Amelia19 /
4 June 2015EuropePaul England and Anja Lunze

UPC: The true meaning of opt-out

Our previous article discussed which type of patent can be litigated where in the new Unified Patent Court (UPC) system. This included the dual track—national and UPC—jurisdiction for classical European patents that will operate during the transitional period.

However, there is another important issue for proprietors of classical patents to consider during the transitional period: do they want to opt out of the UPC?

The UPC agreement states at article 83(3) that during the seven-year transitional period (and only then), the proprietor or applicant for a classical European patent may, if it wishes, opt out one or more classical European patents from the ‘exclusive competence’ of the UPC. We have put exclusive competence in speech marks here for a reason: most, it is probably fair to say, understand these words to mean that an opted-out patent is removed from the jurisdiction of the UPC entirely. In other words, an opted-out patent, and any supplementary protection certificate (SPC) based on it, can be litigated only in the national court of its validation for the entire period that it is in force.

There is, however, an alternative view. The alternative view is that removing a classical patent from the ‘exclusive competence’ of the UPC means it is still subject to the UPC’s non-exclusive competence. If this view were correct, then an opted-out patent would continue to exist in a dual jurisdiction like that of the transitional period, for its entire life.

At the time of the 16th draft of the Rules of Procedure, the drafting committee had added a note that appeared to rule out the alternative view. This note was then removed in the 17th draft, apparently reflecting ongoing discussions about the issue. Consequently, it remains to be seen whether the final version of the rules, which are expected this summer, will clarify this matter. We come back to the importance of this below.

First, there is another change introduced into the 17th draft rules to consider. This concerns a bar on opting out. It was already the position under the draft rules that the lodging of an action in the UPC concerning a classical European patent prevents that patent from being opted out later. This bar serves the purpose of preventing a patentee from disrupting proceedings in the UPC by opting out the patent being disputed mid-way through.

However, the 17th draft rules went further. An amendment was introduced to state that the bar on opt-out will be permanent, “irrespective of whether the action is pending or has been concluded”.

Consider also the right to withdraw an opt-out. This is provided for under article 83(4) of the UPC agreement. It allows a proprietor to effectively change its mind and withdraw an earlier opt-out, so that the classical European patent concerned is taken back into the exclusive competence of the UPC, once the transitional period has expired.

Much like the opt-out, there is also a bar on withdrawal, if the opted-out classical patent has become the subject of litigation in a national court. Again, this bar is permanent.

“A successful revocation action in the UPC will have effect in all the countries that are contracting to and have ratified the UPC.”

What does all this mean for patent proprietors and their competitors?

There are a number of factors that proprietors must balance when making a decision about opting out a classical European patent. These include uncertainty about how the new court will work, including concerns about the quality and consistency of the decisions that will be made and how long it will take the court’s procedures to ‘bed-down’. But there are also the potential, significant, costs savings and management efficiencies in litigating in as little as one set of proceedings in the UPC rather than potentially several national actions, in parallel.

However, there are two fundamental and countervailing issues that proprietors will need to weigh up about the UPC. These are the risks of revocation, on the one hand, because a successful revocation action in the UPC will have effect in all the countries that are contracting to and have ratified the UPC. On the other hand, there are the benefits of obtaining injunctions. This is because infringement actions, including preliminary injunctions, also apply to all those countries that are contracting to and have ratified the UPC.


The minimum number of EU member states that must ratify the UPC agreement for the court to come into force is 13. The revocation of a classical European patent in the UPC will have effect only in those countries that have ratified. Therefore, in the first couple of years of the UPC’s existence, before every contracting member state has had a chance to ratify, a patent may be revoked in fewer than the full 25 contracting member states.

As more countries ratify the UPC agreement, the scope of the effect of UPC decisions will become accordingly greater. The same point applies in respect of enforcement. Infringement actions, including preliminary injunctions, are applicable only in those member states that have ratified the UPC. In theory, an injunction may be effective in only as few as 13 countries if it is granted very early in the operating life of the UPC.

Nonetheless, the scope of application of decisions on revocation and infringement are extensive compared to the scope of national court decisions. In particular, decisions will cover the significant commercial markets of Germany, France and the UK from the outset, because the ratification of these countries is mandatory before the UPC can come into force.

The result is that a proprietor who does not opt-out a patent has the opportunity to enforce it in one action across multiple territories. But, they may also risk losing the patent across multiple territories in a single revocation action.

How proprietors decide to approach these risks will depend on how strong they believe their patents to be, their commercial value, their relevant markets and transportation routes, their general IP enforcement policy and how likely it is that they will ever need to enforce them. Furthermore, opting-out a large number of patents might sum up to a considerable financial burden for patent proprietors as the opt-out fee that is to be paid per patent has been suggested to be set at €80 ($89).

For some patentees the risk of central revocation of their most important patents will be determinative. This was reflected at an earlier stage when the draft rules appeared to allow the possibility of a revocation action being lodged in the central division of the UPC on the first day of its coming into force, before any opportunity for the proprietor to file an opt-out at the UPC registry.

This was eventually addressed by the introduction of a ‘sunrise’ provision to the draft rules. This provision will allow proprietors to opt classical European patents out at the European Patent Office (EPO) before the UPC agreement comes into force. The EPO will then transfer all opt-out applications to the UPC registry immediately upon the UPC coming into force, closing the window of opportunity for pre-emptive actions.

But could a patentee have it both ways? Could a patentee avoid the downside of a potential pan-European revocation by opting-out the relevant patent, followed by waiting until such time as they wish to enforce it and then withdrawing the opt-out?

They could do this, but it carries an apparent risk. As we have seen, if an action is started concerning a patent in a national court before it is withdrawn, the withdrawal option is permanently barred. If withdrawal is permanently barred so is the possibility of enforcing the patent in the UPC.

This raises a potential problem about the permanent bars on opt-out and withdrawal: abuse. If it is enough for any claim, however spurious, merely to be lodged in order to prevent opt-out or withdrawal, then it may be used tactically—for example, the lodging of a meritless revocation claim against an opted-out patent to prevent the patent ever being enforced in the UPC. If this is so, a patentee’s only guarantee of maintaining its pan-European enforcement option is never to opt out in the first place.

Or is it? This brings us back to the true effect of the opt-out. If the alternative view is correct—that opt-out only gives the national court a shared jurisdiction with the UPC—then this problem goes away, it seems, because the UPC would remain as a forum in which the proprietor can enforce, regardless of opt-out and regardless of whether the opt-out can be withdrawn.

Moreover, if the alternative view is correct, then patentees for whom the opt-out is important to avoid the risk of a pan-European revocation will be disappointed. It is a pressing issue, but it remains without a definitive answer.

Paul England is a senior associate at  Taylor Wessing in London. He can be contacted at:

Anja Lunze is a partner at Taylor Wessing in Munich. She can be contacted at:

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