Fee and easy

Four experts ponder the zero opt-out fee announced for the Unified Patent Court

Adrian Murray
Legal director
Pinsent Masons

Mark Ridgway
Allen & Overy

Alan Johnson

Alexandra Pearson
Hogan Lovells

A zero opt-out fee for the Unified Patent Court was announced in February. What does this mean for potential users of the unitary patent system?

Mark Ridgway: The zero opt-out fee will be very welcome news—for any company that is cautious about the new system, being able to observe it in operation before deciding to take part is highly desirable.

This is also the fair approach. People can now be won over to the new system (or not), without an artificially high opt-out fee affecting their behaviour.

Alan Johnson: Patent applicants can now take their decisions without having to take budgetary issues into consideration. Opting out achieves the certainty of national jurisdiction only.

Alexandra Pearson: Patent applicants can now take their decisions without having to take budgetary issues into consideration. Opting out achieves the certainty of national jurisdiction only. One of the few areas of clear consensus in the Unified Patent Court (UPC) costs consultation was that the €80 opt-out fee should be removed or lowered. The announcement of the free opt-out fee is therefore positive news.

Why offer an opt out for a system that hasn’t even launched yet? Is the UPC being written off before it even launches?

Pearson: The answer is that the patent proprietors applied for these patents and applications before the system was conceived and so, an allowance for those patent applicants to opt out and continue with their legitimate expectations as to how these property rights would be dealt with by the courts in Europe is a fair option to provide. The system will hopefully prove itself by the quality of its decisions/procedures and then more will leave patents in the system and/or opt in.

Adrian Murray: The thinking behind starting the opt-out option to patent holders prior to the new system becoming operational is to prevent the unitary patent registry being overwhelmed with opt-out requests on day one.

If it was only possible to opt patents out of the new regime on day one of it coming into operation, then patent holders that are adamant that they do not want their patents to be under the jurisdiction of the UPC would seek to opt their patents out as soon as possible, to ensure that the jurisdiction of the UPC could not be seized.

Ridgway: Unfortunately, the reality is that the new system was always going to be unpopular in some quarters. That said, the opt-out exists for the benefit of the companies and individuals that use the patent system—it allows them to avoid the new system if they want to.

The reality is that many companies will want to do this because they don’t know how the new system will behave and do not like like the uncertainty that this brings—for example, if it does not work properly the system could threaten the value of patents that companies have invested significant sums of money in.

The reasons for the opt out are therefore two-fold in my view. First, any attempt to force companies to take part would have been deeply unpopular, hence politically undesirable. Secondly, related to that, compulsory participation (at least immediately) would have increased the likelihood of further legal challenges. In short, therefore, the designers of the system had no practical choice but to allow for an opt out if they wanted it to go ahead.

Johnson: I can understand that it may seem strange to be offering patent applicants an option not to use the new system, but not when you consider that what has been done is a major moving of the goal posts.

The UPC is a very different system and while attractive to many, it will certainly not be attractive to all. When patent applicants ‘signed up’ to using the European Patent Office to prosecute their patents, they believed their patents would be litigated nationally. This suits many patent applicants very well. A small- and medium-sized (SME) entity would, under the existing system, only ever litigate in its home country.

Under the new system, however, it could face a revocation claim brought against it in the Paris central division. Indeed, even if the applicant for revocation was also German, the parties would have to litigate in Paris. Is it sensible to impose that new regime on anyone, let alone an SME?

Offering patent applicants a transitional arrangement that maintains the status quo is perfectly reasonable In any event, quite enough patent applicants will be in a different position and want to take the benefit of the new system, not to worry about those who may prefer the old system.
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