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Opting out of the Unified Patent Court

The opening of the Unified Patent Court (UPC) is, at the time of writing, expected to take place in early 2023. The UPC will have exclusive jurisdiction over Unitary Patents, and eventually also over national validations of European patents in the states participating in the UPC. That represents a significant change to the current system, under which validity and infringement of European patents are subject only to the jurisdiction of the national court(s) in question.

Proprietors and applicants who do not wish their European patents to fall under the jurisdiction of the new court will be able to “opt out” of the UPC during a transitional period. If an opt out is filed, the current jurisdiction of national courts will be retained.

Opting out may be attractive to proprietors and applicants who do not wish their patents to be vulnerable to third parties seeking revocation in multiple European countries in a single court action via the UPC. Currently, a single revocation procedure for a European patent in multiple territories is only available during the EPO’s nine-month opposition period, after which revocation actions can only be brought on a country-by-country basis. Opting out may also appeal to those who want to wait and see how UPC case law develops before engaging with the UPC system.

For those planning to opt out, it will be important to have a complete understanding of, and evidence for, any previous changes of ownership of rights and there are benefits to ensuring that patent registers are up-to-date. In particular for more complex cases, or where there is concern that records may not be complete, it may be beneficial to review records now. This process could be time-consuming and for patents which are already in force and could otherwise be litigated at the UPC on day one, waiting to begin the process of identifying the ownership until the exact date of the UPC opening is known may be leaving it too late.

Filing opt outs: identifying the true owner

A sunrise period will begin around three months before the opening of the UPC, allowing opt outs to be filed before the UPC system comes into effect. Once the UPC has opened, it will be possible to file an opt out during a transitional period of at least seven years.

An application to opt out of the jurisdiction of the UPC must contain, among other things, the names and addresses of the relevant proprietor(s) or applicant(s) and the states for which they are proprietor(s) or applicant(s). Authorisation for filing the opt out also needs to be obtained from the proprietor(s) or applicant(s).

For the purposes of filing the opt out, the person entitled to be registered as proprietor or applicant (the “true owner”) is treated as the proprietor or applicant, whether or not they are named as such on the EPO or national registers. Where there are multiple proprietors or applicants, they must all file the opt out. Further, the opt out must be made in respect of all of the states for which the European patent was granted or are designated in the application, not only in respect of UPC Participating Member States.

This means that the true owners for each designated state of a European patent or application must be determined before an opt out can be filed. Failure to file the opt out in the correct name could result in the opt out not being valid, with the effect that the European patent in question could be found at a later stage to be subject to the jurisdiction of the UPC.

In most cases, the true owner(s) will simply be the proprietor(s) or applicant(s) named on the published patent specification or application, and as such will be easy to identify. However, careful consideration will be required when a transfer or a name change has taken place. In those circumstances the true owner(s) may not be named on the published patent specification or application, although they may be named on the relevant patent registers if the change has been recorded.

If, however, a change in proprietor or applicant details has taken place but has not been recorded on the relevant patent registers, or has been recorded on only some patent registers, then the identity of the true owner will differ from the person actually registered as such. The opt out must still be made in the name of the true owner(s), but the opt out must be filed with a declaration that the listed parties are the true owner(s).

When considering the identity of the true owner, it is important to remember that the opt out must be made in respect of all of the states for which the European patent was granted or are designated in the European patent application. This is understood to mean that the true owner(s) must be named for all relevant designated states (and validation and extension states, where fees were paid to the EPO), even those which are not participating in the UPC, and even those in which the European patent may have since lapsed or not have been validated.

Where an assignment has taken place, there is therefore a need to explore the chain of title in detail not only for those states in which the European patent was in force at the time of the assignment but for every state in which the patent was granted.

An example would be where: (a) a European patent was granted in respect of all EPC contracting states in the name of company A; (b) validated in Germany, France and the UK; and (c) subsequently those German, French and UK national parts of the European patent were assigned to company B by an assignment referring only to the German, French and British parts of the European patent. Under these circumstances an opt out (if desired) would need to name not only company B for Germany, France and the UK, but also company A in all other designated states named on the granted European patent specification, even though the European patent had lapsed in those territories.

Recommended practice

Careful consideration may be required in order to determine the true owner(s) of a European patent or application, so that the correct entity or entities can be named when filing the opt out. For applications or patents to be opted out, particularly if the opt out is to be filed in advance of the UPC coming into effect, we recommend taking action now to confirm who is entitled to be named as proprietor or applicant for each designated state, regardless of the current status of the patent rights in that state.

As a first step it would be prudent to identify European patents and applications for which a change of ownership has taken place at any point since filing the application. For those cases it will be necessary to determine who is entitled to be named as proprietor or applicant in each designated state. For a European patent assigned after grant, care may be required to determine whether the terms of the assignment transfer ownership only for countries in which the patent is in force or covers residual rights in countries in which the patent has lapsed or was never validated. Once the true owner(s) are identified, it should be checked whether those entitled persons are currently named in the patent registers.

If the true owner(s) are not named on the patent registers (e.g. because a transfer of ownership or name change has not been recorded), then it will be necessary either to file the opt out in the name(s) of the true owner(s) with a declaration that they are entitled to be registered as such, or to have the change recorded prior to filing the opt out. Under the UPC rules, the person shown in each national patent register and the EPO register is presumed to be the person entitled to be registered as proprietor or applicant, so it may be preferable to have any unrecorded changes in ownership recorded now, and prior to filing the opt out.

In addition, there are advantages to having the patent registers reflect the true owner(s) of a patent, whether or not an opt out is to be filed. Some national provisions (for example section 68 of the UK Patents Act) restrict the ability of a patentee to recover costs in the event that a change of ownership is not promptly recorded in the register. In UPC proceedings, the court can in some circumstances lower the ceiling for recoverable costs, and in deciding whether to do so the court must consider the procedural behaviour of the parties. UPC practice in this regard has not yet been developed, of course, but “procedural behaviour of the parties” may include a delay in recording an assignment. There may therefore be advantages to having the correct parties recorded on national patent registers even if a patent is to be kept in the UPC system.

J A Kemp’s Assignments team is able to effect recordal of changes in ownership in any jurisdiction and would be happy to assist in making sure that patents and applications stand in the name of the true owner on the various patent registers prior to filing an opt out.