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| Antje Brambrink |
While a variety of legal questions still remain during the wait for the first decisions on the merits, a multitude of decisions and orders regarding provisional measures and procedural aspects have provided valuable insights already.
This article will provide a brief overview of the key takeaways attained during the UPC's first year of practice while also outlining future developments for the court's second year in service.
Key Insights
Attractive Forum for Companies Across Industries
Despite early uncertainties about how much momentum the new forum would gain right off the bat, the UPC has exceeded expectations, with more than 370 proceedings[1] being filed within its first year of business.
Many experts had predicted a certain tentativeness in industries like the pharmaceutical branch, citing the risk of central patent attacks resulting in ramifications in up to 17 participating member states. However, the UPC has gained trust across all industries, including even the life sciences sector.
On the first day of the launch, the two big pharmaceutical companies Amgen Inc. and Sanofi already filed actions against each other as part of a larger cross-jurisdictional patent dispute. The estimated litigation value of €100 million ($107 million) for each of the UPC proceedings shows that there is much at stake, but it might also indicate that the parties have great confidence in this new venue.
The continuous trend of the UPC being used across industries is reflected in the current statistics for the cases filed through the end of May.[2] However, the majority of cases relates to electricity (87 cases in the International Patent Classification Class H), followed by human necessities (60 cases in IPC Class A), performing operations and transporting (36 cases in IPC Class B), physics (29 cases in IPC Class G), and chemistry/metallurgy (17 cases in IPC Class C), while comparably lower case numbers are pending in the IPC Classes D (textiles/paper), E (fixed constructions), and F (mechanical engineering, lighting, heating, weapons, blasting).
Not only has the range of industries been broad, the UPC has also attracted companies of various sizes, including global players as well as small and midsize enterprises.
Moreover, there is a clear trend of the UPC attracting patentees: 134 of all proceedings were infringement actions, where 165 defensive counterclaims for revocation were brought, while only 39 standalone revocation actions were proactively filed.
Focus on German Divisions
Litigants have been particularly drawn to Germany: Out of the 373 total cases counted by the UPC, 265 were filed with German divisions, while France takes second place, with 66 filed actions. Within Germany, Munich has established itself as the most prominent forum, reaching a total of 148 filings.
While the claimant of a revocation action has no choice of forum — since the venue depends on the IPC class of the patent-in-suit — in infringement proceedings, plaintiffs are given more flexibility in choosing their forum, depending on the defendant's domicile or the location of the accused infringement. Therefore, it comes as no surprise that litigants are selective in their filings.
Forum shopping in infringement proceedings shows a clear focus on German divisions: 104 out of a total of 134 infringement actions were filed in Germany, again with a majority of 54 cases being filed with the Munich Local Division.
The popularity of the German division is in line with the traditional distribution of European patent disputes. Even before the opening of the UPC, the German patent courts had by far the highest annual case numbers.
The large case load has led the UPC to appoint further legally qualified judges to certain German and French divisions and to increase the working time of some part-time judges.[3] This should enable the court to manage the increasing case load effectively and to meet the demands and expectations of the litigants.
Growing Uptake Rate for Unitary Patents
Not only is the UPC on the rise, European patents with unitary effect are also gaining more and more traction. Almost one in every four European patents granted by the European Patent Office has been converted into a unitary patent, translating into a 24% uptake rate in 2024 and over 27,500 registrations in total since June 2023.[4]
Preliminary Injunction Proceedings Gaining Much Attention
Garnering widespread attention, the first unitary patent has already been asserted before the UPC. On June 1, 2023, 10x Genomics Inc. requested a preliminary injunction against NanoString Technologies by the Local Division in Munich. On the same day, the applicants also filed another preliminary injunction request based on a classical European Patent with the UPC. This shows that litigants now have various strategic opportunities in view of the UPC and the unitary patents.
In September 2023, the Court of First Instance refused the preliminary injunction for the classical European patent[5] but granted it for the unitary patent.[6] Even though the Court of Appeal lifted said injunction later in February 2024,[7] cases like this not only shape the law but also provide more certainty and clarity for those companies still monitoring the new system.
Court of Appeal Paves the Way for More Transparency by File Inspections
The Court of Appeal has handed down further decisions. In particular, the ruling on the request for file inspection by a member of the public drew much attention.
Before, the courts of first instance had taken diverging views. While the Central Division in Munich required a concrete, verifiable and legitimate reason in the Sanofi-Aventis v. Amgen[8] case in September 2023, the Nordic-Baltic Regional Division considered a credible explanation sufficient, unless confidentiality reasons would speak against the access.
In the second instance, in April 2024, the Court of Appeal held in the case Ocado Innovation Ltd. v. AutoStore AS[9] that a careful weighing of interests is required and that the stage of the proceedings also factors in. The ruling is important since the interest of the public to form a better understanding of decisions in view of the arguments brought forward by the parties is a prerequisite to build public trust in the new system.
Protection of Confidential Information Possible
While providing more transparency through potential file inspection, the UPC also has a variety of instruments in its repertoire to adequately protect confidential information during litigation. The court can restrict, for example, access to certain information contained in pleadings, or limit the collection and use of evidence in proceedings to specific persons upon request.[10]
According to the Rules of Procedure, the number of persons with access should not be greater than necessary, while still guaranteeing the right to effective remedy and fair trial. Thus, every party has the right to at least one natural person having access to the restricted information in addition to the respective lawyers or other representatives.
