December 21, 2023
Law360
The Unified Patent Court, or UPC, launched on June 1. Since then, a multitude of cases have been filed by various litigants across industries. While we are still waiting for decisions in proceedings on the merits, there are a variety of insights to be taken away from the first decisions and orders issued during the court's first six months.
This article provides a concise overview of nine key learnings from the past months, evaluates the UPC's strategic role in global patent litigation and looks at its prospects for 2024.
Even though the UPC is a relatively new forum, it has garnered a great amount of momentum right from its start. As of Dec. 12, 130 proceedings have been registered in the court's case management system, or CMS. Due to the time lag until publication and the fact that not all proceedings are registered immediately to the public, actual filing numbers are likely even higher.
Of those 130 registered proceedings, 56 are infringement actions, nine are applications for provisional measures, 23 are revocation actions and 42 are counterclaims for revocation.[1] This shows that the UPC is being recognized as an attractive forum in patent litigation and is gaining more and more traction.
Among the filers are world leaders in their respective industries. The range of industries represented is very broad and extends from the dominant electronics branch to mechanics, life sciences and physics. Although the pharmaceutical industry was predicted to behave rather cautiously, it is to be particularly emphasized that the pharmaceutical sector has also been involved already from the start.
The global patent dispute between Amgen Inc. and Sanofi SA is an example, since, on the first day of the UPC's launch on June 1, both an infringement and a revocation action were filed in relation to European patent 3 666 797, which protects "antigen binding proteins to proprotein convertase subtilisin kexin type 9 (PCSK9)." Each of the cases has a litigation value of €100 million ($109.6 million), according to the parties' estimates.
The number of proceedings and large spectrum of filers alone are tributes to the UPC's appeal. Litigants are likely attracted to the large territorial reach of the currently 17 European countries in which a decision may take effect, as well as the comparatively short timelines of the proceedings that allow for rapid legal clarity.
As set out in the rules of procedure, the timelines for the submissions are very tight. The court intends to issue first-instance decisions on the merits within about a year, while the duration to obtain a preliminary injunction can range from one day to three or four months, depending on the individual circumstances and urgency of the case.
The UPC may have a considerable impact on global patent litigation. For example, in June, Ocado Ltd. sued AutoStore in three separate UPC divisions — the local divisions in Düsseldorf and Milan, as well as the Nordic-Baltic regional division in Stockholm — based on three different patents related to warehouse storage systems. At that point in time, the parties were already involved in an array of other patent disputes in the U.S., the U.K. and Germany, according to public information.[2]
On July 22, shortly after the initiation of the UPC actions, the parties announced a complete settlement of their global dispute to avoid "further litigation and costs."[3] Considering the significant settlement amount of £200 million ($254.9 million) and the close proximity to the beginning of the UPC proceedings, the latter may have contributed to facilitate such settlement.
The ex parte preliminary injunction issued within one day by the local division in Düsseldorf in myStromer AG v. Revolt Zycling AG demonstrated how fast the UPC can react to time-sensitive matters.
In the dispute between myStromer and Revolt Zycling, which concerned European patent 2 546 134 that protects a "combination structure of bicycle frame and motor hub," the court considered the case urgent due to a trade fair where the bikes in question were displayed.
The judges saw a risk of irreparable harm due to the threat of hardly reversible loss of sales and market shares, and thus issued the preliminary injunction the same day the application was filed. The injunction was granted on June 22 without even hearing the respondent and despite a protective letter being filed.
We have also seen a case in which a European patent with unitary effect, a so-called unitary patent, was litigated. The local division in Munich addressed in its Sept. 19 decision the preliminary injunction proceedings between 10x Genomics v. NanoString Technologies inter alia the question of urgency.[4] The latter seems to be measured against a different standard depending on the presence of a classic European patent or a unitary patent.
The court examined whether the patentee of a classic European patent would have been able to assert his claims at an earlier point in time on a national basis — an option not viable to the owner of a unitary patent. This can be important for the strategic planning of patent disputes and for the choice of patent to be asserted in preliminary injunction proceedings.
The UPC has issued several decisions on the extensions of filing deadlines. The Munich local division has granted some extensions in view that the procedural law is relatively new, and the CMS is still being optimized. It can be expected, however, that this may be more strictly handled once parties have become more familiar with the new system.
Furthermore, some balancing between the different local divisions and the Court of Appeal has taken place. For example, on Oct. 13, the Court of Appeal issued a decision in Amgen v. Sanofi, holding that if a claimant did not provide the annexes to a complaint simultaneously with the statement of claim in the CMS and, if as a consequence, these have not been available for the defendant when accessing the CMS, then this in itself may be a sufficient reason to request a term extension.[5]
Under Rule 262 of the rules of procedure, the UPC's decisions and orders shall be made publicly available, whereas the submissions of the parties are only available to the public upon a reasoned request.
According to the views of the Munich central division in a Sept. 20 order in Sanofi v. Amgen case, such requests may only be granted in the case of a concrete and verifiable, legitimate reason.[6] The Munich central division denied requests in two cases that were based on either personal and professional interest or for educational purposes.
This strict handling is distinctly different to the full transparency in opposition proceedings at the European Patent Office or the easier approach taken by the German Federal Patent Court, for example.
The Nordic-Baltic regional division took a less strict view in its Oct. 17 order in Ocado v. AutoStore.[7] The applicant requested information "for public scrutiny and discussion as the new court system launches and develops." The division granted the request, noting "also the written procedure shall, in principle, be open to the public, unless the court decides to make it confidential, to the extent necessary."
