UPC Court of Appeal Clarifies Requirements for Withdrawing an Opt Out
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UPC Court of Appeal Clarifies Requirements for Withdrawing an Opt Out

In a recent decision in case UPC_CoA_489/2023, the UPC’s Court of Appeal overturned an order of the Court of First Instance (Helsinki Local Division) that the withdrawal of an opt out was invalid. The decision provides helpful clarification on the situations in which an opt out can validly be withdrawn.

Background

Since the start of the transitional period[1], proprietors have been able to opt out their European applications and patents from the jurisdiction of the UPC. However, should a proprietor change their mind, the opt out may be withdrawn (the proprietor can in effect “opt in”), thus allowing the proprietor to bring an action at the UPC based on a patent that had previously been opted out.

Article 83(4) UPCA however stipulates that the withdrawal of the opt out is valid only if an action has not already been brought before a national court. Such a national action would have the effect of ‘locking out’ the opted-out patent from the jurisdiction of the UPC by preventing the opt out from being withdrawn. However, the wording of this provision does not explicitly state whether the national action must have been brought within a certain timeframe for it to have the ‘locking out’ effect.

Details of the case

The proprietor of EP3295663, AIM, filed an opt out for the patent on 12 May 2023, during the sunrise period before the UPC entered into force. On 5 July 2023, AIM withdrew the opt out and on the same day lodged an infringement action and a request for a preliminary injunction against Supponor at the Helsinki Local Division of the UPC.

As part of their response, Supponor filed a preliminary objection, contesting the validity of the withdrawal of the opt out. Supponor argued that a national action which was brought before the German national courts in 2020 (before the start of the transitional period) and which was still pending at the time the opt out was withdrawn rendered the withdrawal ineffective. The Helsinki Local Division agreed with Supponor, accepting the preliminary objection and denying AIM’s requests for preliminary measures due to the UPC’s lack of jurisdiction.

In overturning the order issued at first instance, the Court of Appeal reviewed the meaning of the phrase “Unless an action has already been brought before a national court” in Article 83(4) UPCA. The Court considered the general principles of interpretation, the meaning of the phrase read in the context of Article 83 UPCA as a whole, and the object and purpose of Article 83 UPCA.

Ultimately, the Court’s opinion was that the phrase “Unless an action has already been brought before a national court” in Article 83(4) UPCA should be interpreted as referring to an action brought before a national court during the transitional regime (see headnote 2). The Court additionally noted that the term “action” in Article 83 UPCA refers to all actions mentioned in Article 32 UPCA over which the UPC has jurisdiction, not only to infringement and revocations actions (see headnote 1).

Thus, the Court decided in the present case that, given the national action had been brought before the German national courts prior to the start of the transitional period, the national action did not render the withdrawal of the opt out ineffective. The Court therefore set aside the first instance decision and referred the original infringement and preliminary injunction actions back to the Helsinki Local Division to decide on the substance.

Comment

This decision highlights the importance of carefully considering the litigation history of a case before filing or withdrawing an opt out. If an action has already been brought before a national court during the transitional period (on or after 1 June 2023), then filing an opt out will have an irreversible effect (precluding subsequent litigation at the UPC) because it will not be possible to withdraw the opt out. If, however, the action was brought before a national court prior to the start of the transitional period, then an opt out could be withdrawn, assuming there are no other national actions brought during the transitional period.

Generally, it seems from the caselaw to date that the UPC is reluctant to relinquish jurisdiction based on parallel national litigation. In this decision, the Court of Appeal notes at paragraph 29 that:

“The Court of Appeal rejects Supponor’s argument that the limitations to the possibility of opting out and withdrawal of opt-out serve the purpose of limiting the possibility of parallel litigation and the inherent risk of divergent claim interpretation. The chosen transitional regime deliberately creates a situation where parallel proceedings between national courts and the UPC are explicitly foreseen. If the CMS really would have wanted to prevent (the consequences of) parallel litigation, they would have chosen a different transitional regime”.

We have also previously reported here that the UPC has on multiple occasions decided not to stay proceedings involving patents which have not been opted out in view of parallel pending national proceedings.

Please contact your usual J A Kemp attorney if you have any general or case-specific queries regarding the requirements to file an opt out from the UPC or a withdrawal of an opt out.

[1] A seven year period from opening of the UPC on 1 June 2023 during which national courts and the UPC have shared jurisdiction over European patents (other than unitary patents, for which the UPC has exclusive jurisdiction).