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UPC Court of Appeal clarifies when Opt-Outs can be validly withdrawn
Summary
In a decision dated 12 November 2024 the Court of Appeal (“CoA”) of the Unified Patent Court has clarified that Art. 83(4) UPCA must be understood to mean that an earlier opt-out cannot effectively be withdrawn if an action has been brought before the national court at any time during the transitional period (i.e. on or after 1 June 2023). Proceedings that were brought prior to the transitional period, whether still pending or not, do not stand in the way of an effective withdrawal of an opt-out.
Background
The case of AIM Sport Development AG vs. Supponor OY, Supponor Limited, Supponor SASU, Supponor Italia SRL, Supponor Espana SL (UPC_CoA_489/2023, UPC_CoA_500/2023) concerned the circumstances in which a UPC opt-out can be validly withdrawn. The CoA addressed the correct interpretation of Art. 83 UPCA. This article sets out details of a transitional regime (that will last at least 7 years from the commencement of the UPC on 1 June 2023) during which a parallel jurisdiction still applies between the UPC and national courts of the Contracting Member States.
In the present case AIM were the owner of a European patent which had been opted out on 12 May 2023. On 5 July 2023 AIM applied to withdraw this opt-out. On the same day AIM lodged an infringement action against Supponor, based on the patent at issue. Supponor contested the effectiveness of the withdrawal of the opt-out, based on the fact that there existed earlier national litigation in Germany relating to the patent.
The UPC’s Court of First Instance (“CFI”) held in an October 2023 decision that the UPC did not have competence over the patent at issue owing to its opt-out on 12 May 2023. In the view of the CFI the withdrawal of the opt-out on 5 July 2023 was ineffective due to the earlier German proceedings, commenced in 2020 and still pending before the German courts at the date of the opt-out and of the withdrawal. The CFI stated that the Art. 83(4) UPCA was “clear and unambiguous…The wording does not provide any limitation or restriction to the effect that it would only apply to previous national proceedings that have been initiated during the transitional regime after 1 June 2023”. They also considered that the wording of Rule 5.8 of the Rules of Procedure (“RoP”) confirmed the position.
However, the CFI’s conclusion has now been reversed by the CoA on appeal. Contrary to the view of the CFI, the CoA held that the meaning of Art. 83(4) UPC was “clear based on its wording read in the context of Art. 83 UPCA as a whole and considering its object and purpose”. In particular, the wording and context of Art. 83 UPCA lead to an interpretation of the phrase “Unless an action has already been brought before a national court” in Art. 83(4) as referring (only) to actions brought during the transitional period. The CoA was of the view that Rule 5.8 RoP was not inconsistent with Art. 83(4) UPCA and would, in any case, be over-ruled by the “clear meaning of a higher-ranking provision of the UPCA”.
Implications
This Court of Appeal decision is a helpful clarification that valid withdrawals of UPC opt-outs will only be prevented by previous national litigation that was commenced during the transitional regime, i.e. on or after 1 June 2023. It also serves as a timely warning of how the UPC courts are still in the process of interpretating a new set of laws and rules – and at times coming to contrary positions. In particular, it is noteworthy that both the CFI and the CoA felt the meaning of Art. 83(4) UPC was clear despite coming to opposite views on its meaning.