LSPN Spring: ‘Fascinating’ UPC is a ‘wake-up call’ for US lawyers

10x Genomics injunction showed the need to take the court ‘really seriously’ says US lawyer | With a focus on efficiency and plaintiff-friendly measures, the UPC's impact on patent valuations and litigation strategies is becoming increasingly apparent, at LSPN Spring.

The Unified Patent Court (UPC) is causing a stir among US lawyers as early decisions hint at significant changes to come.

Charles Larsen, partner at McDermott Will & Emery, urged his fellow legal professionals to pay attention to the emerging case law in the court at LSPN North America Spring on May 8, 2024.

"There's some fascinating stuff going on in the UPC. It's probably the greatest change of scene for our practices in years,” explained Larsen at the Boston event.

Larsen, who works with a team spanning the US, Germany, and France, emphasised the importance of understanding the UPC's implications for US lawyers.

One of the highlights of Larsen's presentation was a deep dive into the early decisions on preliminary measures at the UPC.

These ex parte measures left defendants unable to defend themselves if they hadn't taken protective measures.

As a result, Larsen cautioned that when thinking about launching a product, rights owners have to be “ready to go” as an ex parte decision can happen to anyone.

A warning of the UPC’s efficiency

He went on to discuss the significance of preliminary injunctions in the UPC, citing cases like the 10x Genomics v NanoString, where the preliminary injunction led to a 13% stock drop and eventually bankruptcy for NanoString—despite the Court of Appeals overturning the decision.

"This is a pretty powerful tool that's never been available in Europe before," Larsen noted. “So you have to take this really seriously.”

The UPC is built for plaintiffs, suggested Larsen. "Its decisions are by and large good for plaintiffs so far,” he said, while highlighting the court’s efficiency.

“They're serious about the timing and series about the procedure,” noted Larsen, comparing the court to an “even more streamlined” International Trade Commission (ITC).

Larsen advised to “be ready, because if you're going to bring a case, you have to get it ready up front”, as there is no opportunity to bring in new evidence later.

The court wants to see protective letters

Larsen compared the court’s protective letters system to US opinions.

These letters involve seeking counsel's opinion on patent infringement and validity and are used to protect against preliminary injunctions by demonstrating a good faith belief in the invalidity of a patent, he explained.

The court keeps these opinions confidential until needed, providing a way to bolster against potential injunctions.

“The courts are signalling that they want to see them,” said Larsen.

However, some earlier cases lacked thorough analysis, focusing only on non-infringement without considering validity.

Doing a proper analysis can make these letters a powerful tool and “could be the difference between you waking up in the morning and having your hat handed to you by a court versus being able to keep your product on the market.”

The UPC is intended to be used

Larsen concluded his presentation by discussing the implications of the early UPC decisions for US lawyers.

He suggested: “This court is intended to be used and its aim is not to just be part of the global strategy but to be the place you bring the best cases and fight them out.”

In 2012, litigators criticised the Patent Trial and Appeal Board (PTAB) as a "kangaroo court" and believed that district courts were the only reliable venues for determining patent validity, he recalled.

However, over time, attitudes have changed, and the PTAB has become a significant venue for challenging patents.

Larsen compared the PTAB to the UPC, highlighting the value of European patents is increasing, making them more valuable assets.

The UPC is where the “big action” in patent matters is now taking place and European patents are becoming more significant in portfolio valuation discussions.

UPC's impact on patent valuations

Additionally, the US is seeing substantial damage awards in patent cases, particularly in life sciences.

The rise of litigation financing is also allowing smaller companies to engage in patent litigation in the UPC.

All of these factors are putting upward pressure on patent valuations.

When acquiring or licensing patents, it's crucial to thoroughly evaluate the scope and strength of European patents, advised Larsen.

Protective measures such as injunctions and protective letters are becoming more relevant, so ensuring that your European patent portfolio is robust and ready for enforcement in the UPC is essential.

This includes considering ownership and enforcement rights, prosecution, opt-out control, and ensuring that your agreements provide the necessary rights and protections. Conducting freedom-to-operate studies in Europe is also essential to ensure that your European patents are ready for any potential challenges.

Concluding his presentation, Larsen encouraged his fellow US lawyers to pay close attention to the developments in the UPC, as they are likely to have significant implications for their practices.

LSPN Spring runs from May 8-9 at the Sheraton Boston in Boston, Massachusetts.

This year marks the event's sixth annual event and covers everything from patentability to eligibility, prosecution to litigation, the agenda will provide valuable insights into the entire lifecycle of US patent protection.

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