SEP Litigation
Confidentiality is of particular importance if parties are ordered to produce documents that are not open to the public and contain sensitive information. This applies especially in litigation over standard-essential patents and fair, reasonable, and nondiscriminatory[11] royalty rates.
In one of the first cases dealing with SEP litigation, the Mannheim Local Division underlined, however, the necessary transparency of comparable license agreements to determine appropriate FRAND conditions in the case Panasonic v. Xiaomi. In its April 30 order, the Mannheim Division considered the negotiation framework established by the European Court of Justice in the 2015 case of Huawei Technologies Co. Ltd. v ZTE Corp. as relevant framework for FRAND licensing negotiations.[12] The UPC is thus starting to adopt the established standards for SEP litigation.
Change of Language of the Proceedings
Whilst the language in UPC revocation proceedings is determined by the language of the patent,[13] there is more flexibility within infringement proceedings. Generally, the languages available depend on the member state in which the division approached is located. In Germany, for example, both German and English have been designated as languages for UPC proceedings before the local divisions.
When filing suit, the initial language can be chosen by the claimant.[14] Consequentially, the language in which the proceedings are set can differ from the language of the patent. However, to circumvent the complexity of working with a foreign language, the defendant can request a change to the language of the patent. On grounds of fairness, and taking into account all relevant circumstances, including the positions of the parties — in particular, that of the defendant — the UPC may grant such requests.[15]
In two decisions dealing with such issues, the UPC took a stance friendly to small and midsize enterprises.[16] The judges agreed to the change of language considering a party being unfamiliar with the language of the proceedings being an important inconvenience even if being assisted by representatives fluent in the language of the proceedings. These decisions show that the UPC is keen to find the right balance of the interests of the parties for a fair trial.
A Very Successful Start
In summary, it has been a very successful first year for the UPC, with a high number of cases being filed across industries by companies of various sizes. Cases with high litigation values gained much attention and show that some patentees have already made the UPC a pillar of their global patent litigation strategy.
The issuance of the first preliminary injunctions helped not only to clarify the legal standards applied by the court, but also showed that the court is well prepared to issue preliminary relief even within a single day if required. The rulings as such show that the court is also keen to strike a fair balance between the interests of the parties where required to guarantee a fair trial.
The shaping of law has already begun, as the first decisions of the Court of Appeal have been issued. This helps to harmonize the diverging opinions of the national panels and will increase clarity and certainty for those litigants who are still taking a wait-and-see approach. This will be key for the long-term success of this new court.
Outlook to the Future
However, since the court is still young and has not yet issued decisions on the merits, there are many questions remaining. For example, how will the UPC handle infringement under the doctrine of equivalents? Which standards will it apply for the assessment of validity — will it follow the standards of the European Patent Office, or establish its own independent approach? And if so, what impact might this also have on the rulings of the EPO?
How will the forum shopping develop? Will the court also be able to attract litigants in divisions other than Germany so that the cases will be spread more evenly across the UPC territories? If not, what will happen with the divisions not frequently used? And how will the newly established third seat of the Central Division in Milan pick up its work?
If the court will be able to address all open questions over the course of time and manage to establish itself as a reliable, trusted venue providing clear answers to legal questions, then it has for sure the potential to become the number one patent litigation venue in Europe in view of its great benefits — including the speedy proceedings, the far territorial reach of decisions, and the simplified enforcement of rulings, to mention only some. It will remain exciting to monitor the further development of this new system.
Antje Brambrink, Ph.D., is a partner at Finnegan Henderson Farabow Garrett & Dunner LLP.
The opinions expressed are those of the author(s) and do not necessarily reflect the views of their employer, its clients, or Portfolio Media Inc., or any of its or their respective affiliates. This article is for general information purposes and is not intended to be and should not be taken as legal advice.
[1] See statistics of the UPC on the case load by end of May 2024, at https://www.unified-patent-court.org/en/news/case-load-court-start-operation-june-2023-update-end-may-2024.
[2] See statistics of the UPC on the case load by end of May 2024, at at https://www.unified-patent-court.org/en/news/case-load-court-start-operation-june-2023-update-end-may-2024.
[3] See the UPC announcement at https://www.unified-patent-court.org/en/news/unified-patent-court-appoints-new-legally-qualified-judges.
[4] See statistics on https://www.epo.org/en/about-us/statistics/statistics-centre#/unitary-patent.
[5] UPC CFI 17/2023 decision of the Local Division Munich, issued on October 10, 2023.
[6] UPC CFI 2/2023 decision of the Local Division Munich, issued on September 19, 2023.
[7] UPC CoA 335/2023, App576355/2023 issued by the Court of Appeal on February 26, 2024.
[8] UPC CFI 1/2023, ORD 550152/2023, issued by the Central Division on September 20, 2023.
[9] UPC CoA 404/2023, issued by the Court of Appeal on April 10, 2024.
[10] See, e.g., Rule 262A of the Rules of Procedure.
[11] FRAND stands for fair, reasonable, and nondiscriminatory.
[12] UPC CFI 219/2023, ORD 14600/2024 issued by the Local Division Mannheim on April 30, 2024.
[13] Art. 49 (6) UPC-Agreement.
[14] Rule 14(2)a of the Rules of Procedure.
[15] Art. 49(5) of the UPC-Agreement, Rule 323 of the Rules of Procedure.
[16] UPC CFI 373/2023, issued by the Local Division Düsseldorf on January 16, 2024; UPC_CFI_239/2023, issued by the Local Division The Hague on October 18, 2023.
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