The option to "opt-out" from the new UPC system gives patent owners the opportunity to declare, according to Art. 83(3) UPCA, that the UPC shall not have competence for litigations concerning a European patent. If an “opt-out” has been declared for a European patent or application, only the national courts will be competent for patent litigations concerning this patent, even after expiry of the transitional period. We cover three key reasons why you might consider this strategy.
1. Patent is weak, very valuable or on the watchlist of your competitors
The biggest threat for patent proprietors in the new system is the centralized revocation action before the UPC. The revocation action before the UPC may invalidate the attacked patent in all participating member states of the UPC in one court proceeding. Therefore, you should declare an opt-out for those European patents for which there is a significant risk that they may be invalidated as the risk that this patent may be destroyed in a single revocation action is high. Also, you should declare an opt-out for those European patents which are very valuable for your business, i.e. your “crown jewels”. Also patents which have been licensed to many licensees paying royalties for their use are good candidates for an “opt-out”, as a revocation in a single procedure may significantly reduce your royalty income. In this case, you want to make it difficult for your competitors and to exclude the possibility to destroy the European patent in one procedure with a central revocation action before the UPC. The only way to avoid this, is the opt-out declaration for this European Patent.
2. Patent is only validated and/or likely infringed in 3 or less participating member states of the UPC
Another case in which an opt-out might be a wise decision is when the European Patent has been or will most likely be validated in only 2-3 or less participating member states of the UPC. It is very likely that the proceedings before the UPC will be more expensive than national litigations. Also cost reimbursement awards in the UPC are likely higher than in the national courts. In the event that the European Patent is only validated in a few participating member states of the UPC, it might be overall cheaper to enforce the patents in national litigations (both infringement and revocation) than in more expensive UPC proceedings. The same applies when a patent proprietor knows that its competitors will likely infringe the European patent in only 2-3 or less participating member states of the UPC. Also, in this case the filing of national litigations might be cheaper. In order to exclude the risk of a centralised revocation action before the UPC, you should declare an opt-out for such European patents.
3. Opposition proceeding is pending against patent
In the event that a European patent is currently attacked in an opposition proceeding before the EPO, this might also be a good reason to declare an opt-out. After the entry into force of the new UPC system, it will be possible to file a central attack on the validity of the European patent in a revocation action before the UPC. This will be also possible during pending EPO opposition proceedings. In particular if the patentee sees good chances to prevail in the opposition proceedings before the EPO (i.e. also because it is difficult to file additional prior art after the end of the opposition deadline), the revocation action before the UPC can be an attractive option for the opponent to have a “second shot” at the validity of the patent. You can only avoid this with an opt-out-declaration for this European Patent.
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