Opt outs, withdrawing opt outs, and “self-pinning” in the decision between AIM Sport Vision AG v Supponor Oy et al.
– all of Carpmaels & Ransford LLP
(EN) A crucial choice for patentees is whether to opt a patent, application, or SPC out of the competence of the UPC. The possibility of later withdrawing the opt out in order to enforce a patent in the UPC makes opting out seem appealingly flexible. But withdrawal may be blocked if prior national actions have been brought against the patent, even prior to the full entry into force of the Agreement on a Unified Patent Court. A recent decision from the Helsinki Local Division illustrates this risk and shows how UPC provisions may be interpreted. The decision is essential reading for practitioners.
(DE) Für die Patentinhaberin ist es von entscheidender Bedeutung, ob sie ihr Patent, ihre Anmeldung, oder ihr ergänzendes Schutzzertifikat (SPC) der Zuständigkeit des EPG entziehen will. Durch die Möglichkeit, den Opt-out zu einem späteren Zeitpunkt zurückzunehmen und wieder am EPG teilnehmen zu können, ist ein Opt-out scheinbar sehr flexibel. Die Rücknahme kann jedoch blockiert werden sein, wenn eine nationale Klage gegen das Patent vorher erhoben worden ist, sogar wenn eine solche Klage bereits vor dem vollständigen Inkrafttreten des Übereinkommens über ein Einheitliches Patentgericht erhoben wurde. Eine kürzlich ergangene Entscheidung der Lokalkammer in Helsinki veranschaulicht dieses Risiko und zeigt, wie die Rechtsvorschriften des EPG ausgelegt werden können. Die Entscheidung ist für Rechtspraktiker eine unverzichtbare Lektüre.
(FR) Un choix crucial pour les titulaires de brevets est de décider s'ils veulent qu’un brevet, une demande de brevet ou un CCP sois soustrait de la compétence de la JUB. La possibilité de retirer l’opt-out à une date ultérieure, et de pouvoir à nouveau participer à la JUB, donne l’impression que l’opt-out est avantageusement flexible. Mais le retrait d’un opt-out peut être bloqué si des actions nationales ont été engagées contre le brevet, même avant l'entrée en vigueur de l'accord sur la Juridiction Unifiée du Brevet. Une décision récente de la division locale d'Helsinki illustre ce risque, et montre comment les règles de la JUB peuvent être interprétées. Cette décision est une lecture essentielle pour les praticiens.
Opting out and the risk of “pinning”
Practitioners will know that patentees and applicants can opt their patents, applications, and SPCsFor simplicity, this article will refer only to patents. out of the competence of the UPC under Article 83(3) of the Agreement on a Unified Patent Court (UPCA) and Rule 5.5 of the Rules of Procedure (RoP).
Opting out has been viewed by some as a safe way of interacting with the UPC. Opting a patent out prevents a third party from filing a UPC action against the patent – which would otherwise tie the patent into the jurisdiction of the UPC, preventing any future opt out. This has been described as the third party “pinning” the patent into the UPC’s competenceE.g. “The Unitary Patent & Unified Patent Court: Guide to key features & perspectives”, Carpmaels & Ransford LLP, 2023, page 6, https://www.carpmaels.com/wp-content/uploads/2023/05/UPC-Guide-2023.pdf..
Whether or not a patentee has opted its patent out of the UPC, a third party may file an action against the patent in one or more national courts, thereby tying the patent into the competence of national courts – “pinning” the patent out of the UPC’s competence. Absent such pinning (i.e. if no national action has been filed against the patent), the patentee can “withdraw” the opt out at any time, under Article 83(4) UPCA and Rule 5.8 RoP, and place its patent back into the UPC’s competence. For example, an opt out withdrawal could be filed immediately before enforcing the patent in the UPC.
The apparent flexibility of opting out has obvious appeal.
