Brexit & the UPC

The most significant development in the world of European patents in recent years was the agreement in 2013 between 25 of the (now) 28 EU member states to establish a Unified Patent Court (the UPC) that would have jurisdiction over the infringement and validity of patents granted by the European Patent Office, in so far as those patents were validated in those participating member states.  A related EU regulation also provides that such European patents can take effect as unitary patents, i.e. patents whose effect would apply uniformly across those participating member states and whose validity could be determined for all those states in a single court action.

The United Kingdom’s decision to leave the EU has repercussions, both for the implementation of the UPC and for the UK’s future participation in the new system.  In order to come into force the UPC Agreement requires ratification by 13 member states, including the UK, Germany and France.  The 13 member state threshold has already been reached and France ratified the agreement relatively early on.  That left the UK and Germany needing to ratify if the UPC Agreement were to come into effect.

There was considerable uncertainty over whether the UK would proceed with ratification following the UK’s Brexit referendum and the decision to leave the EU.  The UPC will be required to refer questions of EU law to the CJEU and, on the face of it, this could be regarded as incompatible with the UK government’s intent to oust the jurisdiction of the CJEU over UK affairs.  However, the UK ratified the UPC Agreement on 26 April 2018.

Meanwhile German ratification has been put on hold pending the outcome of a constitutional challenge in the German courts to the legality of the UPC Agreement.  If the challenge succeeds, that will end the unitary patent/UPC project, at least in its current form.  At the very least there will be a delay of some months and, if the German court decides that a reference to the Court of Justice of the EU (CJEU) is necessary to resolve issues of EU law that have been raised by the constitutional complaint, the delay could be one or two years.

Assuming Germany’s constitutional complaint is dismissed and Germany completes ratification of the UPC Agreement sufficiently early in 2018, the UPC and UP will come into effect before the UK leaves the EU. In that scenario then, following the UK’s departure, which will be in 2019 at the earliest and will most likely be followed by a transitional period to the end of 2020, it is almost certain that the UPC/UP will continue to operate.

That is not the end of the matter however as, even if Germany is able to ratify the UPC Agreement and it comes into force, there is the question of whether the UK will continue to participate in the UPC system after Brexit. The stated intention of the UK government is to remove the UK from the jurisdiction of the Court of Justice of the EU, which could be seen as incompatible with the UK’s continued participation post-Brexit. This raises both legal and political issues.  The UPC Agreement provides for the UK to host one of the three branches of the important Central Division of the UPC.  Should the UK leave the UPC system, that workload will have to be reallocated to one or more of the other participating states. 

The departure of one of Europe’s largest economies would also make the UPC less attractive for litigants.  The prevailing view amongst businesses that trade across the EU, and amongst intellectual property practitioners, appears to be that it would be desirable for the UK to continue to participate in the UPC post-Brexit.  It remains to be seen whether the politicians can deliver that outcome.  If the political will is there, then it is probable that the potential legal issues can also be satisfactorily resolved.
 
If you have any questions regarding the impact of Brexit on your intellectual property rights, please contact your usual Marks & Clerk advisor or, alternatively, you can direct your question to the chair of our Brexit committee, Graham Burnett-Hall.

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