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UP & UPC: legal and documentary considerations

By Sanjeet Plaha, Partner

The UPC and Unitary Patent (UP) have now come into effect.

There are a number of important decisions that need to be made by patent holders in relation to their portfolios including, but not limited to (i) opt ins and outs (ii) ownership and registration (iii) applicable law to existing and future patent applications.

In order to make decisions surrounding opt-outs, it will be important to consider existing agreements and arrangements that are in place with licensees to work out who is responsible for that decision (i.e. patentee or licensee), and if contractual provisions are silent in relation to this point, then conversations need to be had in order to make those decisions.

So what decisions need to be made now…?

As we know, on paper, a registered applicant of a European patent application has sole responsibility for prosecuting it, including deciding which route to take once a European patent is granted. However, in practice, prosecution is sometimes delegated to a licensee through clauses in a licence agreement. This could potentially lead to a licensee taking decisions regarding a patent application that could have significant repercussions for the patentee in terms of subsequent enforcement and revocation risks.

And vice versa, if a patentee is responsible for making decision in relation to an application, the decisions made are likely to affect a licensee.

So, what decisions will have to be made during the prosecution of an EU patent? First whether the patent is going to be validated as a unitary patent or as a classical collection of national EU validations. If the patent will be validated as a collection of national EU patents, then who will decide whether or not they will be opted out of the Unified Patent Court System? And how quickly will that decision need to be made? Leave it too late, and if a revocation action is brought against an EU patent in the interim, then the parties will be stuck litigating in the Unified Patent Court.

And if an EU patent is opted out of the UPC regime, then who can decide if and when it is opted back in? Is the party funding prosecution of the patent best placed to make all decisions or is it the party responsible for enforcing the patent or the party exploiting the technology?

What are HLK’s recommendations?
First existing licences will have to be reviewed, to establish who is currently responsible for prosecuting a patent application and/or making decision about a patent post-grant.

The parties will need to settle the basis upon which a patent application proceeds as a UP vs EU national validations and the basis upon which EU patents can be opted out and subsequently back into the UPC system.

Will these be unilateral decisions or decided upon by patentee and licensee by agreement. And who has the final say if the parties cannot agree? And who will be responsible for the cost of implementing these decisions? It may depend on who is in a better bargaining position.

Once these issues have been agreed, amendments may need to be made to existing provisions or terms may need to be clarified in writing.


Under many European jurisdictions, either the proprietor or an exclusive licensee (and possibly a non-exclusive licensee) can begin infringement proceedings.

For Unitary Patents, exclusive licensees will be entitled to bring infringement actions before the UPC unless the licence agreement provides otherwise (non-exclusive licensees do not have this right, but could be given it in the licence agreement) and assuming the patents haven’t been opted out.

Where a licensee is permitted to take legal action against infringers, the decision they make in respect of where they bring their claim could dictate the future litigation strategy of the patentee (and/or other licensees) without their involvement or consent.

So a decision needs to be made in relation to who can or should be able to bring infringement proceedings and whether there is a difference in approach depending on whether litigation is in the Unified Patents Court or national courts.

What are HLK’s recommendations?
Again, existing licences will have to be reviewed, to establish who is currently responsible for enforcing a patent. The parties need to decide whether those provisions need to be changed depending on where litigation will take place. Which party will pay the legal fees associated with enforcing a patent.

And actually, who will pay for defending a patent against invalidity attacks in national courts following opt-out, given that the cost associated with multiple invalidity defences is likely to exceed the cost of single proceedings at the Unified Patent Court?

For EU patents, responsibility for the opt in / opt out mechanism will also play a part in the provisions regarding enforcement of a patent.

Licence considerations 
The next issue to consider is a scenario where there are multiple licensees. The patent owner may find itself in a difficult position if it has multiple licensees who have different views as to whether the licensed patents should be opted out.  If there is more than one licensee, in circumstances where there are different exclusive licensees in different jurisdictions, this will make the negotiation of terms relating to an opt-out even more complicated.

A patentee will need to try and balance the interests of one licensee (whose preference may be to use a reputable national court to bring an action for infringement), against the interests of all other licensees who may prefer to select the UPC over smaller national courts where they happen to operate.

Some patentees have large portfolios of granted patents and large numbers of licensees. The time required to reach agreement for each case and/or each relationship may be significant. With the new system now up and running, we can’t stress enough that negotiations should begin now if they have not started already.

What are HLK’s recommendations?
Where there are multiple licensees or multiple owners or both, it may be sensible to initially opt out all the patents until a decision has been made in relation to how the portfolio will be litigated.

It may also be sensible for all the parties to set up a committee comprising representatives of all parties to consider issues relating to bringing proceedings opting back in, with an agreed procedure for resolving disputes.

Future agreements
Just as important as the consideration of existing agreements and arrangements is the preparation of future documents. If you are in the midst of negotiating licence arrangements or R&D with third parties then the same issues as set out above need to be addressed.

This is for general information only and does not constitute legal advice. Should you require advice on this or any other topic then please contact or your usual HLK advisor.

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