Changes in the global patent litigation landscape: The impact of the UPC

Although the goal of this new system is to achieve a quicker, more cost effective and efficient process – for example, the Court aims to solve patent disputes within one year from start to finish – the reality is that the new Court will co-exist with the old, national patent jurisdictions for at least the next seven years. It has therefore resulted in an overall system that is – at least for now – even more complex and high-risk than the previous system.

The Court also has the ambition to deliver highly effective relief to plaintiffs who prevail, especially in the form of injunctions. This therefore makes it highly attractive to patent holders globally, particularly given that the Court should be far more cost-effective than pursuing litigation in other jurisdictions – for example, the U.S. or UK. 

The impact of the UPC cannot therefore be overstated. Indeed, this impact, notably, has already been felt by one company – Nanostring Technologies – which was the first company to be the subject of an inter partes preliminary injunction decision in the UPC, and which shortly thereafter entered into insolvency.

It is also clear after nine months of operation that, despite some initial scepticism (no doubt caused by the decade of planning and ‘false starts’ in relation to the UPC), the Court has been enthusiastically welcomed and widely adopted by litigants. This is reflected in the statistics – as of February 2024, the court has seen more than 210 cases filed, including more than 80 infringement actions and 25 independent revocation actions. It is also noticeable that emergency relief has been widely applied for, with more than 20 applications in seven months. Furthermore, more than 100 decisions have already been issued, a clear signal that the Court is working and working quickly.

Despite the benefits of the Court from a patentee’s perspective, however, we see that many clients are proceeding with considerable caution in relation to the transition.

This is because, for defendants in particular, the pace at which the UPC operates (for example, the short period of a few months to a preliminary injunction and 12 months to a full merits decision) and its high stakes mean that advanced planning is needed – parties cannot afford to wait until they are sued before starting preparations. Instead, as soon as a company is aware that a potential case is brewing, they must proactively assess their position and align their defensive strategy and arguments. The best defence may also be to bring proceedings proactively, choosing the appropriate forum, whether within or outside the UPC. 

It is also notable that early adoption of the new system has taken place across a wide range of technologies, although the technology sector has featured more heavily than others. The life sciences sector was expected to hold back from using the Court, and largely that is what has happened (although it remains to be seen how that will change over time). Early signs of significant uptake of litigation by tech companies in the UPC has also been seen, with many major patentees, as well as NPEs, taking action.

While it is early days, it is therefore immediately apparent that neither claimants nor defendants can afford to ignore the UPC, as its adoption has been quick and the Court is already delivering rapid results. Further, it is clear that parties can expect for UPC litigation to occur in parallel with national European (and wider, for example U.S.) litigation. The UPC therefore clearly needs to be factored into any global patent litigation strategy moving forward.

Issue/Risk

High impact of Court’s judgments

The UPC Agreement was initially signed by 25 states, comprising a combined GDP of USD18 trillion (cf the U.S. GDP of USD25,000 trillion), giving the Court significant economic impact.

Current Status

The UPC currently has jurisdiction over 17 states, with a combined GDP of over USD13 trillion. Following Brexit, the UK will no longer take part. However, additional countries (such as Ireland, which has recently scheduled a referendum on the issue) are expected to ratify over time.

Generous approach to ex-parte preliminary/interim injunctions

There was a concern that the UPC might follow the approach of certain national European jurisdictions (eg Germany) by readily granting ex-parte preliminary injunctions (ie without the defendant being notified until after the injunction was granted – similar to a U.S. ‘temporary restraining order’).

Current Status

Although the decisions have been based on specific circumstances, such as the occurrence of trade fairs, the UPC has already issued preliminary injunctions on an ex-parte basis, despite the filing of ‘protective letters’ by defendants to seek to prevent this outcome.

Bifurcation

There was a concern that the UPC would separate the issues of infringement and validity (with infringement being addressed first), as is the approach in Germany. This could lead to an ‘injunction gap’, whereby the defendant would be subject to an injunction before the validity of the patent had been assessed.

Current Status

There is currently no indication that bifurcation will occur frequently (if at all). Instead, the judges and parties appear to wish for infringement and validity to be addressed simultaneously.

Evidence seizures

There has been a concern that aggressive, ex‑parte evidence seizure remedies will be granted by the UPC, and that such measures will become available on a pan-European basis.

Current Status

Again, decisions so far suggest that this concern is justified. Ex‑parte evidence seizures have already been granted by the local divisions in France and Italy.