Protective Letters and the UPC: Mitigating Risks and Safeguarding Business Interests in the New European Patent System

The introduction of the new unitary patent and Unified Patent Court will significantly affect the freedom to operate of many doing business in Europe. The increased geographical coverage of the unitary patent means that more European patents will be in force in essentially all of the countries that are participating in the new system. The convenience of central enforcement of European patents at the UPC increases the risk associated with infringing third party rights.

One aspect of this risk arises from the provisional and protective measures offered by the UPC. The main purpose of these provisional and protective measures is to prevent harm to the patent holder as a result of ongoing or imminent infringement of their patent, or to provide safeguards for any monetary claims that may be awarded against the alleged infringer. They include:

• preliminary injunctions, which may be used to prevent or prohibit alleged infringement,
• seizure of products suspected of infringing a patent to prevent their entry into the market,
• seizure of assets of an alleged infringer, including blocking of bank accounts, and
• freezing orders, where the court orders an alleged infringer not to deal in specific assets, whether or not those assets are located in the UPC’s jurisdiction.

All of these provisional and protective measures related to alleged or suspected infringement of a patent. They may be applied for and granted before an infringement action on the merits has been filed or decided by the court. Moreover, they can be granted by the court without the alleged infringer’s involvement.

The grant of any provisional or protective measures to the patent holder can be appealed by the alleged infringer, and, for example, if the patent is found to be not infringed, the court may order to the patent holder to compensate the alleged infringer for damage suffered as a result of the provision or protective measures. However, the mere grant of any of these provisional or protective measures will be incredibly disruptive to their business even if eventually overturned.

The risk of provisional or protective measures being ordered against you, as a potential alleged infringer of a third party’s patent, can be reduced by filing a protective letter with the UPC. A protective letter is filed in respect of a specific patent that falls within the UPC’s jurisdiction. It sets outs a challenge to any facts expected to be relied upon by the patent holder, the reasons why a possible application for provisional measures should be rejected, and may also include an assertion that the patent is invalid along with grounds for that assertion.

A protective letter remains secret until the patent holder brings an application for provisional measures before the UPC. Therefore, filing a protective letter does not in itself risk putting you in the patent holder’s crosshairs.

If or when the patent holder brings an application for provisional measures against you, the UPC rules of procedure explicitly state that the court will in particular consider summoning all parties to an oral hearing on the application for provisional measures where a protective letter has been filed. This is not a cast-iron guarantee that a protective letter will prevent provisional measures being ordered against you, but it is the most effective way within your control to minimise the risk.

Furthermore, given that the court’s discretion to order provisional measures without hearing the alleged infringer depends on the presumed validity of the patent, i.e. whether the patent has been upheld following an EPO opposition or before any other court, any prima facie reasonable arguments against the validity of the patent provided in a protective letter are likely to further reduce the risk of provisional measures being ordered without the alleged infringer’s involvement.

The official fee for filing a protective letter is low – only 200 € – and it remains on file for six months. If no application for provisional measures is brought within those six months, the protective letter can be extended for six months with payment of an extension fee of 100 €. Further extensions can be obtained with further payments of the 100 € fee.

Finally, most of the information, arguments and evidence required to prepare a protective letter are already obtained during a freedom to operate (FTO) exercise. Where the FTO is prepared based on a specific patent (or patents), or where a specific patent is identified as part of a broader FTO analysis, it is always prudent to determine the risk of infringement and to consider possible non-infringement and invalidity defences. The evidence and arguments produced for non-infringement and invalidity arguments in the FTO are precisely what is required for the protective letter.

Taking all of the above into account, it seems that the filing of protective letters with the UPC will become a regular part of FTO exercises in Europe. The additional cost for preparing, filing and maintaining a protective letter are trivial compared to the potential damage caused by provisional or protective measures, so any way to reduce the risk of such measures being ordered seems worthwhile, even if cases where the application for such measures may seem unlikely.

For more information about the UPC, how to use it to your advantage and avoid being taken advantage of, get in touch with your usual Berggren contact, or get in touch with the author, Michael Nielsen, directly.

This blog article was originally published on Lexology in July 2023.