The UK is going to ratify the Unified Patent Court; what is it and what does this mean for Brexit?

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The UK is going to ratify the Unified Patent Court; what is it and what does this mean for Brexit?

08 Dec 2016

Baroness Neville-Rolfe, the Minister for Intellectual Property, recently announced that the UK still intends to ratify the Unitary Patent (UP) and Unified Patent Court Agreement (UPCA). Patent Agents have generally welcomed this announcement, although there is a wider divergence in the Legal Profession as to which clients this will assist. Broadly it is likely to benefit large corporations over SMEs, although this will vary from sector to sector. However, it came as a something of a surprise to many (including ourselves) who had expected the UK to pull out, or at the very least postpone any ratification as a result of the Brexit vote, despite the Unified Patent Court (UPC) not being an EU institution.

What is it?

The UP is a single patent which will offer protection in the 25 member states who are currently signed up to the UPCA. The UPCA will also establish the UPC. This will provide one singular court system where patent holders can enforce their rights in all the member states. The pharma and life sciences section of the Court will be based in London, the mechanical engineering sector in Munich, the central division in Paris and the Court of Appeal in Luxembourg. This differs from the current system where companies submit one application but receive a different patent for each state, which is then enforceable separately in each state.

A further area where the UPC will differ from the current system is that it introduces the possibility of bifurcation. Bifurcation is where the validity and infringement of patents are decided by different courts in different procedures. This is currently the case in Germany, however in the UK validity and infringement are dealt with in the same court. Under article 33.3 of the UPCA there is the option for the Court of First Instance to separate the validity and infringement claims, by referring the latter to the Central Court and suspending or proceeding with the former. Thus the UPCA allows bifurcation. Proponents of this system argue that this will save both time and money for patent owners, as well as respecting the expertise of patent offices. However, critics argue that this will put extra pressure on defendants who could be judged to be infringing patents whose validity has not been tested. It will also add to the costs and risks for smaller companies.i.

There will be a transitional period of seven years where existing and new patent holders will be able to opt-out in favour of national protections.ii.

What does this mean for Brexit?

This announcement is material in how it relates to Brexit and the upcoming exit negotiations. In the announcement Baroness Neville-Rolfe stated that “the decision to proceed with ratification should not be seen as pre-empting the UK’s objectives or position in the forthcoming negotiations with the EU.” However, it seems implausible that this will not have some bearing on the forthcoming negotiations and the UK’s objectives.

The UK is one of the three countries who must ratify the UPCA for it to come into force (the other two being France and Germany, with the former having already done so and the latter expected to do so shortly). This was seen by some as something the UK could use in negotiations to bargain with; as should the UK not ratify it this would likely lead to a further delay to the UPCA coming into force.

Furthermore, by ratifying the UPCA and with an arm of the UPC in London, the UK will effectively be accepting the primacy of EU law. Whilst the UPC will not be an EU institution Article 20 of the UPC states:

“The Court shall apply Union law in its entirety and shall respect its primacy.”

There are further references to EU law throughout the UPCA and article 24 states that the UPC will base its decisions on “Union Law”. This essentially means that the UK is signing up to a system where UK patent holders will be subject to EU law and a Court based in London will apply EU law. Whilst the UK is still in the EU this does not seem to be too much of an issue but once the UK leaves the EU this will likely cause both legal and political issues. Of particular significance it is likely, at least in this area, that the CJEU will have the final say. It would be strange to accept the CJEU in patents but not in trade marks.iii.

In a legal opinion, commissioned by the IP Federation, the Chartered Institute of Patent Attorneys and the Intellectual Property Lawyers Association, Richard Gordon QC and Tom Pascoe of Brick Court Chambers conclude that it could be possible to stay in the UPC following Brexit. However, this would require the UK to accept the provisions of the UPCA including those which protect EU law and to enter into an international agreement with both the EU and the contracting states to the UPCA, which would safeguard the supremacy and uniformity of EU law. This also comes with the caveat that the European Court of Justice could disagree with this opinion and rule that the UK could not be party to the UPCA, on the basis that it would fail to protect EU constitutional principles.

It seems unlikely that the UK is intending to ratify the UPCA and set up a branch of the UPC in London only to pull out of it in two years’ time. Therefore the UK will need to persuade the EU states and those party to the UPCA that they are willing to allow the UK to remain a party. This will obviously put the UK in a weaker negotiating position with regard to Brexit.

So whilst, on the face of it, this is good news for some patent holders and in particular the UK pharma and life sciences industry it may well be detrimental to the UK’s negotiating position. It also does not allay uncertainty as the UK could still be forced out of the UPC following Brexit.

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i. We will be publishing an article dealing specifically with bifurcation in the New Year.

ii. This is beyond the scope of the current article, however if you would like any further information on this issue please contact a member of the IP team and we will be happy to assist.

iii. There is considerable pressure, for example, to modify the European Doctrine of Exhaustion of Rights, which gives a particular advantage to multinational companies who are able to protect trade marks even after they are put on the market by them. This does not accord with the accepted practice in the rest of the world that there is free circulation after the trade mark owner has put its goods on the market. The significance of this point for parallel importers is particularly important.

To speak to a member of our IP team regarding the above changes, please call 0161 832 3434.

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