UK Government announces intention to withdraw from the UPC

The UK Government recently indicated that the UK will not take part in the Unified Patent Court. This was a significant decision given that the Government had ratified the UPC Agreement after the Brexit referendum and the UK was one of the three mandatory signatories required before the new system could come into effect. (Even more surprising since Boris Johnson was the UK signatory while he was Foreign Secretary.)

Even though the UPC is an international court and not an EU construct, the rationale for the decision appears to be the involvement of the CJEU. The UK’s approach to negotiations with the EU on the future relationship published on 27 February 2020 states “…the Government will not negotiate any arrangement in which the UK does not have control of its own laws and political life. That means that we will not agree to any obligations for our laws to be aligned with the EU’s, or for the EU’s institutions, including the Court of Justice, to have any jurisdiction in the UK.” Clearly the UK Government’s view is that continuing the UK’s involvement in the UPC would compromise this position.

The UPC and the Unitary Patent are one of the most significant developments in IP dispute resolution in over 40 years, offering users a cost-effective means of protection for inventions and a one-stop shop for dispute resolution across Europe.

Launch of the new court depends on the decision of the German Federal Constitutional Court as to whether ratification of the UPC Agreement is contrary to the German constitution. The German decision is expected this year.

The EU Justice Sub-Committee

Rather unusually, the UK Government’s decision was communicated informally to the UK IP professions. Following this, Lord Morris, chair of the House of Lords EU Justice Sub-Committee, having taken evidence last week from Daniel Alexander QC and Julia Florence on behalf of the IP professions (a follow up to the evidence given by, among others, Simmons & Simmons’ Kevin Mooney last year), wrote to the new IP Minister, Amanda Solloway MP, asking her to confirm the Government’s position. We have yet to see an official public statement on the matter by the Government.

The effect of the UK Government’s decision

The UK Government’s decision is disappointing, particularly as the UK ratified the UPC Agreement in April 2018 and there had been significant lobbying by industry and the IP professions to ensure the UK’s continued participation post Brexit. The UK, as one of the major patent litigation centres of Europe with highly experienced patent judges, would no doubt have made a significant contribution to the new system. By taking the UK out of the UPC, UK patent judges will also not be able to become UPC judges which is a great loss. (UPC judges must be nationals of a contracting Member State).

The Unitary Patent

The Unitary Patent will make it possible for anyone (based in the UK, Europe or elsewhere) to obtain patent protection in up to 24 EU Member States by filing a single application to the European Patent Office (EPO).

Today, an inventor can protect an invention in Europe via one or more national patents or a European Patent. Under the current system, while users may file a single application at the EPO for a European Patent (thus offering costs savings against pursuing several national applications), once granted, a European Patent takes effect as a bundle of national rights which must be maintained and litigated separately. The Unitary Patent will be a single right providing uniform protection in all the countries in Europe taking part in the new system.

One downside of a unitary right is that, if challenged, its fate will depend on the decision of one court rather than a series of national courts. So, the success of the Unitary Patent and the UPC will largely depend on the quality of its judges and the consistency of their decisions.

The Unified Patent Court

The UPC will be a new international court set up by 24 Member States to deal with enforcement and validity challenges of both Unitary Patents and European Patents. Its decisions will apply in all EU Member States that have ratified the UPC Agreement.

The UPC’s structure provides Local, Central and Regional divisions for first instance decisions and a central Appeal Court in Luxembourg. The UK was expected to be the home of a section of the Central division dealing with life sciences disputes. Given the UK Government’s decision this section will have to be relocated elsewhere. Given the importance of this section to the pharmaceutical and biotech industries we expect several EU countries will seek to host this section with Italy, France, the Netherlands and Denmark already expressing an interest.

What it means for you

• While it remains to be seen what will happen next, the UPC and Unitary Patent are likely to go ahead without the UK if the German constitutional court gives a favourable decision and Germany ratifies the UPC Agreement.

• In a recent poll by Managing IP of more than 100 in-house counsel from different jurisdictions and industries, the majority of respondents said that a harmonised European patent system would still be desirable even without the UK given its potential reach and cost-saving benefits.

• However, renegotiation of the UPC Agreement and further preparations for the UPC if it is to function are likely to take some time.

• Any business with commercial activities in the countries which do participate in the UPC will need to consider their position.

• The UK will continue to participate in the European Patent Convention as the EPO is not an EU body. UK businesses will continue to obtain European Patents as they do today.

• UK businesses will still be able to apply for a Unitary Patent when the system comes into force. Anyone seeking patent protection in more than three EU countries should consider applying for a Unitary Patent.

• If the new system goes ahead without the UK, patent owners will need to pursue infringers separately in the UK. Infringement of any Unitary Patent will be dealt with centrally in the UPC with patent owners seeking cross-border relief (damages and injunctive relief) through a single set of court proceedings for all contracting Member States.

• Patent owners and users will need strategic advice from legal advisors who operate in the UK and the EU to navigate the dual system successfully.

• Simmons & Simmons has a special insight into the UPC. Kevin Mooney, a senior partner in our international patent litigation practice, is the Chairman of the Drafting Committee for the Rules of Procedure which will apply to all disputes in the UPC.