This article has been written by Shivam Sharma, pursuing a Diploma in ntellectual Property, Media and Entertainment Laws from LawSikho.
It has been published by Rachit Garg.
On June 1, 2023, the Unified Patent Court (UPC) came into force after Germany, as one of the Member States of the European Union (EU), finally ratified the Agreement on the Unified Patent Court (UPCA) on February 17, 2031. The UPC has been established to settle disputes relating to European Patents (EP), including European ‘Unitary Patents’ or ‘UP’, arising between the contracting Member States of the EU. A UP (also called ‘European Patent with Unitary Effects under Article 1(f) of the UPCA) is a patent application in all the Contracting Member States of the EU. It is granted as per Regulation (EU) No 1257/2012 of the European Parliament and of the European Council. The European Patent Convention (EPC) of 1973 established the European Patent Office (EPO), which grants EPs to its 39 contracting Member States (as of 2022). The EPC agreement governs the practices and procedures for granting European Patents through the EPO. While the Patent Cooperation Treaty (PCT) of 1970, which has more than 150 contracting states, grants patent protection across these states through a single ‘international patent application’, the EPC effected a similar unified patent system for contracting Member States of the European Union, though an option to apply through the PCT called the Euro-PCT route is also available. An EP granted by the EPO acquires ‘unitary effect’ after a procedural written request made by the patent proprietor and when its unitary effect has been registered in the Register for unitary patent protection.
Composition and jurisdiction of Unified Patent Court
The agreement states that the UPC shall consist of a Court of First Instance, a Court of Appeal, and a Registry. The Court of First Instance will have central, local, and regional divisions, with the Central Division seated in Paris and having a section in Munich. The Court of Appeal will be seated in Luxembourg, where the Registry will also be seated. The Contracting Member States are free to designate local or regional divisions jointly. The elected President of the Court of Appeal shall represent the UPC.
Under its ambit, the court will decide cases relating to classical European Patents, UPs, and Supplementary Protection Certificates issued for a product protected by a patent. Article 83 of the UPCA provides that for the duration of a transitional period of seven years Starting from the date the UPCA comes into force, cases relating to infringement or revocation of classical European Patents or the declaration of invalidity of a SPC may still be brought before the national courts or other competent national authorities. This period can be further extended by the Administrative Committee.
Benches/ divisions of Unified Patent Court
The Court of First Instance conducts business through a panel of three judges having a multinational composition i.e., belonging from different member states. The regional division and a local division in a Contracting Member State dealing with fifty or more patent cases each year for the past three years sits in a composition of two legally qualified judges being nationals of the states comprising that local division and one legally qualified judge not being a national of the Contracting Member State concerned and is allocated from the Pool of Judges maintained as per Article 18(3). If the number of patent cases in the local division is less than fifty, then the numbers are reversed i.e. one legally qualified judge who is a national of the Contracting Member State hosting the local division concerned and two legally qualified judges who are allocated from the Pool of Judges. However, upon request by any party, the panel of a local or regional division shall request to the President of the Court of First Instance or he can suo motu, allocate an additional technically qualified judge (not more than one in any case) with qualifications and experience in the field of the concerned technology. Any panel of the central division sits in a composition of two legally qualified judges being nationals of the member states concerned and one technically qualified judge allocated from the pool of judges. Upon prior agreement between parties cases can be heard by a single legally qualified judge as well.
Any panel of the Court of Appeal comprises of five judges sitting in a multinational composition except incases arising out of Article 32(1)(i) of the agreement. Three of the five judges must be legally qualified to be a judge and the other two technically qualified judges must have qualifications and experience in the field of concerned technology.
Mediation and settlement
The Court is dedicated towards reaching an amicable solution to disputes for which A Patent Mediation and Arbitration Center has been established with seats in Ljubljana and Lisbon. If the Court deems fit, it may direct the parties to try to settle or explore settlement options. The judge-rapporteur makes arrangements for such proceedings. The limitation period is stayed till the mediation process continues and the parties are not prevented from initiating judicial proceedings if settlement attempts fail. Any settlement or arbitral award has to be confirmed by the Court if requested by parties. No Patent can be revoked or limited in mediation or arbitration proceedings.
Appointment of judges
The legally qualified judges shall have the same qualifications as a person eligible to be a judge in a Contracting Member state. Technically qualified judges shall possess a university degree, proven expertise in a field of technology, and proven knowledge of civil law and patent litigation The judges shall have a good command of at least one of the official languages of the EPO.
The Advisory Committee, formed under Article 14 of the UPCA, prepares a list of the most suitable candidates to be appointed as judges. From the list, the Administrative Committee, acting in common accord, appoints the judges of the Court. A training framework for judges to ensure patent litigation expertise and broad geographical distribution of such knowledge, improvement of linguistic and technical aspects of patent law, etc. has been set up, with facilities in Budapest.
Proceedings before Unified Patent Court
Article 83(3) of the UPCA provides an option to opt-out of the exclusive competence of the Court by notifying the Registry at least one month before the expiry of the transitional period given in Article 83(1). In such a case, the national courts will have competence. This option is available to the proprietor/applicant of granted classical European Patents, SPCs, and patent applications under the same Article. If an action has already been brought before the UPC concerning the above stated categories of patents and SPCs, the opt-out will not be available. The opt-out option, once availed, can also be withdrawn so long as no action before a national court is initiated.
Rules of procedure and construction of proceedings
The proceedings before the UPC are conducted by the UPC Agreement, the ‘Statute of the UPC, and the ‘Rules of Procedure of the UPC,’ referred to as ‘Rules’, hereinafter. These proceedings consist of a written, interim, and oral procedure. A lawyer practicing in any Contracting Member State or having the necessary qualifications of a European Patent Attorney may represent the parties before the Court.
