Locked out forever? The reasoning of the Helsinki Local Divison on Art. 83 (4) UPCA

The Helsinki Local Division has delivered its decision in the matter AIM Sport v. Supponor on 20 October 2023. The court dismissed the case as it did not consider itself to be competent to decide over the classical European patent in suit (UPC, Helsinki Local Division, Decision from 20.10.2023 - UPC_CFI_214/2023 - ORD_572699/2023 and ORD_581208/2023).

The reasoning of this decision was eagerly awaited as it deals with one of the key questions of the transitional period. If it is upheld, many important European patents are permanently locked out from the UPC, provided they were opted out while national actions were still pending when the UPC came into force.

Facts of the case

The classical European patent in suit EP 3 295 663 protects the “digital superimposition of an image onto another image”, which is being used for advertisement in sports stadiums. The patent proprietor had already started national infringement proceedings and was in turn fighting revocation actions in Germany since 2020. During the sunrise period, the claimant had opted out the patent in suit in May 2023. In July 2023, after the UPCA came into force in June, the claimant withdrew his opt-out and lodged an action on the basis of this patent before the UPC. At this time, the national infringement and revocation actions were still pending on appeal before the Munich Regional Court as well as the German Federal Patent Court.

Legal Background

During the transitional period, the patent proprietors have the chance to opt-out their European patents from the new system, the effect being that the UPC loses competence to decide over the European patent, Art. 83 (3) UPCA. However, the patent proprietor is principally not bound by this decision forever. According to Art. 83 (4) UPCA, an opt-out can be withdrawn at any time as long as no action has been brought before a national court. This mechanism of returning the patents to the new system is colloquially called “opt-in”.

The debate focuses on the question when an action must have been brought before the national court in order to lock out the European patent permanently from the UPC system. Art. 83 (4) UPCA might not only refer to actions which were brought after the UPCA came into force, but also to actions which were pending or were even final and binding at that time.

Reasoning

The Helsinki Local Division found that national actions which were already pending when the UPCA came into force render a withdrawal from the opt-out for the European patent ineffective. The European patent in suit was therefore locked out from the new system due to national infringement and revocation actions pending on appeal.

The decision stands out for its strong emphasis on the wording of Art. 83 (4) UPCA. In the eyes of the Local Division, the wording of Art. 83 (4) UPCA and Rule 5.8 RoP (Rules of Procedure) clearly does not set any time limit or restriction as to when the national actions must have been filed. Therefore, not only actions filed after the entry into force of the UPCA on 1 June 2023, but also actions that were already pending at that time can render an opt-in ineffective.

Since the court considers the wording to be so clear and unambiguous, it also does not see any discrimination against the plaintiff or other problems with general principles of EU law, fairness and equity, or the legitimate expectations and interests of the patentees.

Evaluation of the decision

The court holds that in view of the allegedly unambiguous wording of Art. 83 (4) UPCA, the claimant made the decision to opt-out being fully aware of the consequence that it will be locked out forever. The court points out to the claimant that if he didn´t want to bear the consequences of an opt-out, he could have simply remained passive in the UPC.

In our view, it is not as clear-cut as the court makes it out to be. The interpretation of the UPCA shall be based on the principles laid down in the Vienna Convention on the Law of Treaties (VCLT). It is meant to determine the consensus expressed between the contracting states. Not only the wording of the treaty but also the context and the object and purpose of the treaty are to be considered. Here, in the process of literal interpretation by the Helsinki Local Division, a further systematic analysis as well as an analysis of the object and purpose of Art. 83 (4) UPCA got lost.

The court failed to contextualize the debate around which actions might be meant in Art. 83 (4) UPCA into the broader context of Art. 83 UPCA. It also neglected the object and purpose of the provisions and did not go deeper into the question why Art. 83 (4) UPCA states that a withdrawal becomes ineffective when an action has been brought before a national court. Further arguments put forward in the legal literature are – again – rejected on the basis of a too literal interpretation.

Outlook and an open question

Many patent holders have understandably opted out some of their most important patents. It is rather in the nature of such patents that they have already been subject of national revocation or infringement proceedings. It would be unfortunate, if these patents were now blocked from returning to the UPC, if the patent holders decide that they would like to entrust their patents to the system as soon as it proves to be effective and reliable. This is what the opt-out and opt-in mechanism was designed for, and it should be possible to use it accordingly without arbitrary obstacles.

In this context, there is another open question which the court did not need to address and which it explicitly left open. It remains unclear whether cases that were already final and binding when the UPC came into force, also exclude an opt-in. However, if one consequently follows the court’s reasoning, even these patents are now “forever national”, if they have been opted out.

In light of the serious consequences for patents with pending or final and binding national actions, it is rather surprising that the decision falls short in its reasoning. The decision of the Helsinki Local Division is interesting as the court effectively deprives itself of its own competence to rule over these European patents. Simply put, a court needs cases and this reduces the pool of classical European patents which could provide building blocks for the new system. For now, patent holders should bear in mind that an opt-out could be forever, as long as there were national actions pending when the UPCA came into force or even when they were already final and binding. However, it is to be expected that this decision will be appealed and there are good arguments for the claimant. The patents which were opted out, are not yet lost for the UPC.