This week has seen another European election, this time in the UK, with Brexit very much at the forefront of issues. And for intellectual property lawyers, the prospect of Brexit raises many uncertainties.
One of these is the new EU patent court system and Unitary Patent, which are still waiting to be implemented. The court system is a completely new way of litigating all European Patent Office patents in the EU, and the Unitary Patent is a new option for a single EU registration – a little like an EU trade mark.
What will happen, and what should you do as a patent owner or licensee?
The UK’s role
As things presently stand, the Unified Patent Court (UPC) system and Unitary Patent cannot open for business unless ratified by the UK as well as Germany. The UK is also one of the three locations for the UPC’s Central Division courts. However, much doubt exists about whether a non-EU country will be permitted to participate, and if so what legal mechanisms may enable this.
Back in November 2016, the UK government surprised many by announcing that it intended to ratify the UPC and Unitary Patent agreements despite the Brexit referendum outcome. However, necessary steps were delayed by the government’s decision to call a general election this summer. This means that secondary legislation to lay foundations for ratification will not be passed in the UK until the autumn at the earliest. Like many aspects of Brexit so far, the announcement of our intended UPC ratification amounted at least to keeping our options open.
So while an empty new court building in London’s Aldgate awaits its fate, and judges are being recruited amid uncertainty over their future role, will we in the UK now proceed to ratify following this week’s general election?
Subject to the UK’s ratification, it remains possible that the system will be up and running by spring 2018. With the German parliament having passed a preliminary vote back in March, Germany’s elections in September are not expected to delay its deposit of an instrument of ratification around August. That would only leave the UK to ratify in order for the system to come into operation a few months later. The other participating countries view UK participation as valuable in providing a sufficiently broad territorial coverage to attract business to the new system.
While the UK remains a member of the EU until at least 2019, there would be nothing to prevent our full participation. This might allow time for a full assessment of whether a non-EU country can participate in either or both of the UPC and Unitary Patent, and to what extent that country would need to refer legal issues for determination by the CJEU – a tricky political point. And if the UK can continue post-Brexit, there is no reason in principle why other non-EU members of the European Patent Convention (such as Switzerland) could not also participate in due course.
But if we cannot clearly remain post-Brexit, the chaotic possibility of our joining and then leaving the system (or being ‘expelled’) creates great uncertainty and is highly unattractive for industry. Cast in this light, a decision by the UK to ratify without clarity on future participation seems less than pragmatic.
Preparing your business to opt-out
It is important to understand that whatever happens regarding the UK’s participation, UK and other non-EU businesses that own EP or unitary patents will still be able to use the UPC system in the participating EU territories once the system is up and running. Furthermore, when a case concerns an EP patent valid in both EU and non-EU territories, the UPC may be able to adjudicate for all such territories in certain circumstances.
Some industry voices seem keen on the new Unitary Patent: it should save costs compared with traditional European patents designating multiple territories, although it is not yet clear how many territories will be covered by the Unitary Patent either initially or subsequently. Meanwhile, there continues to be a mixed response to the UPC litigation system. The good news is that while unitary patents will only ever be capable of being litigated in the UPC, traditional EP patents can be opted out during the seven-year transitional period.
The ability to opt-out will be available several months in advance of the UPC going live, and every EP patent-owning business should have made a decision on what to do. The decision whether to opt-out should be based on litigation strategy and an understanding of the procedural rules of the UPC, ideally on advice from at least German and UK patent litigation lawyers as well as patent attorneys.
It also presents practical issues to be managed: in order to opt-out, you must have clarity as to the exact legal entity that owns the patents, in whose name (or names, if there are joint owners) any opt-out must be filed, and whether licensing arrangements are affected. Licensees of patents should also be on top of this issue and discuss the consequences of the UPC litigation system, and whether patents will be opted-out, with the patent owner.