THE European Patent Office (EPO) still hasn't issued a statement about the UK's position on UPC. It has been almost a month! António Campinos spoke about this to IAM and in some Managing IP event, but his words aren't the official statement; they're rambles full of lies and inaccuracies, as we noted early in the month. His master won't be happy; no UPC job would likely mean retirement (still, better than prison).
The UK government has just now made it clear that the UK will not be taking part in the Unified Patent Court (UPC) or Unitary Patent (UP) system. This is a volte face on its previously publicised position, but comes as no great surprise. The UK ratified the UPC Agreement in April 2018 under Theresa May's government, a commitment that would mean the UK would continue to be subject to some EU law and the jurisdiction of the Court of Justice of the European Union (CJEU), if participation were to continue post-Brexit. However, the current Government confirmed last week that the UK will not be taking part in the UPC or UP in any form, perhaps reflecting its desire to avoid ceding power in any sphere, no matter how limited, to the CJEU.
What does this mean for the future of the UP/UPC?
Plans to implement the combined package of the UP and the UPC systems have been stalled for some time. A constitutional challenge to the UPC Agreement in Germany has held up its implementation, because the UPC Agreement must be passed by the three biggest countries in patent number (Germany, France and the UK), before the UPC can be introduced. The UP will also not be introduced until the UPC is up and running.
The UK government has confirmed that, post-Brexit, the UK will not be part of the Unified Patent Court (UPC) or Unitary Patent (UP) system.
BACKGROUND
Currently, after the grant of a European patent, it becomes what is essentially a ‘bundle of national patents’. Obtaining these national patents is subject to varying translation requirements to validate the European patent in each of the European states of interest, and maintaining the separate patents requires paying separate renewal fees in each country. Patent infringement and revocation proceedings are also conducted at the national level, which sometimes leads to multiple lawsuits regarding the same European patent in different countries, and which sometimes leads to different results.
The proposed UP sought to replace the current system with a single patent right, removing the need for separate post-grant validation. It promised significant savings in translation costs and renewal fees, especially for patent holders who choose to validate in more than a handful of countries. The UP was to be governed by a uniform patent court litigation system, the UPC, which would issue a single court ruling that would then be applicable in all of the EU countries. The idea of the UPC was to harmonise EU law and avoid a patentee having to litigate the same European patent in multiple EU territories.
The UK Government has confirmed the UK will no longer seek to be part of the proposed unitary patent (UP) or Unified Patent Court (UPC) systems. Given the UPC's alignment with the CJEU, this is not entirely surprising for the UK in a post-Brexit world.
Although it will be unwelcome news for many, the certainty of this new stance may mean the UP and UPC can again pick up momentum, subject to the ongoing legal challenge in Germany and re-working of the agreements without the UK's participation.
Should the UP and UPC agreements be ratified as per the current proposals, UK business will still be able to use the Unified Patent Court and unitary patent to protect their inventions within the contracting EU countries. However, in the UK, businesses will only have the option of protecting their inventions using national patents (including patents available from the non-EU European Patent Office) and UK courts.
UK business will still be open to litigation within the Unified Patent Court based on actions they undertake within the contracting EU countries if they infringe existing rights.
I must confess to being a little perplexed by some of the oral evidence given to the EU Justice Sub-Committee on 10 March.
I can understand that the UK legal profession does not want to lose the influence (and, let’s be honest, the income) that it might gain by the UK’s participation in the UPC. I can also understand that the UK legal profession might not want to lose the opportunity for UK legal traditions to influence the development of case law of a potential UPC. What I struggle to understand, however, are all of the other arguments advanced for the UK’s continued participation in the UPC.
The suggestion from Mr Alexander that SMEs will somehow lose out is, frankly, not supported by the evidence. To the contrary, the fees and rules of procedure of the UPC appear to be specifically designed NOT to be “SME-friendly”.
However, more troubling than this is Mr Alexander’s suggestion that the UK’s participation in the UPC would only require the UK to sign up to a tiny amount of EU law. Unless I have missed something, this is pure conjecture that really should not have been presented as if it were an accepted fact.
Even the superficial (masquerading as “in-depth”) analysis commissioned by the EU parliament’s JURI committee spotted that there is no tried-and-tested legal mechanism that can be invoked to facilitate the UK’s continued participation in the UPC: “Maintaining the UK within the UPCA would need innovative legal solutions, as the UPC is an international court applying EU law – and the reason for Brexit was all about not applying EU law any more.”
