PROCEEDINGS BEFORE THE UPC: FEATURES AND STAKES FOR LITIGANTS – 3/310 May 2023
Following Germany’s ratification of the Agreement on a Unified Patent Court (UPCA)1 on 17 February, it is now certain that the Unified Patent Court (UPC) will open its doors on 1 June 20232. Patent litigation in Europe is thus about to undergo one of the most important changes in its history.
Our second Newsletter on the UPC dealt with the strategic implications of the “opt-out”. We have seen that all unitary patents (UP3) and classical European patents (EP) without opt-out will be subject to the jurisdiction of the UPC. It is now necessary to review what litigants involved in proceedings before the UPC should expect.
We will review the main features of proceedings before the UPC, as well as the different phases of a typical proceeding up to the judgment of the Court of First Instance. Possible actions to preserve evidence of infringement, as well as provisional actions to quickly stop a threatened infringement, will also be discussed.
Focus on some salient features of proceedings before the UPC
- An overview of the UPC
The UPC is a new international and supranational civil court, and the first in the world entirely dematerialized, which will profoundly change patent litigation in Europe by simplifying and centralizing it. It will make it possible to obtain a decision valid on the territory of all the participating States. Thus, for disputes where acts of infringement take place in several States, a single action can be brought before the UPC (instead of an action before each national court where infringement is alleged), leading to a single decision having effect in all 17 participating States (and in the long term, in all EU Member States) – and even beyond in all States designated in the European patent in certain circumstances.
Organisation-wise, the UPC comprises a single Court of First Instance, a single Court of Appeal and a Registry4. The Court of First Instance consists of a central division based in Paris, with a section in Munich (and possibly also in Milan), and several local and regional divisions throughout Europe5. The Court of Appeal has its seat in Luxembourg6.
The UPC has a multinational composition and currently comprises a total of 85 judges: 34 legally qualified judges and 51 technically qualified judges7. The judges have been chosen after a highly selective process, resulting in the selection of judges with the highest level of expertise and proven experience in patent litigation. Many will initially serve on a part-time basis.
1 The Agreement on a Unified Patent Court (UPCA) is available at this link. It will enter into force on 1 June 2023.
2 See the press release: https://www.unified-patent-court.org/en/news/germany-ratifies-agreement-unified-patent-court.
3 European patent with unitary effect, here called Unitary Patent (UP) for simplicity.
4 Article 6.1 UPCA.
5 Article 7 UPCA.
6 Article 9.5 UPCA.
7 The list of judges is available at this link.
- Fast by design: expect short time limits
The Rules of Procedure of the UPC (UPC-RoP)8 provide that the final hearing on infringement and validity issues must be held within one year9. This period is counted from the date of receipt of the statement of claim by the Registry10.
The proceedings are pre-formatted, with the following steps:
To meet this timetable, the time limits in the written procedure are predetermined and very short, generally much shorter than the time limits traditionally granted before most national courts in the participating States.
Indeed, for an infringement action, the exchanges of pleadings during the written procedure are supposed to take place over a six- to nine-month period, as follows11:
For an action for revocation, the time limits are even shorter since the defendant must file its statement of defence within two months from the service of the statement for revocation. The statement of defence may include a counterclaim for infringement12.
8 The UPC-RoP are available at this link.
9 Preamble of the UPC-RoP, point 7.
10 Rule 17.4 UPC-RoP: “The action shall be regarded as having commenced before the Court as from the date of receipt attributed to the Statement of claim.”
11 Rule 23, Rule 29 (a)(b)(c)(d) UPC-RoP.
12 Rules 49, 51, 52 UPC-RoP.
After the written procedure, there is an interim procedure, during which the judge-rapporteur may take various steps that he or she deems necessary in preparation for the oral hearing. For example, he may ask the parties to provide explanations on specific points, answer specific questions, produce evidence and/or documents. The interim conference, if ordered, allows the judge-rapporteur to clarify the parties’ positions, establish a timetable, explore with the parties the possibilities of settling the dispute amicably, make orders regarding the production of evidence, etc. The judge sets the date for the oral hearing. The interim procedure must last 3 months13. The oral procedure consists of a one-day hearing14.
This time-limited proceedings before the UPC is an advantage for patentees, who will obtain a decision on the merits more quickly than before the national courts of the UPC participating States. For example, in France, it takes approximately 1.5 to 2 years to obtain a first decision on the merits of an infringement action with a counterclaim for revocation (assuming no procedural issue arises).
