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UPC – Neo Wireless v. Toyota – on validity of an opt-out

25 Jun 2024

Michael Kobler

Bardehle Pagenberg

Neo Wireless GmbH & Co. KG v Toyota Motor Europe NV/SA (UPC, Court of Appeal) – interpretation of Art. 83(3) UPCA; validity of an opt-out

Toyota Motor Europe NV/SA filed a revocation action against the German part of EP 3 876 490 (“EP ‘490”), which is held by Neo Wireless GmbH & Co. KG (“Neo Germany”), before the Central Division of the Unified Patent Court (ACT_579176/2023; UPC_CFI_361/2023). Neo Germany filed a preliminary ob-jection, arguing that the UPC lacked competence to hear the revocation action be-cause EP ‘490 had been opted out pursuant to Art. 83(3) UPCA. Neo Wireless LLC (“Neo USA”), an affiliate company of Neo Germany, had indeed lodged an application to opt out EP ‘490 for “all EPC states” before the revocation action, on March 30, 2023. However, prior to the opt out, on March 7, 2023, Neo USA had assigned the German part of EP ‘490 to Neo Germany, and the opt out was not filed in Neo Germany’s name, nor had Neo Germany filed an opt out themselves.

Against this background, the Judge-rapporteur at the Central Division, Prof. Dr. Haedicke, rejected Neo Germany’s preliminary objection, finding that the opt out by Neo USA was invalid because it had not been declared by all proprietors, as re-quired by Rule 5.1, lit.(a) RoP. By order of June 4, 2024, the Court of Appeal con-firmed this finding by the Court of First Instance.

The written reasoning of the order begins by pointing out the common under-standing of both sides (and the Court): (1.) Rule 5.1, lit.(b) RoP stipulates that, in case of an opt out, all national parts of a European (bundle) patent must be opted out. In other words, there can be no partial opt out. (2.) Rule 5.1, lit.(a) RoP clearly states that “all proprietors or applicants” of a patent (application) must lodge the application to opt out. (3.) According to Rule 1 RoP, the UPCA prevails in case of a conflict between the UPCA and the RoP.

Therefore, the decisive question was whether, in case the national parts of a Euro-pean patent (application) are held by more than one proprietor (applicant), Art. 83(3) UPCA (“a proprietor of or an applicant for a European patent granted or applied for prior to the end of the transitional period under para-graph 1 (…) shall have the possibility to opt out from the exclusive competence of the Court”; emphasis added) allows for one proprietor to declare an opt out for all national parts.

The Court of Appeal answered this question in the negative. In a first step, the Court looked at the wording of Art. 83 UPCA. It held that the wording (“a/an”) of Art. 83(3) UPCA was inconclusive, because it could either indicate the singular or the capacity of any proprietor or applicant to opt out. Similarly, the use of the plu-ral in the fore-last sentence of Art. 83(3) and in Art. 83(4) UPCA did not support either Party’s interpretation. In a second step, the Court, looked at the object and purpose of Art. 83(3) UPCA and, in particular, at the default position chosen by the legislator, which is that there is an automatic transition of European patents into the jurisdiction of the UPC. Here, the Court found that an understanding of Art. 83(3) UPCA which allowed one of several proprietors to opt out all national parts of a European patent without the other proprietors’ consent, who would then be deprived of enforcing their national parts within the UPC system, would not correspond to the above-described legislative choice.

The decision by the Court of Appeal can be accessed here.

Take away:

Since an opt out application in accordance with Art. 83(3) UPCA must be lodged by or on behalf of all proprietors of all national parts of a European patent, assigning only some national parts to a different company should be considered thoroughly, even within the same group of companies, because it bears the risk of an invalid opt out, either because of oversight or because of the assignee’s unwillingness to agree to an opt out.