THERESA May may indeed have just killed the UPC, based on her historic speech which was delivered earlier this week. We already published a couple of articles about it and this one person drew our attention to a a new article by Peter Leung from Bloomberg BNA. "U.K.’s ‘Hard Brexit’ Plans May Undermine Patent Court" says the headline and here is the opening part with a succinct explanation:
The U.K.’s plan to join the proposed Europe-wide patent court could run into conflict with Prime Minister Theresa May’s desire to leave the jurisdiction of the European Union’s highest court.
May’s Jan. 17 speech promised to “bring an end to the jurisdiction of the European Court of Justice in Britain.”
However, decisions by the Court of Justice of the EU (CJEU) will be binding on the Unified Patent Court (UPC).
May’s speech highlights the fact that the fate of the UPC is closely intertwined with the complex negotiations over the U.K.’s withdrawal from the EU.
In November, the U.K. announced that it would ratify the UPC agreement even though it will leave the EU. The new patent court is expected to start operations in 2017 and will have jurisdiction over a new unified patent right to have effect in most of Europe.
“The decision to proceed with ratification should not be seen as pre-empting the U.K.’s objectives or position in the forthcoming negotiations with the EU,” the U.K. Intellectual Property Office told Bloomberg BNA in an emailed statement.
TM has now ruled out the CJEU having "direct" legal authority in the UK. Does this mean that the unitary patent project has just been killed (despite the UK, rather bizarrely, having previously indicated its willingness to proceed)?
And if not dead, is the UPP mortally wounded? It is now crystal-clear that the UK will no longer be an EU Member State, most likely by 2019. But the current wording of the UPC Agreement and the UP Regulations rather heavily rely upon all "Participating" Member States being EU Members. This affects pretty much every founding principle of the UPP, including issues such as unitary effect / character, legal personality of the UPC and scope / enforcement of decisions of the UPC... and there are no signs yet of any plans to "fix" those problems.
Based upon current signs, it seems that the political will is to press on regardless. But placing such a huge gamble on the system being able to survive Brexit seems absurd. The UK may feel that it will gain influence by getting the UPC up and running before Brexit... but it will then become a hostage to fortune with regard to the inevitable challenge at the CJEU, alleging non-compliance of the UPP with EU law. At that point, the UK will have no representation at the CJEU. So what will the UK then do if the EU Member States decide to kick out the non-EU country in order to preserve the system?
Darren: I have an off-the-wall question for you. Can a "unitary" European Patent have unitary effect in a "Participating Member State" (PMS) that has not ratified the UPCA?
I had always presumed that the answer is a clear "no". However, the rather loose wording used in Reg. 1257/2012 has given me pause for thought. Let me explain why.
Art. 2(a) of Reg. 1257/2012 defines a "PMS" essentially as an EU MS that participates in Enhanced Cooperation under Decision 2011/167/EU (or subsequent decision) in connection with unitary patents. That definition of PMSs clearly includes countries that have not ratified the UPCA.
So this begs the question of whether Reg. 1257/2012 limits the unitary effect of an EPUE to only certain PMSs.
Art. 5(2) is one example of a provision of Reg. 1257/2012 that refers to PMSs in which an EPUE has unitary effect. This of course implies that there can be PMSs in which the EPUE does not have unitary effect... a concept that is confirmed by the 2nd paragraph of Art. 18(2).
However, what is meant in Art. 18(2) by "participating Member States in which the Unified Patent Court has exclusive jurisdiction with regard to European patents with unitary effect"? The UPCA does not talk about "exclusive jurisdiction", but rather "exclusive competence". Further, the "exclusive competence", as defined in Art. 32 UPCA does not have any geographical limits. (The opposite is true for the territorial scope of the decisions of the UPC, as defined by Art. 34 UPCA... but the question of where a decision has effect is completely separate from the question of where a patent has effect.)
Of course, this is where Art. 17(2) or Art. 18(5) of Reg. 1257/2012 could help. Those provisions require PMSs to update the Commission with progress made in updating national laws to ensure no "double" (unitary / national) protection. That is, those countries that do not notify the Commission under Art. 17(2) or 18(5) might be deemed to be PMSs in which there can be no unitary effect.
However, it seems absurd to interpret the territorial effect of an EU Regulation (which, of course, has direct effect regardless of national implementation) by reference to actions taken, or not taken, under national law.
Indeed, if ratification of the UPCA were a prerequisite to an EPUE having unitary effect in a PMS, then why does Reg. 1257/2012 not explicitly say so? After all, ratification progress is mentioned in Art. 18(3)... but with no apparent connection to Art. 18(2).
Also, what are we to make of the mis-match between "exclusive jurisdiction" in Reg. 1257/2012 and "exclusive competence" in the UPCA (bearing in mind the small areas of retained competence of the national courts, as well as the shared competence during the transitional period)?
If we can answer all of the above points, then I suspect that the answer to your original question will also emerge. Indeed, there will likely be a way found for the UPC and national courts to clearly distinguish between EPC Contracting States that are "ratified" PMSs, "non-ratified" PMSs, non-PMS EU MSs and non-EU MSs. But whether that distinction will survive Brexit is another question entirely...