Yet this ‘hedging-your-bets’ view of opting out is not so simple as shown by the Helsinki Local Division in its Decision of 20th October 2023The Decision is combined for ORD_572699/2023 and ORD_581208/2023, corresponding to case number UPC_CFI_214/2023. The Decision may be accessed here: https://www.unified-patent-court.org/sites/default/files/upc_documents/2023-10-20-ld-helsinki-upc_cfi_214-2023-ord_572699-2023-act_551054-2023-and-ord_581208-2023-app_580529-2023-anonymized.pdf., in the case between AIM Sport Vision AG (claimant) and Supponor Oy et al. (defendants). The Division held that a national action commenced before the UPCA fully entered into force on 1st June 2023 did prevent a patentee from withdrawing its opt out. In this case, the patent was effectively pinned out of the UPC’s jurisdiction by the patentee’s own opt out – in what may be described as “self-pinning”.
This article reviews the Decision’s implications for the validity of opt out withdrawals and examines how the Division interpreted of the UPCA and RoP.
The claimant brought an infringement action and an application for provisional measures against the defendants, on the basis of patent EP3295663. The claimant had opted the patent out of the UPC’s competence on 12th May 2023, in the so-called ‘sunrise period’ prior to the UPC’s opening. The opt out took effect when the Court opened on 1st June 2023Rule 5.12 RoP..
The claimant then withdrew the opt out on 5th July 2023, under Article 83(4) UPCA:
Article 83(4) UPCA
Unless an action has already been brought before a national court, proprietors of or applicants for European patents or holders of supplementary protection certificates issued for a product protected by a European patent who made use of the opt-out in accordance with paragraph 3 shall be entitled to withdraw their opt-out at any moment. In this event they shall notify the Registry accordingly. The withdrawal of the opt-out shall take effect upon its entry into the register.
However, the defendants argued that the withdrawal was invalid, because appeals were pending before the German national courts: an appeal of a first-instance decision on infringement, issued on 4th April 2022, to be heard on 12th October 2023, and an appeal of a first-instance decision on revocation, issued on 10th November 2022, to be heard on 5th December 2024. The defendants argued that these were actions “commenced before a court of a Contracting Member State in a matter over which the Court also has jurisdiction pursuant to Article 32” within the meaning of Rule 5.8 RoP:
Rule 5.8 RoP In the event that an action has been commenced before a court of a Contracting Member State in a matter over which the Court also has jurisdiction pursuant to Article 32Article 32 UPCA specifies the actions for which the UPC has competence. They include actions for actual or threatened infringement, and actions for provisional measures. of the Agreement in respect of a patent or application contained in an Application to withdraw, prior to the entry of the Application to withdraw in the register or any time before the date pursuant to paragraph 5The “date pursuant to paragraph 5” is the date of entry into the Register of an application to opt out, or the date of entry of a correction thereto., the Application to withdraw shall be ineffective in respect of the patent or application in question, irrespective of whether the action is pending or has been concluded.
The Division therefore focussed on Article 83(4) UPCA and Rule 5.8 RoP (herein, the “opt out withdrawal provisions”). The Division addressed “[t]he temporal scope“ of these opt out withdrawal provisions in respect of national actions. Did the national actions, which were filed before the UPCA fully came into force, block the withdrawal of the opt out, meaning that the opt out had pinned the patent out of the UPC’s competence?
In this case, the Division said ‘yes’: the prior national actions invalidated the withdrawal, even though the actions were filed before the UPCA fully came into force. Consequently, the opt out could not be withdrawn and the UPC did not have competence over the patent, so the actions were dismissed. In reaching its conclusion, the Division considered how to interpret the wording of the opt out withdrawal provisions, and whether its interpretation was compliant with non-UPC legislation such as the Vienna Convention on the Law of Treaties (VCLT) and the Brussels I Regulation (recast). These considerations are summarised below.
