With still no decision on whether or not a legal challenge at the German Constitutional Court is admissible, it is becoming increasingly uncertain if the new legislation for the Unified Patent Court (UPC) and the unitary patent will come into force before the UK’s departure from the EU. This article briefly outlines what the unitary patent and Unified Patent Court are, summarises the current issues and explains the significance of the timing of German ratification in the context of “Brexit day”.

What is the Unitary Patent?

Currently, when a European patent application is granted, it essentially becomes a “bundle” of individual national patents; one in each state in which it is validated. A unitary patent will be a single, indivisible right and will cover most member states of the European Patent Convention (EPC). After the relevant legislation comes into force, it will be possible to obtain a so-called unitary patent by requesting unitary effect within one month of grant of a European patent.

What is the Unified Patent Court?

The UPC will be a new international court which will have jurisdiction over all unitary patents. It will also have jurisdiction over nationally validated European patents in states covered by the UPC, provided that patentees have not elected to opt out their patents from the UPC’s jurisdiction before any legal proceedings commence.

When will the UPC and the Unitary Patent arrive?

In order for the legislation to come into force, ratification of the UPC Agreement by Germany is required. German ratification will mean that the requirement for ratification by at least thirteen EU states, including the three EU member states with the largest number of patents, is fulfilled. The new legislation is set to come into force on the first day of the fourth month thereafter.

What is the German legal challenge about?

A legal challenge filed in Germany by Dr. Ingve Stjerna (a German attorney) essentially argues that the UPC Agreement is incompatible with German law.

The first step is for the panel of judges to decide whether or not the complaint is admissible. A decision that the complaint is inadmissible would pave the way for Germany’s ratification. Alternatively, if the complaint is determined to be admissible, it will then need to be decided if the arguments have merit. This could involve referral of questions to the Court of Justice of the European Union (CJEU).

Why is the timing of resolution of the German challenge so important?

Many opinions suggest that the challenge is unlikely to be ultimately unsuccessful. Nonetheless, the resulting delay could have serious ramifications for the UK’s participation in the UPC (and the unitary patent), bearing in mind the timetable for Brexit.

Working back from 29 March 2019 (“Brexit day”), in order for the legislation to come into force before the UK’s departure from the EU, Germany would need to ratify before the end of November 2018.

However, even if the legal challenge is resolved in time, Germany is not obligated to ratify immediately and may decide to wait in view of the current absence of agreement on any Brexit deal.

Brexit

As noted in our earlier article “Patent news from Europe: The Unitary Patent and the Unified Patent Court move a step closer”, the UK ratified the UPC Agreement in April 2018. The UK’s ratification indicates its desire to be part of the unitary patent package in spite of Brexit. The UK Government’s White Paper of 12 July 2018, about the future relationship between the UK and the EU, also supports this position. However, at the end of August 2018, intellectual property was described as an “unresolved issue” in the context of Brexit negotiations.

If the UPC Agreement comes into force before the UK’s expected withdrawal from the EU, opinions suggest that the UK may be able to stay in the UPC. However, the UK’s continued participation would require navigation of various legal and political obstacles. Currently it is uncertain whether the UK would continue to be a part of the unitary patent, particularly because the unitary patent is provided for by EU Regulations.

In view of the delay caused by the German challenge, it seems increasingly likely that the UPC Agreement will not come into force before the UK’s expected withdrawal from the EU on 29 March 2019. In this circumstance, the UPC might proceed without the UK. This is because the wording of Article 89 of the UPC Agreement refers to the three EU member states with the largest number of patents. With the UK becoming a non-EU member state, this wording would essentially enable the UK to be replaced by Italy, which would become the EU member state having the third largest number of European patents in force after Germany and France. There is also the question of whether the UK could be a part of the unitary patent in this situation.

In short, the UK’s participation in the UPC and the unitary patent will be subject to negotiation.

What if the German challenge is ultimately successful?

Although many expect the challenge to fail, if it is successful, the UPC will certainly be in troubled waters because Article 89 of the Agreement requires ratification by the three EU member states with the largest number of patents in force. Although this criterion does not mention any states by name, in practical terms it requires Germany’s ratification because Germany is the EU member state with the largest number of patents. Amendment of the legislation would be required in order circumvent this problem, but the question is whether the appetite to continue with the UPC without Germany would still exist.

Need advice?

These are certainly interesting times. We welcome queries from our Australian and New Zealand clients regarding the unitary patent and the UPC and would be happy to discuss what these changes mean for you. Watch this space for further updates and information.