Agreements concerning patents

UPC - The Unified Patent Court

Agreements will only be affected by the UPC system to a limited extent, and actions on IPR agreements will generally fall outside the scope of the UPC's exclusive competence. Independent actions concerning interpretation of licensing or transfer agreements must therefore still be brought before the national courts or submitted to arbitration.

However, this is not the same as saying that the UPC and the unitary patent will not affect both future and existing agreements concerning patents. The UPC and the unitary patent mean that existing agreements may have other consequences than originally intended, and the system raises some new questions which were not necessarily taken into account when the agreements were concluded.

How you and your business will be affected obviously depends on the type of agreement in question and whether, for example, you are the owner (or co-owner) of a European patent or whether you depend on patent rights owned by others (e.g. as a licensee). Below follows a brief description of the key points to bear in mind for the most common types of agreement.

The general advice is to identify the aspects that are central to your current legal position and then ask yourself whether they will be affected when the new system enters into force.

Some of the below restrictions may probably be bypassed by making the agreement subject to the laws of a country which is not a party to the UPC Agreement, while this will not be an option for other restrictions. This is an issue which must be determined on its merits in each case and be carefully considered for the individual contractual terms.

For licensing agreements it is important to point out that under the UPC Agreement, licensees will not be automatically entitled to issue patent enforcement proceedings. Under Danish law, such a right exists in the absence of an agreement to the contrary. In relation to the UPC, a distinction must be made between whether the licence is exclusive or non-exclusive. Non-exclusive licensees only have right of action if so agreed.

Exclusive licensees, on the other hand, have right of action, unless otherwise agreed.
As a licensee, it is therefore important to determine your rights in relation to the licensing agreement, especially if you are a non-exclusive licensee. In this connection, it should be noted that under the UPC Agreement, non-exclusive licensees' right of action must be expressly agreed.

In relation to licensing agreements, it is also important to bear in mind the opt-out scheme which applies to traditional European patents (read more about opt-out here). Only the patent holder may decide whether to opt out or not. If you are a licensee and would like to opt out, you will only be allowed to do so if expressly specified in the licensing agreement.

If, conversely, you are a patent holder and does not want to opt out of the UPC system, it is essential to determine whether your licensing agreements grant licensees the right to opt out.

In relation to licensing agreements, it is important to bear in mind that a partial opt-out is not available for European patents. Thus, if there are different licensees in different countries, they cannot be granted the right to opt out only with effect for their own countries.

Particularly licensees of a unitary patent should bear in mind the possibility of having the licensing agreement registered in the EPO's Register for Unitary Patent Protection. For exclusive licensees, this is important as the patent holder will then be precluded from submitting a statement in accordance with article 8 of the Unitary Patent Regulation that anyone may use the unitary patent as a licensee against appropriate consideration, see below concerning this option, which would obviously, however, be contrary to an exclusive licence.

In relation to a full assignment of rights (transfer of ownership), it should be noted that while Danish law does not attach any particular legal effects to the registration of a change of ownership with the Danish Patent and Trademark Office, the UPC system is based on a presumption that the party being the registered owner is in fact the owner. It is thus important to consider whether to register any change of ownership with the relevant national patent authorities and with the EPO:

For traditional European patents, a change of ownership is still registrable with the relevant national patent authorities.
For unitary patents, a change of ownership is registrable in the EPO's Register for Unitary Patent Protection. It should be noted that the Unitary Patent Regulation directly prohibits agreements concerning transfer of unitary patents being subject to registration of the change of ownership in the national patent registers.
For European patent applications, a change of ownership is registrable in the EPO Register.

The presumption of who is the owner of a European patent will be crucial to the right to bring an action before the UPC and the right to opt out of the UPC system.

For unitary patents, it is important to note that they may be transferred only with effect for all countries where they apply. Thus, it will not be possible to have an ownership structure with one owner in one country and one owner in another country, although this is possible for traditional European patents.

