European Union: Brexit May Stall Implementation Of EU's New Unitary Patent And Patent Court Systems

Last Updated: July 25 2016
Article by Jeung Huh

New unified patent grant and patent court systems, which were to have taken effect in early 2017, will likely be stalled because of Britain's June vote to leave the EU, commentators and member nations fear.

BACKGROUND – THE CURRENT EUROPEAN PATENT AND COURT SYSTEMS

The current EU patent grant system requires separate filings in each member state. Under the current system, an applicant files an application at the European Patent Office. Once the EPO grants a patent, the applicant must go through a verification process in the patent office of each country in which the applicant wishes to receive patent protection. Each verification process may require separate translations, separate validation processes and separate annual renewal fees. Until the applicant receives a patent from a national patent office, the applicant does not have protection in that jurisdiction.

The current patent court system is similarly duplicative. A litigant must file actions in each country, and a court decision from one country has no effect in other countries. As a result, the current system may create multiple and parallel litigations involving the same patent in different jurisdictions. The numerous litigations increase overall litigation costs and can lead to divergent court decisions regarding the same patent.

THE NEW UNITARY PATENT AND THE UNIFIED PATENT COURT SYSTEM

The new unitary patent system replaces the current cumbersome European patent system with a one-step process. With the unitary system, an applicant files an application at the European Patent Office. Once the EPO grants a unitary patent, the applicant can receive immediate protections in the participating member states by filing a formal request with the EPO within one month after the grant of the unitary patent1. No further filings with individual member states are required, thus eliminating the need for multiple verifications, translations and renewal fees.

The new unitary patent system does not replace the current European patent system. An applicant may still choose to file a patent application through the current European patent system, but the applicant can receive the above-mentioned benefits by filing a unitary patent request.

Similarly, the new Unified Patent Court (UPC) simplifies the current European patent court system by creating a centralized structure for the participating member states. The UPC will have exclusive jurisdiction over the unitary patents and some European patents2 for infringement and validity claims. A UPC decision will provide a uniform and authoritative ruling enforceable in participating member states. Benefits of the UPC include:

  • simplifying the European patent court system by providing a uniform decision enforceable in participating member states;
  • eliminating multiple and parallel litigations in member states and, thereby, eradicating conflicting court decisions; and
  • reducing overall litigation costs.

As currently being drafted, during the initial transition period of seven years, parties can choose between the UPC and the current European patent court system. However, after the transition period is over, parties must use the UPC.

IMPACT OF BREXIT ON THE PROPOSED UNITARY PATENT AND THE UPC SYSTEMS

The UK's vote to depart the EU will likely delay the planned early 2017 start date of the unitary patent and the UPC systems. The UK is one of the three largest patent-designated countries3, and it is one of the three countries that must ratify the Agreement on a UPC (Agreement) before the unitary patent and the UPC systems can be launched. However, the Agreement did not contemplate the UK, or any member state, leaving the EU before ratification occurred. Member states now need to amend the Agreement, or go forward with the current plan – hoping the UK will ratify the Agreement – and make changes later when the UK is out of the EU. While the member states figure out a plan, the original start date of the unitary patent and the UPC systems will likely be delayed.

The participating member states could amend the current draft of the Agreement in response to Brexit. Modifying the Agreement requires member states to address numerous details, which will likely delay implementation. The member states must carve out the portions of the Agreement dealing with the UK; appoint the state with the next largest number of patent activities (either Italy or the Netherlands) to replace the UK; ratify the new Agreement; find a new location for one of the UPCs, which was to have been located in London; revise the annual renewal fee agreement; and adjust the UPC judges pool to exclude judge applicants from the UK. This is likely to be a long process and will most likely delay the start of the new systems.

Another possibility is that the member states will go forward and implement the unitary patent and the UPC systems as currently drafted, and impose changes when the UK exits the EU in two years. This would mean the UK ratifying the current Agreement acting as an EU member, and member states implementing the new system as planned. However, this path is highly unlikely because the new systems will likely be stalled at a later date when remaining member states make adjustments after the UK actually leaves the EU.

CONCLUSION

Brexit will most likely delay the start of the unitary patent and the UPC systems as participating member states pause to figure out what the next step is. As of today, there is no decision how member states will proceed.

Footnotes

1. Patent protection is extended to all EU member states except Spain and Croatia. With Britain's vote to leave the EU, patent protection now might not extend there.

2. During the initial transitional period (seven years extendable to another seven years), a European patent holder can either opt in or opt out of the UPC system. The UPC will have exclusive jurisdiction on the unitary patents and the opt-in European patents. The UPC will not have jurisdiction over the opted-out European patent. After the transitional period, the UPC will have jurisdiction over all patents from the EPO.

3. Germany and France are the two other largest patent-designated countries and are mandatory ratifiers of the Agreement.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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