The Rules provide that the presiding judge may designate himself or another legally qualified judge of the panel as a judge-rapporteur to marshal or supervise the necessary arrangements for the working of the court proceedings.
Proceedings before the Court of First Instance are initiated by the claimant by serving a statement of claim with the patent claim and other requisite information about the parties, the patent, the remedies being sought, a broad description of the factual matrix, and relevant evidence. Upon being served with the statement of claims, the defendant shall, within one month, file preliminary objections and a statement of defence refuting the claimant’s arguments and emphasizing his counterclaims, if any. As per Rule 19 of the Rules, preliminary objections may be lodged raising issues related to the competence of the division indicated by the claimant, the jurisdiction and competence of the Court, and the language of the Statement of Claims. It must contain the particulars and address of the defendant and his representatives, the decision or order sought by the defendant, grounds of objection, and facts and evidence relied on.
The Rules also provide for an interim procedure’ looked over by the judge-rapporteur marshalling the oral hearing by making necessary arrangements. The judge-rapporteur summons parties for an oral hearing by giving two months’ notice, except in the case of an Appeal against orders and unless there is prior agreement to the contrary between the parties. An interim conference to substantiate the main issues and claims and reach a possible settlement of the dispute between the parties may also be undertaken as an interim measure. The interim procedure is deemed to be closed after the giving of a summons, and the oral procedure then commences.
The Oral procedure involves the conduct of the oral hearing before the panel, directed by the presiding judge. In matters involving an appeal of a cost decision, such a hearing is heard by a standing judge with all the powers of the Court of Appeal. Along with the parties’ oral submissions, their witnesses and experts are also heard, and the decision on merits is to be given within six weeks thereafter.
Provisional and protective measures
Freezing orders under Article 61 of the UPCA can be passed on the request of the party claiming an infringement committed or about to be committed of its patent before the commencement of proceedings on merits, and the Court can direct a party not to remove or not to deal in any assets located within its jurisdiction or not. The court can also order, upon request, the preservation of relevant evidence in cases of alleged infringement, along with orders for inspection of premises conducted by persons appointed by the Court. Such orders can be passed ex parte where the delay can cause irreparable harm to the owner/proprietor of the patent or there is a risk of evidence being destroyed.
The Court may order ex parte injunctions, if need be but not routinely, against the infringer or an intermediary whose services have been availed of by the infringer, along with orders for seizure (including blocking of bank accounts) or delivery up of the products suspected of infringing a patent so as to prevent their entry or movement within the trade channels. Similarly, permanent injunctions can be imposed after going into the case’s merits to disallow infringement, and in cases of non-compliance with an order of injunction, a recurring penalty can be imposed.
The Court may order, apart from damages and compensation amounts, certain protective measures with regards to products found to be infringing at the request of the applicant. These measures, as per Article 64(2) of the UPCA, include a declaration of infringement, the recalling of products from the channels of commerce, removing the infringing properties of the products, removing the products from such channels, or their destruction.
The Rules of Procedure of the UPC also provide for the filing of a ‘protective letter’ which is essentially a caveat and is effective for six months. It can be filed if a person believes that provisional measures against him/her can be lodged, making him a defending party in court.
The Court can hear appeals arising out of separate matters related to infringement and those related to validity proceedings. An aggrieved party (Adversely affected party) may file an appeal against:
- final decisions of the Court of First Instance;
- where proceedings have been terminated against any party; or
- orders referred to in Articles 49(5), 59, 60, 61, 62, or 67 of the UPCA.
An appeal against any other order may be filed together with the appeal against the decision or with the leave of the Court of First Instance within 15 days of the service of the impugned decision.
Language(s) of Unified Patent Court
The proceedings before the Court of First Instance will be held in the official language of the Member State hosting the local division or sharing the regional divisions. They can also choose from one or more of the official languages of the EPO. The Registrar maintains a list of languages in the case of more than one different official language in a region, for Contracting Member States to choose from, and in such cases, the language of proceedings is the official language of the region in which the defendant has his domicile or principal place of business. The language in which the Patent was granted can, with the approval of the panel, be chosen as the language of proceedings. The language of the patent is by default the language of proceedings in the central division. The language of proceedings before the Court of Appeal is the same as the language of proceedings before the Court of First Instance.
Costs and fees
The parties can recover costs if successful. Costs are subject to the value of the claim. The maximum award for claims valued above 50 million Euros is 2 million euros, extendable to 5 million Euros in exceptional cases.
Court fees have to be paid following Part 6, Rule 370 of the Rules, and the table of fees (sections I, II, and III) adopted by the Administrative Committee pursuant to Article 36(3) of the UPCA. It is categorized into fixed and value-based fees. For infringement actions, counterclaims, actions for declaration of non-infringement and compensation for license of rights, the fixed fee is 11,000 euros, and for applications to determine damages, the fixed fee is set at 3,000 Euros. The value-based fee for actions before the Court of First Instance and Court of Appeals with claims valued below 500,000 Euros is 0 euros, with maximum fees of 325,000 Euros for claims valued more than 50 million Euros. Section III of the table of fees provides fees for other procedures and actions before the Court of First Instance, like revocation actions, counterclaims for revocation, applications for provisional measures, etc. A value-based fee is not applicable to revocation actions or counter-claims.
The success of the UPC will be determined from the annual data vis-à-vis cases disposed of, applications received/granted, the delay and the consequential potential loss of revenue, market value or opportunity to applicant businesses, etc. While many regions of the world do not have such a unified forum for resolving intellectual property disputes, the success and functioning of the UPC may serve as a beacon for India and its corresponding South Asian countries.
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