International Litigation: Litigating Patents in Europe: A Whole New Ball Game

It’s a whole new ball game for European patent ligation: The Unified Patent Court opened for business on June 1, 2023.

U.S. companies and other patent holders doing business in Europe—and their lawyers—stand to benefit greatly. “Previously, patent cases had to be filed in individual countries,” says Kristof Roox, a Brussels-based partner in Crowell & Moring’s Intellectual Property Group. “The establishment of the UPC means that cases are filed in one court whose jurisdiction extends to all countries that are signatories to the UPC Agreement (UPCA). One set of laws applies instead of many, and costs are lower.”

Pre-UPC: A patchwork system

European patents are granted by the European Patent Office under the 1973 European Patent Convention. Patents granted by the EPO are known as classic European patents, or EPs.

This system has considerable limitations, however. Chief among them is that an EP is a bundle of national patent rights and, consequently, patent litigation takes place on an individual-country basis. Each country not only has its own laws and courts, but also has its own patent renewal fees and official language(s) for proceedings and translation. The outcome of litigation in any one country has little to no impact on litigation in any other country.

The result is a fragmented, patchwork system governing European patents that is inconsistent, costly, and highly impractical. It favors deep- pocketed parties that can afford to litigate potentially lengthy matters in multiple jurisdictions.

What is UPC?

The UPC is an international court whose legal basis is the UPCA, which is an intergovernmental treaty that was signed by 25 EU members in 2013. Only EU members can participate in the UPC; all have signed the UPCA except Croatia, Poland, and Spain. Of the 27 EU members today, 17 have ratified the UPCA (see table, page 27) and the remaining seven members are expected to do so eventually.

As part of the new system, the EPO can now also grant European patents with unitary effect known as UPs (unitary patents).

The UPC’s structure is simultaneously simple and complex, notes Roox. The simplicity lies in the fact that there are two levels of courts, the Court of First Instance (i.e., lower court) and the Court of Appeal. But things get complicated with the Court of First Instance, which has three divisions.

There are 13 local, country-specific divisions in 10 countries (Germany has four local divisions due to the historically large volume of patent cases in its courts). The regional division comprises Estonia, Latvia, Lithuania, and Sweden, which have agreed to have their cases heard in Stockholm. Infringement claims can be brought in the local/regional divisions of the UPC where the infringement has occurred or where the defendant is located.

The central division adjudicates patent revocations (i.e., invalidations), with certain exceptions. Its main seat is in Paris, with additional seats in Munich and Milan, and its work is divided according to the subject matter of the patent in dispute. Three countries that aren’t in a local or regional division—Bulgaria, Luxembourg, and Malta— bring actions in the central division.

The Court of Appeal is in Luxembourg and hears appeals of decisions by the Court of First Instance. Both the Court of First Instance and the Court of Appeal can file requests for preliminary ruling on questions about EU law with the Court of Justice of the European Union.

Jurisdiction and transitional period

The UPC has exclusive jurisdiction over EPs and UPs. During a seven-year transitional period that started when the UPCA went into force (and which may be extended by up to seven years), actions relating to EPs may alternatively be brought before national courts or other competent national authorities.

EPs can be opted out of the UPC’s jurisdiction in the transitional period. Patent holders can even opt out EPs and then opt back in if they want to take advantage of the UPC system. Once national proceedings related to an opted-out EP have started, however, the opt-out cannot be withdrawn. The UPC has exclusive jurisdiction over UP applications, which cannot be opted out of.