The UPC in 2024: Statistics, Trends and Substantive Law

UPC Munich

This year saw the start of the Unified Patent Court (UPC) issuing substantive decisions. As of December 9, the UPC has issued over 20 decisions on the merits, primarily involving infringement actions, and numerous decisions relating to provisional measures. The Court has granted injunctions in all cases where a patent has been found to be valid and infringed (including Standard Essential Patent (SEP) cases). The Court has been effective in resolving cases within a year. Key legal principles were clarified, including claim construction and requirements for the granting of provisional measures. The UPC’s approach to added subject matter so far aligns closely with European Patent Office (EPO) practice but its approach to inventive step differs.

Trends

By the end of November 2024, over 585 cases had been filed, involving more than 200 patents. These include 219 infringement cases (with around 60% involving counterclaims for revocation), 50 revocation cases (with two infringement counterclaims), and three requests for declarations of non-infringement. Additionally, there have been 57 applications for provisional measures, preservation of evidence, or for inspection, with 46 of these being requests for provisional injunctions.

While the number of infringement cases is notable, it is important to remember that Germany alone used to handle several hundred such cases annually before the UPC was established, although this has now dropped. This indicates that many cases that would have been filed in Germany are now being brought to the UPC, with 85% of UPC infringement cases starting in a German local division.

The number of direct revocation cases at the UPC is relatively low compared with the 3,000 to 4,000 oppositions filed annually at the EPO. This might be due to the large number of European patents that have been opted out of the UPC system, totaling over 630,000.

Cases brought before the UPC cover a wide range of technologies, with the information and communication technology (ICT) sector leading in numbers, followed by medical technology and consumer goods. Although there are fewer cases in the pharmaceutical and biotech sectors, those that exist are part of significant international disputes, such as that relating to PCSK-9 inhibitors, and actions over biosimilars.

English (which is accepted at all divisions of the UPC) is the most common language used in UPC cases, accounting for 52% of actions, followed by German at 41%.

The UPC has been effective in resolving cases within about a year, with the first decision on the merits issued on July 3, 2024.

Provisional Measures

It is notable how carefully at this stage the UPC evaluates whether a patent is likely to be infringed (and subsequently valid), making it crucial for parties to present a comprehensive case on validity and infringement, as well as demonstrate urgency.

As to the merits, although the patentee has the burden of proof to demonstrate infringement, on questions of validity the burden is on the defendant. The standard of proof in each case is a “sufficient degree of certainty”, which the Court of Appeal held to mean “more likely than not” (UPC_CoA_335/2023 NanoString v. 10x Genomics February 26, 2024). [Disclosure: Bird & Bird represented Nanostring in this case].

Applicants must act promptly upon learning of an alleged infringement, taking necessary steps to support their claims without unnecessary delays. In most cases, the court does not require applicants to prove that they need a provisional injunction to protect their position while awaiting a hearing on the merits, as long as they act swiftly.

Twenty-two decisions have issued, with around 66% of the applications being granted. 12 of these involved granting provisional injunctions, while in one case the defendant agreed to cease and desist.

Of the cases where provisional measures were denied, reasons included doubts about patent validity, unlikely infringement, and lack of urgency.

Decisions on the Merits

Around 60% of infringement actions were found to be valid and infringed, all resulting in permanent injunctions, a couple including exceptions. It is interesting to note that no defendant has persuaded the UPC to withhold a final injunction, despite cases covering a wide range of technologies and fact patterns.

Other than one infringement action where no infringement was found, the remainder involved successful counterclaims for revocation.

There have been a handful of decisions relating to revocation actions, with four patents revoked, two maintained as amended, and one maintained in its original form.

Considering all actions involving validity, around four in 10 patents have been found invalid.

Substantive Law

Claim Construction

During 2024 the UPC has set out its position regarding claim construction, with the Court of Appeal clarifying that, as with national law, the patent claim is the primary basis for determining the scope of a European patent, with the description used to interpret the claim’s scope. These principles apply to both infringement and validity assessments (UPC_CoA_335/2023 Nanostring v 10x Genomics, February 26, 2024). In UPC_CFI_1/2023 Sanofi v Amgen 16 July 2024 the Munich CD confirmed that the patent may act as its own dictionary.

It is noted that the area of claim construction is one where there is currently controversy in the EPO, as evidenced by referral G1/24 in July 2024 to the EPO Enlarged Board of Appeal.

Equivalence

One UPC division has considered equivalents. The Hague LD established a test for infringement by equivalents, considering technical equivalence, fair protection for the patentee, reasonable legal certainty for third parties, and whether the allegedly infringing product is novel and inventive over prior art (UPC_CFI_239/2023, Plant-e Knowledge v Arkyne Technologies November 22, 2024).

The possibility of appeal from this decision means that the test for infringement equivalents in the UPC may be confirmed early in the UPC’s jurisprudence.

Inventive Step

The UPC has also set out its position regarding inventive step.  As may have come as a surprise to some, in most cases the UPC divisions are not explicitly following the EPO’s problem/solution approach for inventive step. Instead, they consider what each prior art citation discloses and whether a skilled person would arrive at the invention based on that prior art and common knowledge. In UPC_CFI_255/203 Meril Italy v Edwards July 19, 2024, the Paris CD noted that applying the problem/solution would not lead to a different conclusion.

