UPC Rules of Procedure approved – 19th time’s a charm

The Administrative Committee has formally approved a version of the UPC’s Rules of Procedure (the “Rules”) during a meeting held in Luxembourg on 8 July 2022.  These approved Rules will enter into force on 1 September 2022 and include several important changes compared to the previous iteration – the 18^th draft version published in 2017.  The full set of amendments with accompanying explanatory notes from the Committee can be found on the official UPC website HERE.  Below, we highlight several of the more important changes practitioners and potential users of the UPC should be aware of.  Particular attention should be paid to the amendments to Rule 5, which have the potential to affect patent owners for every EPC state, even those that are not (and will not be) signatories to the UPC Agreement.

Rule 4 – lodging documents

Written pleadings and other documents are to be signed before submission, in accordance with the requirements of the Case Management System (“CMS”).  The UPC has long intended to be a paperless system, and this notion is reinforced with the approved Rules narrowing the scope for when documents can be filed in hard-copy form to only if the CMS “has ceased to function”.  Otherwise, all documents must be filed electronically.

Rule 5 – opt-out and withdrawal of opt-out

Previously, Rule 5 required an application for opt-out to be made “in respect of all the Contracting Member States for which the European patent has been granted or which have been designated in the application”; i.e. a patent / application was to be opted out for all member states party to the Unified Patent Court Agreement (“UPCA”). 

The approved version of Rule 5 has replaced the term “Contracting Member States” with “all states”.  On its face, new Rule 5 therefore requires an opt-out to be made not only for states party to the UPCA, but for every EPC state, including EU states that are not signatories to the UPCA (Spain, Poland, Croatia) as well as non-EU states (e.g. the U.K., Switzerland, Norway and Turkey).  Analogous amendments have been made to the provision concerning the withdrawal of an opt-out (i.e. opting back in). 

On a practical level, this change will impose more work to effect an opt-out for European patents with divided ownership as the consent of each proprietor will be required.  A European patent / application having any of its designations assigned to a third party is within the scope of this rule.   It will also place greater emphasis on the need for careful preparation, and review, of assignments. 

As well as the practical implications, there are potentially significant legal ramifications for this amendment.  The rule change means the opt-out must now cover the designations for fourteen countries that are not party to the UPC Agreement and have no prospect of joining the new system, and the suggestion the UPC could have a sound basis for requiring this is surprising.  What is more surprising is the explanation given by the Administrative Committee for the change. It said that the ‘Contracting Member State’ wording was “inconsistent with the indivisibility of the application to opt out” and “It implies that the UPC solely has jurisdiction over UPCA Contracting Member States, which is not the case.” 

For EPC countries outside the European single market, there is no basis for an assertion that the UPC, or any division of it, has jurisdiction in respect of European patents designated for that country, and this suggestion otherwise from the Administrative Committee looks like an attempt to expand the UPC’s jurisdiction.  Stay tuned for a separate article we are preparing that explores in detail the jurisdictional arrangements supporting the UPC system. Different levels of arrangement exist in respect of different groups of EPC countries. An assertion that the UPC will have jurisdiction over non-signatory countries, and in particular non-EU countries, such as the UK, is administrative overreach. If the judiciary of the new court follows the lead of the Administrative Committee it will have unsettling implications for international dispute resolution and represent a disappointing start for the new system.

New Rule 5A – Unauthorised opt-outs

A new Rule 5A has been added to enable unauthorised opt-outs and unauthorised withdrawal of opt-outs to be removed.

The UPC’s Case Management System does not require any proof of consent from the proprietor in an application to opt-out or withdraw an opt-out, leading to concerns of unauthorised opt-outs or withdrawals of opt-outs from third parties.  This new rule provides a welcome safeguard against this. 

To nullify an opt-out or withdrawal of an opt-out, the proprietor of the patent (or applicant, in the case of a patent application) applies to remove the entry of the unauthorised opt-out or withdrawal of an opt-out from the register, providing supporting reasons.  The application for removal will then be assessed “as soon as practicable”. 

Rule 112 – Oral hearings and video conferences

The prior version of the rules permitted video conferencing in certain specific circumstances but contained no general provision for the main oral hearing.  New Rule 112.3 addresses this by granting the Court discretion to allow a party, representative, expert or witness to attend the oral hearing by video conference. 

The Court can also permit the entire hearing to the held by video conference if it is agreed by all parties or if the Court considers it appropriate “due to exceptional circumstances”.  Though this sounds like it would only apply in limited circumstances, the explanatory notes from the Administrative Committee give as an example the disproportionality of a long journey for short and simple proceedings. 

Thus, whilst the default position is for hearings to be held in person, the approved Rules acknowledge the increased prevalence of video conferencing over the past couple of years. 

Rule 262 – Public access to documents

There was much (justifiable) concern about recent proposals to require a ‘reasoned request’ to obtain copies of the court’s judgments and orders and the resulting implications for the principles of open justice.  The approved Rules allay these concerns to some extent but are still more restrictive than the previous iteration from 2017, under which all pleadings, evidence, decisions and orders were publicly available. 

Under the approved Rules, decisions and orders made by the court will be automatically published (following redaction of any personal data within the meaning of the EU GDPR and any confidential information).  However, pleadings and evidence shall only be made available to the public upon “reasoned request”, with the decision being taken by the judge-rapporteur following consultation with the parties.  The existence of such documents (though not their contents) will, however, be publicly listed on the register through the CMS. 

Confidentiality

A party can request that certain information within written pleadings or evidence be kept confidential.  In making the request, the party is required to provide suitably redacted copies of the documents as well as the specific reasons the information is confidential.  To give the parties time to make any such confidentiality request, the register will not show the existence of any pleadings or evidence (which might invite a ‘reasoned request’ for publication) until 14 days after they been made available to all recipients. The information will then remain unavailable to the public until the the court takes a decision on the confidentiality request.  Parties therefore only have a short window in which to make any confidentiality requests and will need to be on top of this throughout the proceedings. 

New Rule 262A – Protection of confidential information

Rule 262A deals with confidential information and the limitation of its disclosure to the other party, as opposed to the public more widely (which is dealt with under Rule 262).   In deciding whether to grant a party’s request that certain information in its pleadings or the collection and use of evidence be designated as confidential, the court will consider whether the grounds relied on by the party making the request “significantly outweigh” the interest of the other party to have full access to the information / evidence in question.  The court will also consider written comments from the other party prior to making a decision on the request. 

The rule prohibits a party from keeping information entirely undisclosed to another party and requires that access to confidential information be provided to at least one natural person from the other party and their representative. 

Rule 355 – Decisions by default

A decision by default is a decision made in favour of a party based on the failure of the other party to take an action within a time limit set by the rules or court.  Following a discussion with the European Commission, a decision by default against a defendant of a claim or counterclaim can only be given with consideration of the procedural conduct of the defendant and not solely on the fact a step was not taken within a given time limit.

Summary

It is not surprising that further changes to the rules have been made as the Administrative Committee sought to agree an approved version.  The majority of these are within the scope one might expect at this late stage, however the proposed amendment to Rule 5 has potentially serious ramifications that might have just revealed the ambitions of the UPC