Brexit, A Further Blow to Europe’s Unitary Patent

9 months ago by in EPO, EU Patent, European Patent Litigation, Unified Patent Court Tagged: , , ,

After Britain’s public vote to leave the EU, the question comes up – in as far as intellectual property is concerned – what effect the Brexit has for the Unitary Patent (also referred to as “UPC”) project that finally seemed to have picked up steam.

It is likely that the UK leaving the European Union will have material effects on the UPC, either for the Unitary Patent as such or for the time the UPC will come into effect. Firstly it is important to make a distinction between the EU Regulation  whereby the Unitary Patent was established and the Agreement (an international Treaty) establishing a UPC Court.

A Brexit means that the UK will no longer be bound by,  nor party to Regulation (EU) No 1257/2012 of 17 December 2012 implementing enhanced cooperation in the area of the creation of unitary patent protection. However, the UK is also signatory to the UPC Agreement (“UPCA“) , an international  treaty to establish the Unitary Patent Court(system), so not the patent itself, but the judicial part of it( deciding on infringement and validity for example). Although the UK has not yet ratified the Agreement, the question arises whether a Brexit means that Britain can no longer be part of the UPC court system either. For sure, Brexit will have the consequence that the Unitary Patent, once into effect, will not cover Great Britain anymore. So a judiciary system establishing 3 Central Courts  -among which London – would make no sense if a London based Court would have jurisdiction over an EU unitary patent to which the UK is no party. A non-EU Member State cannot take part in the UPC. That is true for Switzerland, Norway and as a result of Brexit, also for the United Kingdom.

In addition, according to article 89 UPCA  the Agreement can only come into force if at least “three member states in which the highest number of European patents had effect in the year preceding the year in which the signature of the Agreement takes place” ratify the Agreement/Treaty. The UK is one of those “three member states”.

A further complication would be for patentees to decide which route to choose after their patent application has been granted after a European examination process.  According to the Unitary Patent Regulation a patentee has one month after grant to file a request for unitary effect at the EPO. After a Brexit however even a choice for a Unitary Patent would mean that this would not cover an important market like the UK anymore. In this case the UP route may become a lot less interesting for the patentee and force him to choose the European Patent route[1]. In that case the patent would also cover the UK (once validated).  An alternative is to still choose the Unitary effect after grant an file for a UK national patent on top of that.

The UK is a major contributor to the UPC system, both in the preparatory stage as well as in the current stage where Judges apply to become member of the “poule” of EU Judges who ultimately will decide the cases being brought before them once the UP becomes a fact of life (which was planned to happen around spring 2017). Experienced UK Judges have applied to become members of the UPC court.  They would have brought a vast load of expertise and experience into the new Court. I

It is likely that this must be reviewed as it is hard to understand how UK Judges can be part of a court deciding on a EU Unitary Patent to which their country is not part and which patent will not cover the UK.

The UPC Agreement makes no provision for what would happen to the London Central Division of the Court in this event. Some have speculated that it might be moved to the Netherlands, others that it might even stay in London, although English judges would presumably be unable to apply as only nationals of the UPC Member States can act as judges (see Allen & Overy Memorandum).

An interesting overview on the current state of play of European IP rights, including EU Trademarks (for which the Brexit may also have a profound impact) and how to deal with a Brexit e.g. for existing licenses and enforcement of other IP rights is given by the law firm Freshfields Bruckhaus Deringer. With their consent we publish this overview below:

Current state of play

  • EU member states benefit from a range of pan-EU intellectual property regimes. These include pan-EU IP rights, like EU Trade Marks and Registered Community Designs, and central administration schemes, like the European Patent Office (which also extends beyond the EU). These systems create economies of scale for owners of multinational IP portfolios.
  • A new EU unitary patent system is due to be introduced in the next few years.
  • Many domestic UK IP rights stem from EU law. UK courts must interpret those rights in line with decisions of the EU Court of Justice.
  • National courts in the EU can, in some cases, issue pan-EU injunctions against IP infringers.

