UPC Weekly - UPC dials up the advantages for patentees

2024 Week 46

We report this week on two new UPC decisions that make the UPC an even more attractive choice for patent holders seeking to enforce their European patents. The headlines are that:

(i)    There is more flexibility for patent holders to choose the timing of patent enforcement at the UPC using an opt-out and opt-in strategy, even for patents that were previously the subject of national proceedings.

(ii)    There is a wide net for patent infringement damages at the UPC. 

We also have news on claim interpretation and how bifurcation affects proceedings.

Let’s look into the details…

The opt-out hokey cokey

Many readers will remember the “sunrise period” before the UPC opened for business on 1 June 2023. Patent proprietors were bombarded with information about the new system and in particular were being asked about whether they wanted to opt out their European patents from the UPC.

The pros and cons were fairly easy to understand: stay in the UPC and you can use the new system’s wide territorial reach for enforcement of your patent. Or opt out of the UPC for safety (maybe for “crown jewels” patents) to avoid the possibility of a central revocation action at the UPC that could kill the European patent in the same wide territory.

What made opting out superficially attractive was that it is also possible to withdraw the opt-out. So a patent proprietor can have their cake and eat it – opt out their patent to avoid an unexpected central revocation action, but then withdraw the opt-out and sue for infringement at the UPC at a time of their choosing. 

But there’s a wrinkle. To add a bit of jeopardy to the otherwise-attractive opt-out option, there is a possibility of being locked out of the UPC system permanently. If you opt out your European patent and you or someone else starts national court proceedings, then you can’t ever withdraw the opt-out to get back into the UPC system.

In AIM v Supponor, the UPC Court of Appeal had to decide whether this permanent lock-out from the UPC should apply based on national proceedings that were actually started before the UPC began (i.e. before 1 June 2023) and were still ongoing at that time.

Having considered the background to the policy in detail, the UPC Court of Appeal decided that the prohibition on a withdrawal of an opt-out only applies where national proceedings are commenced on or after 1 June 2023.

So, what does this mean for patent proprietors? Well, it establishes certainty and means that any history of national litigation on the European patent (started before 1 June 2023) does not affect the flexibility provided by opting out from the UPC and then deciding to withdraw the opt-out. In other words, for any patents which are opted out, but for which national court proceedings were started before 1 June 2023, it will now be possible to opt them back in to the UPC to start infringement proceedings. But care is still needed – for any European patent where national proceedings are started after 1 June 2023, then if an opt-out is filed, it is not possible to withdraw the opt-out.

More back-damages available

Edwards v Meril is another UPC decision that caught our eye this week – part of the long-running dispute between Edwards and Meril relating to replacement heart valves. 

In this decision, the UPC Local Division Munich decided that it should be possible for Edwards to be awarded damages for patent infringement not only for the time since the UPC started but also for infringements dating before then, up to the UPC limitation period of five years.

This is significant. Some patent proprietors may have been putting up with low-level but geographically widespread patent infringement for years, because the cost of taking action in each country was prohibitive and time-consuming. Now, in respect of those same historical infringements, it is possible to start a single UPC action that gathers together all of the financial damage into one large pot. So, some infringers may have just seen their practical liability to patent infringement proceedings increase significantly.

Other key updates this week

The headlines above are welcome news for patent holders. Alongside this, we now have further clarification on how claims should be interpreted, the importance of experts and the effect of bifurcation of the proceedings. 

UPC avoids needing a doctrine of equivalents – for now

In the same Edwards v Meril case, the comparison between the alleged infringement and the claims was not straightforward. Edwards invited the court to consider infringement via a doctrine of equivalents, but the court decided that this was not necessary. In a decision strikingly reminiscent of the old UK Catnic case about construction lintels, the court in effect gave a purposive interpretation of various features of the claim, commenting that “the term ‘in parallel’ must not be understood in a strictly mathematical sense” in view of the drawings and the intended technical effect of the feature.

Expert evidence given significant weight

The court referred extensively in their decision to the expert evidence presented in the case, and also from the Central Division revocation proceedings (which were bifurcated from the infringement proceedings) and national proceedings. Although expert evidence is often offered in UPC cases, we have previously seen the UPC judges form their own view on various technical matters. Here, the court reached their view on claim interpretation and backed this up with explicit references to the expert evidence.

What is the effect of bifurcation?

Also in Edwards v Meril, the UPC Local Division Munich decided that Meril’s prosthetic heart valve infringed Edwards’ patent EP 3646825 B1. Unusually in this case, there were bifurcated proceedings – the UPC Central Division Paris had decided on a central revocation action and the counterclaim for revocation from the infringement proceedings. The outcome of the revocation proceedings was that the patent was maintained in amended form.

The court had some sharp words for Meril. In their view, Meril had tried to game the UPC system by creating a new legal entity to start the Central Division revocation action. This seems to have backfired because the counterclaim for revocation at the Local Division was referred to the Central Division, without the infringement action also being referred.

So, validity and infringement were decided separately, by different panels of judges. The Local Division was careful to explain that they were using the same claim interpretation as the Central Division. 

Meril asked for the infringement proceedings to be stayed pending the outcome of the appeal against the decision in the revocation action. This revealed the inherent inefficiency in bifurcated proceedings. In order to dismiss this request, the Local Division felt it necessary to review the prior art and the decision in the revocation action in order to check for material errors in the Central Division decision. The Local Division went further than saying that there were no such errors – they gave their view that the appeal would not result in revocation of the patent, and so decided there should be no stay of the proceedings. 

This blog was co-authored by Lucy Coe and Matthew Naylor.