Emerging trends from the Unified Patent Court

Since the Unified Patent Court's (UPC) successful launch (it opened its doors on 1 June 2023), it has had an increasing caseload and participation from players of varying sizes across a number of sectors.

The Court of First Instance has so far received a total of 476 cases (up to the end of August 2024), which has prompted the court to recruit additional judges, increase the working time of certain part-time judges, and increase the working capacity of the Court of Appeal. The court has shown a commitment to its tight timelines and proved that it can act expeditiously, so far successfully meeting its aim of concluding first instance proceedings on the merits within one year from commencement of the action.

There have been a wide number of decisions from different Local and Central Divisions of the Court of First Instance, including the first substantive decisions on the merits, and there has been guidance on some key issues from the Court of Appeal of the UPC.

Although the practice and procedure of the UPC are still developing, a number of important trends and issues have emerged from the decisions so far.

Jurisdiction

The jurisdictional coverage of the UPC has recently expanded, with Romania becoming the eighteenth Contracting Member State from 1 September 2024.

While Ireland is a UPCA signatory, it has not yet ratified the agreement. A referendum to decide whether or not to ratify the UPCA was scheduled for June 2024 but was postponed by the Irish government, with no alternative date provided. The next Irish general election must take place by March 2025 so it is likely that any decision on the referendum will be made by the next government.

Notwithstanding Ireland's postponed referendum, the Court of Appeal has also confirmed that, despite being a signatory of the UPCA, Ireland is not a Contracting Member State and therefore a preliminary injunction cannot extend to cover it. A Contracting Member State must have both signed and ratified the UPCA.

Forum shopping

Although the competencies are prescribed for the sections of the Central Division for revocation actions, claimants have a choice when it comes to infringement actions. For example, they could choose the Local Division where the infringement is or has taken place, or where the defendant is seated. This means that claimants are afforded an element of forum shopping, which gives them the choice to select a division they think might give the most favourable outcome.

Indeed, in considering the need to harmonise two similar orders made by different divisions between the same parties relating to the same confidential information (although the patents were different), the Paris Local Division noted that "one division is not bound by a decision in another division despite belonging to the same unified court". Not only does the court as a whole intend to forge its own path with respect to procedure and substantive patent law, but different divisions may also proceed in different manners. This gives claimants lots of food for thought.

It is apparent from the court's caseload that German Local Divisions are proving most popular with court users. The Munich Local Division has seen the highest number of infringement actions and revocation counterclaims, followed by Düsseldorf and Mannheim.

Paris has been the most active of the Central Division sections, likely due to the provisional split of competencies formerly assigned to the proposed London section of the Central Division. The new Milan section of the Central Division (which has replaced the former London section) did not open its doors until 27 June 2024. Now that it is open, the Milan section will handle cases relating to IPC class A (human necessities (not including supplementary protection certificates (SPCs)), which had been dealt with provisionally by Paris.

Court users

So far, a broad range of industries have been represented in UPC actions, including telecoms/electronics, mechanics, physics and life sciences.

The pharmaceutical industry was expected to respond cautiously to the UPC, but there have been big players involved in high value disputes from the start, including the first action filed.

Telecoms standard essential patent (SEP) litigation has also been commenced, as well as long running medical devices disputes, and a range of smaller mechanical engineering cases.

Language

The UPCA and Rules of Procedure contain provisions concerning the language of proceedings. In the Central Division, the language of the proceedings will be the language in which the patent was granted. However, in the Local/Regional Divisions, the claimant will have some choice depending on the language(s) offered by the division, which could be different to the language in which the patent is granted. Although many of the initial proceedings were filed in German, over the course of the year English has become the predominant language of proceedings in the Court of First Instance.

There have also been decisions concerning attempts to change the language of the proceedings after they have been commenced. The language can be changed by joint request by the parties, but where there has not been agreement, there have been mixed results.

