Out-Law News

Helsinki UPC ruling a warning to businesses on European patent opt-outs

European patent owners that have decided to opt their patent out from the jurisdiction of the Unified Patent Court (UPC) cannot withdraw that opt-out where parties have filed national lawsuits in respect of those patents even if that lawsuit was initiated before the UPC became operational, according to a new ruling.

The Helsinki local division of the UPC ruled on the matter in the context of a dispute between AIM Sport Vision (AIM) and Supponer. AIM sought to assert European patent rights and obtain from the court an order that would prohibit Supponer supplying AI-based digital content display systems for use in football stadia across Europe.

Sarah Taylor

Senior Practice Development Lawyer

This decision … emphasises the fact that patentees need to consider their opt-out strategies very carefully, as getting it wrong may mean that the UPC is no longer accessible to them

On 12 May this year, AIM exercised its right to opt the relevant European patent in this case out of the UPC’s jurisdiction. The UPC subsequently became operational on 1 June 2023. AIM withdrew its prior opt-out on 5 July and filed is statement of claim and a preliminary injunction application against Supponer before the Helsinki local division of the UPC on the same day.

However, Supponer challenged the claims raised against it. In particular, it claimed that AIM’s withdrawal of its opt-out was ineffective and so its claims should be dismissed. It cited the fact that national infringement and revocation proceedings in Germany in respect of AIM’s patent were pending before AIM had exercised its right to opt-out, meaning that the UPC had no jurisdiction over the matter.

In agreeing with Supponer’s assessment, the Helsinki court considered provisions in the UPC Agreement (UPCA) and UPC Rules of Procedure (RoP).

Article 83(4) of the UPCA and Rule 5.8 of the RoP provide that an opt-out can be withdrawn unless an action has already been brought before a national court of a UPC contracting member state. 

AIM argued, amongst other things, that Article 83(4) UPCA cannot apply to national actions filed before the entry into force of the UPCA on 1 June 2023, and that any other interpretation would be in violation of the Vienna Convention on the law of Treaties (VCLT), in particular the principle of non-retroactivity of international treaties, of which the UPCA is an example. AIM also said that there are different parties in the national and UPC actions and therefore Article 83(4) UPCA cannot apply in this case.

However, the Helsinki court rejected AIM’s arguments, determining that the VCLT requires that “a treaty shall be interpreted in good faith in accordance with the ordinary meaning to be given to the terms of the treaty in their context and in the light of its object and purpose” and that the UPCA was clear and unambiguous as it states that the withdrawal of an opt-out is possible "unless an action has already been brought before a national court...". It considered that there is no limitation or restriction to that wording to the effect that it would only apply to previous national proceedings that have been initiated after 1 June 2023, and said a reading of the RoP further supports that view.

The court therefore found that AIM’s withdrawal of the opt-out was ineffective due to the national proceedings and that the UPC therefore lacks competence to rule on the claims raised against Supponer in respect of the patent at issue.

Patent litigation expert Dr Julia Traumann of Pinsent Masons said: “This is the first decision of the UPC regarding opt-outs. The decision could affect many opted-out patents whose owners might not have thought, at the point they have opted-out their European patents from the UPC’s jurisdiction, that they would effectively be blocked from withdrawing those opt-outs if there were earlier initiated actions before a national court.”

Opt-out strategies remain an important and much discussed topics for businesses that may wish to engage in patent litigation in Europe. Traumann said: “It remains to be seen whether an appeal will be filed and if so, what view the UPC Court of Appeal would take on this issue. Any decision would have potentially far-reaching consequences for the development of the UPC.”

Sarah Taylor, also of Pinsent Masons, added: “In this decision, the court highlighted the fact that AIM had made a strategic decision to opt its patent out of the UPC’s jurisdiction, being fully aware of the consequences of doing so. It could have done nothing, which would have allowed it to take advantage of the dual jurisdiction that is available during the UPC’s initial seven-year transitional period, which would have allowed it to bring proceedings in either the national courts or the UPC. This decision therefore emphasises the fact that patentees need to consider their opt-out strategies very carefully, as getting it wrong may mean that the UPC is no longer accessible to them.”

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