Function and architecture of the Unified Patent Court (UPC)

In our series on the new Unitary Patent and the new Unified Patent Court (UPC), we have already written about the historical background (here), the EU legal basis (here) and the preparatory phase (here). A continuously updated overview of the countdown before the start of the new jurisdiction can be found here.

A description of the function and architecture of the Unified Patent Court is provided in this article.

I. Jurisdiction of the UPC

The Unified Patent Court has jurisdiction over infringement actions and nullity actions based on the Unitary Patent and, in particular, over actions for provisional relief and declaratory actions for non-infringement (Art. 32 UPC-A).

In addition, jurisdiction the UPC has jurisdiction for nullity actions against all pending and future European Patents (as well as for patents based on Euro-PCT applications) which have been or will be validated in a EU state if it participates in the UPC. For European patents, it is possible to opt-out of the UPC jurisdiction.

II. Architecture of the UPC

The architecture as well as the procedural law of the UPC can be found in the UPC Agreement (UPC-A) and its Rules of Procedure.

1. First Instance

The first instance of the UPC, which receives actions for infringement or invalidity of a unitary patent, is formed by a central division and local divisions. In addition, it is possible for a group of participating EU states to form a regional divisions.

a. Central Division

The central chamber will be divided between Paris and Munich. Originally, a sub-location of the central chamber was also planned in London. However, this has become obsolete with the withdrawal of the United Kingdom from the UPC Agreement (UPC-A).

The sub-location in Paris will be responsible for patents in the IPC classes B (work processes; transport), D (textiles, paper), E (construction; mining), G (physics) and H (electrical engineering).

The sub-location in Munich will be responsible for patents from IPC class F (mechanical engineering; lighting; heating; weapons; blasting).

It has not yet been clarified at which sub-location cases will be heard that were planned at the sub-location in London, which is now no longer planned. This concerns cases in IPC classes A (daily necessities) and C (chemicals; metallurgy). Presumably, they will be split between the remaining two sub-locations. However, a new sub-location in another participating EU state could also be designated.

The central division will always act with one technically qualified judge and two lawyers in infringement and invalidity disputes. The technically qualified judge will be selected specifically with regard to his technical competence from a pool of judges maintained by the UPC. This is to ensure a high quality of judgments in technical details.

b. Local Divisions

Local divisions can be located in any EU state participating in the UPC. The number of local divisions in an EU state depends on the number of patents litigated in that EU state.

A local division will sit with three lawyers, one of whom chairs the chamber. For larger jurisdictions, two judges shall have a judicial qualification of the state of the local chamber and one shall have a judicial qualification of another participating EU state. For smaller jurisdictions, it is the other way around.

At the request of a party or the court, a technically qualified judge shall be added to the three judges. The technical judge shall be a judge technically specialized in the case in question. Just like the foreign member, he or she will be selected from the UPC pool of judges. This option is intended to ensure the technical competence of the court.

In Germany, local chambers are planned in Düsseldorf, Hamburg, Mannheim and Munich. These cities also host the most experienced courts for national infringement cases. Due to its four local chambers, Germany will be the state with the most UPC capacities of the participating EU states.

c. Regional Divisons

A regional division can consist of two participating EU states. The aim of a regional chamber is to pool expertise for states with fewer patent disputes and thus to be able to obtain high-quality decisions.

A regional chamber should consist of two lawyers with judicial qualifications from the region and one lawyer with judicial qualifications from another participating EU state. As with the central division or a local division, a technically qualified judge from the UPC pool of judges may be called in at the request of a party or at the request of the division.

Currently, only one regional division has been formed. The countries of Lithuania, Estonia, Latvia and Sweden have joined together to form the Nordic-Baltic regional division.

d. Competence of Central, Regional and Local Divisions

Competence of the Central Division

Actions for infringement or nullity may be heard by the central division with the consent of both parties (Art. 33 (7) UPC-A). Actions for invalidity of a unitary patent or a European patent can be filed as initial actions only at the central division (Art. 33 (4) UPC-A) .

The central division is also responsible for infringement actions against potential infringers who are not domiciled in an EU state participating in the UPC, for example against defendants from Spain or the USA (Art. 33 (1) UPC-A). However, these can also be filed in a local or regional chamber. Furthermore, the central division is competent if an infringement action could be heard in a participating EU state but this EU state neither has a local division nor is part of a regional division (Art. 33 (1) UPC-A).

