Good news for patent proprietors: the CoA's decision on the requirements for withdrawing an opt-out

Co-author: Hannes Huber

A few months ago, we discussed a first instance decision by the UPC Helsinki Local Division, according to which classical European patents would have been permanently locked out from the UPC, if they had been opted out while national actions concerning these patents were still pending when the UPCA came into force. This decision has now been successfully appealed before the Court of Appeal (CoA), which ruled on the highly relevant question of the requirements under which patent proprietors can effectively withdraw an earlier opt-out for their European patents during the transitional period of the UPC.

Legal background: opt-out and opt-in

During the transitional period (seven years from 1 June 2023), patent proprietors can opt their classical European patents out of the jurisdiction of the UPC, Art. 83 (3) UPCA. However, a patent proprietor can withdraw an opt-out pursuant to Art. 83 (4) UPCA (so-called opt-in) at any time, as long as no action has been brought before a national court. Thus, if an action has been brought before a national court at the time of the `opt-in´ request, the path to the UPC is in principle permanently blocked.

An important question in this context is whether the way back to the UPC is permanently blocked only in cases of actions brought before national courts after the UPCA entered into force or also in cases of actions which were already pending or even final and binding at that time. This question concerns in particular the meaning of the phrase `unless an action has already been brought before a national court´ in Art. 83 (4) UPCA.

The decision of the Helsinki Local Division

In view of the Helsinki Local Division (UPC, Decision of 20 October 2023, UPC_CFI_214/2023), not only national actions commenced after the entry into force of the UPCA on 1 June 2023 but also actions that were already pending at that time may render a withdrawal of an opt-out ineffective.

In this case (AIM Sport v. Supponor), the patent in suit (EP 3 295 663), for which an opt-out was filed on May 12 May 2023 during the so-called sunrise period of three months prior to the entry into force of the UPCA, had already been subject to infringement and nullity proceedings in Germany, which were still pending when the UPCA entered into force. The Helsinki Local Division found the withdrawal from the opt-out declared on 5 July 2023 (i.e., after the UPCA entered into force) to be ineffective, mainly arguing that the wording of Art. 83 (4) UPCA would not contain any time restriction as to when the national action must have been filed and that the patentee had deliberately chosen to opt out in full awareness of the legal effects. Consequently, the Court dismissed the case for lack of jurisdiction over the patent at issue.

Decision of the CoA

The CoA now overturned the Helsinki Local Division’s finding in its recent order issued on 12 November 2024 (UPC_CoA_489/2023, UPC_CoA _500/2023) and remanded the case for further proceedings on the merits. The second panel of the CoA considered the withdrawal of the opt-out of the patent at issue effective, meaning that the Court of First Instance wrongly dismissed the actions (ACT_545571/2023 and ACT_551054/2023) for lack of jurisdiction.

The CoA held that the wording and context of Art. 83 UPCA lead to an interpretation of the phrase `unless an action has already been brought before a national court´ in Art. 83 (4) UPCA as referring only to actions brought during the transitional period. The term `action’ therein should not be read in isolation, but in the context of Art. 83 UPCA as a whole. The Court sees no reason why the term `action´ in paragraph 4 should be interpreted differently from the same term in paragraphs 1, 2 and 3, where the term `action’ necessarily refers to actions brought during the transitional period.

In the view of the CoA, this interpretation is also in line with the purpose of Art. 83 (4) UPCA. As the Court points out, Art. 83 (4) UPCA not only serves to allow a patentee to undo the consequences of an earlier opt-out and start using the new UPC system with its advantages. By limiting the possibility to withdraw an opt-out, Art. 83 (4) UPCA is also intended to prevent an abuse of the transitional system by improperly switching between jurisdictional regimes. Such an abuse is not even possible prior to the existence of the transitional regime. The CoA further stated that the purpose of Art. 83 (3) and (4) UPCA was not to limit parallel litigation and the risk of divergent claim interpretation; rather, the transitional regime deliberately creates a situation where parallel proceedings between national courts and the UPC are explicitly foreseen.

Moreover, the CoA holds that an interpretation that would include actions that were brought before a national court before the UPCA came into force would lead to a different treatment of patent proprietors: patent proprietors whose patent had ever been subject to litigation before a national court would be deprived of the possibility to first opt out and subsequently withdraw the opt-out, although such national litigation could have taken place long ago and may not even have been a choice of the patent proprietor itself but initiated by a third party.

Besides, the CoA considers the term `action´ in Art. 83 UPCA to refer not only to infringement and revocation actions, but to all actions mentioned in Art. 32 UPCA over which the UPC has jurisdiction.

Evaluation of the decision

Although the mere wording of Art. 83 (4) UPCA does not suggest any time restriction, there appears indeed no reason why such prior litigation should affect the choices deliberately given to a patentee during the transitional period. A contrary interpretation would disregard the purpose of the transitional regime to opt out and withdraw the opt-out and would unfairly distinguish between patentees on whether their patents have been subject of national proceedings in the past. It would also lead to a result inconsistent with the fundamental legislative intention that absent an opt-out request, the newly established UPC has jurisdiction over all existing European patents.

Conclusion

To sum up, according to the CoA any national proceedings brought prior to the transitional period, whether still pending or not, do not block an effective withdrawal of an opt-out made during the transitional period.

The CoA’s decision is not only legally convincing, but also shows some foresight in that it now allows many patentees whose patents have been involved in previous national proceedings and who have opted out of the new system to return to the so far well-functioning UPC system and benefit from its advantages. The CoA's decision is therefore good news for the UPC itself as it further increases its relevance and attractiveness for patent proprietors.