作者

Adrian Toutoungi

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Charlie Adams

高级律师

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Eelco Bergsma

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Marie Keup

Counsel

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Dr. Anja Lunze, LL.M.

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作者

Adrian Toutoungi

合伙人

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Charlie Adams

高级律师

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Eelco Bergsma

合伙人

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Marie Keup

Counsel

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Dr. Anja Lunze, LL.M.

合伙人

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2023年3月8日

Are your contracts UPC ready? – 2 / 2 观点

Are your contracts UPC ready? How to triage your key IP agreements and templates

  • In-depth analysis

This article was written and published before the opening of the UPC on 1 June 2023.


The introduction of the Unified Patent Court (UPC) and Unitary Patent (UP) has major implications for patent holders who license out their patent rights, businesses who rely on in-licensed patents, and co-owners of patents. In our previous article, we focused on how that impact can be managed in well-drafted patent licence clauses and co-ownership clauses. Here, we consider the practicalities of implementing a review programme to assess whether your existing key IP agreements and templates are ready for the UPC.

Well-drafted patent licence clauses and co-ownership clauses will typically already allocate control over prosecution, maintenance and defence of the licensed/co-owned patents, and control over enforcement of the licensed/co-owned patents between the parties. There tends be a broad range of positions on these issues in licence agreements, with no real market standard. It's not uncommon for an exclusive licensee in a spin-out licence from a university licensor to have responsibility and control over the prosecution, maintenance, defence and/or enforcement of the licensed patents. In other situations, with an industry licensor such as biotech-pharma licences or development and commercialisation arrangements, the licensor may retain control of prosecution, maintenance, and defence partnering arrangement of the licensed patents, but the licensee will control enforcement. Conversely, a non-exclusive licensee will rarely have rights beyond possibly some input into patent strategy. The position is often the same where a licensor grants field-limited exclusive licences, so that the licensor can hold the ring between the various exclusive licensees and balance their interests (and its own).

Aren't these types of clauses enough? Whilst accepting that the introduction of the UPC and UP gives rise to some new issues for licensors, licensees and co-owners, some parties might view these as points of detail which are already covered by the existing wording and question what more is required.

However, a well-advised party will still want to be able to demonstrate to its board and, potentially, its investors that it has carried out a systematic review of its key IP agreements, considered whether any amendments are desirable and achievable (whether merely to improve clarity, or to make substantive changes), and to create an internal paper trail of the conclusion of the review for future reference. We explore below a potential methodology for such a review.


Five-step methodology for triaging key current agreements and templates

  • Identify your key current agreements containing patent licence or co-ownership clauses. Also identify any internal frequently used form agreements or internal templates which containing patent licence or co-ownership clauses.
  • Consider whether, as a question of language and true construction, the existing wording is clear enough to cover all the new issues without ambiguity.
  • If so, are the substantive positions under the existing agreement on all of the new issues appropriate, given the new risk profile arising from the introduction of the UPC and UP?
  • Are further representations and warranties required? Are the notice provisions appropriate for the timescales of the UPC and do you hold up to date contact details for the purposes of serving contractual notices? Are existing governance structures (eg steering committees and IP sub-committees) adequate, or should a new UPC sub-committee be set up? Are any applicable contractual dispute resolution procedures workable in light of the timescales of the UPC?
  • If not, consider whether the relative negotiating strengths of the parties mean that amendment of the existing agreement to reflect the desired substantive position could be achieved.

Start with identifying your key current agreements containing patent licence or co-ownership clauses (and any internal frequently used form agreements or internal templates which contain patent licence or co-ownership clauses).

Next we recommend that a party should consider firstly whether, as a question of language and true construction, the existing wording is clear enough to cover all the new issues without ambiguity. In our view, this will rarely be the case. For example, the typical wording of a clause dealing with "prosecution, maintenance and defence" of the licensed/co-owned patent(s) will not so obviously cover seeking unitary effect (which is a post-grant activity in the EPO, which must take place within the one-month period following grant) for the matter to be beyond dispute. An express reference to seeking unitary effect would improve clarity.

Similarly, a typical enforcement clause which confers on one of the parties "the first right, but not obligation, to initiate and control any legal proceedings against infringement or misappropriation of any Licensed Technology" will not so obviously cover control over opting-out of the jurisdiction of the UPC (or withdrawal of the opt-out) for the matter to be beyond dispute. An express reference to control over opting-out (and withdrawal of an opt-out) would improve clarity.

Incidentally whether a "prosecution, maintenance and defence" clause would cover opting out (or withdrawal of opt-outs) is completely unclear. Opting out (and withdrawal of opt-outs) are not issues related to "prosecution and maintenance". Instead, they are more closely related to enforcement, and so might be thought, at first sight, in the absence of express clarification to fall under the control of the party to whom control of enforcement has been allocated. However, opting out is highly relevant to the "defence" of the Licensed Technology (for example, resisting revocation/nullity actions), so on that basis might be thought to fall within a "prosecution, maintenance and defence" clause after all.