Competence of Regional and Local Divisions

A local division is competent if an infringement of an IP right has occurred or may occur in the EU state of the local division, or if the defendant is domiciled in the EU state of the local division. If an infringement action has taken place at a local division, the invalidity action must also be heard there (Art. 33 (2) UPC-A). Thus, a complete infringement suit can be heard at one court location. Bifurcation of an invalidity action to a special court (as in Germany) is not required (Art. 33 (1) UPC-A).

A regional division has jurisdiction if an infringement of an IP right has occurred or may occur in one of the states of the regional division, or if the defendant is domiciled in the EU state of the regional division (Art. 33 (1) UPC-A). Counterclaims for invalidity must also be filed at the same regional division.

In the context of an infringement action at a local or regional division, the latter may decide to file a counterclaim for invalidity of the unitary patent in question at the central division (Art. 33 (3) a) UPC-A). With the consent of the parties, a local or regional division may even decide to transfer a complete dispute to the central division for hearing (Art. 33 (3) b) UPC-A). However, these possibilities are theoretical. No local or regional division would take the “declaration of bankruptcy” of not being able to conduct a dispute due to lack of competence or time.

Because of the high level of technical competence and the compelling attraction of invalidity counterclaims, local division or regional division are likely to be the most important first-instance jurisdiction. This will apply in particular to the local chambers in court locations that are already very experienced in patent law, such as Düsseldorf and Munich.

2. Second Instance

The appeal court is responsible for appeals on decisions of the first instance and is located in Luxembourg (Art. 9 (5) UPC-A).

For patent disputes, the second instance will sit with three lawyers and two technically trained judges from different participating EU states. The technically trained judges will be selected from the pool of judges of the UPC according to their qualifications for the patent in question (Art. 9 (1) UPC-A).

The chairman will be an experienced judge. Currently under discussion for this position is the German judge Klaus Grabinski from the German Federal Court of Justice (Bundesgerichtshof).

3. Role of the ECJ

At any stage of the proceedings, a question of EU law may be raised on which the UPC needs a decision of the Court of Justice of the European Union (ECJ). In this case, any instance of the UPC may refer the matter to the ECJ for a decision on the issue (R. 266 UPC Preliminary Procedural Rules).

The ECJ should otherwise have no role. This disempowerment is intended because the ECJ is considered unsuitable for patent law matters due to its lack of technical specialization and its long list of other cases. Therefore, the UPC was established as an international convention instead of a European regulation.

III. Costs

The court costs are paid first by the plaintiff and in the end by the unsuccessful party. This also applies to the costs of the opposing party up to a certain limit. Compared to Germany, more expensive proceedings are to be expected. This is in contrast to the much larger jurisdiction of the UPC, where damages or license payments will also be much larger.

IV. Personalia

In October, a list of future judges to UPC was published by the Administrative Committee. Experienced persons were selected both as legal and technical judges

12 of the 34 appointed legal judges will be from Germany:

15 of the 51 technical judges appointed will be from Germany:

V. First Impression

The UPC was designed by practitioners. The focus on technical competence, through the case-based selection of judges with technically appropriate training, is gratifying. Even compared to the Federal Patent Court, with its technical but not case-specific selected judges, the decisions of the UPC should be of higher quality in terms of technical understanding.

The possibility of a counterclaim for invalidity of the patent-in-suit in infringement proceedings is a departure from the German bifurcation system. However, the specialization advantage of the bifurcation system is compensated by the technically competent divisions/instances of the UPC. Thus, the advantage of a compact procedure remains with the UPC, where many aspects (e.g., the amount in dispute, the interpretation of a patent-in-suit, the viability) have to be heard only once. An “Injunction Gap”, as in Germany, is not even possible with the UPC. This is also to be welcomed.

The influences from the United Kingdom (a common law state) are not particularly evident in the architecture of the court. These have been reflected more in the procedural law. If one wanted to, one could see the influence of the United Kingdom in the increased court costs. However, especially companies that place a high value on patent protection of their developments might see these costs as justified by the large jurisdiction of the UPC and the designated resources for an effective, high quality trial.

Author: Dr. Martin Kuschel