UPC Court of Appeal decision on opt-outs

On 4 June 2024, the UPC Court of Appeal, led by presiding judge and judge-rapporteur Rian Kalden, handed down its decision in Neo Wireless v Toyota (UPC_CoA_79/2024) confirming that a valid opt-out application must be filed by or on behalf of all proprietors of all national parts of a European patent to be effective.

Neo Wireless LLC (Neo USA) was the owner of the European application EP 3 876 490 (EP 490) for all designated states. The German part of the application was transferred in February 2023 to Neo Wireless GmbH & Co KG (Neo Germany), the defendant in these UPC proceedings. In March 2023, Neo USA filed an opt-out for “all EPC states” – however, the opt-out application was not filed on behalf of Neo Germany, nor was the consent of Neo Germany annexed or exhibited to the opt-out application.

Toyota subsequently brought a revocation action against the German part of EP 490 before the Paris Central Division of the UPC. Neo Germany filed a preliminary objection on the grounds that EP 490 had been validly opted-out from the jurisdiction of the UPC, and the UPC therefore lacked jurisdiction and competence to decide on the revocation action. At first instance, the Paris Central Division held that the opt-out filed by Neo USA was invalid, because not all proprietors of all national parts had lodged the application as required by Rule 5.1(a) RoP, consistent with Article 83(3) UPCA.

Neo Germany submitted that the wording of Article 83(3) UPCA only requires that “a proprietor” of or “an applicant” for a European patent “shall have the possibility to opt out from the exclusive competence of the Court”, and therefore that an opt-out by any one applicant for a European patent should be sufficient.

The Court of Appeal considered that the answer to the question was not clear from the ordinary meaning of Article 83(3) and therefore the Article needed to be interpreted in accordance with the object and purpose of the Article. The Court of Appeal determined that the legislator had chosen the “default position” that ”there is an automatic transition into the jurisdiction of the UPC”. The Court therefore rejected the appeal by Neo Germany, finding its patent had not been opted out of the UPC and thus confirmed the UPC’s competence to rule on the underlying revocation action.

This decision serves as a warning for any patentees seeking to avoid UPC litigation to ensure that all national parts have been opted out by all proprietors. This is likely to be especially complex in situations such as this, where certain national parts have been assigned to local subsidiaries or IP holding companies.