With its ratification of the agreement establishing the Unified Patent Court (UPC), Italy could play an active role in negotiations on the future of the court and the unitary patent in the context of Brexit, which could have a profound effect on IP rights protection. The ratification law also modifies the Code of Industrial Property, adding a new rule on contributory infringement that will have a significant impact on protection rights – especially with regard to new technologies, such as three-dimensional (3D) printing.
Following Senate approval, the agreement establishing the UPC (Law 214) was passed on November 3 2016. This was the final step in Italy's troubled accession to the UPC system, which will make patent protection in Europe cheaper and more efficient.
Italy's ratification of the UPC is particularly important and well timed, as it will allow the government to play an active role in negotiations regarding the system's future post-Brexit, including the nomination of Milan as a potential central court seat. Despite the UK government's intention to ratify the agreement, it unlikely that the UPC's central court in London (which deals with pharmaceutical patent cases) will be maintained. However, the United Kingdom's continued participation in the UPC system remains a desirable outcome among Italian IP professionals and could be viable through a limited modification of the Agreement on the European Patent Court should the United Kingdom decide to remain within the European Economic Area or the single market, despite the inevitable political difficulties relating to the European Court of Justice's power of interpretation. In order to be successful, the unitary patent must be attractive and affordable for companies and the United Kingdom's continued presence is important in that regard.
The fate of the unitary patent and the UPC is not the only reason for reflection following Brexit by legal experts who deal with intellectual and industrial property. What has emerged from the first round tables (in particular, the one held in Milan in September 2016 in the context of the International Association for the Protection of Intellectual Property congress) is the need for innovative and out-of-the-box solutions to handle the post-Brexit reality in terms of:
- substantive law and the protection of acquired rights; and
- enforcement and cross-border issues, which will require a specific agreement between the United Kingdom and the European Union that is similar to the Lugano Convention for ex-European Free Trade Association countries, but broader in scope.
Even the transition phase presents considerable problems, due to the fact that IP rights have a long life. Thus, it will be necessary to find cost-effective solutions which also ensure a sufficient certainty of rights. European IP judges will play a fundamental role in this regard and must continue to seek common solutions, even after Brexit.
If Brexit's first victim is the unitary patent system, which will require at least a partial renegotiation, brands and models will also be affected, as the cross-border effects of European patents will no longer apply automatically to the United Kingdom and will need to be re-established. Italy is especially concerned about the potential consequences in the agri-food industry, which will be keenly felt, as the rules applied in the United Kingdom post-Brexit may be different from those applied in the European Union. Therefore, it will be necessary to ensure that under any agreement on the free movement of goods between the United Kingdom and the European Union, agri-food products which do not comply with EU rules will not be imported into the European Union. As agreements are not always respected by local manufacturers and importers, it will be necessary to redouble precautionary measures, especially on the part of the food processing industry trade associations.
The main task that Italian companies and their legal counsels must undertake is a review of contracts – in particular, licence agreements and technology transfers – especially if they are long term. Contracts will need to be flexible to ensure efficient enforcement even after Brexit. Changing filing strategies and putting British patents alongside European patents seems premature: it seems unthinkable that post-Brexit legal protection will not be granted to holders of EU trademarks and community models in the United Kingdom, whose extension will therefore be reduced, and protection with an autonomous patent will likely have an unnecessary cost. More generally, London will be reconsidered as a global hub for IP rights management, while other European locations could become more attractive. Milan could become a major player in this context, since institutions, companies and professionals are now working together, as the recent positive experience of Expo 2015 proved. Brexit, therefore, could be good for Italy and Italy's ratification of the UPC agreement is a positive step in this regard.
A new rule on the indirect or contributory infringement of Italian and European patents recently came into force in Italy as part of the UPC ratification agreement. Contributory infringement had been already been highlighted by scholars as a means of opposing:
- the supply of off-patent products or instruments; or
- an infringer's use of off-patent products with an illicit aim.(1)
This possibility is not expressly covered by the Industrial Property Code or the Patent Law, but was already permitted in Italian case law. In particular, the Italian courts have identified the key element in determining whether the supply of a product capable of multiple uses is lawful based on a supplier's real or perceived knowledge that the product, which does not infringe patent rights, will be used for an activity that is covered by the scope of another party's patent and is essential in that regard.(2)
In comparison to the pre-existing framework, the clarification provided by the new rule concerns the specification that a contributory infringer's conduct remains unlawful even when the direct exploitation of the patent is not, since it benefits from the exceptions under Article 68(1) of the Industrial Property Code (the most important of which concern private use for non-commercial purposes and experimental use) and a patent is implemented in another country, provided that in the latter case the patent protection is also in force in Italy. The first clarification, in particular, is extremely important for 3D printing, which is also feasible at a private level. If an item protected by a patent is printed by a private individual without a commercial aim, it would not constitute direct infringement. However, this exception does not apply to the supply of means univocally directed to allow the exploitation of a patent and, in particular, providing printing instructions to produce the infringing product.
In theory, the new rule may also play a role with regard to the production of a drug still covered by a patent or a supplementary protection certificate in order to test bioequivalence, as required to obtain marketing authorisation for the corresponding generic drug. However, the Italian rule seems to state specifically that the relevant exception holds objectively in relation to that destination, rather than operating for the exclusive benefit of marketing authorisation applicants.
For further information on this topic please contact Cesare Galli at IP Law Galli by telephone (+39 02 5412 3094) or email (firstname.lastname@example.org). The IP Law Galli website can be accessed at www.iplawgalli.it.
(2) See in particular Italian Supreme Court, November 1 1994, 9410, which found a foreign company guilty of contributory infringement after it licensed a patent and supplied projects and know-how for the construction of an infringing industrial plant in Italy. See also Court of Turin, October 12 1981, in Riv dir ind, 1985; Court of Milan, October 25 1984, in Giur ann dir ind, 1984; Milan Court of Appeal, June 23 1992, Ibid, 1992; and Court of Turin, March 10 2009, Ibid, 2009.
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