Article 83(4) UPCA and Rule 5.8 RoP
For this case, the Division considered that neither of the opt out withdrawal provisions contains an explicit time limit, such as a date before which national actions may have been brought without blocking a subsequent withdrawal of an opt out. For example, neither provision expressly states that national actions will not block withdrawal of an opt out if those national actions were brought prior to the 1st June 2023 entry into force of the UPCA. Article 83(4) UPCA simply states that an opt out may be withdrawn “[u]nless an action has already been brought before a national court“. Rule 5.8 RoP similarly lacks restriction, stating that any prior national action is relevant if brought “prior to the entry of the Application to withdraw in the register or any time before the date pursuant to paragraph 5 [the effective date of opt out]”.
The claimant seemed to argue that, because Rule 5.8 RoP stipulates that a prior national action has a withdrawal-blocking effect only if that action is “in a matter over which the Court also has jurisdiction”, then Rule 5.8 RoP could only apply to national actions brought after the Court started operations. There appears to have been some discussion over whether the “matter” is a reference to the patent over which the action is brought (which appears to have been the claimant’s position), or to the nature of the action, with reference to Article 32(1) UPCADecision, page 11, paragraph 4.. The Division rejected the claimant’s interpretation, finding that there is no reason to interpret the above expression in Rule 5.8 RoP such that only actions filed after 1st June 2023 would block withdrawal of an opt out, and rejecting any arguments that this interpretation leads to any results that are manifestly absurd or unreasonable, contrary to Article 32(b) of the Vienna Convention on the Law of Treaties (VCLT).
The Division seemed to favour a literal interpretation of the opt out withdrawal provisionsDecision, page 11, paragraph 2., suggesting that their meaning is “clear from the wording”Decision, page 9, paragraph 2..
Non-retroactivity under Article 28 VCLT
The claimant argued that any interpretation of the opt out withdrawal provisions must conform to the VCLT. In particular it highlighted the “rule of non-retroactivity” enshrined in Article 28 VCLT:
Article 28 VCLT – Non-retroactivity of treaties
Unless a different intention appears from the treaty or is otherwise established, its provisions do not bind a party in relation to any act or fact which took place or any situation which ceased to exist before the date of the entry into force of the treaty with respect to that party.
Simply stated, in the absence of a contrary intention, an international treaty does not apply to situations which occurred before the treaty entered into effectKryvoi and Matos, “Non-Retroactivity as a General Principle of Law” (2021) 17(1) Utrecht Law Review pp. 46-58. DOI: https://doi.org/10.36633/ulr.604.. This has been described as a “rebuttable negative presumption” because the rule may be overridden if “a different intention appears from the treaty or is otherwise established”Rosenne, Shabtai (1970) “The Temporal Application of the Vienna Convention on the Law of Treaties”, Cornell International Law Journal: Vol. 4: Iss. 1, Article 1..
The claimant’s argument was that the existence of prior national actions is an “act or fact which took place […] before the date of the entry into force” of the UPCA. It argued that such acts or facts cannot be binding on a party according to Article 28 VCLT, and therefore the literal interpretation of the opt out withdrawal provisions cannot be correct.
The Division disagreed, drawing three main lines of reasoning:
The Division held that its interpretation of the opt out withdrawal provisions involved no violation of Article 28 VCLT because the act of opting out was performed with complete foresight of the UPC provisionsDecision, paragraph bridging pages 9-10..
The Division also held that Article 28 VCLT was not contravened because non-retroactivity applies “[u]nless a different intention appears from the treaty or is otherwise established“Decision, page 10, paragraph 1.. The Division considered that the intention clearly present in the wording of the UPC provisions allowed for retroactive effect.
Finally, the Division held that Article 28 VCLT limits non-retroactivity to “any act or fact which took place or any situation which ceased to exist before the date of the entry into force of the treaty”. The Division acknowledged that a prior national action may be an “act or fact”, but held that prior national actions are not a “situation which ceased to exist” prior to the UPCADecision, page 10, paragraph 2.. The Division viewed the prior national actions as situations which did not cease to exist at the effective date of the opt outs.