However, this will be a new challenge for the parties and their counsels, who will have to be very responsive throughout the proceedings. Plaintiffs, who can prepare their case several months in advance, should be less affected than defendants, who will have limited time to prepare their defence. They will only have three months to conduct a prior art search, find the grounds for invalidity of the patent(s), and formulate non-infringement arguments. However, as a matter of pragmatism, the UPC-RoP provide that the UPC judges will have discretion to apply the procedural rules “in a flexible and balanced manner”15 to organize the proceedings “in the most efficient and cost effective manner”16. This flexibility may consist in, for instance, extending time limits (even retroactively17) for complex actions, or allowing an exchange of further written pleadings18. But conversely, for simple actions, the Court may decide to shorten any time limit19. Only experience will show to what extent judges will use this flexibility in the early years of the UPC to keep it attractive.
It should be noted that before the UPC, the determination of the damages awarded to the successful party may be the subject of separate proceedings after the decision on the merits. Likewise, separate proceedings may be initiated for costs.
- The requirement to “put everything on the table at the outset”
To meet the one-year deadline, the UPC-RoP require each party to present all its arguments and evidence in its first written pleadings (i.e., the statement of claim or the first statement of defence). Parties and their counsels will need to observe this requirement with great deal of care, because the potential consequences are drastic: the Court may disregard any step, fact, evidence or argument that a party has not taken or submitted within a time limit set by the UPC20. For any change of claim or any amendment to its case, a party will have to seek leave from the judge, and to provide reasons why the amendment could not be made from the outset (except for unconditional limitation of the claims, which will always be granted)21. In practice, this requires:
- For the infringement plaintiff, to present all its infringement arguments in the first brief, along with all the evidence, offers of evidence, and proceedings to be taken to supplement the evidence. Strategically, it is therefore preferable to have all the measures of obtaining evidence carried out before the action is initiated, even though the judge-rapporteur may order them during the interim conference22.
- For the defendant in an infringement action, to raise all its arguments of non-infringement as well as all his attacks on the invalidity of the patent in the first statement of defence. This means that the prior art searches will have to be carried out in a very short time, and that all the prior art will have to be submitted from the beginning.
13 Rule 101.3 UPC-RoP.
14 Rule 113 UPC-RoP.
15 Preamble of the UPC-RoP, point 4.
16 Preamble of the UPC-RoP, point 4.
17 Rule 9.3(a) UPC-RoP.
18 Rule 36 UPC-RoP.
19 Rule 9.3(b) UPC-RoP.
20 Rule 9.2 UPC-RoP.
21 Rule 263 UPC-RoP.
22 Rule 103 (a) and Rule 104 (e) UPC-RoP.
- Fees before the UPC: a new parameter to take into account
As the UPC is supposed to be self-financing, all parties must expect to pay court fees. This is a major novelty for litigants, who, in some national jurisdictions such as France, do not have to pay any fee before initiating a patent action23.
The fees include fixed fees and, for certain actions, value-based fees, i.e., fees whose amount depends on the value of the action24. In its 8 July 2022 decision, the Administrative Committee set the fee amounts25 for the principal patent actions:
- Fixed fees: 11,000 euros for an infringement action, a counterclaim for infringement or an application for provisional measures. For an action for revocation, the amount is 20,000 euros.
- Value-based fees: they only concern certain actions (essentially infringement actions or the like, such as an action for declaration of non-infringement or an application to determine damages) and can vary from 2,500 euros for an action with a value of more than 500,000 euros, to 325,000 euros for action with a value of more than 50 million euros. The parties indicate in the statement of claim or defence the value of the action, which is then determined by the judge-rapporteur at the interim conference. The criteria for determining the value of the action are beyond the scope of this newsletter, and the parties and their counsels should refer to the guidelines of the Administrative Committee of the UPC to determine it.
To alleviate these fees, the Rules of Procedure provide for a 40% reduction for small enterprises and micro-enterprises26. In addition, partial refunds are provided for in case of withdrawal or settlement, the refunded amount depending on the stage of the proceedings: 60% before the closure of the written procedure, 40% before the closure of the interim procedure and 20% before the closure of the oral procedure27. If the case is heard by a single judge, a refund up to 25% is possible28.
It should be noted that these refunds may be refused “in exceptional cases” considering the behaviour of the party29. Conversely, the refunds may be increased in the same circumstances, up to 100% if they threaten the economic existence of a party30.
23 In France, the only exception (which is not specific to patents) is the 225€ stamp applicable to all appeal proceedings with compulsory representation.
24 Article 36 UPCA.
25 Administrative Committee – Table of Procedural Costs – Decision of July 8, 2022 available under this link.
26 Rule 370.8 UPC-RoP.
27 Rule 370.9 (b) (c) UPC-RoP.
28 Rule 370.9 (a) UPC-RoP.
29 Rule 370.9 (e) UPC-RoP.
30 Rule 370.10 UPC-RoP.
- Legal costs
Like before the French courts, the legal costs (including lawyers’ fees, experts’ fees, witnesses’ fees, etc.) of the winning party will generally be borne by the losing party before the UPC31. However, we note two novelties compared to French practice:
- In cases where a party is only partially successful, the UPC may decide that the costs will be divided equally between the defendant and the plaintiff, or that each party will bear its own costs.
