UPC Arbitration and the Resolution of Patent Disputes

23/01/24
UPC Arbitration and the Resolution of Patent Disputes

What is the Patent Mediation and Arbitration Centre created by the Agreement on a Unified Patent Court?

 

On 1 June 2023, the long-awaited Unified Patent Court (the “UPC”) opened its doors to address disputes relating to European and Unitary Patents. Disputes will be settled not only by the UPC itself, but also by arbitration when parties opted for it, either in their contract or subsequently when their dispute arose. The Agreement on a Unified Patent Court (the “UPCA”) has indeed created a Patent Mediation and Arbitration Centre (the “Centre”), seated both in Lisbon and Ljubljana (Article 35.2 of the UPCA). The Centre forms part of the UPC but operates independently (Article 2 of the Rules of Operation of the Mediation and Arbitration Centre released on 8 July 2022). The Centre will promote arbitration (and mediation) by providing institutional support and facilities to conduct proceedings.

 

What are the powers of arbitral tribunals with respect to patent disputes? Can arbitral tribunals invalidate patents?

 

The UPCA confers a broad jurisdiction to arbitral tribunals acting under the auspices of the Centre. Arbitral jurisdiction extends to all patent disputes falling within the scope of the UPCA, to the exclusion of disputes concerning the annulment or limitation of patents (Article 35.2 of the UPCA).

The arbitrability of patent disputes has indeed been acknowledged in most jurisdictions subject to one limitation: the lack of powers of arbitrators to cancel patents, in part or in all, with an erga omnes effect i.e., an effect binding on third parties (for instance in Germany or in France. On the contrary, in Switzerland, arbitral tribunals can directly address the validity of patents).

Arbitrators have, however, agreed to address incidentally the validity and scope of patents in contractual disputes (for instance, in France, Paris Court of Appeal, 28 February 2008, no. 05/10577; in Germany, Higher Regional Court of Munich, 25 May 2021, case no. 21 O8717/20). In such a case, the decision on the validity of the patent is binding only between the parties to the arbitration. Third parties remain free to challenge the validity of the patent before the courts having jurisdiction.

In contrast with the broad powers conferred to arbitrators, Article 32 of the UPCA limits the the jurisdiction of the UPC, excluding, for instance, disputes relating to the property of Unified Patents.

 

What are the (numerous) advantages of arbitration to resolve patent disputes?

 

The main advantage of an arbitral award compared with a court judgment is that it will generally be quicker and easier to enforce internationally. This is made possible by the New York Convention on the Enforcement and Recognition of Foreign Arbitral Awards of 10 June 1958. The Convention was ratified by not less than 172 states (the “New York Convention”).

Both UPC judgments and UPC arbitral awards benefit from the provisions of Article 82 of the UPCA and are “enforceable in any Contracting Member State”. If UPC judgments are enforceable in all EU Member States under Regulation no. 542/2014, UPC arbitral awards also enjoy a facilitated enforcement in all the 172 states party to the New York Convention.

Another important advantage of arbitration is that parties can provide for the confidentiality of the proceedings. When highly innovative technology is at stake, such an advantage can prove essential.

A third advantage of arbitration is that it enables parties to choose their arbitrators meaning that they can select professionals with the backgrounds and experience fitted to the particulars of their patent dispute. To assist parties in their choice, the Centre will “draw up a list of mediators and arbitrators to assist the parties in the settlement of their dispute” (AUPC, Article 35.4 and Rules of Operation, Article 14).

Finally, the Centre also provides mediation services which will enable the amicable resolution of sometimes highly technical patent disputes.

 

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