The announcement of the UK government that it won’t participate in the Unitary Patent system has sent a shock wave through the European patent community. One issue is obvious from the reactions to the UK decision: the future of the system, which had been uncertain for some time due to the Brexit and the German constitutional complaint against the UPCA, is taken for granted even less than before. And there are other questions: how should the withdrawal take shape legally? What to do with the pharmaceutical section of the UPC central division, now that it cannot be in London?

Does it make sense to proceed with the Unitary Patent system without the UK? That is the biggest issue right now, Kevin Mooney, chairman of the rules and procedure committee of the UPC Preparatory Committee said last week in reaction to the UK withdrawal.

“Yes”, is argued by different patent experts in articles published on the blogs last week. Guylène Kiesel Le Cosquer, president of the CNCPI, an organisation of IP lawyers in France, told JUVE Patent: “We have always said that the UPC should be with the UK. But if the UK is no longer willing to cooperate, the remaining European countries must move forward with the construction of the UPC.” Colleagues from Germany and the UK reacted in a similar way in JUVE’s article.

Bird & Bird partner Wouter Pors, a long-time supporter of the UP and UPC, told WIPR he thinks the EU and the participating member states are still determined to continue with the project: “Of course, the UPC will be less attractive without the UK, but it will still cover all the major EU member states and will, therefore, have considerable added value compared to national litigation.”

Others, however, are less adamant about the benefits of a UP system without the UK. The website law.com discussed the ‘Deep Shadow’ over the Unified Patent Court and quotes Morrison & Foerster partner Otis Littlefield as saying: “A ‘setback’ is probably an understatement at the end of the day (…). I think that could be the end of this system.”

In a reaction below a post on this blog last week, ‘Max Drei’ wrote: As a UK patent attorney in Germany, my sense is that the UPC was only seen as useful for as long as all three of the EU’s “Big Three” were committed to it.

Huge blow

“Whether there is a future for the Unitary Patent system is probably too early to say”, according to Alexander Robinson, associate at Mathys & Squire. He told Kluwer IP Law: “The official confirmation that the UK will not be part of the project is undoubtedly a huge blow given the size of the UK market and the experience and influence of its patent judges and practitioners. What happens now will depend, at least in part, on how industry perceives the value of a single patent and single court system which do not include such a significant patent market.”

In reaction to questions of Kluwer, president Koen Bijvank of the European Patent Litigators Association (EPLIT) said: “In my view the UP system would still be beneficial to users of the patent system, even if the UK did not participate. So I would welcome initiatives from the remaining member states to find a way forward. This would require modification of the current UPC Agreement and I would hope that this will not be taken as a pretext to renegotiate the entire system.”

Negotiations

Bijvank touches upon an issue that has been pointed out by other supporters – ánd adversaries – of the Unitary Patent project as well. The UPC Agreement will have to be adapted to the new situation, which could be a catalyst for a new, lengthy and difficult round of negotiations, in which all old issues are open for discussion again. And could even mean a new round of ratifications by Member States is necessary.

The number of states that stay out of the system, for instance, could be a reason for renewed negotiations. Important countries such as Turkey and Switzerland were excluded as non EU member states, Spain didn’t join because of the language regime, Poland and the Czech Republic backed out because the UP and UPC system turned out to incur high economic costs, rather than benefits. And now one of the most important states behind the creation of the UP system, the UK, has backed out as well.

On its website, the EPLIT writes that it “remains committed to support the establishment of a pan-European court for adjudicating patent disputes. Ideally, such court would have jurisdiction not only for EU states but also for other European countries, including the UK.”

Magnus Stiebe, a Swedish patent attorney who has worked in Spain for Balder for many years, made another proposal in a comment below a post on this blog: “I think that now time has finally come to implement a unitary EU patent with ENGLISH as the ONLY language. With the UK gone, what almost all of us who are remaining have in common is ENGLISH as our SECOND LANGUAGE. SO LET’S BE PRACTICAL!”

London central division to Milan, Paris?

