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The Unitary Patent Court Alarm Bell (and How to Use the Snooze Bar) The Unitary Patent Court Alarm Bell (and How to Use the Snooze Bar)

The Unitary Patent Court Alarm Bell (and How to Use the Snooze Bar)

Wake up! On February 17, Germany ratified the Unitary Patent Court (UPC) for Europe. This starts the countdown for both patent litigation via the (almost pan-European) patent court and the validation of new patents under the Unified Patent (UP) program in the same region. The UPC and the UP will begin June 1, 2023. 

Before then, beginning March 1, patent owners can opt out of the UPC’s jurisdiction for existing patents that have been validated in any of the UPC countries. Otherwise, by default, those patents will be swept into the UPC. 

Should you opt out? Many are dubious about embracing UPC jurisdiction since, for example, any UPC decision will be binding in all UPC countries. But there are factors favoring either choice, both for existing and for future patents, depending on how you view the balance of downside and upside risks.

Consider the economic scope of the territory for future Unified Patents. While not pan-European, the UPC region includes 17 EU members: Austria, Belgium, Bulgaria, Germany, Denmark, Estonia, Finland, France, Italy, Lithuania, Luxembourg, Latvia, Malta, Netherlands, Portugal, Sweden, and Slovenia. Taken together, these constitute 66% of European GDP and 14% of global GDP. That makes them the third-largest economy on earth—at least for patent planning purposes—after the United States and China, and before Japan, who have 25%, 19%, and 5% shares, respectively. With Unified Patent (UP) annuity costs set at about the price of the four most used jurisdictions for validation, access to patent enforcement in the combined market will be a relative bargain.

But this does not apply to previously validated patents. UPC or not, those stay limited to the countries of the original validations. Opting in does not expand the scope of enforcement to the full UPC region.

So all that is on the table in the next 90 days are the change in venue and the promise (or specter) of the consolidated cost of bringing suits in multiple countries—both of which patent owners and infringement defendants alike may crave or fear. 

Only patent owners get to choose. And those patent owners remember with dread the “death panels” presiding over early expanded post-grant proceedings at the U.S. Patent and Trademark Office. Few want to be first in line to learn how cases will be handled by the UPC substantially and procedurally.

Many also regret the lack of inclusion of other economies. But just as it is incorrect to consider the GDP scope of the full UPC region in making the present opt-out decision, strategists should avoid a sunken opportunity fallacy. True, England has left the EU. Spain, Poland, and Croatia have declined to join the UPC. Ireland, Romania, the Czech Republic, Greece, Hungary, Slovakia, and Cyprus are still on the fence. But these old hopes have nothing to do with making an opt-out decision in the next 90 days for existing UPC region patents.

Opting out is easy if you act promptly. There is no government fee. Each owning entity—e.g., each company or each group of companies jointly holding title to patents—can simply have their agents submit a list of patents to keep out of the UPC.

If you change your mind later, there are similar free procedures for opting back in—provided you do so before any action is instituted at the UPC.

Is skepticism about UPC jurisprudence warranted? Stay tuned.

This publication is intended for general information purposes only and does not and is not intended to constitute legal advice. The reader should consult with legal counsel to determine how laws or decisions discussed herein apply to the reader's specific circumstances.
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