to opt-out even if the others disagree. Rather, the CD rightfully concluded that it is the underlying principle of the UPC that all EPs will be automatically subject to the UPC’s jurisdiction which is why there is an automatic transition from the national system to the UPC system if an opt-out is not declared. Forcing patent owners into this new system cannot be considered unfair since it is the clear legislative intention. Indeed, if it was possible for a single patent owner to opt-out the patent even against the express will of the other patent owners, this would undermine the fundamental legislative decision according to which the UPC is the default venue.

In addition, since neither the UPC Agreement nor the Rules of Procedure provide for any mechanism whereby a patent owner who declares an opt-out needs to inform the other owners, this would mean that – if the patent owner’s argument were correct – a patent owner could opt-out a patent without the other owners even knowing about it. The CD correctly concluded that this cannot be right.

The CD therefore held that the opt-out is equivalent to proceedings before the European Patent Office where Art. 118.1 EPC establishes the irrebuttable presumption that multiple patent owners are “joint applicants” for the purposes of the EPO proceedings. The unity of the European Patent must be maintained before the UPC as at the EPO when an opt-out application is lodged. This is why all patent owners of the different national validations must act jointly.

Conclusion

Our client therefore successfully defended the preliminary objection filed by the defendant in the revocation action. The decision also provides legal certainty in the context of opt-out applications generally. As set out by the CD, if a single patent owner could validly opt-out a patent without consulting the other patent owners, this could mean that the other patent owners may not even be aware of the opt-out and could start UPC proceedings on the assumption that the patent is subject to the UPC even though it is not. This would not only inappropriately impact the other patent owners’ intellectual property rights but would also result in legal uncertainty since the patent owners themselves would be required to investigate whether any of the other patent owners had opted-out the patent or were in the process of doing so, potentially while a UPC infringement action was being prepared.

While the defendant in the revocation action has the possibility to appeal the order, the order brings welcome clarity on opt-out applications.

The published decision will be available on the UPC website soon.