Multijurisdictional patent disputes have increasingly featured litigation filed both in national courts and before Europe’s Unified Patent Court (UPC), where plaintiffs can seek damages and injunctive relief spanning 18 participating EU countries. Since the UPC allows similarly sweeping revocation claims, some patent owners have chosen to opt certain patents out of the court’s jurisdiction to protect key assets from invalidation. While UPC rules allow patent owners to withdraw opt-outs under certain circumstances, they cannot do so after filing national litigation over those assets. Early caselaw interpreted this prohibition more broadly, to include cases filed in national courts before the UPC’s June 2023 launch. However, the Court of Appeal has now held otherwise—ruling that UPC rules do not bar the withdrawal of an opt-out when the national litigation in question was filed before the court began its operations.

For context, the UPC can hear claims involving two types of patents: European patents with unitary effect, or unitary patents (UPs); and traditional European patents (EPs). A UP is a new type of patent established by the UPC Agreement (UPCA), the 2013 treaty that also created the UPC itself, and as the name suggests is a single, unitary right covering all EU member states that join the UPCA. UPs may only be asserted at the UPC and cannot be opted out of its jurisdiction. In contrast, EPs, which were available long before the UPC’s creation, are really just bundles of national patent rights effective in countries selected by the applicant. During an initial seven-year transitional period following the UPC’s launch on June 1, 2023, which can be extended by up to ten more years, the UPC and national courts share jurisdiction over EPs, meaning that patent owners may file infringement litigation and revocation actions in either the UPC or national courts.

Patent owners may also opt EPs out of the UPC during the transitional period, as a result of which the opted-out patent may only be litigated or challenged in national courts; and they have been able to file opt-outs since a “sunrise” period that began three months before the UPC began its operations (i.e., since March 1, 2023). An opt-out can be later withdrawn, although that withdrawal is then permanent. The filing of litigation can limit a patent owner’s options here: An EP may not be opted out if the patent has already been asserted in an “action” before the UPC, as established under Article 83(3) of the UPCA; and, as relevant here, an opt-out may not be withdrawn if the patent owner has already litigated the patent in an “action” before a national court, as provided by Article 83(4).

Here, the litigation in question stemmed from a dispute between patent owner AIM Sport Development and accused infringer Supponor over targeted advertising technology for use in sports stadiums. The dispute first hit the courts a few years before the UPC’s launch with a case that AIM Sport filed in the Regional Court of Munich in 2020. On May 12, 2023, during the sunrise period, AIM Sport filed to opt the patent out of the UPC’s jurisdiction. AIM then filed a withdrawal on July 5, 2023, shortly after the UPC’s launch, filing an infringement action in the UPC’s Helsinki Local Division that same day.

In October 2023, the Helsinki Local Division ruled that it lacked the competence to hear the case, finding that Article 83(4)—which permits a withdrawal “unless an action has already been brought before a national court”—is “clear and unambiguous” and requires no further interpretation. As a result, it held that there is no time limit because none is explicitly stated: “The wording does not provide any limitation or restriction to the effect that it would only apply to previous national proceedings that have been initiated during the transitional regime after 1 June 2023”. It thus found that AIM Sport’s opt-out had been ineffective.

However, the Court of Appeal disagreed in its November 12 decision, indicating that the lower court had failed to properly interpret Article 83(4) in the context of Article 83 as a whole. Since each of the five paragraphs of Article 83 deal with the “transitional period” during which the UPC and national courts share jurisdiction—the first paragraph laying out that structure, and the remaining four laying out the “consequences” of that structure, including the mechanism for opt-out and withdrawal—the Court of Appeal held that based on this context, all uses of the word “action” must necessarily refer to actions brought within the transitional period. The court found that this position was also supported by the use of the term “still” in Article 83(1), which in relevant part provides that during the transitional period, an infringement or invalidity action “may still be brought before national courts”: The use of this word “clarifies that, during the transitional period, despite the entry into force of the UPC, actions may nevertheless – like before – be commenced before a national court”.

Additionally, the Court of Appeal held that Article 83(2), which establishes that an “action pending before a national court at the end of the transitional period shall not be affected by the expiry of this period”, refers to national actions filed during the transitional period that are still pending when the transitional period ends. On this point, the court rejected defendant Supponor’s argument that this provision referred instead to pending actions filed before the transitional period.

