The future of the Unitary Patent package as seen by the EPO:

Brexit and the German constitutional challenge

Benoît Batistelli, the EPO’s president published this week a communiqué on the future of the Unitary Patent package following a conference hosted by the EPO in Munich.

It appears that the participants were eager to find ways for the Unitary Patent package to go ahead and enter into operation as soon as possible. Benoit Batistelli highlighted in his communiqué that “at a time of economic challenges and significant budgetary constraints for companies, businesses should not be denied the economic advantages and cost savings offered by the Unitary Patent package”.

Another trend common to the event organised in Paris by the UJUB and the conference organised in Munich by the EPO was the  hope that “political leaders will listen to the pleas of the user community to go ahead with the Unitary Patent package”, especially as the UPC will be ready to begin operating once the necessary ratifications of the UPC Agreement are obtained.

Panel discussions among business representatives also  confirmed that “users are by and large happy with the envisaged implementation, including renewal fees, the Rules of Procedure of the Unified Patent Court, and other decisions of the UPC Preparatory Committee”, while a panel discussion among renowned patent judges showed that “future UPC judges will be well prepared for the challenges and that proceedings can be expected to be handled in the most efficient way”. It appears therefore that the expectations in Paris and in Munich for the UPC were very high and that users are eager to see the UPC in action.

Different scenarios for the best way to proceed with the Unitary Patent package were therefore addressed . According to the EPO,  the best case scenario would see the UK going ahead as soon as possible with the ratification of the UPC Agreement. This would allow the UK afterwards, in its EU exit negotiations, to obtain its continuous participation both in the Unified Patent Court and the Unitary Patent.  In fact, as discussed in Paris, “with the UK having brought the system into operation by ratification and having participated in the system from the beginning, it is possible that Member States may allow the continued participation of the UK , even after the ‘Brexit’ takes effect”. The EPO’s president noted however in his communiqué that, even if the UK were not to take part in the Unitary Patent package, there seems to be “a clear feeling in the international user community that the system would remain sufficiently attractive for many”.

Finally, the EPO expressed in its communiqué its support for the UPC, and “stands ready not only to register the first Unitary Patents, but also to assist as much as possible in finding appropriate solutions in the interest of our user community and our Contracting States.”

With Theresa May becoming the new UK Prime Minister today in the UK, one can hope that the UPC will be on her agenda in the coming months.

What future for the UPC now that the UK has voted to leave the EU?

Encouraging steps by participating member states towards the entry into force of the UPC Agreement

On Wednesday (06/07/16) the Union pour la Juridiction Unifiée des Brevets (Union for the Unified Patent Jurisdiction) organised in Paris a conference on the consequences of the Brexit for the UPC. (See the recorded video below)  The participants,  Thierry Sueur, chairman of the IP Committee of the MEDEF -the French business federation- representing the European industry, Professor Winfried Tilmann from Hogan Lovells, Rowan Freeland from Simmons&Simmons, and Alexander Ramsay, chairman of the UPC Preparatory Committee, outlined  the legal and political consequences of the Brexit on the UPC and the immediate next steps for the Preparatory and Advisory Committee in this regard.

After an opening by Pierre Véron who reflected on the shock of the Brexit news (shared by the audience), Thierry Sueur highlighted the position of the European Industry which is demanding that the ratification process continues in order for the UPC to come live, and he thus pleaded for the UK to ratify the UPCA and its protocol. According to him, ratification by the UK would in fact allow the UPC to meet its opening deadline in Spring 2017 and would leave the door open for the UK to take part in the UPC and the Unitary Patent package.

Professor Winfried Tilmann then addressed the question of whether the UK can still take part in the UPC. First Professor Tilmann argued that there were strong political arguments to justify the UK’s ratification. In fact, the UK is still and until the end of the two-year period after its notification of withdrawal under article 50 of the Lisbon Treaty, a member of the EU and, as both houses of British parliament have already started working on ratifying the UPCA, the ratification could therefore be quite straightforward.  He also noted that the UPCA is an international treaty that does not derive from EU law, and that although the UPC shall be a court common to the Contracting Member States -and thus subject to the same obligations under Union law as any national court of the Contracting Member States- it is not a court of the EU -contrary to the ECJ. This would thus mean that the UK local and central divisions could remain in London, and that UK practitioners and judges could take part in the UPC.