- After the decision on the merits, and if applicable, a decision on the determination of damages, the successful party may also obtain a decision on costs in a separate procedure32.
The reimbursement of legal costs in the context of this decision on costs will be subject to ceilings set by the Administrative Committee, which depend on the value of the action (which must therefore also be determined for an action for revocation)33. Without going into detail, it should be noted that, depending on the value of the action, the ceilings vary between 38,000 euros and 2 million euros. As an exception, in limited situations – e.g., in complex cases or when several procedural languages have been used – the UPC may, upon request of a party, increase the ceilings by 50% (for a value of litigation up to 1 million euros) and by 25% (for a value of the action between 1 million and 50 million euros) and up to 5 million euros for cases with a value of the action greater than 50 million euros. The UPC may also lower the applicable ceilings on the costs to be reimbursed when the reimbursement of such costs by the losing party would threaten its economic existence, particularly where the losing party is an SME, an NGO, a university, a public research organization or a natural person.
Means of evidence before the UPC
The UPCA lays down general rules on evidence and facts. The following principles are worth noting for litigants and their counsels:
- The UPC will base its decisions only on the facts and evidence submitted by the parties or introduced into the proceedings by order of the Court34.
- The representatives of the parties must be fair in presentation of the facts and evidence since they must not misrepresent points of law or facts to the UPC knowingly or with good reasons to know35.
31 Article 69.1 UPCA.
32 Rule 150 UPC-RoP.
33 A draft decision in this sense (archived link) had been elaborated by the JUB preparatory committee, but is not yet finalized.
34 Article 76.2 UPCA.
35 Article 48.6 UPCA.
- If an alleged fact is not specifically contested by a party, the fact will be held to be true between the parties36. Therefore, each fact alleged by the opposing party must be contested, or else it will be considered true by the UPC. If a party relies on a contested fact, it will therefore have to produce evidence in support of its allegation37.
- Since the burden of proof is on the party relying on a given fact, any party will have the right to ask the Court to order the opposing party or a third party to produce evidence that is within their control38.
As far as means of evidence are concerned, the UPC offers a very complete range of tools at the disposal of users39: hearing the parties, requests for information, production of documents, hearing witnesses, opinions of experts, inspection of premises, comparative tests or experiments, and sworn statements in writing (affidavits). Some of these means of evidence are new for French practitioners, such as the hearing of witnesses and parties, and may be well worth using.
Varied and numerous means of evidence are available, presumably to enable judges of different nationalities and sensibilities to conduct the proceedings in a manner similar to their national practice. It will be interesting to see to what extent the central, local, and regional divisions of the UPC will develop a unified approach to the use of these various means of evidence, or whether local practices will develop.
36 Rule 171.2 UPC-RoP.
37 Rule 172.1 UPC-RoP.
38 Article 59.1 UPCA.
39 Article 53 UPCA.
- The UPC-style seizure: as attractive as the French saisie-contrefaçon?
In France, as in Belgium and Italy, the saisie-contrefaçon is currently the most important proceedings to obtain evidence of the infringement. Most infringement actions start with this measure, because it is efficient and has a moderate cost. On the other hand, seizures are little used in Germany or in the Netherlands. Will the same be true with the UPC?
The equivalent of the saisie-contrefaçon (or preservation order) is provided for in Article 60 of the UPCA, which provides that the Court may, even before the commencement of an action on the merits, order prompt, provisional measures to preserve evidence in respect of the alleged infringement. These measures may include a detailed description (with or without the taking samples) or a physical seizure of the allegedly infringing products. To be valid, the UPC seizure must be followed by an action on the merits within 31 calendar days or 20 working days (as is the case with the saisie-contrefaçon proceedings we know in France).
Although the two are in some extent similar, the seizure before the UPC is different from the French saisie-contrefaçon. We do not provide here a detailed comparison between the two types of seizure and their respective advantages and disadvantages (which may be discussed with your counsel), but it should be noted that:
- The UPC seizure has a very broad territorial scope since a seizure measure can be enforced in several UPC participating States, which makes it a valuable means of evidence for disputes where the infringing acts occur on the territory of several States.
- The UPC seizure is in principle adversarial: if the plaintiff wants the seizure to be ordered without the other party (the defendant) being informed, he will have to state the reasons why they should not be heard40 (e.g., that any delay would cause irreparable harm, there is a risk of destruction or concealment of the evidence, there is a need to resort to the effect of surprise, etc.). However, even if the plaintiff has requested that the defendant not be heard, the UPC may decide to inform the defendant of the application for a seizure and invite them to file an objection to the application41. Fortunately for the plaintiff, if the UPC decides to inform the defendant, it must first give the plaintiff an opportunity to withdraw the application, which can then remain confidential.
