When the UPC Agreement enters into force, a transitional period of at least seven years will start. In this period, special rules will apply, including an opt-out scheme which enables patent holders to remove their European patents from the UPC system entirely.

Transitional period for European patents

With regard to traditional European patents, article 83(1) of the UPC Agreement provides for a seven-year transitional period after the UPC Agreement enters into force where actions may be brought before the national courts as well (provided that the patent holder or applicant has not opted out of the UPC system).

Accordingly, in that period actions may be pending before the UPC and the national courts concerning the same patent. The transitional period may be prolonged by up to an additional seven years.

This transitional period will always apply to traditional European patents. If the patent holder prefers the UPC over the national courts, the patent holder should opt for the unitary patent as only few types of action will be subject to the jurisdiction of the national courts.

Opt-out for European patents

Patent holders and applicants may opt out of the UPC system with regard to European patents and related SPCs, see article 83(3) of the UPC Agreement. In practice, they can do so by notification to the UPC Registry, which will be situated at the UPC Court of Appeal in Luxembourg, before the expiry of the seven-year period.

The opt-out will be available already before the UPC system starts up, see the PPA. This gives patent holders and applicants at least three months to submit the application to opt out to the Registry before actions may be brought before the UPC.

This option is important because if an action is brought before the UPC before the patent holder has time to submit the application to opt out to the Registry, it will be too late to opt out. Patent holders should therefore decide whether to opt out one or more patents from the UPC system.

An opt-out may be withdrawn at the patent holder's discretion, but only to the extent that no action is pending before the national courts.

The complicated opt-out rules are set out in Rule 5 of the Rules of Procedure. It should be noted that an opt-out must cover all countries where a European patent applies. Thus, a patent cannot be subject to a partial opt-out.

The opt-out must also extend to any SPCs granted, and neither the patent nor the SPC may thus be removed from the UPC system independently of each other. If there are two or more patent holders, each of them must submit an application. The UPC will assume that persons recorded as patent holders in the respective patent registers are duly authorised to submit an application to opt out to the Registry. 

The opt-out scheme also applies to European patents, and an opt-out in relation to an application will have effect for any patent granted subsequently and also the related SPCs, if any.

The opt-out scheme is also important to bear in mind when drafting agreements involving patent agreements such as licensing agreements, R&D agreements, technology transfer agreements, etc. The contracting parties should address the issue of whether or not a given right is to fall within the scope of the UPC's competence, and take the necessary scenarios into account in the agreement. The same applies in relation to business transfers involving a transfer of patent portfolios.

UPC - Unitary Patent Court

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