Insights Opting out of the UPC – Strategic Considerations


Opting out of the jurisdiction of the UPC in respect of traditional European Patents (EPs) will become possible from the start of the Sunrise Period on 1 March 2023. If patentees take no action their existing EPs (published applications and granted patents) will automatically become subject to the competence of the UPC once the court becomes operational on 1 June 2023. Patent proprietors will therefore need to give careful consideration over the coming months, prior to the UPC opening its doors, to the question of whether they should opt out some or all of their EPs from the jurisdiction of the UPC so that those patents may only be litigated in the relevant national courts. In this article, we look at some of the factors that a patentee may wish to consider when deciding whether to request an opt-out.

Undoubtedly the main disadvantage of the new UPC system for patentees is the risk of central revocation actions – by launching a single action in the UPC, a claimant may successfully invalidate an EP (that has not been opted out) in all member states participating in the UPC for which the patent is designated. Patentees may also be at an increased risk of declaration of non-infringement actions (DNIs) under the UPC system as the requirements for DNIs are lower in the UPC than in many other European countries. The main advantage of the UPC for patentees is the possibility of pan-European enforcement of an EP via a single action in a single forum – patentees may obtain relief, including an injunction and damages, in respect of an EP that has been infringed, which has effect in the territories of all participating member states for which the EP is designated.

Another perceived downside of the UPC is the untested nature of the court – at least at the outset, there will be no UPC case law to provide an indication as to how matters will be decided, and it will take time before the uncertainty over how the procedural rules will be applied and how the court will operate in practice is resolved. This may give certain patentees reason to opt out until the system has been tested and they can see for themselves how things are working on the ground.

Whether or not any particular EP (including any related SPCs) within a portfolio should be opted out from the competence of the UPC will depend on the circumstances of the specific case and the extent to which the advantages of the UPC system outweigh the downsides. The following general factors may be relevant to deciding whether to request an opt-out:

  • Value of the patent: If the patent or pending application is a so-called “Crown Jewel” patent, in that it covers very important and/or valuable technology, a patentee may prefer to shield such a patent from the risk of a central revocation action before the UPC as well as from the risk arising from the lack of any case law and uncertainty over how the court will work in practice, and opt out this type of patent. It is expected that many proprietors will choose to opt out their most valuable patents or at least one patent within a valuable family, at least initially. Patentees may also consider filing divisional applications of valuable patents and then opting out the parent while leaving the divisional to fall within the jurisdiction of the UPC.
  • Strength of the patent: If a proprietor is confident that their patent is strong from a validity perspective i.e., that a validity attack could be successfully defended, for example if the patent has already survived one or more EPO oppositions, they may be less concerned about the risk of a central revocation action in the UPC and may be inclined not to request an opt-out so that they can benefit from the possibility of pan-European enforcement. However, it should be borne in mind that the patentee will have to defend the patent before a new and untested court. Conversely, proprietors may wish to protect patents known to be weak i.e., that are potentially vulnerable to revocation actions (for example if the patentee is aware of potentially problematic prior art) from the risk of central revocation before the UPC by filing an opt-out.
  • Relevance of pan-European enforcement: The extent to which the possibility of pan-European enforcement will be useful to a proprietor in respect of a particular patent will depend on the likely location of any infringers. If it is anticipated that a patent might need to be enforced against one or more infringers operating or selling in multiple participating member states, then the possibility of being able to bring a single infringement action in the UPC and of obtaining pan-European relief could be particularly attractive. Conversely, if it is known that actual or potential infringers are operating in only one or two member states then the proprietor may prefer to opt out the patent to avoid the risk of a centralised revocation action in the knowledge that it would be feasible and not excessively costly to bring infringement actions in those national courts where the infringement is likely to occur. In some cases, where the proprietor has deep pockets, the proprietor may wish to opt out its patents in order to force defendants into costly litigation in multiple national courts (with the aim of deterring parties from filing invalidity attacks or counterclaims).
  • Risk of getting ‘pinned’ in national courts / ‘locked out’ of the UPC: Since an opt-out can be withdrawn once, patent proprietors may decide to opt out a patent at first and then withdraw the opt-out only if an infringement action before the UPC is intended. However, withdrawal is no longer possible if an action involving the opted-out patent has already been brought before a national court (this broad wording is understood to include an action pending in a national court at any time i.e., before or after the official start of the UPC). As such, patentees should be aware that, if a patent has already been the subject of national litigation in a participating member national state before the start of the UPC, withdrawal of an opt-out will not be possible and enforcement in the UPC will be blocked permanently. Third parties or potential may also seek to capitalise on this rule by launching a ‘random’, low-cost national action whilst the patent is opted out thereby “locking” the patent in the national court system and out of the UPC system.
  • Possible implications for national patents in the same patent family: Some of the member states participating in the UPC, such as Germany and France, have amended their national laws governing the prohibition of double patenting between EPs and national patents, so that stricter rules apply if an opt-out is filed. Patentees should therefore be mindful of these national laws in cases where they are considering opting out an EP which has parallel national patents in participating member states.
  • Influence over UPC jurisdiction and case law: Whilst the unpredictability over how the new court system will operate may deter some patentees from participating initially, large companies for whom patent litigation is of key importance may opt to keep their patents in the UPC system so that they can be actively involved in UPC litigation and can shape and influence how the case law and procedure develops.
  • Speed of decision: The aim of the UPC is to reach decisions on both infringement and validity within 12 months. As such, for patentees wishing to obtain a quick decision, the UPC could provide a significant advantage over jurisdictions where the courts are known to operate much more slowly.
  • Patent ownership: An opt-out request must be signed by all actual proprietors of the patent and a declaration of entitlement must be submitted by each proprietor. Accordingly, before any opt-out request is filed, the chain of ownership should be checked, as should the EP and national registers to ensure that the correct applicants and/or proprietors are recorded. If the co-owners of an EP cannot agree on whether to opt out, then an opt-out will not be possible. If a patent is licensed, the licence should be reviewed to check whether it contains any provisions that give the licensee any say in the decision of whether to opt out the patent. If required, consent should be sought from the licensee to opt out.
  • Costs: Although there is no official fee for submitting an opt-out declaration, the filing process will typically be conducted by a European patent attorney. As such, the process will entail some costs – whilst these costs may be modest on a per patent basis, they could become significant if the entirety of a large patent portfolio is opted out or if the recordal of the correct proprietors needs to be checked. Costs can be reduced or avoided if EPs are left to fall within the jurisdiction of the UPC or if only a few patents within a large portfolio are opted out.

In respect of patents that will be granted after the UPC becomes operational on 1 June 2023, patentees will need to decide whether to request unitary effect (the resulting UP will automatically fall within the jurisdiction of the UPC and may not be opted out) or whether to leave the EP as a bundle of individual patent rights, which during the transitional period will be subject to the dual jurisdiction of the UPC and national courts. In deciding whether to request unitary effect and/or whether to opt out EPs for which unitary effect is not sought, proprietors will need to consider similar factors to those outlined above.