The UPC - Opt-out dangers: lessons from limitation; dual jurisdiction complexities

This Kat continues to think about the Unitary Patent and the Unified Patent Court.  It just won’t go away, and he fears that there will be no escaping the topic for years to come.  Indeed he thinks there may be a UPC Rule developing: “When two or more European patent practitioners are gathered together for any purpose, the UPC will end up being discussed sooner or later”.  Anyway, for today he has two sets of thoughts, one set are his own, and one set has been sent to him by Katfriend Dr. Ulrich Blumenröder of Grünecker Kinkeldey Stockmair & Schwanhäusser.

Kat with
Rule 5 of the 15th Draft of the Rules of Procedure (concerning the ability to opt out of the Unified Patent Court System) contains in Paragraph 1 the following seemingly innocuous statement “Where the patent or application is owned by two or more proprietors, all proprietors shall lodge the Application.”  It is clear from this, and from Article 83 of the UPC Agreement “a proprietor … shall have the possibility to opt out from the exclusive competence of the Court” that the opt-out request must be filed by the proprietor or all of the proprietors.  Presumably therefore the request shall have to demonstrate that they are indeed the proprietor of the patent.  Presumably also the Registry (or, if all goes to plan, during the sunrise period, the EPO) will have to check that the requester is indeed the proprietor of the patent.

If the case is a pending application then the requester corresponding to the registered proprietor at the EPO should suffice.  But what about after grant?  After the opposition period (and any opposition) is over, the EPO will not record changes to the patent proprietor.  If there has been a change, the proprietor is faced with the potentially onerous task of demonstrating their entitlement to file the opt-out request.

Something similar happens in a limitation application, which has an analogous problem.  EPO Form 2380 offers the following possibilities to the applicant:

the above-mentioned patent proprietor, whose name is entered in the European Patent Register, is still the proprietor of the above-mentioned European patent. 
there has been a change in the name of the patent proprietor whose name is entered in the European Patent Register. Supporting evidence is enclosed. This person is still the proprietor of the above-mentioned European patent.
the requester(s) became proprietor(s) of the above-mentioned European patent by a transfer of rights.
Supporting evidence is enclosed:
• recent excerpts of the relevant national registers and/or
• other means of evidence.  

It will be seen that any change from the status as granted requires evidence.  Assembling and providing this evidence for even a single patent, even more so for an entire portfolio, could represent a costly and time-consuming task.

But there lurk here more hidden dangers, because the proprietor may have rights in more territories than bargained for.  The European patent is automatically valid in all territories that do not require translation, and the patent remains valid for that territory until it lapses for non-payment of renewal fee.  A patent that is granted in English that the patentee *thinks* he is validating in, say, UK, France, Germany, Spain and Italy, gives rights in Ireland, Luxembourg, Malta, Monaco, Switzerland and Liechtenstein without any action.  Suppose then shortly after grant the patent is assigned, for the territories that the patentee *thinks* he has.  Then suppose the patentee at grant is dissolved.  The new owner can show ownership of the European patent in UK, France, Germany, Spain and Italy.  Will the opt-out request be refused because he cannot show ownership in the phantom countries just mentioned?  (It seems appropriate to refer to phantom countries, not only because we are so close to halloween.)  This Kat recalls Luxembourg as being one of the few pre-London agreement countries not to have any translation formalities, so this may be named the “Luxembourg problem”.  For how long will the Registry consider that these phantom rights exist?  The initial deadline for paying the first renewal fee due after grant?  The extended deadline with surcharge?  The restoration period?  If the UK is such a phantom designation, the restoration period is 19 months, so patents stay revivable for a very long time.

Dr Blumenröder
Dr Blumenröder has been mew-sing about areas of unclarity and infelicity in the opt-out himself.  His thoughts on the topics can be accessed here, beginning with the cautionary admonition “While on its face everything seems to be easy (“You file an opt-out with the UPC and you are out”), many aspects are unclear.”

Moreover, following this Kat’s post on some matters relating to the dual competence of the UPC and national courts for non-opted out patents during the transitional period, Dr Blumenröder kindly drew the IPKat’s attention to his thoughts on this topic as well – with an equally ominous beginning “The exclusive jurisdiction of the UPC is not as exclusive as it appears.”  In this paper he considers the various complexities of how the jurisdictions may overlap.

If you have taken the trouble to grapple with all of these issues, then you will probably want to read the third paper in the trilogy as well.

At the moment this Kat feels that the number of issues of concern is increasing only in proportion to the amount of time spent thinking about the matter, and will not be surprised to find more aspects to worry about over the next few months.

