The United Kingdom's Minister for Intellectual Property, Baroness Neville-Rolfe, has announced that the government is proceeding with preparations to ratify the Unified Patent Court Agreement (UPC Agreement).
Ratification of the UPC Agreement by the UK (and Germany) will bring into effect the establishment of a new court, the Unified Patent Court (UPC), for signatory countries. It will also make available European patents of unitary effect (Unitary Patents or 'UPs') to cover those countries.
What will the Unified Patent Court do?
The new court will have, subject to an 'opt-out' option for patent owners, exclusive jurisdiction regarding the enforcement and validity of all existing European Patents ("EP"s) designated for the signatory countries. Additionally, it will have exclusive jurisdiction in respect of Unitary Patents. A first instance branch of the court will be established in London, and also a section specialising in life sciences.
As the Minister has said, this adds a new approach to patent protection, which has the potential to make European patents more useful to a wider range of businesses. How efficient the court will be remains to be seen, but the intention is that it will be quicker and cheaper than conducting multiple parallel court cases, as is currently necessary to enforce a European patent in each of the jurisdictions for which it has been granted. UK lawyers, businesses and judges have all been closely involved in the development of the UPC.
A Unified Patent Court, or something like it, has been an objective ever since the European Patent Convention (the "EPC") was completed in 1973 introducing the current system for granting European Patents. The EPC is an international treaty which now has 38 signatory countries.
The UPC Agreement is also an international treaty, but governs the enforcement of European patents and it involves interplay with EU law and some oversight by the Court of Justice of the European Union (CJEU). It is currently limited to member states of the European Union. The Unitary Patent aspect of the package is given effect by EU Regulation.
How quickly could the UPC and UP system be up and running?
Preparations for the new system were well advanced before the Brexit referendum, the outcome of which created uncertainty as to whether the UK would continue to participate. A small part of the necessary legislation remains to be passed by Parliament.
Parliamentary approval will entail the concession of jurisdiction regarding European patents covering the UK to the new court and the CJEU. Whether this issue becomes a problem in the passage of the secondary legislation through parliament may provide a bell-wether as to the attitude of parliament to ongoing cooperation with Europe on commercial and legal matters.
Germany is proceeding with the national legislative steps that it needs to take in order to ratify the UPC Agreement, and it is understood that it will be in a position to ratify the Agreement shortly following the UK. Accordingly, if the UK Parliament passes the necessary legislation and the Government completes the ratification process in 2017, the new court could be in operation in 2018, possibly even earlier.
How will the UPC and UP system be impacted by Brexit?
This is unclear, and differing opinions have been expressed. The Government has given no indication of how it will address, or what its position is regarding, the legal uncertainties raised by any ratification of the UPC Agreement by the UK in the shadow of a looming Brexit.
In September 2016, two leading experts in UK constitutional law, barristers Richard Gordon QC and Tom Pascoe, issued an opinion on whether and how the UK could remain involved in the UPC and UP system upon Brexit. In their view, in order for the UK to remain involved, it would need to reach an agreement with the other participating states and the EU. The CJEU would have the final say on the legality of such an agreement. Further, the CJEU would only recognise the agreement as legally enforceable if appropriate safeguards were put in place to protect EU constitutional principles, including the UK accepting the supremacy of EU law in its entirety as regards patent disputes before the UPC.
In the opinion of Gordon and Pascoe, if the UK were, before Brexit, to ratify the UPC Agreement in its current form, in order to get the system up and running, then there would be a risk that the UK court would have to cease operating upon Brexit or following a later ruling to that effect from the CJEU.
Other commentators, from outside the UK, have expressed doubt as to the need for a further agreement to be reached in order for the UK to remain within the UPC system. However, if this is correct, stakeholders should nevertheless be aware of the following:
- The UPC Agreement provides that the court will respect EU law (amongst other sources) and will, where necessary, refer questions of EU law to the CJEU. The court, including the UK branch, will remain bound by that requirement.
- The UPC system relies upon the existing EU legislation governing jurisdiction, service of proceedings and enforcement of judgments. It is likely that there will be agreement between the UK and the EU as to the replacement of that legislation upon Brexit, but if not then it will cease to have effect in the UK.
- In order for the legislation establishing Unitary Patents to continue to cover the UK, legislative steps at the EU and the national level will be needed.
- The UPC Agreement contains no provisions pursuant to which a participating country may exit the system after it has ratified the Agreement.
How will Brexit be impacted by the UPC and UP system?
Ratification of the UPC Agreement by the UK would represent a unilateral indication of the UK's intent to continue constructive and collaborative cooperation with its EU partners in the implementation of that Agreement.
Ratification of the UPC Agreement by the UK also has the potential to bring into the Brexit negotiating pot elements of legal and commercial uncertainty in a field which is, at present, operating relatively independently of EU law.
What can I do in practice to reduce the impact of the current uncertainty?
The UPC will not have jurisdiction in respect of national patents. The national system for the grant and enforcement of patents will also be unaffected by Brexit. Innovators seeking commercial certainty regarding the UK may therefore wish to consider filing an application for a UK national patent alongside any European patent application designating the other EPC countries for which protection is sought.
Following ratification of the UPC Agreement, it will become possible to "opt-out" existing European patents from the exclusive jurisdiction for the UPC system. The effect (including the duration) of the opt-out will not become clear until the court is in operation. In the absence of an opt-out, the UPC will have exclusive jurisdiction in respect of all European patents.
The government's commitment to ratify the UPC Agreement puts this important development back on track for the UK and the other signatory countries. It also raises uncertainty as to the UK's continuing involvement in the UPC and UP system following Brexit, as agreement with the other participating countries will be needed.
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