At today's EU Competitiveness Council meeting, the UK IP minister Baroness Neville Rolfe told other EU ministers that the UK would proceed with preparations to ratify the UPC Agreement. The position of the UK, which is one of three countries that must ratify the Agreement for it to come into force, had been uncertain since the Brexit vote in June this year.
As it stands, the Agreement is only open to EU member states so the UK would have to leave when it leaves the EU, expected to be in 2019, unless the terms are renegotiated before then.
The decision is a boost to those who want to see a Unitary Patent and Unified Patent Court. Eleven states have already ratified the Agreement, so once the UK and Germany both do so then it can come into force.
In a statement, the UK government said it would work to bring the new system into being "as soon as possible". But Neville Rolfe also said today's decision "should not be seen as preempting the UK's objectives or position in the forthcoming negotiations with the EU". That means it remains to be seen if, and how, the UK can remain part of the UPC after it leaves the EU, and what effect any decisions of the Court would have in the UK post-Brexit.
A particular concern that if the UK stayed in the UPC post-Brexit, it would be subject to EU law in certain areas. This might be politically unacceptable.
Nevertheless, EU Commissioner Elzbieta Bienkowska welcomed the UK's statement, saying it was "very good news for European industry and SMEs". She refused to be drawn about what would happen in the long term when questioned.
Work on the setting up of the UPC, some of which had been paused, can now resume. One of the most important tasks is to appoint the judges.
If all goes smoothly, the first Unitary Patents could be granted as soon as mid-2017, although it would be rash to make any firm predictions about timing for this 40-year old project.
Reaction from patent professionals
While some patent practitioners have welcomed today's clear decision, others have pointed to the uncertainty it creates. Here's a selection of comments received by Managing IP so far:
Sally Shorthose, Bird & Bird: "The peremptory ratification of the UPC Agreement is likely to leave IP rich industries in some considerable state of confusion – it is unclear what would happen to IP rights created, and litigation commenced, after ratification (and therefore under the new regime) on the occasion of Brexit. It could be said that that will be achieved is considerable expense in obtaining such rights, which expense would be sunk on the UK’s exit from the EU, and is likely to be followed by considerable further expense in trying to determine the status of such new IP rights and litigation. There would be no 'dry run' – this ratification would result in this outcome if (as is most likely) Brexit occurs."
Penny Gilbert, Powell Gilbert: “Today’s announcement will reassure innovative industry. As one of the main countries for patent filing and patent litigation in Europe, the inclusion of the UK is seen as central to the successful implementation of the new UPC regime. It is therefore pleasing to see that the efforts to date have not been wasted. There is clearly a will to move the UPC project forward after many decades of failed attempts. Legal opinions have made clear that there is no legal reason why the UK cannot participate in the UPC and remain within it despite an eventual Brexit. Working towards establishing that certainty will be an important next phase. The key role that the UK will play by hosting the life sciences division of the Central Division of the UPC will further strengthen the position of London as a hub for legal services.”
Paul England, Taylor Wessing: "There is no guarantee that we will be able to remain in the UPC and UP post-Brexit. Most legal analysis suggests that this is perfectly feasible technically. That leaves a question about whether it is politically possible. However, with the possibility that the London life sciences division will be up and running by the time of Brexit, with UK judges appointed to the UPC and possibly the first decisions coming from the court, it would be difficult to remove the UK. The court is also, it should not be forgotten, an intergovernmental body, not an EU one."
Russell Barton, Withers & Rogers: "We welcome news that the UK Government has chosen to proceed with ratifying the Unified Patent Court Agreement, with the UK within the new structure. This is a bold decision which will allow the UPC to proceed in the near future ... The work that has been, and is being, done to find the best way to allow for the UK to be inside the UPC when outside the EU is commendable. This situation was made possible due to the earlier hard and careful work of negotiators who ensured the big issues in patent law would be decided by the UPC’s specialist patent judges, and that the involvement of generalist judges at the ECJ was kept to a minimum."
Nick McDonald, Potter Clarkson: "This significant announcement means the chances of the UPC coming into force in 2017 are materially increased, and that will have a significant (and potentially fairly immediate) impact on patentees, who will now need to seriously consider whether to opt in or out of the new court when it comes into being. It also means that the UK is likely to be part of the UPC when it does come into force. This has to be a good thing, both for the UK IP profession and for the future success of the Court itself." Alan Johnson, Bristows: "It can only be assumed that the Government will deal with the future of the UPC (and unitary patents) as part of the wider Brexit negotiations. This is not the position for which UK industry had lobbied. It had wanted as a pre-condition of ratification, that there would be relative certainty as to the future. Ideally it wanted the UK to have negotiated a clear mechanism by which the UK could continue UPC membership post-Brexit, and a 'plan B' whereby the UK could exit the UPC agreement if necessary – there are no exit provisions in the agreement as currently drafted. These pleas, however, have been ignored in favour of what may be regarded (depending on one’s point of view) as a courageous and optimistic approach or a risky one." (See full statement.)
Gwilym Roberts, Kilburn & Strode: "Whilst it seems likely that there are many details still to be worked out, and we will need to manage the impact of Brexit itself, we view as essential the UK’s continuing contribution to a viable, SME friendly pan-European patent court."
Gordon Harris, Gowling WLG: "This is a positive development and helps demonstrate the UK's commitment to active engagement with Europe as we move towards Brexit. Given that the UK's ratification is a key stage of the process there can now be optimism that the proposed court system will proceed and, hopefully provide the streamlined enforcement procedure which has been discussed for so long. Of course, the uncertainty that the UK leaving the EU might create could lead to a scenario where its long term membership of the UPC comes into question. Further, even the process of ratification will require secondary legislation in parliament which might provoke some debate given the role of the CJEU in the UPC system. However, this is a broadly positive development and keeps hopes of full participation in the UPC by the UK alive for the time being."
David Knight, Fieldfisher: "As regards the Unified Patent Court (UPC), the UK is a great advocate of the new system. The debate has been whether to try to get it up and running before the UK leaves the EU – and then seek to maintain that status quo as part of the Brexit deal – or whether to hold back and use the veto that the UK currently has on the UPC as part of its Brexit negotiation. Seemingly the government has gone with the former. Despite all the Brexit posturing that's currently floating around, there's a desire among other EU nations that the UK is part of the UPC. There are a number of reasons for this, including that - without the UK being a participant - the costs and benefits analysis will shift and there will likely be less take up. Secondly, other EU nations are concerned that without the UK, the UPC will become totally dominated by Germany."
See also statements by Dehns and D Young. We will add further links as more analysis is available.
You can read all our UPC and Unitary Patent coverage, including our UPC scenarios, at managingip.com/UPC and about Brexit at managingip.com/Brexit. Check the hashtag #UPC on Twitter for the latest news.
The latest developments will be discussed at our European Patent Forums in Palo Alto and New York this week, and we will bring reports in due course.
