Opinion
The Unified Patent Court (UPC) is a remarkable success story, like the European Patent Patent Office, but unlike many other “European” and especially EU initiatives that just don’t work in the Digital Era.
A suitable forward-looking indicator is the sooner-than-expected popularity of the Unitary Patent, as we noted on LinkedIn yesterday. What is also fascinating to watch is that the Munich I Regional Court with well over 300 new patent infringement cases filed last year continues to thrive. This is apparently not a zero-sum game.
But when such an ambitious project starts, certain “childhood diseases” are inevitable. One of them was (and in some people’s opinion still is) a purely technical one: the case management system. Even from our perspective (the public-facing part of it), there is some work left to do there. But the giant elephant in the room is that the vast majority of cases are filed in the German Local Divisions (LDs), with the time from docketing to decision now being a whole lot longer in Munich than the original goal of approximately one year.
In our conversations with UPC judges (see, e.g., our interview with Presiding Judge Camille Liignières of the Paris LD), we do not get the impression that they are unhappy. Judges who sit on less busy first-instance divisions have a greater opportunity to complement panels elsewhere. We also don’t see that patentees have a problem: they have choice, and they exercise it.
There are, however, two unhappy types of stakeholders:
- From the perspective of governments with limited domestic UPC activity, it feels like just giving German patent judges more power and, which they presumably like even less, subsidizing their work. That part could be solved by higher court fees, and by just having higher notional dispute values, the UPC’s fee income would also increase.
- Some law firms and national practice groups of law firms feel left behind, if not marginalized. They see the booming UPC business and would like a larger piece of the cake.
If you asked me personally, I would very much like to see a higher percentage of cases filed outside of Germany. I don’t live there anymore and don’t go there often. The LD that is most convenient for my purposes is Vienna, followed by Paris. But I also have a vested interest in the UPC (as a whole) doing well, and that’s why I urge caution.
The second group is trying to lobby the first and to influence the Presidium. That is what we deduce from a press release and open letter by Bardehle Pagenberg (ip fray firm profile), whom everyone in the UPC community obviously knows. They are doing fine and published their response to questions from EPLAW (European Patent Lawyers Association: association website), which is apparently seeking input from many UPC firms on the question of an “uneven” distribution.
Starting with terminology, an “even” distribution in a strict sense is neither achievable nor desirable. But what EPLAW presumably means is a more balanced one, which is both achievable (over time) and desirable.
We can deduce from Bardehle Pagenberg’s reply that a variety of proposed measures are being discussed. EPLAW cannot decide, but it wants to build momentum for some ideas and then see what the UPC can do.
Bardehle Pagenberg supports certain ideas or is neutral (such as declaratory-judgment venues), but opposes those suggestions that they feel would do more harm than good. They point out that the current geographic distribution of cases is less surprising if one looks at the status quo ante, which is true, but I think it’s also true that it should be a key objective for the UPC to achieve an improvement in that regard.
The relative weight of the German economy is a limited part of the reason at this stage. The UPC is a battleground for American and Asian companies, at least with respect to major cases. But I do agree with Bardehle Pagenberg that one can’t just attribute the popularity of the Germany-based LDs to what is perceived as patentee-friendliness.
Here is my thinking on some of the ideas that are apparently being floated, followed by some ideas of my own.
EPLAW’s ideas
Obviously, the fact that EPLAW tosses out ideas doesn’t mean they stand by them. But they could and should have filtered out some of them.
Per-division panel cap
Limiting the number of panels of a given division to one (except, maybe, where there already is more than one) is, in one word, self-sabotage. At the heart of this one is the stated goal of slowing down the most popular divisions so as to drive litigants away. It is clearly a bad idea of the “to cut one’s nose to spite one’s face” kind. The harm to the UPC as a whole would be obvious.
For that idea and all others that weaken the UPC as a whole, I would urge their proponents to take into consideration that this is not a zero-sum game between communicating vessels. Cases would just go to the Munich I Regional Court, whose leadership would not face similar lobbying pressure and could easily create more panels. And there are other jursidictions, such as Brazil, that increasingly have the potential to attract case.
The goal must be to strengthen panels in less busy venues, and I’ll get to that later.
Various venue transfer ideas
I know that concept from the U.S., where it comes up all the time. I had been following U.S. cases in granular detail more than a year before I went to the first European (German and French) patent hearings and trials in late 2011, and while I now spend a lot of time on UPC matters, I still have a strong passion for U.S. litigation. I’ve seen U.S. cases where a defendant legitimately sought a venue change, but I’ve also seen abuse. Sometimes they even allow “venue discovery” just to establish the facts for this type of decision.