The Court of Appeal has given guidance on factors to be taken into account when considering changing the language to that of the patent, for example: the language mostly used in the field of technology, the language of the evidence, any potential delays caused by a change, the size of the parties relative to each other.

If the balance of interests is equal, the defendant's position is decisive as the claimant has had the choice of when and where to bring its action, and the choice of language that the patent was granted in. The language skills of the parties' representatives are not a relevant factor. It is possible that we will see claimants opting to file in the language of the patent to avoid any disputes regarding change of language, which can put pressure on already tight deadlines.

Opt-outs

Opt-outs can still be made during the course of the transitional period and, as anticipated, some early decisions have emphasised the importance of getting them right. Opt-outs must be made before any proceedings are started and, if an opt-out has already been made, it cannot be withdrawn once national proceedings have commenced.

The Helsinki Local Division held that the withdrawal of an opt-out was ineffective because national proceedings had already been commenced, even though this was before the UPC was operational, the patent is now locked out of the UPC system. Meanwhile, the Vienna Local Division decided that the exercise of an opt-out after a preliminary injunction application was launched at the UPC was ineffective, meaning that the patent was locked into the UPC system.

Deadlines and extensions

The Rules of Procedure set out strict timelines for each stage of the litigation. The UPC has so far proved that it can meet its timeline of providing first instance decisions on the merits in approximately one year from the start of the proceedings.

To stay on track to meet the one year timeline, the court has been sticking closely to the prescribed deadlines, with only some very short extensions of time – for example, in a complex SEP case where the complexity justified a short extension – but many rejections of extension requests.

Parallel actions

The UPC has a discretionary power to stay an action when there are parallel proceedings in the European Patent Office (EPO) and a "rapid decision" is expected from the EPO. "Rapid decision" is not defined in the UPCA, but the Munich section of the Central Division has provided guidance on what the term means and when the court might use its discretionary power.

In particular, what is rapid must be considered on the facts of the case, the expected decision need not be limited to final decisions and can include first instance Opposition Division decisions, and the interests of both parties must be taken into account while observing the principles of proportionality, flexibility, fairness and equity. Acceleration of opposition proceedings may not be enough to warrant a stay of UPC proceedings, depending on how the timelines for each action stack up.

In considering the interplay between UPC proceedings and national proceedings during the seven to fourteen year transitional period for non-opted out patents, the Paris section of the Central Division found that the lis pendens rules in the Recast Brussels Regulation do not apply to the UPC where a national action was commenced before the UPC was operational. In this case, a revocation action had been filed in the German Federal Patent Court in 2021, some two years before the UPC went live. Even though an appeal of the Federal Court's decision was pending at the time the Paris section made its decision, it found that the UPC could proceed (including with respect to the German designation at issue in the national proceedings) because the national proceedings started before 1 June 2023.

Injunctions

There have been a number of both inter partes and ex parte preliminary injunction applications, including appeals to the Court of Appeal.

The most notable of these cases was the first preliminary injunction application made on the court's opening day in 10x Genomics v Nanostring. A preliminary injunction was initially granted by the Court of First Instance but was overturned by the Court of Appeal in its first substantive decision.

At first instance, the Munich Local Division held that there was a "sufficient degree of certainty" that the patent at issue was valid, having held that it was convinced that the patent would be found to be novel, sufficiently disclosed and inventive. The court also balanced the parties' interests, finding that 10x Genomics' interest in not having its patent infringed outweighed the interests of Nanostring in securing a market share. The court did not order any security so the preliminary injunction was enforceable immediately.

This decision was initially heralded as the UPC establishing itself as a patentee-friendly court. Despite the injunction being overturned by the Court of Appeal, the Munich Local Division's approach of conducting a detailed review of a patent's validity, including evidence and arguments, on a case-by-case basis has endured and been used as a blueprint in other cases.