Regarding the legal factors involved in considering whether the UK could leave the EU but still be a contracting member state under the UPCA, article 84 of the UPCA appears to be an obstacle. In fact it provides that only EU member states may ratify the UPCA. According to Professor Tilmann, this condition implies, that countries which ratify the UPCA remain EU member states. Therefore if the UK leaves the EU pursuant to article 62, 65, and 67 of the Vienna Convention on the Law of Treaties, both the UK and the other signatories of the UPCA, would have the right to cancel the contractual relationship between the UK and themselves.  Article 84 would thus need to be amended to allow the UK to be a signatory to the UPCA even after leaving the EU. Such a change is possible for Contracting Member States on the basis of article 149a(1)(a) of the European Patent Convention and would not require them to re-ratify an amended UPCA. The amendments to the UPCA could in fact be included in the Brexit agreement which would in turn  have the quality of Union law and “pursuant to article 87(2) UPCA, the Administrative Committee has the power to change the UPCA in order to bring it in line with Union law”.

However it is important to note that, were the UK to leave the EU after ratifying the amended UPCA,  it would be bound by the ECJ’s decisions and by its interpretation of EU law as the UPC has the obligation to refer questions on EU law to the ECJ. The UK would also be jointly and severally liable for damages with other contracting member states as provided by the UPCA. Finally, during the transitional period, national UK courts would also be bound by the UPCA within the same remit as stated above.

The legal consequences of the UK leaving the EU would nonetheless be wider than those faced for the UK’s participation to the UPC. In fact the unitary effect would also need to be extended to the UK by agreement under article 142 (1) EPC. This would result into a Unitary patent deriving its effects from EU law when applying within the territory of the EU, and a Unitary patent deriving its effects from international law when applying to the UK.

Rowan Freeland then explored what would happen were the Contracting Member States to “exclude the UK of the UPCA” before it leaving the EU, in order to pursue the implementation of the UPC and Unitary Patent. According to him, re-negotiations of the UPCA to exclude the UK would be possible, but would require a new ratification of the newly amended UPCA. This would in turn require Denmark to organise a new referendum for the ratification of the new UPCA. Rowan Freeland however highlighted that 50% of all European Patents are validated in the UK, France and Germany. Therefore if the UK were not to take part in the UPC and the Unitary patent, a smaller number of users than expected might potentially be interested in the UPC and the Unitary patent. This reasoning would extend to the unitary patent “top 4” renewal fees which is based on the cost of renewal in the four EU countries that have registered the most patents. Indeed, if the Unitary patent effect is not extended to the UK, and if the latter is not part of the UPC the savings achieved by opting for the Unitary patent would decrease.

Finally, despite the general uncertainty, Alexander Ramsay tried to be reassuring and explained that for the moment the Preparatory Committee was working as normal and that the recruitment process was still ongoing. As the chairman of the Preparatory Committee, he emphasized that member states are encouraged to actively pursue their efforts for ratification in order not to delay the coming live of the court, whenever that may be. Alexander Ramsay explained that no contingency plan had yet been drafted as the political situation is very unclear. The Preparatory Committee will therefore need to have more elements of information on the position of the UK and on how the other contracting member states wish to proceed, before devising new options for the UPC and Unitary patent. Alexander Ramsay however was positive and seemed to believe that the project of the UPC and Unitary patent will survive Brexit and come live anyway.

Although the atmosphere cannot be described as joyful, the participants (including the UPC Blog) expressed their hopes to see the UPC and the Unitary Patent becoming a reality in the near future and for EU countries to seize this opportunity to bring the union closer through IP.

Below the recorded video of the conference available on YouTube:

The documents (presentation slides) of the conference can be found here.

The Patents (European Patent with Unitary Effect and Unified Patent Court) Order 2016: Despite the Brexit referendum the UK is getting ready to take part in the UPC.

Encouraging steps by participating member states towards the entry into force of the UPC Agreement

As mentioned a few weeks ago the UK Parliament has been working on secondary legislation to amend the UK Patents Act 1977 to give effect to the UPC Agreement and EU legislation on the Unitary patent.

The final legislation has now been published.  The Statutory Instrument (SI)  (2016 No. 388) was signed on 12 March 2016  without the Parliament needing to amend it. It will however only come into force when the UPC Agreement comes into force (art 1(2) SI) .

This SI is only one of the two SIs required to enable the UK to ratify the UPC Agreement.  The other SI is required to reflect the UPC Protocol on Privileges and Immunities, and is now being drafted following the recent approval of that Protocol by the Preparatory Committee at the February meeting.

Since the UK Brexit referendum is getting closer and has become a subject of much speculation it is interesting to note the opposite dynamics that it has created.  On the one hand, it seems that were the UK to leave the EU, it would no longer  be able to take part in the UPC, as noted in the House of Commons debate on  01/03/2016 on the SI.

On the other hand, the UK government has adopted  a policy  whereby it proceeds on all matters on the basis that the UK will remain in the EU. The UK IPO for example stated that the Brexit referendum will have no effect on the UK’s ratification of the UPCA by mid-2016 and on the opening of the Court at the start of 2017. Indeed the Patents (European Patent with Unitary Effect and Unified Patent Court) Order 2016 is a tangible proof of the UK government’s willingness to be ready on time for the UPC to meet its opening schedule.