Co-ownership/licensing agreements – Impact of UPCA

The Agreement on a Unified Patent Court (“UPCA”) will have a significant impact on agreements on Patents, especially on co-ownership and licensing agreements.

The Parties to a co-ownership or licensing agreement shall take into account the provisions applicable to European patents with unitary effect (namely Unitary Patents or “UP”) and those applicable to the Unified Patent Court (“UPC”).

1. Unitary Patent (“UP”)

We remind that a UP shall have a unitary character, i.e. shall provide uniform protection and shall have equal effect in all the participating Member States.

1.1. Co-owners

A transfer or a licence of a UP may be registered in the Register for unitary patent protection (which constitutes part of the European Patent Register by the EPO) (Art. 2(e) Reg. EU 1257/2012).

One critical point regarding co-ownership is to decide the order of joint applicants entered in the European Patent Register. The law applicable (Governing law) to a UP as an object of property is set as the national law of the State of residence or principal place of business on the date of filing of the application for the European patent of the joint applicant which is indicated first, provided this State is a UP participating Member State (“UPMS”).

If the first applicant has no residence or principal place of business in a UPMS, the governing law shall apply to the next joint applicant indicated in the order of entry and having his residence or principal place of business in a UPMS.

If no applicant has a residence or principal place of business in a UPMS, the Governing law is defined by the national law of the applicant having a place of business in a UPMS on the date of filing of the application for the European patent (Art. 7(1) & (2) Reg. EU 1257/2012).

If no applicant had his residence, principal place of business or place of business in a UPMS, the Governing law is German law (Art. 7(3) Reg. EU 1257/2012).

Therefore, the selection of the first listed co-applicant on the date of filing should be thus discussed and decided by the co-applicants prior to filing the European patent application or PCT patent application which would designate EP, i.e. the euro-PCT. This strategic issue should be considered as from now as Unitary Patent protection may be requested for any European patent granted on or after the date of application of Regulation EU 1257/2012 (Art 18(6)): a European patent application filed today may become a UP if Regulation EU 1257/2012 enters into force before grant of the European patent.

It is also important in this decision to review national law of each possibly designated UPMS (depending on the order of co-applicants) as rights may significantly differ from one country to another. National laws may set mandatory provisions or consider default rights in the absence of provisions to the contrary. Typically, co-applicants should carefully analyze notably provisions on:

  • inventorship,
  • the right to a patent,
  • compensation for employee inventions
  • assignment of co-ownership shares, possibly including right of pre-emption,
  • grant of licence(s),
  • right to exercise an action before a court, and more generally
  • default rights, such as for example compensation payable by a co-owner working the invention due to those who do not work the invention, etc.

1.2. Licensee(s)

A UP may be licensed in respect of the whole or part of the territories of the participating Member States (Art. 3 Reg. EU 1257/2012). Accordingly, the holder of a Unitary Patent may consider having different licensees on the UPMS as long as the licensing agreements comply notably with Art. 101 of the Treaty on the Functioning of the European Union (TFEU) and Regulation EU 316/2014 on the application of Article 101(3) TFEU to categories of technology transfer agreements to meet the application of competition law and the law relating to unfair competition.

2. UPC

The UPC is established for the settlement of disputes relating to European patents and UP.

2.1. Before any dispute is brought before the UPC

Parties should carefully consider their co-ownership or licensing agreements including notably whether they wish the UPC have exclusive competence for a possible litigation as set forth in art. 32 UPCA or opt out from this exclusive competence according to art. 83(3) UPCA (2.2-) and the agreement provisions regulating the right to exercise an action before the UPC (2.3-).

