Eight Practical Tips for Effective Use of Protective Letters in the UPC

Just as in Germany, the Netherlands, and Belgium, the UPC allows for the filing of protective letters. Here are eight key tips to consider for leveraging this strategic tool effectively.

1. Understand the Purpose of a Protective Letter

According to the Rules of Procedure, protective letters can be filed as a pre-emptive defence against any application for provisional measures. However, the primary aim of a protective letter is to prevent provisional measures being ordered without the defendant being heard, in other words, to guard against ex parte provisional measures.

Rule 212 states: “The Court may order provisional measures without the defendant having been heard, particularly where any delay is likely to cause irreparable harm to the applicant or where there is a demonstrable risk of evidence being destroyed.” While this rule is not limited to cases of irreparable harm and risk of evidence destruction, these are the classic justifications for ex parte measures. Thus, the primary goal of a protective letter should be to convince the Court that there is in fact sufficient time for the case to be heard inter partes without causing irreparable harm or that there is no risk of evidence being destroyed.

When arguing that there is sufficient time for the case to be heard inter partes, it may be worth noting that a UPC Representative is available on behalf of the defendant for an inter partes hearing at any day and at any time, even via a video or phone call.

The foregoing does not mean that you cannot or should not also argue that the invoked patent is invalid, not infringed, or other points such as lack of competence. However, unless these are particularly strong arguments, it may often be challenging to convince the Court to reject the requested ex parte measures based solely on such arguments, especially in the case of an application to preserve evidence, which, while intrusive, is simply aimed at securing evidence.  Therefore, the defendant must do both: argue that there is sufficient time for the case to be heard inter partes or that there is no risk of evidence destruction and demonstrate that you have a substantive case.

In this respect it may also be noteworthy that the R.202(2)(e) specifically requires the defendant to give information about any prior or pending proceedings relating to the patent concerned. If there are such proceedings, it is generally an important indication that the applicant could have requested provisional measures earlier and that there is a serious substantive dispute between the parties.

The secondary goal of a protective letter is to limit the impact of any measures in case they would be granted ex parte. For instance, in the case of an injunction, the defendant might argue for a high security requirement, and for evidence seizure, that its scope should be limited and conducted in a way that minimally impacts business operations. For example, by explaining that in a multinational, IT systems are often designed so that downloading large amounts of data by a bailiff is virtually impossible, or automatically blocked, to prevent malicious parties who might gain access to the systems from easily stealing large amounts of data. Or by explaining that certain obvious search terms, if used so frequently, make it pointless to use them to search entire IT systems without combining them with other terms.

2. File Nationally Too

Do not forget that during the transitional period of 7 years, there is dual jurisdiction for European Patents that have not been opted out, meaning both the UPC and national courts are competent to hear cases. Therefore, where possible, you should also file your protective letter with relevant national courts. The content will not differ much, and if costs are an issue, a machine translation can be easily produced. In the Netherlands, you might even be able to file the letter in English as an attachment with a short cover letter in Dutch.

Additionally, note that ex parte measures can have a cross-border effect. In other words, if an alleged infringement occurs only in Germany, it may still make sense to file a protective letter in the Netherlands due to possible application to preserve evidence if entities from the same group are located there. Through these entities, evidence could also be collected to support an alleged infringement in Germany by affiliated companies.

3. The Protective Letter Could Reach the Applicant

Once a defendant files a protective letter, it gets registered with the Registry, but is not disclosed to the parties the defendant has indicated might file an application for provisional measures. However, once an application for provisional measures is made, under Rule 208 the Registry must forward a copy of the protective letter to the panel or judge appointed along with the application for provisional measures, and to the applicant as soon as practicable. This means the applicant will also receive a copy of the defendant’s protective letter. This could lead the applicant, given the strength of the defensive arguments in the protective letter, to withdraw the application for provisional measures and prevent the defendant from becoming aware of it. However, the defendant should also realize it could also result in the applicant / patentee later using statements from the protective letter against them. A protective letter may sometimes need to be drafted under pressure, potentially leading to poorly formulated arguments that could haunt a defendant later in the dispute if they need to amend these arguments.

