The UPC now looks like a racing certainty, but don't bet on UK being part of the unitary patent regime
Last week the UK ratified the Unified Patent Court agreement. It was a surprise move that caught many off guard; but although it does take Europe closer towards getting a one-stop patent litigation regime, much still needs to happen before this becomes a reality. Patent professionals across the continent and further afield have seen so many previous UPC false dawns that they will be forgiven for not believing the system will come into being until the day it actually does. However, that is no way to plan.
So, to get greater clarity on where things go from here, I spoke once again to Bristows partner Alan Johnson, who has followed the long and often tortuous progress towards the creation of a single European patent regime as closely as anyone. And his message was unambiguous: the UPC is coming, it is going to include the UK and it is highly likely that it will be up and running by the end of 2020.
On the unitary patent, though, Johnson is less clear. As things stand, he is doubtful that Brexit Britain can be a part of it. Should that turn out to be the case, it would mean additional costs for patent owners, while also making the unitary patent a significantly less attractive option overall. Although Johnson did not say this, to me that may well mean that ways around the current legal blocks to the UK’s participation may well be found. We shall see.
Look out, as well, for an explanation of why the role of the Court of Justice of the European Union (CJEU) in the UPC system should not be overplayed and why it is no impediment to the UK’s participation.
Here’s the full interview.
What must happen now before the UPC can actually get up and running? Obviously, there is the German court challenge, so are there any timeframes after which implementation before Brexit becomes impossible?
One (hopefully) minor point to mention first is that two states still need to give consent to the start of the provisional application phase (PAP). As with ratification, we need three plus 10 and we currently have only eight of the 10 even though 14 “others” have ratified. So even if the German Constitutional Court (BVerfG) gives the thumbs up so that Germany can complete the big three, we need two more to do this.
This can happen in one of two ways.
First, the countries which have ratified but not authorised the PAP can do so. These countries are: Austria, Bulgaria, Latvia, Lithuania, Malta and Portugal.
Second, other countries that have yet to ratify can do so and approve the PAP too. Slovenia appears to be nearly ready to ratify, but the chances of one of the others ratifying very soon seem low.For example, Ireland needs its referendum and Hungary has its own constitutional complaint to overcome.
On the other hand, I believe any of Latvia, Lithuania, Malta or Bulgaria could quite easily approve the PAP. It was rumoured Malta was specifically waiting for the UK to ratify, but would then do so; and we came across this tweet re Bulgaria (we really are following all of this very diligently!)
The main issue, however, depends on the BVerfG, doesn’t it? How do the scenarios work with regards to that?
Ideally, the BVerfG decision will be handed down by June or maybe July. If this is in favour of the UPC system, then the PAP could start in time for the system proper to begin on 1st March 2019 (it needs about six to eight months – mainly so as to get the judges appointed) and hence before Brexit. The UK can then join while still an EU state and (having already worked out the necessary changes to the Unified Patent Court Agreement - UPCA) make them under Art 87 UPCA and change the definitions so that the requirement for parties to be EU states is amended by 29th March, Brexit day.
But if the BVerfG takes a little longer, and the PAP cannot start until too late to be completed by 1st March, that is not the end of the story, though I did notice that Juve seems to think (in German) starting before Brexit is essential. I accept that the situation is a little more complicated, mainly because the PAP does not trigger Art 87 – it is not one of the articles brought to life early by the Protocol on Provisional Application. However, I cannot see any reason why (for example) the participating states cannot agree a protocol - an interpretation protocol whereby it is agreed that "Member State" means "Member State at the date of signature (or ratification)".
That may not even be technically necessary, but if you take a different view, then it would, I think, do the trick. Maybe even an interpretation statement from the Preparatory Committee would suffice – though obviously its legal status is rather more questionable. Indeed, even if the BVerfG takes even longer, and not even the PAP can be started pre-Brexit, I believe such a Protocol would be sufficient.
A separate matter is the Unitary Patent (UP) and Translation Regulations. Thanks to the transitional period post-Brexit, until 31st December 2020 the UK will still be bound by all EU regulations including these, so that is not a short term problem.
It is obviously preferable to get the system started properly pre-Brexit, but if it doesn’t, then there are solutions available and where there’s a will, there’s a way. Crucially, ratifying now has the huge advantage that the UK has followed through on its promise to ratify and now everyone should be ready to talk to the British government about sorting out how any technical difficulties are resolved and how the UK stays in the system long-term.
What’s your best guess as to how things play out from here?
There seems to be a general consensus that the BVerfG will throw out the Stjerna complaint. Admittedly, most of those commenting seem to be patent lawyers, not constitutional lawyers, but if that is correct, it is a question of when, not if.
Although things do get progressively less clear cut as time passes, if we suppose we have a withdrawal agreement which includes the transition period ending 31st December 2020 (which seems a reasonable supposition), then provided the BVerfG gives its response in the next year or so (also seems reasonable) and it is positive for the UPC (also seems reasonable) then the system will start with the UK in it.
