Carve-out or blocking torpedo? A crucial question to be decided by the Unified Patent Court

It's a problem that arises from the very beginning when planning a European litigation strategy that includes the Unified Patent Court (UPC): does the UPC have competence to decide on a European Patent if a national part of this European Patent is already subject to national litigation? Practically speaking: what action can you bring, if any, in the UPC if you plan a patent action in a national court first, or you are already fighting a national action?

We may now have just received a big clue as to the answer.

The UPC and national court dual track

During the seven-year transitional period of the UPC that will begin on the day it opens, the UPC Agreement provides a choice of forum between the UPC and the national courts of those countries participating in the UPC for actions concerning European Patents that have not been opted out. 

The choice is limited to the action and not the patent concerned. As a result, different actions concerning the same non-opted out European Patent and the same parties can be filed in a national court and the UPC concurrently. For example: 

• A national action for enforcement of one national designation of a European Patent can proceed concurrently with an action for revocation of the whole bundle of European Patents in the UPC participating countries.
• A national revocation action against one national designation of a European Patent can proceed concurrently with an action to enforce the whole bundle of European Patents in the UPC participating countries. 

If, however, UPC revocation or infringement counterclaims were to follow in the UPC in these examples, respectively, the result is that the UPC and national court would be seised simultaneously with the same cause of action, in respect of the same patent (that is the nationally litigated designation of this European Patent) and the same parties. The lis pendens rules in the Brussels Ibis Regulation are intended to avoid such duplicative actions and the risk of the conflicting decisions that may result between different courts on the same patent designation. 

Why is this a problem?

While this does not affect countries such as the UK or Switzerland, because they are not participating in the UPC, take – for example – the situation in which a party brings a national enforcement action against a non-opted out European Patent in a UPC participating country. If the defendant responds to that action with a revocation claim in the UPC, which will include all the bundle of designations for UPC countries including the patent designation in the national enforcement action, how can the plaintiff respond? Can they respond with a UPC enforcement action of the whole UPC bundle, or will that be barred by the lis pendens rules because the national designation is already being enforced in the national court and the UPC? Or is there another option?

Such considerations are acutely important to planning a strategy if parties are not to shoot themselves in the foot, by cutting off later options.

What will the UPC do?

There is nothing express or implied in the UPC Agreement or the Rules of Procedure to say what the UPC will do. So what are its options? 

To take the above scenario again, staying an action for the enforcement of the whole UPC bundle (torpedo scenario) would be consistent with the requirement of the UPC to make collective decisions for all European Patents in the UPC participating countries, and at the same time avoid the possibility of a duplicative decision. However, it comes at a huge strategic cost to patent owners (and to third parties, if the scenario is swapped for one in which a party begins with a national revocation and the patent owner responds with an enforcement action in all the UPC countries). 

Alternatively, the UPC could instead decide that an action for enforcement/revocation of the whole UPC bundle is different to an action for enforcement/revocation of a single designation in the national court and proceed with the whole bundle, or that it can at least remove the nationally litigated designation of the European Patent (carve-out). 

What is the clue?

This question was recently addressed as part of a mock UPC trial in the Paris Commercial Court (which will host the UPC's Paris branch of the central division). According to participants' reports, in this mock case, it was decided that the UPC should proceed with all designations in the UPC bundle except that which is being litigated nationally. This clearly indicates a tendency towards 'carve-out'.

This mock decision is clearly not a binding precedent, but two of the judges making it were Klaus Grabinski and Camille Lignières. Lignières has been appointed a legally qualified judge of the Paris local division of the UPC. Grabinski is designated to be the President of the UPC Court of Appeal and has also played a decisive role in the development of the UPC's Rules of Procedure. Consequently, this is an important hint that this course is most likely to be the one taken by the UPC in future. It would mean that parties should not be inhibited from bringing national actions for fear that they then block their UPC options. But this will need to be confirmed by the court when it is operational.

Many open questions related to the UPC will be answered by its case law. The finding from the mock trial indicates that the participating judges were convinced of the possibility of carve-outs and that referral of the court to the Court of Justice of the European Union on this issue was not necessary. 

However, although one could find that UPC judges have the legal tools to deal with the question under the provisions of the UPC Convention itself, it seems at least not unlikely that these specific questions will be finally clarified only after a referral to the Court of Justice of the European Union.