To UPC or not to UPC: that is the question

Since the official launch of the Unitary Patent System on 1 June 2023, the Unified Patent Court (UPC) now has exclusive jurisdiction not only over new unitary patents, but also over existing European patents (EPs). However, in order to avoid the exclusive jurisdiction of the UPC, EP owners have been able to ‘opt out’ their patents, so that national courts retain exclusive jurisdiction for the lifetime of the opted-out EPs. Opting out was already possible during the so-called ‘Sunrise Period’, the three-month period leading up to the start of the Unitary Patent System, and will remain possible for the entire transition period of 7 years after the start of the Unitary Patent System. Opting out is not irreversible: subject to certain exceptions, withdrawal of opt-outs remains possible during the transition period should a patentee change its mind or strategy.

During the Sunrise Period, and especially in its final weeks leading up to the end of May 2023, the number of opt-outs filed drastically increased, with more than 500,000 opt-outs registered shortly before the launch of the UPC. Considering that in recent years more than 180,000 patents per year were filed with the European Patent Office (EPO), this number of opt-outs is very high. Following the end of the Sunrise Period and the launch of the UPC, the number of opt-outs has more or less stabilised, but statistics from July 2023 show that the weekly number of opt-outs was still significantly higher than the weekly number of patents granted by the EPO. This contrasts sharply with the number of opt-out withdrawals registered in July, which totalled only around 120.

Interestingly, the July statistics also show that the chemical, pharmaceutical and biotech sectors have the highest opt-out rates, while the media and telecommunications sectors have the lowest. In terms of countries, the US, Germany, Japan and the UK are among those with the highest number of EPs opted-out.

Is it fair to say that the figures reflect a lack of confidence in the UPC? Probably premature to say at this stage given the reasons for opting out are too diverse to simply attribute these figures to distrust. However, the impact of the UPC on patent litigation should not be underestimated and it is likely that many of these patentees prefer to avoid the resulting uncertainty and the risk of central revocation actions. Many EPs only apply in a limited number of designated EPO member states, and the underlying products and methods protected are also unlikely to be marketed in many (let alone all) member states, further limiting the strategic value of the EP and the potential benefits of the UPC. All of these reasons, combined with the continued possibility of withdrawing the opt-out, may explain why many patentees are adopting a wait-and-see attitude. Further research will certainly provide deeper insight on the figures and the importance of the various drivers behind the opt-outs, and time will tell whether the UPC can dispel existing doubts and convince the IP community of its added value.

Alexis Fierens is a partner at DLA Piper and is based in Brussels, Belgium. He has over 18 years’ experience as an IP and commercial lawyer. For further information on the UPC, please visit https://www.dlapiper.com/upc.