According to public information,[8] this decision was appealed. As such, it will be interesting to see how the UPC's Court of Appeal will shape the requirements for file inspection.
While a claimant has no choice about the venue when it comes to nullity actions — the technology of the patent being decisive — this is different for infringement actions. In that case, the claimant may select the venue based, for example, on where the infringement is taking place or where the defendant is seated, as established in Article 33(1) of the UPC agreement.
The statistics of registered UPC infringement actions are telling. Among the 56 infringement proceedings registered at the CMS, 42 were filed in Germany — more than half of them, or 22 cases, in the Munich local division. This is similar for applications for provisional measures, as five out of nine proceedings were filed in German divisions, four of which were filed in the Munich local division.
The large number of cases being filed in German divisions is in accordance with the traditional distribution of national case filings within Europe, where Germany is one of the top patent litigation venues.[9] In view of the large case numbers, German judges have gained a lot of experience and even two of them are sitting on the benches of the German UPC divisions in first instance. This might be one of the reasons attracting litigants.
The languages available for UPC infringement proceedings depend on the individual UPC division where an action is filed and the choice of the claimant. Hence, the language of proceedings may differ from the language in which the patent was granted. This may be an unfavorable situation for parties not familiar with the language of the proceedings.
Defendants may therefore apply for a language change, which was seen in the Oct. 18 order in Plant-e Knowledge BV v. Arkyne Technologies SL before The Hague local division.[10] The claimants argued against the change of language, but the court considered being sued in a foreign language that one does not master is an important inconvenience for the defendant, even if being assisted by representatives that are fluent in such language. This shows that the UPC is keen to strike a fair balance between the parties' interests.
Having already attracted various renowned global players and cases with high litigation value within the first days of proceedings, the UPC has managed to establish itself within the first six months as an appealing jurisdiction. The far territorial reach, short filing deadlines and extremely quick issuance of preliminary injunctions show that the UPC is well-prepared to provide for rapid legal clarity.
This is attractive for patentees. From the defendants' side, however, in particular, the tight filing regime and the huge impact on various jurisdictions involved may be perceived as burdensome. Those who fear being sued should therefore consider when and how to best prepare for potential UPC proceedings.
In view of the high demands that UPC litigation may bring, it may even facilitate settlements to resolve patent disputes quickly. Accordingly, this new venue should not be underestimated by patentees when creating a coherent global patent litigation strategy.
After the court's successful start, it will be interesting to monitor the further development of the UPC. In view of the high number of cases, many new decisions are likely to be issued in 2024. The second, third and fourth quarters of 2024 will be particularly important to further understand the UPC's jurisprudence as the first decisions in proceedings on the merits are expected at that time.
It will be interesting to see how the UPC will shape the law, as there are many burning questions. For example, which approach will the court take when assessing infringement under the doctrine of equivalence, or what impact will case law of the European Patent Office have on the UPC's decisions on the validity of patents?
The shaping of law may also have an impact on the overall acceptance of this new system. Comparing the UPC and national case filing numbers will tell us more about the significance and acceptance of the UPC in European litigation. Whether all or only certain industries will make increasing use of the unitary patent might also be informative in this regard. We are therefore very much looking forward to further developments in 2024.
[1] See current statistics of registered proceedings here: https://www.finnegan.com/en/upc-registered-proceedings.html.
[3] See AutoStore's press release at https://www.autostoresystem.com/investors-press-releases/autostore-and-ocado-settle-all-patent-litigation.
[4] UPC CFI 2/2023, https://www.unified-patent-court.org/sites/default/files/upc_documents/2023-09-19-ld-munich-upc_cfi_2-2023-act_459746-2023-app_528389-2023-anonymized-english-translation.pdf.
[5] UPC_CoA_320/2023, https://www.unified-patent-court.org/sites/default/files/upc_documents/final-order-appeal-572929-eng_0.pdf.
[6] UPC_CFI_1/2023, https://www.unified-patent-court.org/sites/default/files/upc_documents/2023-09-20-cd-munich-upc_cfi_1-2023-ord_550152-app_546231-2023_order-rejecting-2621b-application_anonymized.pdf.
[7] UPC_ CFI_11/2023, https://www.unified-patent-court.org/sites/default/files/upc_documents/2023-10-17-rd-nordic-baltic-upc_cfi_11-2023-ord_543819-2023-act_459791-2023-anonymized.pdf.
[8] https://www.managingip.com/article/2cg4kvrdh27jf8epjlam8/upc-appeal-judges-to-rule-on-transparency.
[9] See for example the numbers published here: https://www.juve-patent.com/people-and-business/germanys-case-numbers-drop-but-dusseldorf-remains-most-important-patent-location/.
[10] UPC_CFI_239/2023, https://www.unified-patent-court.org/sites/default/files/upc_documents/2023-10-18-ld-the-hague-upc_cfi-239-2023-ord_581189-2023-app_580938-2023-plant-e-v.-arkyne-technologies-anonymized.pdf.
Originally printed in Law360 on December 21, 2023. This article is for informational purposes, is not intended to constitute legal advice, and may be considered advertising under applicable state laws. This article is only the opinion of the authors and is not attributable to Finnegan, Henderson, Farabow, Garrett & Dunner, LLP, or the firm’s clients.
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