It’s just hard to see how this can work for the UPC, and without changing the UPC Agreement (UPCA). Changing the UPCA at time where Europe has huge problems in other areas does not look like a good or realistic idea.
DJs in LDs
The idea of allowing claims for declaratory judgment (DJ) of non-infringement to be brought in Local Divisions and not only in the Central Division will either make no non-negligible impact or one has to change Article 33(6) of the UPCA, which prioritizes infringement actions.
International mix of judges
EPLAW apparently requested feedback to the idea of “[c]hanging the allocation of judges in that e.g. German judges spend more time at a non-German Division and/or having non-German judges being more permanently allocated to a German Division.”
Bardehle Pagenberg supports this idea (and proposes the related one of making the international judge the judge-rapporteur in suitable cases), and so do I. This also relates to an idea I will discuss in the next section.
My own ideas
Anti-concentration rule
If feasible, it would be nice to require parties who bring multiple parallel cases against the same defendant to file them in divisions based in different countries. For example, if three or more cases are filed by the same patentee against the same defendant within a rolling 12-month period, they should be filed in at least two different countries unless there really is just one option under the rules.
In order for this to work, the parties would have to be defined in functional terms (or simply as corporate groups), unlike the way it is done when a subsidiary that was not sued for infringement brings a standalone revocation claim.
If parties could not be strictly forced to do so, case management might achieve the effect. For example, if you try to take a huge number of patents to trial against the same party in the same U.S. district court, you probably won’t get a near-term trial date. The problem there is that if you file in different venues, there would probably be consolidation in one venue, so there is no workaround. But in the UPC it could work. For example, defendants could be given generous extensions of time for their pleadings in these cases. But this would then depend on the judge-rapporteur, and it would not be easy to enforce this UPC-wide. A mere recommendation by the Presidium could persuade parties to comply with an anti-concentration guideline.
Increasing panel predictability in “smaller” divisions
It is a problem when litigants know only one judge in a given venue. It means that the majority of the legally qualified judges is not known. (The technically qualified judge is a different topic as they are assigned based on subject matter anyway.)
This is a resource question, but with higher (non-subsidiized) fees the UPC could make sure that there is always a second legally qualified judge available, even if part-time. That would not make an immediate impact, but it would increase predictability.
But it may just not be possible to have at least two local judges everywhere. Here are some ideas that do not require additional funding:
- LDs with only one local judge could publish slots for filings, with a deadline and on a first-come-first-serve basis. They would list the three legally qualified judges that would be put together without knowing the case yet, and a window such as 45 days. The first claimant to file an infringement case there during that period will get it assigned to that panel of three (plus a potentially needed technically qualified judge). If no one takes the slot, a new panel will be defined, and so forth unless a certain level of use is reached.
- Instead of publishing the full panel of three, it would also help to just know two. So, for example, you would know that if you are the first to file now within a certain window, not only the local judge but also a second judge are known. That is then the situation you have in a division where there are two local judges.
- Yet another option is to at least define a limited pool of international judges for a division. For any given LD with only one local judge one could define a pool of three judges assigned to other divisions who will provide the second judge (the third one would be picked from the entire pool). But if the judges in the LD-specific pool have very different judicial philosophies and degrees of experience, it may not help much.
Of course, you never know whether a judge resigns or gets promoted to the CoA. Even recusals could happen, though it is unlikely among legally qualified judges. At any rate, the goal should be to provide a greater level of predictability in “smaller” divisions barring the unforeseeable.
If “slots” are offered, they could come with specific dates for interim conference and oral hearing, obviously with the inevitable imponderabilities involved that could lead to a rescheduling.
The risk of near-simultaneous filings trying to take the slot would be limited, but in any event, it could be eliminated or addressed:
- Counsel could contact the clerks to reserve a spot for e.g. 48 hours.
- There could be an alternative venue stated in the complaint if the promised panel is no longer available, and the case would then be referred.
- Alternatively to that, the clerks could get back to counsel and not docket the complaint if is meant only for a particular pre-composed panel.
The idea is to let those divisions prove more often what they can do.
Hopefully the debate will lead to a good outcome without frictional losses
We will follow the debate with great interest. I have personally attended UPC hearings in three different countries by now, and if I include my contributors, we have collectively been to UPC venues in five different countries. That number is very likely to grow this year, and not only by adding Luxembourg because of the Court of Appeal.
This is an important debate to be had, but it should not adversely impact the UPC’s reputation or create friction.