The Court of Appeal found that its interpretation of Article 83(4) is consistent with the overall “object and purpose” of Article 83, to ensure a “gradual transition” to the new UPC system. To that end, the court found that the opt-out mechanism introduced as part of that transition is meant to respect the rights of the owners of EPs, many of which “pre-date” the launch of the UPC, by allowing them to “gain more confidence and familiarity with the functioning of the new UPC before subjecting their patents to the new system”. Moreover, the court found that the purpose of the limitations placed on opt-outs (not possible once a UPC action is filed) and withdrawals (not possible once a national action has been filed) is to “prevent an abuse of the system by improperly switching between jurisdictional regimes”. To that end, the court held that to be “[c]onsistent with this purpose” of preventing abuse, the language of Article 83(4) that bars withdrawal when a national action has “already been brought” must be read as referring to those brought after the launch of the transitional period, since “[p]rior thereto, an abuse of the system is not even possible” (meaning that a patent owner could not have abusively switched between jurisdictional regimes when the UPC’s regime had not yet launched).

The Court of Appeal also rejected Supponor’s contrary argument that the purpose of the opt-out and withdrawal limitations is to “minimiz[e] parallel litigation and avoid[] the risk of contradictory decisions”, countering that the transitional period is structured in a manner that “deliberately creates a situation where parallel proceedings between national courts and the UPC are explicitly foreseen”—and that at any rate, potential conflicts are already covered by applicable lis pendens rules (those governing the handling of parallel proceedings stemming from the same cause of action) provided by Articles 29-32 of the Brussels Recast Regulation.

More broadly, the Court of Appeal underscored that a rule barring withdrawals for national actions brought before the transitional period “would lead to a different treatment of patent proprietors” by preventing any patent owner “whose patent had ever been subject to litigation before a national court”, even in litigation filed long ago and potentially by a third party, from opting-out and then withdrawing that patent. This “consequence” would have no justification and would run counter to the aforementioned “object and purpose” of the opt-out/withdrawal system, the court found.

The Court of Appeal took much the same interpretive position as to Rule 5.8 of the UPC Rules of Procedure (RoP), which similarly to Article 83(4) provides that a withdrawal of an opt-out shall be ineffective when a national action has been brought “in a matter over which the Court also has jurisdiction pursuant to Art. 32 of the Agreement”. Here, the court found that the word “also” means that this “phrase refers to the situation in which there exists actual parallel jurisdiction of the UPC and the national courts in these matters”. As a result, the court held that Rule 5.8 must “be interpreted such that only national actions commenced during the transitional period block the withdrawal of an opt-out”. To the extent that Rule 5.8 had a different meaning from Article 83, as argued by Supponor, the court held that this would be immaterial because the UPCA takes precedence over the Rules of Procedure, which “may serve to fill a gap but cannot serve to overrule the clear meaning of a higher-ranking provision of the UPCA”.

The court then concluded by summarizing its holding as follows:

The Court of Appeal concludes that Art. 83(4) UPCA must be understood to mean that an earlier opt-out cannot effectively be withdrawn if an action has been brought before the national court at any time during the transitional period. Proceedings that were brought prior to the transitional period, whether still pending or not, do not stand in the way of an effective withdrawal of an opt-out.

(Emphasis in original.)

It is not yet clear how many opted-out patents previously asserted in national courts may now be eligible for withdrawal—and thus, for litigation once again before the UPC—as a result of this decision. However, early reactions suggest that the number could be considerable; IAM, for instance, reports that the “ruling potentially clears the path for large numbers of patents” for UPC assertion. That same coverage also underscores the strategic impact of the Court of Appeal’s decision according to practitioners, with Supponor’s counsel criticizing it as “giv[ing] patentees/plaintiffs a ‘second shot’ (in plain contradiction to the Rules of Procedure)”. Taylor Wessig attorney Paul England also remarked that the lower court decision came relatively early in the UPC’s history and may thus have served to deter subsequent withdrawal attempts from the get-go, whereas now those patent owners may choose to reconsider.

The decision follows another recent Court of Appeal ruling on opt-outs that created a potential pitfall for patent owners that have spread the ownership rights to their assets among multiple holding companies. In that June 2024 ruling, the appellate court held that opt-outs must be filed by all owners of the national parts of an EP, invalidating an opt-out filed by Fortress Investment Group LLC plaintiff Neo Wireless LLC, a US entity, because it had assigned the rights to the German part of the patent at issue to a German subsidiary that had not joined its opt-out request.

Further details on that decision are available at “Neo Wireless Failed to Opt Cellular Patent Out of UPC’s Jurisdiction, Rules Court of Appeal” (June 2024).

More on other recent developments with the UPC can also be found in RPX’s third-quarter review. RPX members additionally have exclusive access to a webinar produced in parallel with that report that takes a closer look at the UPC, including a primer on the court and the Unitary Patent, the UPC’s caseload and NPE filings, and a look at what is attracting patent plaintiffs and litigation funders to the court, plus a deep dive on outcomes and remaining uncertainties on some key issues.