In other words, nobody knows what it will take to persuade the CJEU to accept the participation of a non-EU Member State in a court that applies EU law. Indeed, based upon Opinion 1/09, it appears that the CJEU would most likely view such participation as being a total non-starter.
I must also beg to differ with the suggestion that the CJEU would likely only have a relatively limited role in resolving disputes before the UPC.
Firstly, the CJEU might need to answer fundamental questions relating to the UPC itself… such as whether the UPC Agreement is compatible with EU law, or whether the set-up of the court means that it is NOT a court common to EU Member States (and so is not able to make preliminary references to the CJEU).
Secondly, the CJEU would be responsible for interpreting provisions such as Article 5(3) of Regulation 1257/2012. That is, they would need to make sense of a provision that, as confirmed by the CJEU in C-146/13, applies NATIONAL law(s) of infringement to cases involving unitary patents. This will not be straightforward, not least because of difficulties in determining how to resolve apparent conflicts between different (national and/or international) laws in the country whose laws are to be applied.
Finally, even if and when those fundamental questions are resolved, the CJEU might then need to consider other tricky questions, such as whether the UPC would be competent to handle SPC disputes in respect of the UK … bearing in mind that, from 2021 onwards, laws governing SPCs and marketing authorizations in the UK will diverge from corresponding EU laws.
I do not exclude the possibility that all of the legal issues outlined above can be resolved in a manner that permits the UK’s (post-2020) participation in the UPC. It is just that I cannot identify, nor have I ever seen or heard, any persuasive legal arguments that would make me confident of such an outcome.
Against this background, the decision of the UK government not to seek to participate in the UPC appears to me to be perfectly consistent with the UK’s red lines with respect to EU law and the CJEU. I therefore suspect that no amount of lobbying from the legal profession will change that decision. Indeed, it is possible that continuing lobbying efforts on the UPC now could backfire in the long term. Thus, much as the UK legal profession seems to be in the early stages of grief with respect to the UPC (mostly denial, but also anger, bargaining and depression), I think that it is perhaps time to start moving towards acceptance.
Patent-eligibility of software is not covered by any EU law so fortunately it would not be possible to have any CJEU judgments or referrals on that.
Daniel Alexander was referring specifically to the Biotech directive 98/44/EC not to patent eligibility generally. That directive may be complex but it is definitely niche. I would think that by IPC code, it could only theoretically be applied to a very tiny percentage of patents. It has been in force for 22 years (during which there will have been many thousands of patent cases) with barely any CJEU referrals -the Brustle case (stem cells), clarification of Brustle and Monsanto (non extracted DNA).
The UK parliament’s House of Lords EU Justice Sub-Committee has reported today here that its Chair, Lord Morris of Aberavon, has written to the IP Minister, Amanda Solloway, asking whether she can confirm recent media reports that the “UK will not be seeking involvement” in the Unified Patent Court (UPC) and unitary patent. The letter was written yesterday, following the Sub-Committee’s meeting in the morning – see House of Lords committee examines effect of UK not participating in UPC. The Sub-Committee notes that the government has not yet made an official statement on its position.
Tensions between the EU’s legal order and the international investment law regime are not exclusive to the Brexit era, but they certainly gained momentum in the aftermath of this referendum. By incautiously declaring that the UK will remain a party to the Unified Patent System regardless of Brexit, the British government arguably shaped (il)legitimate expectations on the part of investors who aimed at exploiting their intellectual property rights in the UK while benefitting from the judicial protection of the forthcoming Unified Patent Court as much as of the European institutions (and market) as a whole. Indeed, not only the System itself will undergo a process of major rebalancing after London’s departure from the EU, but more importantly, the UK will most probably be unable to retain its membership in the System after the actual delivery of Brexit. These complications trigger a wide spectrum of fundamental dilemmas investing the definition and scope of concepts such as unilateral declaration, indirect expropriation, reasonable expectation, estoppel, and public policy exception, under both EU law and international investment law. It is therefore essential to explore these intersections as to anticipate possible scenarios in the event of both domestic court and international arbitral claims lodged by patent investors pre- and post-Brexit, having due regard for competition concerns on the side of the EU, yet referring to recent Canadian case law which opened the gate to investor-State claims in the field of intellectual property.