UPC: 16th draft of Rules of Procedure unveiled yesterday. The obstinate "opting-out" fee: will those who sow the wind, reap the whirlwind?

Kluwer Patent Blog
March 7, 2014

Please refer to this post as: , ‘UPC: 16th draft of Rules of Procedure unveiled yesterday. The obstinate "opting-out" fee: will those who sow the wind, reap the whirlwind?’, Kluwer Patent Blog, March 7 2014, http://patentblog.kluweriplaw.com/2014/03/07/upc-16th-draft-of-rules-of-procedure-unveiled-yesterday-the-obstinate-opting-out-fee-will-those-who-sow-the-wind-reap-the-whirlwind/


UPC aficionados will be interested to learn that the 16th draft of the Rules of Procedure was unveiled yesterday.

Readers will remember that the previous draft was published on 31 May 2013. Since then, the Drafting Committee has been working on a new draft that may – or may not – accommodate the comments received from stakeholders, including those discussed at the European Judge’s Forum that took place in Venice on 25-26 October 2013. Trying to comment on the 382 Rules of the draft in this very brief blog would be like trying to sum-up the history of mankind in a haiku. So this author will focus his attention on one aspect that appears to be here to stay: the obstinate “opting-out” fee.

Readers are advised to read the new text of Rule 5 in its entirety, since it has been significantly updated, in particular, to take care of supplementary protection certificates. For example, new Rule 5.2 states that: “(a) An Application to opt out a European patent or application pursuant to rule 5.1 or an Application to withdraw an opt-out pursuant to Rule 5.8 shall extend to any supplementary protection certificate(s) based on the European patent. (b) Where any such supplementary protection certificate has been granted at the date of lodging the Application, the holder(s) of the supplementary protection certificate(s) shall if different from the proprietor(s) of the patent lodge the Application together with the proprietor(s). (c) Where any such supplementary protection certificate is granted subsequent to lodging the Application, the opt-out shall take effect automatically on grant of said supplementary protection certificate(s), and the holder(s) of such supplementary protection certificate(s) based on the European patent shall notify the Registry of the details required under Rule 5.3. (d) Rules 5.7. and 5.9  shall apply mutatis mutandi in relation to actions commenced in respect of any supplementary protection certificate. (e) For the avoidance of doubt, it is not possible to opt out supplementary protection certificates (whether granted by the authorities of a Contracting Member Stare or otherwise) based on a European patent with unitary effect.”

In this quick sneak preview, two comments may be advanced in relation to the provisions governing applications to opt out:

First, making the effectiveness of the opt out subject to a fact beyond the control of the applicant (how long it takes for the registrar to make an entry of the opt out in the registry) appears to be at odds with a system that proclaims fairness to be one of the guiding lights of the UPC (Preamble of the UPC Agreement). If as expected there is an avalanche of opt-outs, the computer systems crash or, moving to a more mundane level, the registrar is simply lazy, it does not seem to be fair to leave the applicant exposed to the risk of being caught within a system where it never requested to be in the first place.

th draft of the Rules of Procedure the situation is even worse as the fee would be applied for not providing a service at all! Let alone the debate around whether the retrospective application of such fee would resist the CJEU’s scrutiny or whether the UPC Agreement or Regulation 1257/2012 provide a legal basis for the opt-out fee. In this author’s opinion, they do not.

Should the judgment of 27 February 2014 be taken as a word of warning? We will see, although one does not need a crystal ball to understand that forcing patentees that do not want to use the system to fund the costs of those who may want to use it cannot be right. Clearly, the opt-out fee has an exclusively budgetary purpose, the very budgetary purpose that the CJEU has found to be contrary to EU law, albeit in a different context, in paragraph 23 of this judgment.  All in all, time will tell whether those who sow the wind, will reap the whirlwind.