 What should I be thinking about now?

  • Portfolio management – Do I need to make any changes to my filing and management strategy to ensure my unitary EU IP rights (including any new unitary patents) would be protected in both the EU and UK post-Brexit?
  • Enforcement – Would I still be able to rely on any existing injunctions to protect my rights – in the UK or in the rest of the EU – post-Brexit? Which courts should I be applying to in any litigation I am currently planning in order to get the most effective remedies?
  • Licensing – Are my existing licensing arrangements ready for a Brexit? If the UK leaves unitary schemes, will my existing licences cover transitional or successor national rights in the UK? Should I be thinking about including special provisions in any new licences to cover transitional or successor national rights?
  • IP diligence – If I am buying or selling a business, what would be the potential impact of a Brexit on the target’s IP licences and on security over the target’s IP rights?

What could the position be following a Brexit?

The answers to many of the above questions would depend on the nature of a post-Brexit UK/EU relationship.

To give an idea of the range of possible outcomes, we have considered what the position would be under the ‘Norwegian option’ and the ‘World Trade Organisation (WTO) option’ – on the basis that these are at opposite ends of the spectrum of existing models for an alternative relationship with the EU.

What if the UK left the EU, joined the European Free Trade Association and remained a member of the European Economic Area (EEA)? (the Norwegian option)

  • The UK would continue to participate in the European Patent Office.
  • Unitary EU IP rights, eg EU Trade Marks and Community Designs, would not continue in the UK. Parliament might introduce new ‘successor’ IP rights. However, this could cause issues with existing IP licences, security over IP rights, and judgments and injunctions in IP proceedings.
  • National rights based on or influenced by EU directives, eg copyright, supplementary protection certificates, national trade marks and national designs, would continue. It is likely that they would remain aligned with EU law as most relevant directives apply to the EEA.
  • Exhaustion rules prevent trade mark and design right owners from using their IP rights to restrict the sale of goods that have been put on the market in the EEA with their consent. These rules apply EEA-wide, and so would be unchanged from the present position.
  • The new unitary patent system would be vulnerable to a Brexit. Not only is the new system limited to EU member states, but the UK must also ratify the agreement for the new system to come into effect. A Brexit would require the existing agreement to be re-written, and the new unitary patent rights to be extended to the UK as a non-EU jurisdiction.

What if the UK left the EU without any form of free trade agreement? (the WTO option)

  • The UK would continue to participate in the European Patent Office.
  • Unitary EU IP rights, eg EU Trade Marks and Community Designs, would not continue in the UK. Parliament might introduce new ‘successor’ IP rights. However, this could cause issues with existing IP licences, security over IP rights, and judgments and injunctions in IP proceedings.
  • National rights based on or influenced by EU directives, eg copyright, supplementary protection certificates, national trade marks and national designs, would continue. The UK would be unlikely to diverge quickly from existing EU law without repealing existing domestic legislation.
  • Current exhaustion rules would mean that trade marks and design rights could be used to restrict imports from the UK into the EU. New rules would need to be agreed with the EU to maintain the present position and avoid price differentials arising between the UK and the EU.
  • The new unitary patent system would be vulnerable to a Brexit. Not only is the new system limited to EU member states, but the UK must also ratify the agreement for the new system to come into effect. A Brexit would require the existing agreement to be re-written, and the new unitary patent rights to be extended to the UK as a non-EU jurisdiction.
  • UK courts would no longer be required to interpret UK IP law in light of EU rules. This could result in a gradual divergence of UK and EU IP law.

With thanks to: Walter Hart, EP&C Patent Attorneys,  Eelco van der Stok, Freshfield Bruckhaus Deringer

[1] P.S. please note the difference between a European Patent and a EU Unitary Patent. A European Patent is a patent granted according to the existing system whereby an examination process is undertaken by the European Patent Offices (Munich/The Hague) which can lead to a grant of the patent right, which then results in a bundle of national patents for all countries member of the EPO.

IPEG Intellectual Property Expert Group is an IP consultancy based in Europe