UPC: Defence possibilities for defendants
1. Formal Grounds for Defence
As a formal ground for defence, defendant may challenge the jurisdiction and competence of the UPC, as the competence of the national courts continues to apply for all actions that are not listed in the UPC agreements, such as any actions based on opted-out EP patents.
For any infringement claim to succeed, claimant will need to show that defendant has used the invention, or that such use is imminent. Defendant, on the other side, may show that no such use has occurred, either for a lack of any reserved act of use (such as making, offering, placing on the market) in the relevant territory, or for the accused product or process not being subject matter of the patent in suit. For the latter, defendant may show that one or more features of the asserted patent claims are not realized in the accused product or process. The UPC agreements provide for certain limitations on the effect of a patent, such as acts done privately and for non-commercial purposes, acts done for experimental purposes, or various other acts that are in the public interest and/or are exempted from patent protection by international treaties. If any of these situations apply, defendant may also establish a sound non-infringement defence.
3. Revocation (counter-)action
One of the most common defenses against a claim for patent infringement is the challenging of the patent’s validity. For the UPC system, there are two different options to challenge a patent that is being enforced in a pending infringement case: First, defendant may file a separate revocation action with the competent division of the UPC, or an opposition with the EPO, which then remains separate from the infringement case. Secondly, defendant may file a revocation counteraction, which will then be part of the infringement case and will be dealt with simultaneously.
In case of a separate revocation action, defendant will usually request that the infringement case is being stayed until a decision on the patent’s validity, or that any decision on infringement is made subject to the condition subsequent that the patent is not held invalid. The UPC courts have discretion to grant these requests.
There will be (and are already) numerous strategic considerations for a defendant in an infringement case at the UPC whether to file a separate revocation action, a revocation counteraction, or both. Some of these considerations include the question of which division may best decide on the patent’s validity (as a separate revocation action filed by non-party to the infringement case can bring this case to the central division), which division should be handling the infringement case, the question of when relevant prior art will become available, and whether the infringement case has been brought by the patent proprietor or a licensee.
4. Entitlement to Use
Defendant may further raise a defence concerning its entitlement to use the patented technology, which can be based on (a) defendant’s co-ownership of the patent, (b) a license which allows defendant the use of the patent, and/or (c) defendant’s prior use rights.
5. Antitrust Defense
While the UPC agreements do not set out any antitrust defenses itself, it explicitly allows to apply EU law, so that the general restrictions on antitrust and anti-competitive behavior are likely to apply also in front of the UPC. Consequently, it is expected that the UPC courts will apply the framework set out by the ECJ in relation to anti-competitive behavior by the enforcement of standard essential patents (“SEP”), including the necessity for an SEP holder to make a fair, reasonable and non-discriminatory (“FRAND”) offer and for an implementer to appropriately respond thereto. It is unclear, however, whether the UPC courts will assume the task of setting a FRAND rate for a potential license on a SEP, if the antitrust defense is being raised, noting that courts of the participating EU member states have been reluctant, so far, to engage in such calculations themselves.
6. Exhaustion of Rights
Exhaustion occurs if a product has been placed on the market in the EU by or with the consent of the patent proprietor, which provides for a EU-wide (regional) exhaustion and a corresponding defence in front of the UPC.
7. Limitations and Forfeiture
The UPC agreements set out a five-year period after which actions “relating to all forms of financial compensation may not be brought”. Forfeiture is not explicitly mentioned in the UPC agreements, but the UPC must apply all rules, procedures and remedies in a “fair and equitable manner”, which may include the possibility to defend against a claim being brought extremely late (and against the justified expectations of the defendant) based on good faith considerations.
8. Entitlement Suits
Another possible defence is to claim ownership rights to the patent in suit. Such entitlement suits however fall outside the jurisdiction of the UPC courts. They still need to be filed with the competent national courts, most often at the place of domicile of defendant; the UPC is then likely to stay its proceedings.