Unified Patent Court: an introduction to the UPC's general jurisdiction
Published on 26th Jan 2023
Knowing the UPC's competence and international jurisdiction rules is vital to understand what it can hear and reach
After many years of planning, the Unitary Patent (UP) and the Unified Patent Court (UPC) are due to launch in Europe in mid-2023. For the first time, the new UP will introduce a single patent right covering all EU Member States that have ratified the UPC agreement and the UPC opens up the possibility of pan-EU injunctions and central patent revocation for UPs and European Patents (EPs) that have not been opted out of the UPC system.
The new UPC system will result in substantial changes to the system of granting and litigating patents in Europe and there is much to learn, and still some unknowns, about how the court will operate. The jurisdiction of the UPC is a key topic to get to grips with as it could inform strategic decision making.
A court has jurisdiction when it has the ability to adjudicate a dispute. Jurisdiction rules are needed to determine when courts have jurisdiction to deal with cases – they provide certainty to know where claimants can bring a dispute and where defendants might have a dispute brought against them.
Up until the UPC goes live later this year, there is no single forum in which to bring patent infringement proceedings or post-grant revocation actions (following expiry of the European Patent Office (EPO) opposition period). This has meant that each national designation of a EP has been required to be litigated separately in each of European Patent Convention (EPC) contracting states in which it applies.
However, the introduction of the UPC will create a single venue for such litigation, covering all of the EU Member States that have ratified the Agreement on a Unified Patent Court (UPCA) (known as UPCA contracting Member States).
The UPC will have exclusive jurisdiction over UPs. During the transitional period, EPs that are not opted out of the UP system will be under the dual jurisdiction of the UPC and national courts. The ability of EP owners to opt out of the UPC system presents some additional jurisdictional complications during the transitional period. At the end of the transitional period, all EPs (excepting those that have been opted out during the transitional period) will be subject to the UPC's exclusive jurisdiction.
This means, for the first time, there will be a single forum for litigating patent disputes (that fall within the UPC's remit), reducing the need for multiple separate national actions across Europe. This will also mean that UPC decisions and remedies will have effect in all UPCA contracting Member States (and potentially beyond, as a result of the court's co-called "long arm" jurisdiction, which will be covered later in this series).
However, the issue of jurisdiction can be tricky and there can be a number of options depending on a range of factors, including the cause of action, domicile of the parties, location of alleged infringement and whether parallel proceedings have been commenced. This opens the door to strategic litigation. Users of the new system should be aware of the jurisdiction rules and consider how they might impact their litigation strategies.
Under article 32 of the UPCA, the UPC has exclusive competence over certain types of litigation relating to UPs and EPs (subject to the transitional opt-out provisions). These are:
- Actions for actual or threatened infringements of patents and supplementary protection certificates (SPCs) and related defences, including counterclaims concerning licences.
- Actions for declarations of non-infringement of patents and SPCs.
- Actions for provisional and protective measures and injunctions.
- Actions and counterclaims for revocation of patents and for declarations of invalidity of SPCs.
- Actions for damages or compensation derived from the provisional protection conferred by a published European patent application.
- Actions relating to the use of an invention prior to the granting of the patent or the right based on prior use of the invention.
- Actions for compensation for licences of right under article 8 of the Unitary Patent Regulation.
- Actions concerning decisions of the EPO in carrying out the administrative tasks in connection with UPs assigned to it under article 9 of the Unitary Patent Regulation.
This does not cover all potential actions relating to UPs and EPs – national courts will retain jurisdiction for matters not falling within the above competence. For example, inventorship and employee compensation claims.
Rules on international jurisdiction determine which state's court has the power to adjudicate a dispute. Article 31 of the UPCA states that the international jurisdiction of the UPC is governed by either the recast Brussels Regulation or the Lugano Convention, as appropriate.
The recast Brussels Regulation, updated in 2014 to include the UPC as a court common to UPCA contracting Member States, sets out the rules on jurisdiction and the recognition and enforcement of judgments relating to civil and commercial matters (including patents) in EU Member States.
The general rule for jurisdiction under the recast Brussels Regulation is that defendants that are domiciled in an EU Member State, regardless of their nationality, are sued in the courts of that Member State. The regulation also sets out certain rules on special jurisdiction that may be available to the claimant, for example suing in the courts where a tort (such as patent infringement) occurred.
With respect to European Free Trade Association (EFTA) states, a similar system to the regulation exists by virtue of the Lugano Convention. The EU (with Denmark as a separate signatory), Iceland, Norway and Switzerland are signatories to the convention.
Neither the recast Brussels Regulation nor the Lugano Convention applies to the UK post-Brexit, nor is the UK participating in the UP and UPC systems.
