UPC: businesses unfazed by German government hesitation
After the German government’s suggestion that it will wait for Brexit before ratifying the Unified Patent Court Agreement, businesses say the news does not affect their already frozen preparation strategies
With their plans for a harmonised European patent system already on hold for some time, patent-focused businesses say they are unfazed by the German government’s suggestion that it will stall the Unified Patent Court Agreement’s implementation until after Brexit.
In response to a question from the Free Democratic Party parliamentary group this month, the Federal Ministry of Justice said the issue of the UK leaving the EU would play an “important role” in the further implementation of the UPCA.
It added that the real and legal implications of Brexit must first be “examined and voted on at European level”. The ministry also said the opinion is ongoing, which, according to private practice lawyers at Kather Augenstein, means that the UPC’s launch could be further delayed.
The assumption before news of the federal government’s hesitation was that it would ratify the UPCA soon after the constitutional complaint was decided, and presumably thrown out, because it had only stalled the process at the insistence of the Federal Constitutional Court.
But the government’s suggestion, if followed, means it is now very unlikely that the UPC will be established before the UK is due to leave the EU on October 31. Since the UPCA requires all UPC-ratifying parties to be EU member states and for the UK to be one of those parties, that development raises questions about the timeframe of the UPC.
At best, the project will need to be delayed for a short time: either to consider whether the UK can participate having already ratified the agreement; to amend the UPCA to allow the UK to participate as a non-EU member; or to amend the agreement to enable the UPC to start without the UK.
At worst, the harmonised patent project will collapse altogether.
That news has raised questions over whether a delayed ratification might frustrate business plans for the UPC that might have been due to start after the Federal Constitutional Court heard the UPCA complaint; the only thing until this point that was holding up the UPC’s establishment.
Patent Strategy reported in March 2019 that businesses were holding out for the constitutional court’s decision before they started to prepare for the UPC, despite the news that the complaint had been put on the court’s roster for this year.
But in-house counsel at confectionery, manufacturing and pharmaceutical companies say they are similarly apathetic to the news of the German government’s hesitation because their plans have progressed to the furthest point they can, or are very close to that point, without achieving absolute certainty of the UPC’s establishment.
They add that it is largely inconsequential to them in terms of preparation whether the UPC project is further delayed or derailed, although the former is obviously preferable.
“I have given some thoughts to our strategy; given that we only have about 75 to 100 European patents or so, I believe I will be able to finalise the decisions on which patents to opt-out and which patents to continue with the UPC in about one month,” says the head of IP at a factory tech company. “That leaves plenty of time to implement the strategy.”
He adds that it is going to be difficult to start the UPC when its organisers will have to find a new home for the central division’s life sciences and chemistry section, which is set to be based in London.
“It is unimaginable that the EU would leave that in the UK; and the Netherlands and Italy have already stated that they lay claim to host it,” he says. “I expect that this will take some time to sort out, so I am not in a hurry.”
Lars Kellberg, corporate vice president of patents at Novo Nordisk in Copenhagen, adds that his firm similarly did a lot of preparation for the UPC four years ago and has decided as a matter of principle not to work on it any more until it is certain to materialise.
“We have a lot of documents prepared and work that has been carried out that we can dive into. I do not want to invest anyone analysing or doing more work until we know the UPC is coming.
“I have not yet spoken to my management team about whether this German government hesitation would affect our approach – although it’s likely it will. We are in a good position, but the work was done years ago and it will take time to implement.
“But we are in a good position and we don’t have to get out in a hurry – we can wait and see,” he adds.
The global head of IP policy at a pharmaceutical company in Switzerland says his company has similarly prepared as much as it can and that it will be relatively straightforward to continue preparations once there is complete certainty that the UPC will be established.
There is a slim chance, of course, that the constitutional complaint will be heard soon and the German government chooses not to hold up ratification.
But in-house counsel say they are confident that the UPC will be delayed beyond this year, despite arguments from Kather Augenstein that the government is firmly bound to the will of the Federal Parliament and must implement the ratification act with the president’s signature without delay.
“It is logical,” says Olivier Corticchiato, patent lead for nutrition at Nestlé in Switzerland. “Only a few people want the UPC to enter into force before Brexit and without adaptation. Hence any possible legal trick will be found to delay its ratification.”
The head of IP at a factory tech company adds that Kather Augenstein is probably correct that the government cannot wait – but he points out that that impetus does not mean the government cannot delay ratification for a few weeks or even a month.
“A delay of one or two months would be unlikely to cause a legal action with any chance of being successful,” he says. “There are several countries that have deposited their instruments of ratification several months after approval in parliament.”
The UPC seems ever less likely to start this year and with the UK as a participant. If the will is there, the UPC project may well continue without the UK – and based on previous conversations with private practice and in-house practitioners in Europe, we suspect there is.
Until then, businesses will keep their plans on hold and are ready to pounce as soon as the whole mess is sorted.