The UPC Court of Appeal (“CoA”) has confirmed that the withdrawal of an opt-out is permissible where national proceedings concerning the patent in question are started before 1 June 2023, overturning the first instance decision of the Helsinki Local Division.
BACKGROUND
Pursuant to Article 83 of the UPC Agreement (“UPCA”), during the transitional period (a period of at least seven years, commencing on 1 June 2023), the UPC has parallel competence with national courts with respect to European patents which have not been opted-out of the jurisdiction of the UPC. After the transitional period, the UPC will have exclusive jurisdiction over all EPs designated to UPC participating EU Member States (unless these EPs have been opted out during the transitional period), as well as over unitary patents.
Where an opt-out has been filed, this can be withdrawn to bring the patent within the jurisdiction of the UPC during this transitional period, e.g. in order to enforce a patent centrally. However, Article 83(4) UPCA makes clear that an opt-out can only be withdrawn if “no action has been brought before a national court in respect of the patent to the opt-out.”
In this case, AIM Sport opted-out its patent prior to 1 June 2023, but later applied for the opt-out to be withdrawn on 5 July 2023. On the same day, AIM Sport filed a preliminary injunction application before the UPC (Helsinki Local Division) against Supponor. However, Supponor objected to the Court’s jurisdiction to hear the claim on the basis that AIM was barred from withdrawing its opt-out in respect of the patent asserted because of parallel national proceedings commenced in Germany in 2020 (the appeal for which is currently pending).
The Helsinki Local Division sided with Supponor, ruling that the prior German proceedings meant it did not have competence to hear the case. This was based on a literal interpretation of Article 83(4), with there being no limitation on when the national claim must be brought in order to block an opt-out withdrawal. The effect of this first instance decision was that opt-outs essentially became permanent with respect to patents that had been subject to national actions prior to the entry into force of the UPC.
DECISION
Last month the CoA overturned the Helsinki Local Division’s decision, ruling that withdrawal of an opt-out is not barred by national proceedings commenced before 1 June 2023. The CoA did not consider there to be any reason as to why national proceedings which commenced prior to the transitional period (whether or not still pending) should prevent withdrawal of an opt-out.
In reaching its decision, the CoA explained that the ability to opt-out only exists from the start of the transitional period (whilst patentees were able to file opt-outs during the sunrise period, they only became effective as of 1 June 2023) and are not allowed if an action has already been brought before the UPC. Within the context of Article 83 UPCA as a whole, and considering the object and purpose of the transitional regime of parallel proceedings, the CoA considered that an “action” pursuant to Article 83(4) UPCA should be given the same meaning as it is in the other paragraphs of Article 83, being one brought during the transitional period. The CoA added: “In particular, there is no apparent reason why such past litigation should influence the choices deliberately given to a patent proprietor during the transitional period”.
The CoA therefore concluded that Article 83(4) should be interpreted as referring (only) to actions brought during the transitional period.
The CoA also confirmed that the term “action” in Article 83 UPCA refers not just to infringement and revocation actions, but to all actions mentioned in Article 32 UPCA over which the UPC has jurisdiction. This is despite the fact that Article 83(1) UPCA only references infringement and revocation and/or declaration of invalidity actions.
IMPACT OF DECISION
This decision is relevant to patentees who routinely review their opt-out strategy for their patent portfolio; companies may have previously been advised that they could not litigate in the UPC in the future with respect to currently opted-out patents which were the subject of national litigation prior to 1 June 2023. The CoA’s decision now opens up the possibility of withdrawing the opt-outs for such patents, to bring them within the competence of the UPC.
From the perspective of potential infringers, this presents a new risk as patents of concern could now swiftly be opted back into the UPC and centrally enforced against them across Europe. This is therefore a relevant consideration for factoring into existing and future FTO strategies.
