2017: the year of the UPC?
Published on 7th Feb 2017
After the Brexit vote in June 2016, many of Europe’s patent lawyers’ feared this could be the end for the Unified Patent Court. Before the referendum, the project had looked to be nearing completion, after a decade of negotiation and preparation. However, the participation of the United Kingdom was essential, with the UPC Agreement requiring British ratification, alongside that of France and Germany, before the Unitary Patent and Unified Patent Court could come into effect. UK ratification of a major European (though not entirely EU) project in the aftermath of the vote seemed highly unlikely.
What has happened since?
The 5 months following the referendum were characterised by collective soul-searching and uncertainty: would the other UPC contracting states find a way to go ahead without the UK, or might they abandon the project altogether?
The UK patent community instructed leading counsel to prepare an opinion, which concluded that the UK could, in law, participate in the UPC despite Brexit, provided that the CJEU is given ultimate jurisdiction for various EU constitutional principles to be safeguarded:
- supremacy of EU law;
- responsibility for infringements of EU law; and
- uniformity, through preliminary references to the CJEU.
The UPC would also have to enable private parties to obtain damages for any breach of EU law committed by the UPC, which would require extending the jurisdiction of the CJEU itself, since it is currently able only to hear such claims from Member States. If the UK were prepared to accept those limited residual elements of CJEU jurisdiction, then in principle it could continue to participate in and benefit from the UPC system.
But patent users remained concerned that ratification could lead to the undesirable outcome that the UPC did come into operation, only to lose the benefit of the English judges’ expertise if the UK ceased to participate after Brexit. The industry lobby was therefore split as to whether or not ratification for an interim period was desirable.
UK decides to ratify
Against the backdrop of this debate, on 28 November 2016, almost out of the blue, the UK government announced that it would, after all, be ratifying the UPC Agreement. This raised a new set of questions: what will happen when the UK ceases to be part of the EU? Will the UPC Agreement be renegotiated in time to enable the other participants to continue operating the court (albeit moving the London Central Division to Milan) without interrupting whatever proceedings are then on foot? Will the other participants be willing to countenance a non-EU state participating – and if so, what is to stop other non-EU states which agree to accept the same terms from joining the club too? Switzerland for one is known to be interested in becoming a party.
While these questions remain to be answered, the Preparatory Committee has now announced that it is moving forward with the recruitment of judges and expects the UPC to be operational from December 2017 – a mere 9 months later than had been expected before the Brexit vote. However, Prime Minister Theresa May appears to be moving the UK’s opening position for the Brexit negotiations further away from the possibility of retaining any elements of EU membership, which makes accepting the constitutional preconditions for participation in the UPC look less likely rather than more. Despite the Preparatory Committee’s ambitious timetable, the uncertainty around the UPC is still far from being resolved.
What does this mean for businesses?
For businesses trying to decide whether to opt their existing European Patents out of the system when it begins to operate, or to elect unitary status for their pending applications once granted, the picture remains very uncertain. The “sunrise period” for opting out European patents is now planned for early September 2017, which for holders of large portfolios may be barely time to carry out a thorough portfolio review.
Bringing proceedings in the new court remains feasible in theory at least for a short time after December, since the Rules of Procedure envisage a timetable to trial of only 12 months – excluding appeal. Which patent holder, though, will be willing to risk the uncertainties hovering over the court’s future, whatever the immediate benefits of the new unified system?