The UPC - Opt-out dangers: lessons from limitation; dual jurisdiction complexities The UPC - Opt-out dangers: lessons from limitation; dual jurisdiction complexities Reviewed by Darren Smyth on Monday, November 04, 2013 Rating: 5


  1. Why to opt out ? What are the objective benefits of having a case decided by a national court instead of UPC?

  2. The issues surrounding the UPC are getting messier by the day.

    And we don't even know yet what the effects of the Unified Patent will be on prosecution before the EPO. Crucial questions such as procedural fees and the financing of the patent system are not settled yet, and are being haggled outside of the public's view.

    When you think that the people in charge of this mess are the "geniuses" who brought you Rule 36, Rule 164, etc. ...

  3. An email commentator has sent this comment, concerning the limitation procedure (not opt-out of UPC):

    "There is a related problem on post grant amendment under current EP’s. If the national patents there are extant at a time after grant are assigned but those which have lapsed are not then it can become impossible to obtain a post grant assignment, if the original proprietor has cease to exist, because the rules require that the proprietor of all national patents that came into force at grant consent to the amendment."

    This Kat has no experience of this situation, but it seems to arise from Rule 92(2)(b) referring to the "Contracting States in which the patent has taken effect", which is apparently irrespective of subsequent fate of the patent in any such Contracting State.

  4. I recall that a few years ago, the Irish patent office started sending out "loss of rights" letters on cases which had automatically come into force in Ireland. In the space of a month I got three queries from overseas clients who had received these letters: one asked if it was a scam, another wanted to know why we had validated in Ireland when we had not been intructed to do so, and the third was from a new client who had only just acquired the rights in the invention and was concerned that the Irish rights had not been disclosed under "due diligence". It was always my practice to inform clients about the states where the patent came into force automatically when reporting grant as clients had been known to change their minds.

    What about the situation that could exist where the original grantee assigns the patent rights to different proprietors in different contracting states? Although probably rare, it is possible, as the EP application is legally a bundle of independent patents once it has been granted.

  5. I'm not an expert, so these may be stupid questions, but I'm somewhat baffled by this post.

    Firstly, I'm puzzled at how people can "accidentally" get a patent in Ireland. Surely the applicant has either ticked a box marked "Ireland", or has ticked a box marked "All countries, please" knowing that Ireland was one of the countries on offer? How can getting the patent you asked for be a surprise, given that you presuambly know they speak English in Ireland?

    And secondly, I thought UPC only applied if your EP was valid in all the 25 countries involved? That it was a unitary right, applying exactly the same to all the 25 co-operating countries? So how come someone who thinks their patent is only valid in some of those countries, and whose patent is indeed only valid in some of those countries (albeit more than he thought), is getting in bother with the UPC at all?

  6. As the Kat's original post notes,

    But there lurk here more hidden dangers, because the proprietor may have rights in more territories than bargained for. The European patent is automatically valid in all territories that do not require translation, and the patent remains valid for that territory until it lapses for non-payment of renewal fee."

    Applicants did originally have to designate individual states, and pay individual designation fees for each state, but current EPO procedure automatically designates all states and involves payment of a single designation fee. Hence any EP patent that was filed in English, will, on grant, automatically come into force in Ireland and will remain in force there until the next renewal fee falls due.

    It rtrtanspires that the answer to my original query is given in section 2.2 of Dr Blumenröder's first paper:

    2.2 More than one proprietor

    Where proprietors are different in different contracting member states, the Rules appear to allow that as many opt-out applications can be lodged as there are groups of proprietors. Obviously, this allows a circumvention of the idea to a European patent either under the regime of the UPC or the regime of national courts. The mere use of affiliates allows ensuring the access to both court systems.

  7. To Anonymous at Monday, 4 November 2013 17:04:00 GMT:

    I would agree that many litigants would likely prefer a single court action.
    However, a patentee may prefer to have the patent contested in 20+ countries if it is deemed "too valuable" to put all the eggs in one basket, so to speak. For example, when a big pharma company obtained a EPO patent on a blockbuster drug, it may make business sense to pay for multiple litigations, as the odds are that the patent will be retained in at least some countries. The revenue stream for even a few countries could justify the expense.

  8. Actually the situation is much more complex...

    First, applicants for opt-out should not have to prove entitlement, as they usually never do before patent offices. Moreover, it almost impossible for the Registry to check the CURRENT proprietors in all (up to 28) patent offices, so at the end the Registry will just enter the applications.

    Another issue is that ALL proprietors should file the application to opt-out, for example:

    what if one proprietor does not want to opt-out? Are all the other proprietors then forced to accept a new system which they did not even choose?

    what if the reluctant proprietor owns just the Turkish portion of the European patent? (note that there is a period between the last two sentences of Rule 5(1))

    what if the proprietors, after multiple assignments, do not even know each other?

    in case of two applications made by two proprietors for the same patent should they pay two opt-out fees?

    what if an application to opt-out is filed (by a different proprietor) after an application for unitary effect for the same patent/application at the EPO?