2.2. Opt-out

It is reminded that the Court shall have exclusive competence in respect of (art. 32 UPCA):

  • (a) actions for actual or threatened infringements of patents and supplementary protection certificates and related defences, including counterclaims concerning licences;
  • (b) actions for declarations of non-infringement of patents and supplementary protection certificates;
  • (c) actions for provisional and protective measures and injunctions;
  • (d) actions for revocation of patents and for declaration of invalidity of supplementary protection certificates;
  • (e) counterclaims for revocation of patents and for declaration of invalidity of supplementary protection certificates;
  • (f) actions for damages or compensation derived from the provisional protection conferred by a published European patent application;
  • (g) actions relating to the use of the invention prior to the granting of the patent or to the right based on prior use of the invention;
  • (h) actions for compensation for licences on the basis of Licences of right Article 8 of Regulation (EU) No 1257/2012 (Licences of right); and
  • (i) actions concerning decisions of the European Patent Office in carrying out the tasks referred to in Article 9 of Regulation (EU) No 1257/2012 (Administrative tasks in the framework the EPO).

According to the transitional regime (art. 83 UPCA), during a transitional period of seven years (which may be prolonged by another seven years) after the date of entry into force of the UPCA, an action for infringement or for revocation of a European patent or an action for infringement or for declaration of invalidity of a supplementary protection certificate issued for a product protected by a European patent may still be brought before national courts or other competent national authorities.

Nevertheless, if an action has already been brought before the UPC, the UPC shall have exclusive competence as set forth above according to art. 32 UPCA.

Proprietors and applicants who do not wish the UPC to have such exclusive competence may opt out prior to the end of the transitional period. To this end, they shall notify their opt-out to the Registry.

For more details on opt out, please see our previous notice here.

In case of co-ownership, all co-owners should lodge an opt-out (Rule 5 UPCA). This concretely means that all co-owners should agree to opt out or not!

If one co-owner wishes to opt out but the co-ownership agreement does not mention any decision or regime for deciding on a possible opt-out, one may expect tough discussions on this aspect just before lodging an opt-out… keeping in mind that time will run against the one wishing to opt out as an action brought before the UPC (revocation action) will set the exclusive competence of the UPC. You may not be able to shield your European patent from the central action for revocation.

The licensee has no right to lodge an application to opt out, but may wish to opt out or not. It is recommended, or even necessary to limit the patentee’s liability, to get licensee’s consent before deciding on the exclusive competence of the UPC.

Similar comments apply to the withdrawal of an opt-out.

It is recommended to review all agreements to secure the decision or even decide on the exclusive competence of the UPC. You may just be liable if you do nothing unless waiting for a claim by an unsatisfied co-owner or licensee!

2.3. Bringing an action before the UPC

Co-ownership or licensing agreements usually state who and according to which provisions a Party can bring an action before a Court against an alleged infringer.

As a general principle, the patent proprietor shall be entitled to bring actions before the UPC (art. 47 UPCA).

Unless the licensing agreement provides otherwise, the holder of an exclusive licence in respect of a patent shall be entitled to bring actions before the Court under the same circumstances as the patent proprietor, provided that the patent proprietor is given prior notice. Accordingly, an exclusive licensee may bring an action before the UPC without consent from the patent proprietor unless stated otherwise in the licensing agreement.

The holder of a non-exclusive licence shall not be entitled to bring actions before the Court, unless the patent proprietor is given prior notice and in so far as expressly permitted by the licensing agreement.

Parties have to review their agreements to know under which provisions the Parties may enforce a patent falling within the scope of UPCA.

Also the Parties may negotiate other different aspects of a future possible legal action brought before the UPC, such as among other: the type of protection for Europe (National patents, European patent or UP), forum shopping, the language of the patent to influence the language of proceedings, especially before the central division which shall use the language of the patent, etc.

2.4. Arbitration and mediation Centre

The UPCA also established a patent mediation and arbitration centre having its seats in Ljubljana (Slovenia) and Lisbon (Portugal) provide facilities and Rules of patent disputes falling within the scope of UPCA. It would be thus possible to designate this mediation and arbitration centre in an agreement, but in our opinion, it is premature to include such designation in a mediation or arbitration clause until UPC enters into force and the mediation and arbitration centre is well-established.

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