On 28 May 2024, the UPC Court of Appeal (in decision UPC_CoA_22/2024) upheld a decision of the Court of First Instance, Central Division (Paris Seat) not to stay revocation proceedings before the UPC pending parallel opposition proceedings before the EPO concerning the same patent. Following previous Court of Appeal decisions, this non-technical appeal was adjudicated by a panel of three legally qualified judges.
The Appellant, Carrier Corporation (“Carrier”), had lodged a request pursuant to Rule 295(a) of the Rules of Procedure of the UPC seeking a stay of the proceedings pending the outcome of these opposition proceedings before the EPO. Shortly prior to their request for a stay in the UPC proceedings, Carrier requested that the EPO accelerate the opposition proceedings.
Rule 295(a) states (emphasis added):
“The Court may stay proceedings where it is seized of an action relating to a patent which is also the subject of opposition proceedings or limitation proceedings (including subsequent appeal proceedings) before the European Patent Office or a national authority where a decision in such proceedings may be expected to be given rapidly.”
When there are accelerated proceedings before the EPO, Rule 298 states (emphasis added):
“The Court may stay its proceedings in accordance with Rule 295(a) pending the outcome of such request and any subsequent accelerated proceedings.”
In their appeal, Carrier argued that “rapidly” in Rule 295(a) should denote relatively quick proceedings compared to either the typical pace of opposition proceedings or the expected pace of the UPC proceedings, or both. The Court of Appeal set out that, as a general principle, the Court will not stay proceedings. It held that the mere fact that the revocation proceedings before the UPC relate to a patent which is also the subject of opposition proceedings before the EPO is not sufficient to allow an exception to this principle.
The Court reaffirmed that decisions in which the UPC and EPO issue different rulings on the revocation of a European patent are not irreconcilable – the latter decision will prevail, ideally having been made with the earlier decision taken into account. The term “rapidly” in Rule 295(a) is to be interpreted in light of this principle.
The term “may” in Rules 295(a) 298 means that the Court has a discretionary power to stay the proceedings when a rapid decision may be expected from the EPO. Whether or not a stay is granted depends on the balance of the interests of the parties. The Court held that acceleration is relevant to this assessment, but that the mere fact that the EPO has granted a request to accelerate the opposition proceedings is not sufficient to stay revocation proceedings before the UPC.
In this case, despite the fact that the EPO had accelerated proceedings, the fact that the scheduled date for oral proceedings in the EPO opposition (25 October 2024) was over four months after the scheduled date for the oral hearing in the UPC revocation proceedings (21 June 2024) led to the Court finding that no ‘rapid’ decision from the EPO was expected, and no stay was granted. The continuation of revocation proceedings in parallel with the opposition proceedings was deemed not to place an unreasonable burden on Carrier. The fact that the Court of First Instance declared the Carrier’s request to amend the patent inadmissible in respect of claims other than claim 1 also was not sufficient to alter the Court of Appeal’s assessment.
Impact for patentees
By setting out the above principles, the Court makes it clear that stays will only be granted at the UPC in very narrow circumstances. The mere fact that there is a parallel opposition, accelerated or not, is insufficient. This leads to the very real prospect of patentees having to defend their patents on two fronts. As stated by the Court of Appeal: “Where one body upholds the patent and the other revokes it, the latter decision will prevail.” This is likely to be troubling news for patentees, who under the right circumstances, may prefer to opt out their patents from the UPC system until such a time that they wish to initiate infringement actions, whereupon the opt-out could be withdrawn. This would avoid the danger of facing a revocation action at the UPC alongside an opposition at the EPO.
This decision adds some clarity to an already fast-developing body of case law on stays before the UPC. Although it was not referenced in this decision, the test of requiring a “concrete expectation” in the near future was seen in a decision in November by the Munich Central Division in a revocation action between Astellas and Healios (UPC_CFI_80/2023), In that decision, despite an opposition hearing date being set only three months before the oral hearing for the revocation action before the UPC, the Court did not consider this to be ‘rapid’.