On the other hand, it will be possible to license the unitary patent to different licensees in different countries. This paves the way for an ownership structure where, for example, co-ownership may be coupled with a licensing agreement to ensure that each co-owner is granted a licence for their own country, so as to make the scenario resemble that of different owners in different countries.

With regard to unitary patents, it is also important to note that as far as issues relating to ownership are concerned, they are only subject to the laws of one country, typically the country where the patent applicant has its residence or principal place of business at the time when the patent application is filed with the EPO.

This will be particularly relevant in relation to mortgaging and similar agreements using patents as collateral, including in connection with floating charges. In those situations, it is far from certain that perfection and other requirements are subject to Danish law. Similarly, the relationship between different mortgagees will not necessarily be governed by Danish law.

As a creditor, you also cannot expect a unitary patent to be free and clear of any third party rights such as security rights, just because no rights have been registered in favour of such third party in the register of chattel mortgages in Denmark.

Instead, any issues arising between the parties (such as interpretation of the agreement, breach, termination for cause, etc.) will still be subject to the laws of the same country as the one to which the agreement is subject. The parties will typically have included specific provisions in this regard in the agreement.

For co-ownership agreements about European patents – and generally where there are more than one owner of a patent – it is important, as for licensing agreements, to clarify who may enforce the right. Under Danish law, such a right belongs to each owner in the absence of an agreement to the contrary. In the UPC system, however, the rules are not quite clear and it is therefore recommended to ensure that this matter is governed in the co-ownership agreement. This also applies to situations where a European patent is issued with different owners in the different countries where it applies.

In addition, it is important to note that all owners must agree before it is possible to opt out of the UPC system. Read more about opt-out.

For unitary patents, it should be noted that no co-ownership agreements may be concluded to have one or more owners for one country and one or more owners for other countries. It is possible to enter into co-ownership agreements concerning unitary patents, but the owners must be the same for all countries where the unitary patent applies.

However, a licence may be granted to different licensees in different countries where the unitary patent is applies.

According to Rule 8(4) and 8(5) of the UPC Rules of Procedure, there is a presumption that the person registered in a national patent register (for patents granted) or with the EPO (for applications or unitary patents) must be regarded as the rightful owner.

It would therefore generally be a good idea to consider whether to update registrations to reflect a change of ownership as incorrect registrations may confer legitimacy on an unauthorised person, see also above concerning transfer agreements in general.

The UPC system should be taken into consideration for agreements where the "fruits" of the agreement may consist in the development of patentable inventions. This would typically be the case for R&D and similar agreements. It may also be the case for non-disclosure agreements ("NDAs") where the parties sometimes agree that a party giving the other party access to specific material under the promise of confidentiality will also own any inventions resulting from the process.

For such agreements, it is generally important to specify who owns the invention. If the parties agree on co-ownership, it is further important to specify who, for example, will file the patent application and be in charge of the further process before the EPO, if relevant. Similarly, it should be specified whether a potential patent should be granted as a national patent, a European patent, or a unitary patent and whether to use the opt-out scheme for European patents and, if so, who will decide whether or not to opt out.

As such matters rarely lend themselves to detailed regulation before the invention has even been made, the parties should consider whether to provide for ongoing adjustment in their relationship to ensure that they will regularly discuss and adjust those matters to the necessary extent.

As a novel feature, article 8 of the Unitary Patent Regulation introduces the possibility of allowing the holder of a unitary patent to file a statement with the EPO to the effect that the holder is prepared to allow any person to use the unitary patent as a licensee against appropriate consideration.

Such a statement will be recorded in the Register for Unitary Patent Protection and will entitle the patent holder to a 15% discount on renewal fees for the patent in question. The statement may be withdrawn at any time and cannot be registered if an exclusive licence has already been recorded in the Register for Unitary Patent Protection.

If the parties disagree on the amount that would constitute appropriate consideration, the UPC will have exclusive competence to decide the question.