Fee-Less Opt-Out for European Patents from the UPC

The previously contemplated fee for opting out of "classical" European patents from the Unified Patent Court ("UPC") system has been abolished by the UPC Preparatory Committee. The UPC Case Management System will also allow for lodging multiple opt-out applications at once, thus facilitating the procedure.

As Germany is expected to deposit its ratification of the UPC Agreement in the near future (which will trigger the start of the UPC system), patentees will have to deal with the strategic question of if and which of their patents to opt out. This Alert focuses on the opt-out aspect in view of its importance for companies' timely assessment of their IP rights and prospective budgeting.

The UPC Agreement stipulates that the UPC will have jurisdiction not only over unitary patents, but also over existing "classical" European patents and Supplementary Protection Certificates ("SPCs") issued for a product protected by a European patent. During the transitional period of seven years, patent holders can choose to opt their European patents, patent applications, and SPCs out of the regime. An opt-out will require a notification to the registry by no later than one month before expiration of the transitional period. A notification may be already made during the sunrise period of three months before the UPC Agreement enters into force. The opt-out may also be withdrawn at any time unless an action relating to one of the patent designations has already been brought before a national court. If it is exercised after the transitional period has expired, withdrawal will place all the designations of the patent into the exclusive jurisdiction of the UPC.

An opt-out of a European patent will require an opt-out application to be submitted via the UPC Case Management and eFiling System, and is free of charge. This system is presently under development, and the beta test site can be accessed by registered users under https://cms.unified-patent-court.org/login. 

The knowledge of a fee-free opt-out is of importance for companies with IP portfolios looking ahead at the year 2022 and 2023 when the UPC system is predicted to come into force. While no official cost will be associated with the process as such, opting out will require an affirmative act. Therefore, patent holders are urged to timely analyze their IP portfolios and to decide whether to opt out or not, for each IP right concerned. 

This decision will depend on a number of factors, such as the qualities of the patent, including its strength and significance for the business; cost of patent enforcement; industry-dependent geographical scope of patent protection; and business activities, to name just a few. It can also be expected that the pharmaceutical industry will tackle the issue differently than automotive manufacturers. 

When making the decision, understandable skepticism toward an unproven and transformative regime should be weighed against the benefits of a single forum, generally lower costs, and a unique opportunity to shape the case law of the new court. Regardless, the decision on opt-out is due, and it is due soon.