In deciding to overturn the first instance court's decision, the Court of Appeal reassessed the decision on validity. The Court of Appeal took a different approach to claim construction, holding that the claim is the decisive basis for determining the scope of protection afforded by a European patent, but that the description and drawings should be used too. The Court of Appeal disagreed with the first instance court on one aspect of claim construction and therefore was not convinced that the validity of the patent had been shown to a sufficient degree of certainty to justify the preliminary injunction. For a sufficient degree of certainty to be shown, the Court of Appeal was clear that it has to consider that it is "more likely than not" that the patent is valid.

The first final injunction came from the UPC's first decision on the merits, relating to the infringement of a patent for a sanitation bathtub device. The issued injunction covered seven UPC Contracting Member States. The Düsseldorf Local Division took an EPO-style approach to claim construction, following the Court of Appeal's approach in 10x Genomics v Nanostring. The defendant had sought to argue that it had a defence of right of prior use but the information on prior use related to Germany, which was not included in the claim, so the defence was dismissed.

Transparency

Much criticism surrounded the lack of transparency when initially public access to pleadings and evidence was not permitted by the Munich section of the Central Division. We then saw a different approach in the Nordic-Baltic Regional Division, which was appealed and led to guidance from the Court of Appeal.

The Court of Appeal was clear that the interests of the member of the public seeking access should be weighed against other interests, such as protection of confidential information and personal data, the general interest of justice and public order, which includes protection of the integrity of the proceedings. Those seeking access must submit a reasoned request, setting out why the individual has an interest in accessing the specified documents in order for the weighing up to take place.

The court distinguished between members of the public having a general interest (such as better understanding the UPC's decision) and those with a direct interest (such as a competitor or licensee interested in the validity of the patent). In the case of a general interest, the balance will usually be in favour of granting access once the proceedings have concluded by a decision of the court, but may also include circumstances where the action has ended by settlement between the parties or when it is withdrawn.

A direct interest, however, may arise during the course of the proceedings. In this case, the balance is usually in favour of giving access before the proceedings have finished, but confidentiality conditions may be imposed.

FRAND at the UPC

Lastly, there have been a number of standard essential patent (SEP) disputes launched in parallel at the UPC but it remains to be seen just how the UPC will deal with SEPs and therefore fair, reasonable and non-discriminatory (FRAND) issues.

Although there have been a number of interim decisions, we do not expect a FRAND trial until the end of 2024 (with the Mannheim Local Division reserving the right to split the technical and FRAND trials between October and December respectively, depending on delays in the preparation of the FRAND proceedings as a result of issues concerning confidentiality of comparable licences).

The Mannheim Local Division has given a small insight into how it might deal with FRAND cases. Back in June 2024, it expressed concerns regarding Oppo's FRAND defence in a dispute with Panasonic. Although the court acknowledged that Oppo had claimed it was trying to obtain a FRAND licence, including asking the court to set a FRAND rate, the court expressed doubts as to whether Oppo would accept that licence (that is, behave as a willing licensee), which may mean there is a "lack of need for legal protection".

The court said that it was not its task to give legal advice on contract drafting when Oppo requested that the court set the terms of a FRAND licence. The court also expressed concerns over the request to set global rates. In contrast to the UK courts, German courts have never set global FRAND rates and it may appear that the UPC (or perhaps just the German divisions) will follow in those footsteps.

Osborne Clarke comment

Since the court opened, the UPC has proved to be a popular venue with a caseload outstripping what was anticipated. Moreover, the increasing number of Unitary Patent applications and registrations is a further vote of confidence in the court.

Despite numerous key trends emerging from the UPC since its opening, the court is still in its infancy, with relatively few decisions from the Court of Appeal, and it has yet to grapple with some of the thorniest patent law issues.

It remains to be seen how the UPC will be positioned in the European patent landscape, and the further development of the court's body of case law will ultimately determine whether it becomes the leading European venue for patent litigation.

This analysis is in part based on machine translations of decisions not available in English.