Out with the old, in with the new? Considerations for patentees in opting out of the Unified Patent Court


So far in this series of blog posts, we began with an article that highlighted some of the key changes between the current European system of patent prosecution and enforcement and the new Unitary Patent and Unified Patent Court (UPC), set to become operational from 1 June 2023.  In part two, we considered the interesting procedural features of the UPC and how they might influence a patentee’s decision to opt in or out of the regime.

In this part three, we discuss some of the practical and strategic considerations that patentees should weigh up when deciding whether to opt out of the UPC.  Please contact a member of the CMS team if you are interested in discussing this article, or any previous blog posts, in more detail.

Opting out: an overview

During the first seven years of the UPC being in operation (the transitional period), European Patent (EP) holders will have the choice to opt out their patent, or patent application, from the UPC’s jurisdiction.  By opting out, the patent or patent application will remain within the sole jurisdiction of the relevant national courts.  Only those EPs that have been granted, and patent applications applied for, before the end of the transition period and which have not had an action brought against them before the UPC will be eligible to be opted out.  Unitary Patents, by their very nature, are not eligible to be opted out.

The sunrise period commenced on 1 March 2023, meaning patentees now have the ability to begin the process to opt out, with opt outs coming into effect on the first day of the transition period.  In a nutshell, the sunrise period provides patentees with a three-month window in which to decide whether to opt out, without the immediate risk of their patent being attacked. 

Outlined below are some of the key considerations EP holders should be aware of before making their decision to opt out or remain in. 

Practicalities of opting out

Logistical considerations – actual ownership.  First and foremost, anyone can opt out a patent based on instructions of the actual proprietor.  If the opt out is not performed by a representative before the UPC, then the application to opt out has to be accompanied by a mandate signed by the actual proprietor.  Note that the actual proprietor may not be the proprietor listed on the relevant patent register; ownership of a patent could have been assigned to a third party but the assignment not recorded on the register.  It should be further noted that, as no proof is required by the UPC to show you are the actual owner when opting out, this will not be verified until the patent is contested in litigation.  It is therefore especially important to check who the legitimate patent owner is before opting out. 

Logistical considerations – co-ownership and licensees.  Where patents have multiple co-owners, all owners must act in common when choosing to opt out.  Licensees (exclusive or otherwise) cannot choose to opt patents out; however, it will be necessary to assess each individual licence to determine if the licensee must be consulted on such decisions.  It may well be that you are not able to unilaterally opt out your patents from the UPC and other parties need to be consulted ahead of any decision.

Opting out is not a final decision.  Should you choose to opt out a patent and subsequently change your mind, you will be able to withdraw your opt out within the transitional period.  That is, unless an action has already been brought against the patent before a national court.  However, it should be noted that this can only be done once as, once an opt out has been withdrawn, it is not possible to opt out for a second time.

Must opt out of all EP states.  Opting out does not just apply in respect of ‘contracting member states’ only. Rather, the application to opt out must be made for all ‘states’ in which the EP has been granted or designated in its application. This will mean that opt outs have to be applied for other non-UPC participating EU Member States (e.g. Spain and Poland) and non-EU European Patent Convention states (e.g. UK, Switzerland and Turkey).  Patent owners therefore need to take care to ensure their opt out covers all of the same ‘states’ as their patent.

Strategic considerations

Patentees will also need to consider how they could make the UPC work to their advantage, for their patent portfolio or business needs.  The following are just a handful of considerations patentees should bear in mind when addressing the decision to opt out:

  • Selectively opting out – and leaving in – certain key patents.
  • The message you are sending to competitors by either opting out, or selectively opting out.
  • The impact that the UPC’s wide geographic footprint will have on claims of infringement.
  • Commercial implications of certain patents being knocked out at the UPC.
  • Options available for hedging risk by applying for patents before selected national courts and the UPC.  In addition, strategic use of divisionals, for example by opting out only some members of a European patent family and leaving others within the UPC.

As a starting point, it will be necessary to consider the above in respect of your own patent portfolio, but it will also be essential to consider these factors in relation to the portfolio of your competitors. 

With our extensive European presence, CMS is uniquely placed to help our clients navigate this new system.  If you would like to explore whether opting out is appropriate for your patent portfolio, or have any other questions on the upcoming changes, please contact a member of the CMS team, who will be happy to discuss this with you.