Client Alert: Landmark UPC Court of Appeal Decision Opens the Way for More UPC Cases

In a landmark decision, the Unified Patent Court’s Court of Appeal has held that opt-outs from the UPC’s jurisdiction can still be withdrawn even if national proceedings initiated before the UPC’s start on June 1, 2023 were still pending on that date, that is such patents are not “locked out” of the UPC system (AIM v Supponor, CoA 489/2023, Nov. 12, 2024), overturning the first instance decision by the Helsinki Local Division, which had found that such pre-UPC proceedings block a later withdrawal of an opt-out (AIM v Supponor, CFI 214/2023, Oct. 20, 2023). The decision also resolves the disputed question whether national litigation concluded prior to June 1, 2023 could result in a “lock out”.

            As a result, a large number of the more than 600,000 opted out patents have now become “UPC material” that may be “battle tested”, having been subject to prior or still pending national litigation as long as that litigation commenced before June 1, 2023.

I.  Background

            European patent (EP) holders can opt out their EPs from the UPC’s jurisdiction during the seven year transitional period (Art. 83(3) Unified Patent Court Agreement (UPCA)). Just out of precaution, hundreds of thousands of EPs were opted out before June 1, 2023. The opt-out is, however, not a one-way street, and patent holders may later withdraw this opt-out “unless an action has already been brought before a national court” (Art. 83(4) UPCA).

            From the outset, several commentators argued that also national proceedings initiated before the UPC’s launch would block the withdrawal of an opt-out under this rule, especially if they were still pending on June 1, 2023, but also – referring to Rule 5.8 of the UPC’s Rules of Procedure (RoP) – if already concluded prior to June 1, 2023. As a result, any national litigation concerning such an opted out EP would have “locked out” the EP from the UPC.

II. Key Facts of the Case

            The patent holder had opted the patent in suit during the sunrise period, which also was subject to pending national litigation before German courts commenced in 2020. In July 2023, the patent holder withdrew the opt-out and filed an infringement action and request for provisional measures before the UPC’s Helsinki Local Division. Upon the defendant’s preliminary objection, the Local Division dismissed the action holding the withdrawal of the opt-out ineffective due to the pending national litigation.

III. The CoA’s Decision

               The Court of Appeal (CoA) overturned the decision holding that Art. 83(4) UPCA blocks the withdrawal of an opt-out only if a national action is commenced during the seven-year transitional period, i.e. on or after June 1, 2023. National proceedings initiated before this date, whether still pending or concluded, do not affect the withdrawal of an opt-out.

IV. Implications for Portfolio and Litigation Strategies

               The CoA’s decision is significant both for patent holders and those potentially subject to infringement litigation, as it clarifies that only national proceedings initiated during the UPC transitional period, i.e. after June 1, 2023, can prevent the withdrawal of an opt-out.

            First, patent holders can safely opt out EPs that have been subject to national litigation commenced prior to June 1, 2023 without the risk of being “locked out” of the UPC system just for that reason (only the risk of a later “lock out” by national litigation commenced after June 1, 2023 remains). This could lead to more opt-outs of EPs that patent holders have not yet opted out because they feared to be “locked out”.

            Second, patent holders may now have more EPs available for UPC litigation because they are now free to withdraw opt-outs declared for EPs that were or still are subject to national litigation commenced prior to June 1, 2023. Those may be “battle hardened” patents that can now also be asserted at the UPC.

            In turn, potential defendants also have to revisit their strategies. They may want to commence litigation before the UPC, for example, to revoke EPs that were subject to national litigation commenced before June 1, 2023 and have not yet been opted out for fear of a “lock out”. They may also want to initiate national proceedings against opted out EPs to keep them out of the UPC if such EPs were thought to be “locked out” because of prior national litigation prior to the CoA’s decision.

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If you have any questions about the issues addressed in this memorandum, or if you would like a copy of any of the materials mentioned in it, please do not hesitate to reach out to:

Dr. Jérôme Kommer
Email: jeromekommer@quinnemanuel.com
Phone: +49 89 20608 3002 

Max Weiler
Email: maxweiler@quinnemanuel.com
Phone: +49 40 89728 7008

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