Opt-Out or Stay In

Opting out removes the UPC’s jurisdiction over a given European patent so that the national courts retain sole jurisdiction over it. In other words the litigation options for that patent remain the same as before the start of the UPC. The opt-out declaration is effective from the day of entry into the UPC register if all requirements are observed. The current set up of the UPC Case Management System requires that each patent, to be opted out, is identified individually by its application or publication number. 

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Any European patent that has already been granted by the EPO can be opted out. The same applies also to any pending European patent application. Once the application has been opted out, the opt-out declaration will continue to apply also for the granted patent.

The big exception are Unitary Patents (EP-UEs). They cannot be opted out and always fall under the jurisdiction of the UPC.

An SPC will automatically be opted out if the patent on which it is based is opted out. Even if a patent has expired, it is still possible to opt it out, e.g. in order to make sure that the relevant SPCs are opted out as well.

Handbook Chapter

Yes, the opt-out can be withdrawn at any time, even after the end of the transitional period. This restores joint jurisdiction of the UPC and national courts (if withdrawn before the expiry of the transitional period) or exclusive jurisdiction of the UPC (if withdrawn after the end of the transitional period). However, once the declaration to opt out has been withdrawn, no further changes regarding jurisdiction can be made. In other words: a second opt-out is no longer possible.

Patentees also have to bear in mind that the declaration to opt out cannot be withdrawn if the patent has been litigated in a national court. In other words, past or pending litigation before a national court irrevocably blocks the path to the UPC for the duration of the patent.

In principle, yes. An opt-out is possible for all pending European patent applications and patents until one month before expiry of the transitional period (seven years, which can be extended to 14 years).

However, an opt-out is no longer possible if an action has already been filed in respect of the relevant European patent before the UPC. In such a case, the UPC retains exclusive jurisdiction with effect for the participating member states for the entire term of the relevant patent.

Likewise, if a national action is filed after an opt-out has been declared, the opt-out cannot be withdrawn, irrespective of whether the national action is still pending or has already been concluded.

You can opt out from now on. The opt-out can be declared at any time until one month before expiry of the transitional period (seven years, extendable up to 14 years) provided that the opt-out declaration is still allowable (see "Can I opt out at any time?").

In respect to pending EP applications, an action may be brought before the UPC e.g. for revocation of the relevant patent upon grant, or for a declaratory judgment that the relevant patent claims are not infringed. While it is uncertain whether and under what conditions such kind of revocation action or action for declaration of non-infringement is admissible before the grant of the relevant patent, it cannot be excluded that the UPC will consider such action admissible, in particular if the patent is granted while the legal action is pending before the UPC.

To reduce the risk of such early action against a future patent, we recommend deciding on whether to opt out well before patent grant, for example upon obtaining the notification according to Art. 71(3) EPC. The early instruction to opt out a pending patent application will help making sure that the “opt-out” is registered before the patent is granted and thereby effectively disable later revocation actions or actions for declaration of non-infringement before the UPC from being successful. It may also discourage third parties from even trying to invoke the UPC to attack patent applications for which an opt-out has been registered.

The patent portfolio should be analysed in order to identify those patents that are to be opted out from the exclusive jurisdiction of the UPC (see "On what basis will I decide whether to opt out some or all my patents?" for more information). This also applies to pending European patent applications. Additionally, ownership issues with existing European patents should be assessed since co-owners must opt out jointly (see "Who can opt out?")

Opting out means that your patent is protected from central UPC revocation actions. If a third party prevails in the request of a UPC revocation action, the patent in suit will be revoked in all UPC countries at once. The UPC revocation action can be filed any time during the lifetime of a patent.

Before the start of the UPC, central revocation of a European patent has only been possible via the EPO opposition procedure; however, this procedure must be initiated within nine months as of the publication of the grant of the patent. After the expiry of the nine-month period, revocation actions for a European patent can only be pursued in national proceedings. These are only effective for one country.

Patentees should expect that their most valuable patents may well be targeted by competitors through UPC revocation actions and give serious consideration to opting out such patents.

Handbook Chapter

Although the opt-out decision can be withdrawn (only once!) a third party can trap the patent in its opted-out state by initiating national litigation. If many national proceedings are started, litigation costs may be higher than before the UPC. On the one hand, the door to the UPC is shut for good once national proceedings have been initiated, and the opportunity to test and influence the UPC is missed. How much of a loss that is depends on how useful UPC enforcement is in the individual case. On the other hand, patent litigation in national courts has been working for decades and the procedures are well known.

The UPC revocation action is the first procedure whereby a third party can request revocation of a European patent (for all of the UPC-participating countries) at any time during the lifetime of the patent.