Even if the BVerfG were to uphold the complaint in some fashion, if it could be fixed (eg, if it upholds the quorum point, then what must happen is that Germany starts again and gets it right this time), then if this is done before the end of 2020 (again seems reasonable), the system starts with the UK.
Overall, therefore, I am very optimistic that the system will start before end-2020 and the UK will be in it. And I am reasonably optimistic that we will manage to get at least the PAP started pre-Brexit – and that maybe we can even get it all started on 1st March 2019.
So, if it starts by end-2020, the question is then: “what next?”.
Obviously, that is more difficult to predict, but if the UK continues to want to be a part of the system (as seems very likely no matter what government we have), then the question is what about other states? As to that, provided European industry continues to view the UK as an essential part of the system, I cannot imagine the present diplomatic consensus changing - which is that Europe as whole wants the UK in the system.
There is not only the importance of the market, but also the importance of UK judges. Having been to Venice for a couple of the European patent judges’ annual meetings there, it is impossible to overstate the high regard in which they are held.
Where that gets me to is that if the current will remains, as I think it will, a way will be found to keep the UK in the system at least for conventional European patents (EPs).
So, that’s the UPC – what about the unitary patent and other details?
The unitary patent (UP) part is trickier. It is an EU instrument. How exactly can the regulations be made to continue to apply to the UK? I am not sure I know. It needs working on because it is obviously preferable for industry, especially British industry, that we remain a part of that too; but I do have my doubts that the UK can stay in the UP part of the package.
If that is right, then a way needs to be found to transit UP coverage of the UK to European patents that cover the UK. That is not a problem though: the EPO has expressed clear willingness to help with the administration (why would they not? – it will mean more fees for them!) and the UK has made it clear that there would be no loss of rights.
So, users seeking unitary protection in the run-up to 2021 need not be concerned about any loss of rights, but only the potential for an extra UK renewal fee if we leave that part of the package. From a litigation perspective it would be no different as the EP (UK) could be litigated in the UPC too.
One oddity could be supplementary protection certificates (SPCs). They are national sui generis rights, but follow EPs (and UPs). If the UK does not continue directly to be subject to the SPC Regulations, it could (in the longer term) have a different SPC right to the rest of the participating states. But critically the Unified Patent Court Agreement (UPCA) says the court retains jurisdictions over SPCs, so for long as the UK has something which is vaguely the same (as it surely will), I think again there is no issue here. It may just mean that the court might have to apply slightly different legal tests to the determination of SPC disputes depending on the country covered by the right. But it is something which will need to be addressed.
This is the kind of question that lawyers absolutely hate, but where are you putting your money on how things go from here?
Overall my best guess is that the UK will stay in the UPC system long term, but that it may find itself Brexiting the UP part of the system. As to timings, were I a betting man – which I am not – I would offer these odds:
PAP started before 31/12/20 – 1/500
Whole system started before 31/12/20 – 1/100;
PAP started by 29/3/19 – 1/4;
Whole system started by 1/3/19 – currently Evens but drifting every day – maybe 6/4 or 2/1 by a month’s time, and 4/1 or longer odds if we’ve heard nothing by early June. If nothing by September, all bets off.
What’s the precise nature of the CJEU’s role in the system and how does that work with the UK’s insistence that post-Brexit the UK courts should be the final arbiters of law in the UK?
On the first point, the nature of the CJEU’s role, I really believe this will be limited. As with the current national situation, the CJEU is strictly just a reference court: it will answer questions on EU law put to it by the court. In no sense at all is it an appellate court.
The CJEU should hear referrals on issues such as SPCs and the biotech directive, and other relevant EU law issues such as the Brussels Regulation and competition law exactly as at present, but no more save in one respect which is that EU law will now include interpretation of the UP and translation regulations (1257 and 1260/2012). However, if the UK is not in the UP part of the system, that falls away.
On the second point – “taking back control” – I can see that this is at one level not consistent with that, but if it’s very limited, then is it really a problem?
There is, though, another answer to this. The following is a direct quote from the UK government when it announced its intention to ratify the UPC in November 2016: “The UPC itself is not an EU institution, it is an international patent court. The judiciary appointed include UK judges.” That is right. The UPC is most definitely not an EU institution, but a court set up by a group of countries which have agreed it should make referrals to the CJEU on certain limited issues. The CJEU takes referrals from that court and answers the question that court poses.
Hence CJEU jurisdiction over the UK (if you want to call it that) is indirect, as our existing first instance and appellate courts themselves are neither referring questions nor being given the answers and hence being told what to do.
For me it is a much bigger political issue that we are delegating our jurisdiction over European (UK) patents to the UPC than that the UPC refers some limited matters to the CJEU. We are doing that, entirely by choice. It’s something we have been striving to achieve for decades – and let us not forget since before we joined the Common Market as it was then known. For me it’s entirely the right decision.