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

Written by Louise AMAR 8 July 2016

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:

https://www.youtube.com/watch?v=p5clCZXqgxk

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


Tags:

Brexit

Unitary Patent

UPC

UPC Agreement


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