The Unified Patent Court: choice of forum

Written on 8 Jun 2016

Which division?

The UPC at first instance consists of three types of division:

  • local divisions, in Contracting States that have exercised their option to establish them (namely, in Contracting States already accustomed to a significant amount of patent litigation);
  • regional divisions, set up between two or more Contracting States, as an alternative to local courts (to date the only regional division that has been set up is the Nordic-Baltic division); and
  • a central division, which amongst other things will hear disputes arising in Contracting States that have not set up either a local or regional division.

The central division is based in Paris, although trials of mechanical patents will be heard in Munich and trials of life sciences and chemical patents will be heard in London. The local and regional divisions can hear trials with subject matter in any technical field.

Only in the central division can the parties be certain that infringement and validity will be tried together, eliminating the perceived risk that a patent may be construed one way – broadly – for the purposes of analysing infringement but another – narrowly – for the defence of any validity attack.

There is also an expectation that the judges of the central division will be those out of the UPC pool of international judges who are most experienced in patent matters.

It is unlikely, however, that the majority of cases will be heard in the central division, since the rules on jurisdiction (Article 33 UPC Agreement) will ordinarily point to one or more local divisions as the forum for infringement actions.

What options will a patentee have?

A patentee or exclusive licensee bringing an action to enforce the patent is likely to have a wide choice of divisions in which to bring its claim:

  • it can sue an EU-based defendant either in that defendant’s home territory or where the allegedly infringing activities take place or are threatened to be done – in each case in any local or regional division for that territory;
  • it can sue a non-EU defendant where the defendant infringes or where it has a place of business (which need not be its legal place of establishment), or in the central division; or
  • if the defendant is a member of a multinational group and another member of the group is also being sued for the same infringement, it can sue both defendants in the same division.

Since many businesses sell products in a number of Contracting States, this may give the patentee an effectively free choice of local, regional and central divisions.

So, what will be the main factors that will influence which division to bring an action in?

Language

The usual considerations as to “home advantage” may suggest a particular division for EU patentees. The rules relating to the usual language of proceedings are that:

  • local divisions will hear proceedings in the official language of the relevant Contracting State in which they are based;
  • regional divisions can choose their operating language (the Nordic-Baltic regional division, the only one so far, has chosen English); and
  • the central division will hear proceedings in the language of the patent.

Thus, the patentee may be able to impose a language for the proceedings which the alleged infringer will have to handle through translations.  Further, since infringement and validity will not necessarily be tried together, they may be considered not only in different courts but also in different languages.

Given that claim construction almost invariably turns on nuances of interpretation, this would exacerbate the unpredictability of outcomes.  Such uncertainty may, of course, increase the pressure on both parties to settle.

However, this uncertainty and ability to dictate language for tactical reasons may be reduced if, as appears possible, almost all divisions of the Court will operate in English as well as the local language. The exception to this is the Austrian division, which is proposing to use only German.

Judges

However, the flipside of a strategy based on the most favourable language for the patentee is that the local division concerned will consist of a mix of local judges and international judges drawn from the international pool.  The proportion (1:2 or 2:1) will depend on the patent caseload of the local courts.

Unless the international judge(s) happens to speak the local language, the tribunal could have to deliberate in a common language, in which one or more judges may be less than fluent for technical and legal discussions. At least one judge will also be working from translations of the technical documents.

It is impossible to know in advance which party might be favoured by such a tribunal, since there is no way of guessing where misunderstandings may arise.

Approach to procedure

The local and regional divisions’ decisions on procedural matters will also be factors influencing the choice of division, since some may be perceived as more or less patentee-friendly. At least to start with, the local divisions are expected to use the procedural flexibility of the UPC. It allows for most of the known procedural options available in any national court, but does not mandate any given set to allow them to follow a process that is similar to their respective existing national procedure.

Thus, disclosure of documents and cross-examination of witnesses may be permitted in the English local division but not in Belgium, for instance.  However, the point of having a pool of judges, with any division always incorporating at least one non-local judge, may moderate this. Further, both procedural and final decisions are capable of appeal, so the operation of the rules should begin to converge over time, once the Court of Appeal has begun to hand down rulings on procedural matters.  Once the UPC has been operational for a few years, an initial appearance of patentee-friendliness in a division may be eroded if the final decisions from a given division prove to be routinely overturned.

The Court of Appeal’s decisions may not, however, have much impact on those issues which the local divisions are expressly competent to decide because they remain governed by national law.  For instance, the UPC Agreement does not appear to allow for an overseas parent company to be joined as a co-defendant, unless it is also an infringer within the Contracting States.  This tactic, often used in the English courts, is useful if the overseas company is the only one with documents relating to the functioning of the product and reverse engineering is likely to be difficult.  It can also push the dispute up the agenda at ‘head office’ by forcing the parent to become directly involved in the defence.  It may be the case that where such an overseas company would be jointly liable under national law, it will be possible to join it as a party to an action brought in the relevant local division.

What options does the alleged infringer have?

Unless the parties agree in advance on the choice of division, the alleged infringer is unlikely to have much control over the choice of division in any infringement suit unless:

  • it has no place of business in the Contracting States and carries out its activities solely in jurisdictions where no claimant would choose to sue (which cannot be identified at this early stage), such that the claimant is likely to elect the central division; or
  • it carries out the allegedly infringing activities in jurisdictions covered by 3 or more regional divisions, in which case it can insist that the action be transferred to the central division.

The latter is the only realistic option – but as of May 2016, only one regional division is being set up, for Sweden and the Baltic states.  This criterion is therefore currently impossible to meet.

Even bringing a pre-emptive action for revocation of the patent or a declaration of non-infringement, which must be filed in the central division, does not guarantee that any infringement action will also be heard there.  The patentee can choose to bring its claim in the central division, but does not have to do so.  If it instead brings an infringement claim in a local division, the local division has discretion whether to:

  • stay pending the validity case decision;
  • proceed with the infringement case; or
  • transfer the infringement case to the central division to be heard with the validity action.