Continuing our series of posts on the UPC, we consider why a European patent holder might choose to opt out of the system.

As set out in our previous blog post, we expect that the Unitary Patent and the Unified Patent Court will come into existence in early 2017.

When the UPC first comes into effect, there will be an important transitional period whereby proprietors of existing European Patents will be able to “opt-out” of the new regime. It is expected that the decision of a proprietor to “opt-out” of the UPC will last for the lifetime of the patent unless the “opt-out” is withdrawn.

Whilst an “opt-out” can be withdrawn at any time, a proprietor of a European patent can only decide to “opt-out” during the seven-year transitional period.

The transitional period

During the transitional period (currently set to be seven years) a European Patent will be able to be litigated either in the UPC or in the national courts. If a proprietor of a patent does not “opt out” within the transitional period, that patent becomes subject to the exclusive jurisdiction of the UPC meaning that those patent will not be able to be litigated in national courts and any decisions made in relation to those patent will have unitary effect.

The right to “opt out” cannot be exercised if prior to the appearance of an application to opt out on the register a claim is commenced in the UPC concerning that patent. Therefore proprietors of patents who do not want their patents subjected to the UPC system should opt out as soon as possible as earlier action by a competitor for a central revocation action could prove highly damaging.

Why opt-out?

There are many reasons why a proprietor may make a decision in relation to certain patents but we set out below some of the factors which are likely to be taken into account:

• Little damage by opting out:  we expect many proprietors to take a “wait and see” approach to see how the UPC works, the quality of its decisions.
• No fee to opt-out: can change mind to opt back into regime at later date.
• Risks of successful revocation action applying across all of Europe if do not opt-out.
• Opting out gives certainty over where proceedings can be brought.
• Licensing revenue: if a patent generates licence revenue across Europe may wish to opt-out to protect licensees, as a UPC decision could damage all licensees.
• How widely the patent is used throughout Europe?

Why not?

By opting out the proprietor of a patent loses all the potential benefits of pan-European protection. Infringement in different jurisdictions could result in numerous actions throughout Europe which can be expensive and difficult to enforce. A single application will mean that a strong patent has wide protection throughout Europe without the expense of filing a European Patent with numerous European offices.

See all of our articles about the UPC here. If you have any queries about these issues, please contact our patent litigation specialists Victoria Wright and Nicholas Mitchell.