However, some questions remain unanswered. For example, if a decision in opposition proceedings was due to be given during the written proceedings before the UPC (and well in advance of the oral hearing) it might be justifiable for a short stay to allow parties to take that decision into account in pleadings before the UPC. It is not clear whether this would be within the narrow circumstances envisioned by the Court. However, considering the Court of Appeal’s comments in this decisions on the timeline of opposition appeals at the EPO it appears highly unlikely that a long-term stay would be enforced:
“To avoid unnecessary duplication of proceedings, a long-term stay of the revocation proceedings would therefore be required, as it is not in dispute that the losing party will appeal against the decision in the opposition proceedings. Such a long-term stay is clearly at odds with the aforementioned guideline of an oral hearing within one year and clashes with the Respondent’s legitimate interest in obtaining a decision by the UPC to determine its freedom to operate as soon as possible”
Regardless, the Court’s default position is clear in that stays at the UPC will not be granted. We will have to wait for the development of more case law before we see what narrow conditions might prevail in obtaining a stay, short term or otherwise.
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The present decision of the CoA of the UPC has been commented in another blog.
What is noticeable is not only that the CoA has put the bar for a stay extremely high, it has also claimed supremacy of the UPC over the boards of appeal of the EPO.
It is noted, but only as an aside in the article, that decisions of the EPO and of the UPC are not necessarily irreconcilable. As such this is correct, but only part of the story.
In Point 25 the CoA said the following:
“…., the interests of harmonising decisions on the validity of a European patent can be promoted by ensuring that the body that decides last can take the decision of the body that decides first into account in its decision. That means that the interests of harmonisation in general do not require a stay by the UPC where it can be expected that the UPC will issue its decision first…..”
In view of the inherent different time limits in the different procedures, the UPC will always decide first. This has nothing to do with harmonisation. What the CoA claims in Point 25 is simply supremacy of the UPC over the boards of appeal of the EPO.
If the UPC has maintained a patent and found it infringed, the patent might still be revoked by a board of appeal of the EPO. With the patent revoked by the EPO the decision of the UPC becomes obsolete, not to say irrelevant.
It can also happen that the UPC revokes a patent which is eventually maintained by a board of appeal of the EPO, even in a limited form. The prior art taken into account might be different, but more important the interpretation of the claim might be quite different.
Such a situation can also happen with contradictory decisions of a national court with that of a board of appeal of the EPO. With the limited geographic reach of a national decision, this is acceptable. In view of the larger reach of UPC decisions, the consequences of such diverging decisions can be much less favourable for the parties.
after all, why should a decision of the UPC prevail over a decision of the EPO? For instance, interpretation of a claim when it comes to grant or validity, can be quite different as when it comes to infringement. Irreconcilable decisions are thus perfectly possible, not to say pre-programed.
If an infringer had to pay damages at the UPC and the patent will eventually have been revoked by the EPO, were will the infringer get his money back? Conversely, if a patent is maintained by the EPO but revoked by the UPC, were will the proprietor get compensation for a possible infringement?
Those questions are not of theoretical/academic nature, and rather to think whether the UPC will come up with more lenient requirements for a stay, an answer those questions is due.
At a conference, “EPO UPC friends of foes?”, Sir Robin Jacob wanted to hear from the chair of the legal board of appeal of the EPO that the EPO will follow the case law of the UPC. The rather diplomatic answer was “It depends”.
A panel member at this conference, patent attorney in private practice, has also mentioned the possibility of more oppositions at the EPO, for instance from generics manufacturers, as those companies have no interest in a quick decision on a patent.
We are thus not yet at the end of the story when it comes to a stay.
The possibility of irreconcilable decisions between the UPC and the EPO has never been seriously taken into consideration when the UPC was set up.
The primacy of the UPC over all other patent jurisdictions has always been held as its founding dogma.
But even dogmas have to confront reality.
I can imagine that if the UPC were to grant the stays, everyone would rush to file opposition to most of the patents just to slow down possible future decisions of the UPC against an infringer. I think the only way to solve this conflict is for the EPO to give priority to patents already before the UPC, so that the delay between the two decisions is minimised
There is no real way to solve the conflict, but for the EPO to follow the decisions of the UPC.
An opposition cannot be started before 9 months from grant.
An infringement or revocation action before the UPC can start immediately after grant, if the patent is not opted out.
By the time there is a decision from the OD, the CFI of the UPC might have taken a decision.
Once the OD has decided, even as quickly as possible, there are two months to file an appeal and 4 months to file the grounds for appeal.
For your information, the EPO has officially decided to accelerate opposition and appeal as soon as it is informed of an action before the UPC.
In view of the inherent time limits, the EPO will never be as quick as the UPC.
The risk of irreconcilable decisions between the two bodies is thus real, unless the boards of appeal decide to slavishly follow the UPC. I hope to never to see this!
The BA is going to follow the UPC as long as the UPC follows the EPC, and viceversa, the convergence point is there, no one is going to want to diverge.