Under article 4(1) of the recast Brussels Regulation, a defendant domiciled in an EU Member State can be sued in the courts of that state. However, if the EU Member State is also a UPCA contracting Member State then the UPC will have jurisdiction with respect to matters in its competence (a later article in this series will explore the issues that arise during the transitional period). Whereas if the EU Member State is not a UPCA contracting Member State then the defendant can be sued in the national courts of that state.
The general jurisdiction under article 4(1) of the regulation has been interpreted to mean that the courts in a defendant's country of domicile can assert jurisdiction over infringements relating to both domestic and foreign IP rights (albeit applying the relevant foreign laws in the latter situation) and can award remedies on the same basis, provided that the issue of validity is not raised.
Article 24(4) the regulation provides that each member state has exclusive jurisdiction to determine the validity of patents that apply in its state. Thus, if invalidity of the patent is raised in response to an action for infringement of a foreign patent, the court of the defendant's country of domicile may not proceed with the infringement action in respect of that patent. The courts of some EU member states may be willing to stay the infringement proceedings pending resolution of the validity issues in the country in which the patent is registered. More commonly, however, the court will decline to address infringement of the foreign patent, and both validity and infringement will fall to be determined by the courts of the state in which the patent is registered.
As the general jurisdiction conferred by article 4(1) will also apply to the UPC, if a defendant is domiciled in a UPCA contracting Member State the UPC will also have jurisdiction to consider infringement of 'foreign' patents – that is, those granted in states that are not UPCA contracting Member States. However, since the UPC's competence is limited to matters concerning UPs and EPs, this jurisdiction is effectively limited to claims for infringement of EPs granted in non-UPCA contracting countries.
Beyond the general jurisdiction that is set out by the regulation, grounds for special jurisdiction are also provided. The most important of these are: in relation to a tort, the place where the harmful event occurred (article 7(2)); disputes arising out of the operation of a branch, subsidiary or other establishment (article 7(5)); multiple defendants and close connection (article 8(1)); and counterclaims arising from the same facts (article 8(3)).
"The place where the harmful event occurred" is usually the most relevant special ground for patent disputes. This ground provides that the courts of the country where the infringement occurred have jurisdiction. As such, if a defendant is not domiciled in a UPCA contracting Member State but the infringement takes place in a country that is a UPCA contracting Member state, the UPC will have jurisdiction.
If an action is brought before both the UPC and the national court of a non-UPC EU Member State then the lis pendens rules set out in the regulation would apply. This means that the court first 'seised' of the action has priority, and any subsequently seised court must stay its proceedings if they involve the same cause of action between the same parties (article 29).
For there to be the same cause of action, in addition to the proceedings having to involve the same parties, they must also concern the same patent and the same acts of infringement. Whether the parties are the same is decided per EU rules rather than the national law of any courts involved.
The infringement actions relating to different national designations of an EP are not considered to be the same proceedings. Nor are validity and infringement proceedings considered to be the same action. However, an infringement action and a corresponding action for a declaration of non-infringement do involve the same cause of action. This opens the window for "torpedo" non-infringement actions.
Article 30 also introduces the discretion to stay proceedings in the case of related actions. Actions are held to be related where they are so closely connected that it would be expedient to hear and determine them together to avoid the risk of irreconcilable judgments.
Where the same or related actions are brought before the courts of a third state (a non-EU country) and jurisdiction is based on articles 4, 7, 8 or 9 of the regulation then the court may stay the proceedings in certain circumstances. However, this is discretionary and therefore the court may continue with the proceedings in certain circumstances also (see articles 33 and 34).
Osborne Clarke comment
The rules relating to jurisdiction applicable to the UPC are complex. However, users of the new system will need to familiarise themselves with the different jurisdictional options as there may be strategic advantage to pursue certain claims in certain courts.
The jurisdiction offered under the recast Brussels Regulation with respect to the location of domicile of the defendant in infringement cases is broad. Member States' courts, which includes the UPC, are able to issue decisions on infringement of both national and foreign patents and can likewise order damages on a worldwide basis. However, validity remains under the exclusive jurisdiction of member states (including the UPC with respect to UPs and EPs, subject to the transitional rules).
In addition to the usual rules on international jurisdiction, it is crucial to understand the scope of the UPC's competence. The UPC is not competent to hear every type of case relating to EPs and therefore it is important to know what is in the court's remit and what isn’t.
This is the first article in a short series in which Osborne Clarke's UPC team dive deeper into jurisdiction that will consider the UPC's "long arm" and issues arising from the transitional period, including the option to opt out.