Opt-outs are dealt with in Part IV of the UPC Agreement entitled “Transitional Provisions”. The prevailing view is that these provisions should be interpreted to mean that an opted-out patent is no longer subject to the jurisdiction of the UPC and the opt out shall remain in place for the lifetime of the patent. Furthermore, during an initial transition period of seven years, proceedings for infringement and revocation can be brought before national courts, irrespective of whether a European patent or application has been opted out.
However, when one looks at the provisions, such an interpretation, whilst it is certainly plausible and possibly correct, is not necessarily so. Indeed, it could be said that the provisions raise more questions than answers and there is at least one plausible alternative.
Article 83(1) of the UPC Agreement permits national actions only in respect of four explicitly indicated causes of action, namely an action for infringement or for revocation of a European patent, or an action for infringement or for a declaration of invalidity of a Supplementary Protection Certificate. Such national actions under this provision are only permitted for the first seven years after entry into force of the new regime. On this reading one then understands that the opt-out in Article 83(3) relates only, as it explicitly states, to the “exclusive jurisdiction” of The Unified Patent Court. According to this interpretation, the UPC retains exclusive jurisdiction over all European patents, unless a European patent has been opted out, in which case the UPC shares jurisdiction and national proceedings are permitted for certain causes of action for a period of seven years only.
These questions of interpretation are important not only for commercial certainty for owners of European patents and applications, as well as SPCs, but also for legal certainty as to the fundamental rights and obligations attaching to European Patents and SPCs based on them.
Part V of the UPC agreement is a series of provisions relating to the substantive rights attaching to all European patents and to which the agreement applies, including direct and indirect infringement. It is well understood that national laws, while stemming from the same EPC and CPC underpinnings, may be different in practice to each other and to how those prescribed in Part V of the UPC Agreement come to be interpreted by the new court. What then of the effect of an opt-out on the substantive law attaching to a European Patent? Was it the intention of the legislators to permit patentees the ability to so change the fundamental nature of a European Patent and retrospectively?
The UPC has not yet grappled with these fundamental questions which interested so many stakeholders in the run up to this new era.
Perhaps defendants in national proceedings may still challenge the jurisdiction of national courts to hear cases based on the proper interpretation of the transitional provisions in the UPC Agreement. Similarly, one would expect parties to proceedings before the UPC to seek to test the boundaries and interpretation of these critical provisions, perhaps even seeking to revoke at the UPC European Patents that have been opted out.
Any questions on the proper interpretation of the transitional provisions in the UPC Agreement must be resolved at first instance and then at the Court of Appeal. In resolving these questions, the court will need to engage with questions which go to the heart of the UPC regime, to questions of substantive law and to questions of the proper demarcation between national property rights and those which are the exclusive jurisdiction of the new regime. We await the judgment of the UPC on this matter.
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Should Art 83(3) not be interpreted in the light of Art 32, which defines the exclusive competence of the UPC?
Art 32(1) defines the exclusive competence of the UPC, whereas Art 32(2) defines actions:
– which do not come within the exclusive competence of the UPC; and
– for which the national courts of the Contracting Member States remain competent (regardless of the existence or expiry of any transitional period).
The distinction that the UPCA draws between actions under Art 32(1) and Art 32(2) rather suggests that there is no difference between:
– falling outside of the EXCLUSIVE competence of the UPC; and
– falling outside of the competence of the UPC.
Unless, that is, one believes that the competence of the UPC extends to actions (under Art 32(2)) for which the national courts remain PERMANENTLY competent, such as determination of ownership disputes.
I would also add that the proposed, rather unusual, interpretation of Art 83(3) would render Art 83(1) otiose. If an opt-out were required to ensure that national courts remain competent during the transitional period, then Art 83(1) becomes meaningless on its own.
Personally, I would instead focus my attention on the other point mentioned in the post, and in particular whether it can possibly be correct that the mere filing or withdrawal of an opt-out could, by virtue of changing the applicable law of infringement, change (for one and the same EU Member State) the conclusion on whether an act by a third party infringes a patent. Think, for example, of the divergent Bolar / experimental use exemptions and the fact that various UPC Participating Member States have not (fully) aligned their national laws with the provisions of the UPCA. Now THAT would be an interesting point to see addressed by courts.
I would focus my attention also on the wording of Art 83(1), which seems to imply that only actions defined at Art. 32(1) (a), (d) and – maybe – (e) may still be brought before national courts or other competent
national authorities during the transitional period, in the absence of an opt-out.
Therefore, actions for declarations of non-infringement, actions for provisional and protective measures and injunctions, and actions for damages or compensation could not be brought before national courts during the transitional period, in the absence of an opt-out.
Where is it written in the UPC that the opt out shall remain in place for the lifetime of the patent?
A withdrawal of the opt-out is explicitly foreseen in Art 84(4) UPCA. The fact that an opt-out can be withdrawn has a consequence which has not been fully thought through.
I am going further than just Bolar/experimental use exemptions.
In case of an opt-out, an potential infringer can only be sued before a national court with limited costs and territorial competence.
If the opt-out is withdrawn, a potential infringer can be sued before the UPC which entails more costs and has a much wider territorial competence.
The question which arises is whether the opt-out applies ex-nunc or ex-tunc. This question has not been settled in the UPC, but is of utmost importance. The VCLT is of no help in this matter.
In case of a counterclaim for nullity the patent could be limited or revoked. This effect is clearly ex-tunc, so that it can be considered that the effect of the withdrawal of an opt-out is actually ex-tunc. If it is ex-nunc, the consequences might be less severe, but still rather drastic in matters of cost and territorial competence.
The ex-tunc effect is actually a problem as it boils down to a retroactive application of the UPCA which can have dear consequences for the potential infringer. This effect would solely be dependent from the will of the patent proprietor.
Retroactive effect of legal rules is a very delicate subject. This is even more the case as it would be at the whim of a private entity. I am not sure that the possibility of an ex-tunc effect of the opt-out of the withdrawal would be considered in conformity with the constitution of most, if not all, member states of the UPCA.