In this context it may also be practical to outline the entire procedure by which the Court handles a protective letter. If, upon reviewing the protective letter, the Court determines that the ex parte application should not proceed without further consideration of the protective letter, it will issue a preliminary order to the applicant alone. This order informs the applicant of the Court’s intention to notify the defendant about the application. At that moment, the applicant is presented with the opportunity to withdraw the application and may request that the proceedings remain confidential. Should the applicant decide against withdrawal, the Court will then issue a subsequent order that the application be forwarded to the defendant, thereby inviting the defendant to lodge an Objection as per R.209.1(a). Following this, the Court will most likely call both parties to an oral hearing according to R.209.1(b), although it retains the discretion to decide on the now inter-partes application without such a hearing.

If the Court finds the protective letter unconvincing, it may opt to proceed by summoning only the applicant to an oral hearing, leaving the defendant uninformed of this development, thus continuing the process on an ex parte basis as outlined in R.209.1(c).

Finally, for the sake of completeness, it is noted that the Court after reviewing the application and protective letter denies the application without further ado, although such a scenario is rather unlikely to occur.

4. It Can Work Against the Defendant

Be aware that a weak protective letter can even work against a defendant. This was evident in the proceedings before the Local Division of Düsseldorf (action no. UPC_CFI_177/2023) between myStromer AG and Revolt Zycling AG. In this case, the applicant argued the urgency of their application based on the contested embodiment, a bike, being exhibited at the “Eurobike 2023” trade fair. The defendant’s protective letter, which argued exhaustion and denied infringement, was deemed weak by the Local Division. It therefore granted the application ex parte, noting the defendant had not significantly contested the infringement or the validity of the patent in their protective letter.

5. Filing for Patents That Are Opted Out

A defendant can also file protective letters for European Patents that have been opted out. As the patentee can simply withdraw their opt-out, making the UPC competent again. This was also confirmed in the proceedings between  SES-imagotag SA against Hanshow Technology (action no. UPC_CFI_292/2023)). The protective letter had been filed on 10 August 2023 when the opt-out was still in force, which was only later withdrawn by the patent holder on 29 August 2023

6. Costs of a Protective Letter May Be Reimbursed

The SES-imagotag case also shows that the costs of a protective letter may be reimbursed. The Court dismissed the application for provisional measures due to insufficient certainty of infringement and ordered the applicant to pay the costs of the legal proceedings and other costs incurred by the defendants, including the cost of lodging the protective letter. This case illustrates the potential for protective letters to not only influence the outcome of proceedings but also impact the allocation of costs. The Court of Appeal of Luxembourg upheld this order, reinforcing the significance of protective letters in the proceedings.

7. Protective Letters Are Temporary

Remember that protective letters are a temporary safeguard. They expire after six months, but their effectiveness can be extended for another six months upon payment of an additional fee. Further extensions also require additional payments. It’s wise to consider updating or improving a protective letter not just at the time of extension, but potentially earlier. Given that some letters are drafted and filed under significant time pressure, reassessing a submission proactively—rather than waiting until the renewal period—can ensure that a protective letter is the strongest representation of the defendant’s case. This is particularly important in the context of international disputes, where new developments abroad might necessitate informing the UPC sooner rather than later.

8. Ensure Broad Coverage of Parties and Patents

To maximize the likelihood of a protective letter being recognized and considered, it’s essential to draft it with a wide scope. This means not just encompassing the immediate applicant for provisional measures but most importantly also any related entities that could be filing for measures (e.g. based on a license). Although less critical, the same applies to the entities that need to be protected by the protective letter. It is also worthwhile to identify all entities within the group which may be the subject of an application for provisional measures. This usually requires a minor effort, but it’s advisable to err on the side of including too many entities rather than too few. Additionally, include all relevant patent numbers to ensure comprehensive protection. In doing so, also pay attention to divisionals that could be granted in the foreseeable future. The Rules of Procedure do not require the defendant to include all this information, but it does perform a check on all of this information. It is thus safe and sensible to include it.

Conclusion

These eight points, supported by recent case examples, underscore the importance of protective letters in UPC proceedings. By understanding their purpose, considering dual jurisdiction, and recognizing the potential impacts on case outcomes and costs, lawyers can more effectively use protective letters to defend their clients’ interests in the complex landscape of UPC litigation.