    P.S.: I bet that Rule 5 of the 16th version of the Rules of Procedure will be much different

    P.S.2: Rule 5.9 is obviously ultra vires

    P.S.3: opt-out fees, even if low, are a STEAL

  9. Oh dear too many points here. But thank you everyone for such diverse and thoughtful comments. Trying to take them in order:

    Anonymous of Monday, 4 November 2013 17:04:00 GMT – you have been answered by anonymous of Tuesday, 5 November 2013 06:26:00 GMT

    On the issue of different proprietors in different contracting states (raised by Ex Examiner and I’m a Robot; also discussed in Dr Blumenröder’s paper) – some observers have believed that a European patent can only be opted out if all proprietors for all contracting states agree. Dr Blumenröder considers, I think, that the opt out can be filed in groups for part of a European patent, and (I am filling in the blanks here) only multiple proprietors for any single contracting state need to agree, and any proprietor opting out has to opt out for all the contracting states of which he is a proprietor. Actually Rule 5 is not very clear, and I suspect (like I’m a Robot) that it will be redrafted. I have up to now taken the former view (with which I’m a Robot seems to agree) but I do accept that the curious drafting of Rule 5 makes more sense if the intention is Dr Blumenröder’s reading.

    Anonymous of Monday, 4 November 2013 22:55:00 GMT – your first point has been answered by Ex Examiner. On the second point, the opt-out relates to the competence of the Unified Patent Court (UPC) over the classical European bundle patent, NOT the Unitary Patent, over which the UPC has exclusive jurisdiction and no opt out is possible.

    In response to I’m a Robot:

    1) your first point is simply incorrect as the analogy is not correct. It may possibly be true that the Registry will simply not care and will not perform any review of whether the opt-out applicant is the proprietor of the patent, but I would find this very surprising. In the analogous case of limitation, this point IS examined. Entitlement to grant of a patent by the original applicant is not the same thing at all.

    2) as I mentioned above, there a different views about what “All proprietors” means. Your consequential questions are precisely the kinds of dangers and complexities that my post was intended to highlight, so thank you for expanding on these.

    3) you may be correct that the sunrise period is ultra vires but I don’t think it is “obvious”

    4) the usual meaning of “is a steal” is that it is a bargain. I suspect that you mean the opposite – that opt-out fees are robbery.

  10. The Kat has touched on a area which affects all patent searchers, and has been a cause of considerable angst for many years, when he writes "After the opposition period (and any opposition) is over, the EPO will not record changes to the patent proprietor." I am not a qualified patent agent or attorney, but have worked closely as a searcher with them for many years. How many times have I seen that pained expression, when asked to do a portfolio check on a possible acquisition target, and been obliged to add the caveat that "records of post-grant reassignment to our target company are incomplete". Surely, the launch of the unitary effect is an opportunity to get it right, and REQUIRE either the old proprietor or the new to INFORM PROMPTLY the EPO, to ensure that the Register is up-to-date. If I sell a car in the UK and do not inform the DVLA of the fact, I can be prosecuted or held liable for offences committed by the new owner. Why is it considered acceptable for owners of intangible assets to be so lackadaisical about registering their ownership?

  11. Stephen, how odd that you should apparently be blaming the owner for not informing the EPO, when the issue is, as I think my piece made clear, that the EPO has no competence and will refuse to record any change in ownership after the opposition period is over.

  12. Darren,

    You're right that TODAY EPO has no competence. I think that Stephen's point is that it would be great if TOMORROW EPO has competence.

  13. Thank you, Anonymous of 13:38:00 GMT today. That is exactly my point. If the obligations of a proprietor of a European Patent with unitary effect could be made to include an obligation to inform the EPO whenever their rights are re-assigned, it may go some way towards creating a more complete Register for those rights, and other jurisdictions may be eventually persuaded to follow suit. All the time that national law allows non-reporting or late reporting of post-grant re-assignment, we are struggling with a low quality record of ownership.

  14. When I was in industrial practice, periodic reorganisations often led to changes of name of the subsidiary companies in whose names patents were always filed. We never bothered recording such name changes at the time they were made as there was no point in repetitively incurring the time and expense. Change of name would normally only be effected when it became necessary to do so, such as when litigation was contemplated or the patent (or owning business) was sold, when the chain of name changes would be recorded in one action for a single fee per case.

  15. Ron, that is exactly my experience as well. It is understandable to want to save administrative costs, but it does mean that most national registers cannot be regarded as definitive concerning current ownership of IP rights. I am surprised that the legal community seems content with this uncertainty. This state of affairs places an additional burden on the task of assessing the state of a current portfolio, which I feel is not always understood by the client requesting the search.


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