What seems clear is that the UPC is not following the EPO’s case law on inventive step.

Added Subject Matter

The UPC so far is adopting a strict approach to added subject matter, similar to the EPO’s standard (UPC_CFI_483/2023 Seoul Viosys v. expert e-Commerce October 10, 2024 – in German).

Standard Essential Patents (SEPs)

Only two SEP cases have reached a decision on the merits so far. Both have granted permanent injunctions. In UPC_CFI_390/2023 Philips v Belkin, September 13, 2024, the Munich LD found the SEP to be infringed, and an injunction was granted (no FRAND defense was raised).

In UPC_CFI_210/2023 Panasonic v Oppo, November 22, 2024 (in German), a FRAND counterclaim was raised but dismissed by the Mannheim LD as the defendant was not considered a willing licensor. An injunction was granted as well as the recall/destruction of products.

A decision in another SEP-related case, UPC_CFI_9/2023 Huawei Technologies v. NETGEAR, is due on December 18, 2024, from the Munich LD.

So far, it looks like the UPC divisions in Germany at least are tending to take a similar approach to that taken by the German national courts.

There is only one SEP-related case that is before a non-German division, UPC_CFI_502/2024 KPN v Orope. This was only filed in September 2024 so it is likely to be some time before we see a SEP-related decision from a non-German division.

Withdrawal of an Opt-Out

The Court of Appeal clarified that withdrawal of an opt-out is only affected by actions brought before a national court on or after June 1, 2023 (UPC_CoA_489/2023 Aim Sport Development v Supponor November 12, 2024).

This decision impacts patents with an opt-out in place and subject to litigation before this date. The decision did not consider the position of actions brought in non-UPC countries.

Patent proprietors may reconsider whether to use the UPC for litigation for a patent and, if so, withdraw the opt-out (typically close to or on the day they file a UPC infringement action, so that a potential defendant does not have the opportunity to pre-empt UPC proceedings with a revocation action).

Security for Costs

So far, the likelihood of success with applications for security for costs has been relatively balanced.

The Court of Appeal confirmed that providing security does not per se hinder access to justice (UPC_CoA_328/2024, Ballinno v. UEFA August 26, 2024). A bank guarantee from a U.S. bank was deemed inadequate security in one case (UPC_CoA_301/2024 ICPillar v. ARM September 16, 2024). An application for security was granted in a case involving a new entity with limited financial information (UPC_CFI_164/2024 Suinno Mobile & AI v. Microsoft September 30, 2024). In another case, the court required security if interim measures were ordered without a prior hearing of the defendant (UPC_CFI_452/2023 Ortovox v. Mammut December 11, 2023 – in German).

Language of the Proceedings

Decisions on changing the language of proceedings consider fairness and practicality, including the languages of the parties and the original documentation (e.g. prior art).  Where these conditions are met, change has been granted (UPC_CoA_101/2024 Curio Bioscience Inc v. 10x Genomics April 17, 2024 and UPC_CoA_349/2024 Google v. Ona September 18, 2024).

Case Management System

The only real problem with the UPC seems to be with its Case Management System (CMS), use of which is obligatory. The multiple workflows that it generates for each case imposes a significant staffing overhead on practitioners (and also, it seems, the judges). The UPC authorities are well aware of such problems and indeed, on July 19, 2024, announced cooperation with the EPO to establish a new CMS which it is hoped will be up and running by mid-2025. This would be good news indeed.

What’s Ahead?

As was to be expected given the recognized quality of its judiciary, the UPC in its first full year has already established its reputation for sound, generally well-reasoned decisions. The second half of 2024 has seen the UPC Court of Appeal rule on many substantive matters to help clarify the approach to be taken by the UPC.

In some areas the UPC seems content to adopt EPO law, and especially in those areas where there is EPO Enlarged Board of Appeal case law. However, the UPC is also starting to establish its own body of substantive law as to claim construction and inventive step.

The ready availability of provisional measures, at least as compared with some national jurisdictions, also makes the UPC an attractive forum in appropriate cases. In such applications, the careful scrutiny which the UPC undertakes of the main aspects of the case means that a lot is required of the parties in a very short timeframe but also has the benefit of giving the parties an early neutral insight into those issues. This might prove determinative when a successful patentee, as it must, subsequently commences an action on the merits, and so may contribute to settlement.

The UPC procedure has also demonstrated that it can indeed bring a dispute to a full hearing on the merits, as to both infringement and validity, within a year from service of proceedings, after which the Court has been able to give decisions without undue delay.

Now that the UPC has found its feet, it will be interesting to see how its case load develops in the years to come, especially given that national courts in those EU Member States that have already ratified the UPC have seen several times the amount of patent litigation than is currently before the UPC.

Will the UPC be able to maintain its quality and speed if its case load increases? If it can, will such quality and speed, amplified by the extensive geographic reach of its decisions, compensate for the level of fees, the risk of having to pay substantial costs to the winning party if one loses and the problems (but hopefully for not much longer) with the current Case Management System? We wait to see what 2025 brings.