The Division therefore saw no conflict between a literal interpretation of the opt out withdrawal provisions and Article 28 of the VCLT. The Division noted that its interpretation conformed with the general rule of interpretation in Article 31 VCLT, such there could be no recourse to supplementary means of interpretation as provided for in Article 32 VCLT.
###Brussels I Regulation (recast)
The claimant argued that a withdrawal-blocking effect for pre-UPCA national actions contravened the Brussels I Regulation (recast):
Article 71c(2) Brussels I Regulation (recast)
Articles 29 to 32 shall apply where, during the transitional period referred to in Article 83 of the UPC Agreement, proceedings are brought in the Unified Patent Court and in a court of a Member State party to the UPC Agreement.
Articles 29-32 Brussels I Regulation (recast) govern the handling of “lis pendens”, or “related actions” – in which proceedings involving the same cause of action, between the same parties, are brought in the courts of different Member States. The claimant argued that because the parties in the prior national actions were not the same as those in the present UPC case, the prior national actions should not exert a withdrawal-blocking effect.
The Division disagreed, using two main lines of reasoning:
It held that the opt out withdrawal provisions concern a situation which does not involve actions being brought between different Member States, because the UPC’s competence had been removed by the opt out. The question was whether withdrawal of the opt out had been blocked (i.e. whether the UPC’s competence should be restored), and the Division’s answer in the negative meant that Article 71c(2) did not applyDecision, page 10, final paragraph..
The Division also highlighted that the UPC provisions do not mention parties, only patents. It was therefore enough that the patent in question had been subject to prior national actions, whether or not the same parties had participated.
Overall, the Division’s interpretation of the opt out withdrawal provisions is clear: when a prior national action was commenced before and remains pending after an opt out took effect, withdrawal of the opt out is prevented by Rule 5.8 RoP. The patentee’s opt out causes “self-pinning” of the patent outside the UPC’s competence.
“Self-pinning” in other guises
A natural extension of this scenario is a prior national action that was commenced and concluded before an opt out took effect. Do concluded prior national actions also trigger the withdrawal-blocking effect of Rule 5.8 RoP, and mean that the opt out causes self-pinning?
The Division would not be drawn on this specific point, highlighting that the case at issue involved prior national actions that were pending on 1st June 2023 (when the opt out took effect) and were still pending when the Decision was handed downDecision, page 11, paragraph 3.. Even so, the Division appeared to favour a literal interpretation of the opt out withdrawal provisions, the wording of which it held to contain no explicit time limit. As recorded in the Decision, almost all elements of the Division’s reasoning seem equally applicable to prior national proceedings that are concluded, as they do to those prior national proceedings that remain pending. The Division reached its conclusion in the current Decision having already acknowledged the claimant’s argument that a literal interpretation of the opt out withdrawal provisions “would discriminate against all those patentees whose European patents have ever been subject to a former national action”Decision, page 11, paragraph 1..
Opting out: not without risk
“There’s no such thing as a ‘wait and see’ approach to the UPC”, according to the President of the Court of Appeal of the UPC, Klaus GrabinskiNo such thing as ‘wait and see’ approach, warns UPC’s top judge as sunrise period begins, Houldsworth and Grabinski, 1st March 2023, https://www.iam-media.com/article/no-such-thing-wait-and-see-approach-warns-upcs-top-judge-sunrise-period-begins..
The President may not have had the UPC’s opt out system in mind, but the above statement seems apt following the Helsinki Local Division’s Decision. Far from being a passive, ‘wait-and-see’ strategy, opting out can be a permanent choice – an act of “self-pinning” – depending on the national actions that have been filed against the patent previously.
Practitioners will no doubt be keen to see whether the Decision is appealed and, if so, whether the UPC’s Court of Appeal also addresses the issue of concluded prior national proceedings.
All views expressed apply solely to the decision under discussion. All views are those of the author(s) at the time of writing, and do not necessarily represent the authors’ current views or those of their employer. This article provides a summary of the subject-matter and should not be acted on without first seeking legal advice.