IP Insights: Prior use rights at the UPC

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Today, Michael Kobler and I will discuss the “Right based on prior use to an invention” in Article 28 of the UPCA. Such prior use right can give the defendant an important defense tool in patent infringement proceedings. Before we go into some detail, Michael, could you summarize the purpose of such prior use right?

Sure, the purpose of the prior use right is to compensate for deficits of the so-called “first-to-file principle”. This principle means that the first person to file a patent application for an invention is entitled to the patent rights – not the first person who makes the invention first. While this provides for a high degree of legal certainty, it can also lead to an unjust situation where a person who was already in possession of the invention at the application date, but decided not to file a patent application, is attacked for patent infringement. So, let us have a look at the UPC Agreement now: What does Art. 28 of the UPCA say?

Art. 28 UPCA provides for a dynamic reference to the applicable national provisions. This means that there is no pan-European prior use right. So, each member state has its own prior use right with effect only within the territory of the respective UPCA member state. As the UPC will have to apply these different national provisions on the respective prior use rights, it will play an active role in harmonizing these different principles and concepts. Now, turning to the prerequisites of these national provisions: What are the overarching principles according to your experience?

I see three main prerequisites which the defendant has to substantiate and prove: First, the prior user must be in possession of the invention. Which means, objectively, the invention must exist, for example in product descriptions or technical drawings and, subjectively, it must be recognized as an inventive idea. Possession also means that the invention is executed on an industrial scale in general. However, certain preparatory acts may be sufficient if the prior user can show that they were determined to start commercially exploiting the invention very soon. Second, the prior user themselves, and not a third party, must be in possession of the invention and exploit the invention. In other words, in most member states, such as Germany and France, the prior use right cannot be transferred or assigned individually, but only together with the business unit for which it was established. Third, and this is certainly the vaguest prerequisite, the prior user must act honestly and fairly. Dominik, what are the main legal effects of the various national prior use rights?

Well, above all, the prior user cannot be attacked for patent infringement because the acts become lawful in relation to the patent proprietor. However, this legal benefit only extends to the territory of the respective UPCA member states. For other member states, the defendant should substantiate the relevant prior use rights based on the relevant national provisions which apply in the respective UPCA member states. Once the different national prior use rights are harmonized, this could lead to same results for all UPCA member states if the defendant is able to substantiate the relevant prior use rights for these UPCA member states. Plaintiffs, on the other hand, may want to carve out those UPCA member states from their complaint for which they believe the defendant could be able to substantiate prior use rights. As of today, in many member states, the scope of the relevant prior use right must be defined autonomously. For example, the scope of the German prior use right does not extend generally to further developments if such further developments go beyond the initial prior use and intervene with the invention. In this respect, in Germany, quite sophisticated case law applies which needs to be assessed carefully.

What about third parties, particularly customers? Can they benefit from the prior use right?

In Germany, this is not excluded based on the principle of “de facto exhaustion”. However, this will be certainly one aspect which will be harmonized by the UPC over time.