- The UPC seizure “gives the defendant a voice” with the “protective letter” system, which is a major change compared to the familiar saisie-contrefaçon. Provided for in Rule 207 of the Rules of Procedure, this system allows a potential defendant to any provisional measures (and therefore to a seizure) to file a protective letter with the Registry, in which he or she sets out the reasons why the measure should not be ordered. Unlike an application for a preliminary injunction, we believe it is unlikely that a protective letter will be a determining factor since the seizure is an evidentiary measure. However, it may influence the extent of the relief that the judge will be inclined to grant, and especially to encourage the use of trade secret protection measures.
- The UPC seizure report is limited to the UPC: unlike the French saisie-contrefaçon, in which the report can be used in any proceedings, including foreign proceedings, the UPC seizure report can only be used in the context of a UPC proceedings on the merits42, unless otherwise specified by the Court.
In summary, although it has an advantage in terms of its territorial scope, the UPC seizure not as easy to implement for patentees as the French saisie-contrefaçon. Only time will tell whether this means of evidence will be actually used by the parties, and whether certain divisions will be more inclined to reinforce its effectiveness by using it ex parte.
For situations where the infringement must be stopped quickly (and well before a decision on the merits is made within a year) it will be possible to seek injunctive relief against a suspected infringer.
The injunctions are intended to43:
- prevent any imminent infringement,
- provisionally prohibit the continuation of the alleged infringement,
- to make the continuation of the alleged infringement subject to the lodging of guarantees to ensure the compensation of the patentee.
The UPC may order a preliminary injunction against the defendant, seizure or delivery of the suspected infringing products to prevent their circulation, seizure of the defendant’s movable and immovable property, including the blocking of his bank accounts, as well as an interim award of costs44.
40 Rule 192.3 UPC-RoP.
41 Rule 194.1 UPC-RoP.
42 Rule 196.2 UPC-RoP.
43 Article 62.1 UPCA.
44 Rule 211.1 UPC-RoP.
The application for provisional measures must be reasoned and very detailed. The applicant must set out the requested measures, explain why provisional measures are necessary to prevent a threatened infringement or the continuation of the alleged infringement45, and why its interest in obtaining such measures should prevail over the interests of the defendant46. He will also have to provide sufficient evidence to convince the judge that he owns a valid patent and that the patent is infringed or likely to be infringed47.
In the case of a non-adversarial (i.e., ex parte) application, the reasons why the defendant should not be heard must be explained (as in the case of seizure for infringement). A high duty of loyalty on the part of the plaintiff is expected by the UPC: the applicant has a duty to disclose any material fact of which he is aware that could influence the UPC in its decision to issue an order without hearing the defendant as well as any pending proceedings or unsuccessful attempts in the past to obtain provisional measures based on the same patent48.
It should also be noted that – as with the seizure – even if the applicant has requested that the defendant not be heard, the UPC may decide to inform him of the application for provisional measures and invite him to file an objection to the application, convene the parties to a hearing (with or without the presence of the defendant)49. Only in cases of extreme urgency, the UPC may immediately decide on the application.
In ruling on the application for provisional measures, the UPC will consider in particular:
- the apparent validity of the patent, i.e., whether it has been upheld in opposition proceedings or whether it has been the subject of proceedings before any other court;
- the urgency of the matter;
- whether the respondent was heard;
- whether a protective letter has been filed. We have seen above that any person who believes that a request for provisional measures against him or her is likely to be filed soon can file such a letter50, which is likely to be of much greater interest in the matter of a preliminary injunction.
It should also be noted that the UPC may decide to summon the parties to an oral hearing. The decision may be delivered orally to the parties at the closure of the oral hearing, or in writing as soon as possible after the closure of the oral hearing51. If an action on the merits is not initiated within 31 calendar days or 20 working days from the date set by the UPC in its order, the respondent may request revocation of the provisional measures52.
For more information on your strategic options for proceedings before the UPC, we invite you to contact our teams.
45 Rule 206 UPC-RoP.
46 Rule 211.3 UPC-RoP.
47 Rule 211.2 UPC-RoP.
48 Rule 206.4 UPC-RoP.
49 Rule 209.1 UPC-RoP.
50 Rule 207 UPC-RoP.
51 Rule 210 UPC-RoP.
52 Rule 213 UPC-RoP.
STÉPHANIE ROLLIN DE CHAMBONAS
Partner – Lawyer
Deputy Head of Litigation Department
European Patent Attorney