Thirdly, a party should consider whether the substantive position in the existing clauses is appropriate, given the new risk profile attaching to patent issues in Europe in light of the introduction of the UPC and UP (see our previous article for more information), and the interplay between seeking unitary effect and enforcement issues.

In this table, we've set out various substantive positions on "prosecution, maintenance and defence" issues and "enforcement" issues which are commonly encountered in patent licence and ownership clauses, with comments on their appropriateness for the UPC and UP regime, as well as potential further issues to consider:

Licensee has standing to sue Control over prosecution, maintenance and defence  Control over infringement proceedings  Comment
No Licensor's sole discretion Licensor's sole discretion
  • This is the most licensor-favourable approach.
  • If acting for licensor, consider amending to clarify that control over opt-outs (including withdrawal) and seeking unitary effect is with the licensor.
  • If acting for the licensee (in particular where the licence is exclusive), consider whether licensor's sole control over these UPC issues is commercially acceptable. Consider amending to insert an obligation on the licensor to consult with the licensee and take its representations into account. Consider also a veto right for the licensee.
Yes Parties to confer and seek to agree; licensor has ultimate decision-making authority Licensor has first right of action against alleged infringers; licensee has right to bring claim if Licensor does not take action within [X] days
  • If acting for the licensor, consider whether the licensee's step-in right on infringement litigation is still commercially acceptable. Consider amending to insert an obligation on the licensee to consult with the licensor and take its representations into account in exercising its step-in right. Consider also a veto right for the licensor.
  • Where the licence covers only some (but not all) of the territory of the UPCA contracting states which have ratified the UPCA as of the effective date of the licence (or which might ratify the UPCA during the term of the licence), a licensor should consider particularly carefully whether the licensee's step-in right is still commercially acceptable. Given the significantly increased risk in the UPC system of spill-over effects in territories reserved to the licensor or granted to other licensees, an existing step-in right in a territorially-limited licence may no longer be workable.
  • If acting for the licensee, consider whether the licensor's first-line control over these UPC issues is commercially acceptable. Consider amending to insert an obligation on the licensor to consult with the licensee and take its representations into account in exercising its step-in right. Consider also a veto right for the licensee.
Yes Licensor's sole discretion Licensee's sole discretion
  • If acting for the licensor, the issues in the row above continue to apply. Consider also amending to clarify that control over requesting unitary effect is with the licensee. Consider whether control over opt-outs should be treated in the same way as all other infringement claim issues, and be ceded to the licensee. Or whether control over opt-outs is so important that it should be reserved to the licensor.
  • Given the potential interplay between requesting unitary effect, bringing infringement actions and opting out, consider carefully whether it is still workable to divide control over these issues between the licensor and licensee or whether control over all these issues should be united in the hands of one of the parties (at least within the UPC territory).
Yes Licensee's sole discretion Licensee's sole discretion
  • This is the most licensee-favourable approach.
  • If acting for licensee, consider amending to clarify that control over opt-outs (including withdrawal) and requesting unitary effect is with the licensee.
  • Consider also seeking robust warranties/representations and undertakings from the licensor regarding getting consent from co-owner to allow opting out.
  • If acting for the licensor, consider whether the licensee's sole control over these UPC issues is commercially acceptable. Consider amending to insert an obligation on the licensee to consult with the licensor and take its representations into account. Consider also a veto right for the licensor.
  • Where the licence covers only some (but not all) of the territory of the UPCA contracting states which have ratified the UPCA as of the effective date of the licence (or which might ratify the UPCA during the term of the licence), a licensor should consider particularly carefully whether the licensee's step-in right is still commercially acceptable. Given the significantly increased risk in the UPC system of spill-over effects in territories reserved to the licensor or granted to other licensees, an existing step-in right in a territorially-limited licence may no longer be workable.

Finally, a party should consider its negotiating strength relative to the other parties and whether it has sufficient leverage to achieve amendment of the existing agreement to reflect the desired substantive position within the required timescale.

To avoid opening the entire agreement to a potential renegotiation, consider whether amendment by way of a side letter rather than a formal deed of amendment is available and whether tactically - and also optically - that might be a better route than a formal deed of amendment. However, this choice will only be available if it is clear that a side letter would be effective legally. This in turn will depend on whether you are providing any consideration under the side letter to support the amendments being made for your benefit.

Should you wish to discuss a triage programme for your key agreements, updating your template licence clauses and co-ownership clauses, or have any questions about getting your contracts UPC  ready, please contact the authors of this article or any member of our UPC Group.

A wide range of detailed briefings and insights from the international Taylor Wessing UPC Group are also available on our UPC page.

The Unified Patent Court (UPC)

The UPC and Unitary Patent will introduce the most radical changes to patent litigation in Europe in 40 years.

Visit our UPC hub
Visit our UPC hub
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