Without going into too much detail of a UPC revocation action, it is useful to look at some of its key characteristics. The proceedings are fast, effective over a large and commercially valuable territory. The UPC revocation action can be filed at any time, and reimbursement of patentee’s legal costs in case of an unsuccessful attack is capped, albeit at a relatively high level. It may be possible to initiate a UPC revocation action with moderate costs (as compared to e.g. multiple national revocation actions).

Thus, the UPC revocation action shares some traits with US IPR proceedings. On this basis, it is possible that the impact of the UPC revocation action in Europe will be similar to that of the IPR proceedings in the US when they were introduced some years ago.

Before the start of the UPC central revocation of a European patent was only possible via the EPO opposition procedure; however, this procedure must be initiated within nine months of grant of the patent.

The only procedure available after the expiry of the nine-month opposition period is to initiate national revocation actions. However, these are only effective for one country, and these procedures are generally time-consuming and expensive if several revocation actions are to be run in different countries.

Patentees must expect that individual patents which have become highly valuable may well be targeted by competitors through UPC revocation actions and should give serious thought to opting out such patents. In this connection, patentees should consider as well that pending opposition proceedings before the EPO do not protect valuable patents from a second attack before the UPC.

First, you need to assess and balance the risks of a central attack against the advantages of UPC enforcement – ideally for each individual patent. This depends on many factors including significance and strength of the individual patent, nature and characteristics of products concerned, market and competition, logistics and budget:

• Which of my patents are so valuable that I cannot risk a central revocation action?
• Can I deal with possibly several central revocation actions at once under a new regime with strict and very short deadlines?
• How useful is cross-border enforcement, including the new inspection proceedings, for my case?
• Are the new and enhanced inspection proceedings before the UPC useful for my case?
• Where do the competitors manufacture, and where do they sell? If this is the case in countries where currently no effective or fast legal protection exists, this may speak for litigating before the UPC.
• How adequate is the alternative to UPC enforcement (e.g. to how many and which courts would I have to go to achieve my commercial objectives)? 

Opting out everything at first maintains the status quo and could be considered a safe option. The biggest risk – the UPC revocation actions – are avoided. One can also later withdraw the decision for each patent and opt back in to the UPC system, provided that no national litigation has been initiated with respect to that patent in the meantime.

However, this approach has some drawbacks, both in the short term und long term.

Short term, you risk being prevented from using the UPC for exactly those patents where UPC enforcement will put you in a stronger position. Competitors can trap opted-out patents permanently in national litigation by initiating a lawsuit in a national jurisdiction. This may effectively decrease the value of those patents.

Long term, companies who opt everything out may lose the opportunity to shape the UPC case law by having fairly strong patents litigated before the UPC. If most big players in certain industry sectors opt out all of their strong patents, this could jeopardize the acceptance and attractiveness of the UPC. Good cases make good law, bad cases make bad law.

The proprietor of a European patent or the applicant of a published EP application is entitled to opt out. They can also entrust another person, such as a European Patent Attorney, to prepare and submit the opt-out declaration.
Co-owners must opt out jointly or in agreement. This applies also where different designations in UPC signatory states are owned by different legal entities.

If an SPC and its basic patent are owned by different entities, then the opt-out must be performed by both entities, together, in order for it to apply to the SPC.

Licensees are not able to apply for an opt-out. This applies even to exclusive licensees. Therefore, if a licensee has a preference for opting out, they should take this issue up with the patentee in good time. Also, license agreements should be checked as to whether a right of the licensee to enforce a patent or similar rights may result in a contractual obligation for the patentee to respect the licensee’s preference with respect to whether or not to opt out.

Co-owners must opt out jointly or in agreement. This applies also where different designations in UPC signatory states are owned by different legal entities.

As a result, it is crucial to approach other co-owners in time to seek their approval if an opt-out is desired, to collect relevant documentation, and to prepare a jointly signed authorization for the person submitting the opt-out application.

If an SPC and its basic patent are owned by different entities, then the opt-out must be performed by both entities, together, in order for it to apply to the SPC.

Opt-out declarations are submitted to the UPC registry using an online procedure. 

The acknowledgement of receipt and registration of the opt-out declaration does not result in the opt-out having been validly declared. The application to opt out can be corrected, but this will only be possible as of the date of the registration thereof.

The validity of an opt-out declaration can be challenged before the UPC.

No, but your attorney may charge a fee for performing the opt-out process.

During that transitional period (at least seven years) the UPC will acquire joint jurisdiction over your European patent, together with the national courts. This means that the patentee can enforce its patent either before the UPC or before one or several national courts, and an invalidation action or action for declaration of non-infringement can be initiated either at the UPC or before the competent national courts with respect to that European patent.

After the expiry of the transitional period, the UPC will acquire exclusive jurisdiction (in the UPCA territory) over all European patents and pending applications that have not been opted out.