An obvious issue to be solved is the relocation of the life sciences section of the central division, which had been allocated to London. Milan has repeatedly made clear it is very interested in housing this division; but the Italian government doesn’t seem to support this – it put forward Turin as an alternative candidate – and other member states and cities may be interested as well. There is also a possibility that the entire way the central division is organized – with sections in Paris, Munich and London – will be discussed again.

Alexander Robinson: “I would not be surprised if the loss of London prompted a rethink about whether a decentralised “central” division makes sense at all.” In the JUVE Patent article, Guylène Kiesel Le Cosquer says: “Originally, the UPC’s headquarters were to be in Paris only. The division of the UPC’s headquarters into three countries is the result of a political compromise that only dates back to 2012. (…) Therefore, personally, I think that France has to defend the return of the responsibilities of the central London division within the Paris division.”

Politics

In the meantime, what  will happen with the UP system doesn’t only depend on what the patent community wants, Robinson stresses: “Ultimately, the future of the project – if it has a future after the BVerfG’s decision concerning the complaint against ratification of the UPCA – is essentially a matter of politics, and therefore inherently unpredictable. Will continuation of the UPC project in some form be seen as a desirable political outcome, for instance as a signal of EU progress after Brexit? Or, conversely, will the political price of dropping the project altogether be seen as negligible?”

Politics, rather than an absolute refusal to allow the jurisdiction of an international patent court which can refer cases to the CJEU, may even be behind the whole decision of the UK government to announce its withdrawal from the UP and UPC, according to Koen Bijvank: “Perhaps this is wishful thinking, but it is not impossible that the UK’s announcement was made only as part of the negotiations for a trade agreement with the EU. If so, there is still hope that by the end of the year the UK may change its position. I would think that any modifications to the UPC Agreement should not be made until there is absolute certainty about the position of the UK and its relationship with the EU.”

Could the UK’s announcement be a matter of tactics, as Bijvank suggests? What he brands as ‘wishful thinking’, is a point that is also made in the analysis of JUVE Patent: “Given the UK’s renewed calls for an IP chapter in any new trade deal [with the European Union], clearly patent law holds clout as a bargaining tool. As such, many lawyers say it is not the last to be heard on the matter.”

No provisions for withdrawal

Apart from the political side, there are a lot of legal questions which will have to be answered. The UK announcement that “Participating in a court that applies EU law and bound by the Court of Justice of the European Union (CJEU) is inconsistent with our aims of becoming an independent self-governing nation” does not have any legal effect. Debate has opened already, among others below posts on our blog, how the withdrawal must be arranged in practice. ‘Concerned observer’, for instance, wrote: “Can anyone explain to me how the CURRENT agreement can be amended to move the central division away from London? Revision of the UPC Agreement (to “improve the functioning of the court”) will not be possible under Article 87(1) until AFTER the later of: (i) seven years after entry into force of the UPCA; and (ii) the point in time when 2000 infringement cases have been decided by the UPC.” The UPCA doesn’t contain provisions regulating what should be done if a member state that has already ratified wants out.

From a legal perspective, Alexander Robinson points out one positive effect of the UK’s withdrawal: “In some senses, the decision may come as a relief, providing as it does a degree of certainty. In particular, if the UPC had gone ahead with the UK as a member post-Brexit, the CJEU’s notoriously unclear Opinion 1/09 would potentially have continued to cast doubt upon the legality of including a non-EU member and I imagine that a referral to the CJEU on this point could well have arisen at some point, threatening to unravel the whole system. From that point of view, the UK’s self-exclusion may well be welcomed by at least some of those in the EU who still wish to press ahead with the project.”

The way forward will depend, of course, from another sword of Damocles that has been hanging over the UP system since March 2017, when a constitutional complaint was filed in Germany against the ratification of the UPC Agreement. The crucial ruling of the German Federal Constitutional Court (BVerfG) in the case is expected in the next few months. Robinson: “If the complaint is upheld, we are looking at further delays at the very least, if not cancellation of the project altogether. But we can probably expect there to be increased calls for the whole project to be revised or abandoned in any case.”


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6 comments

  1. Here MaxDrei: I should welcome renewed vigour, to set up an EU Patents Court. Here’s why.

    The EPC/EPO shows the way to a world-wide roadmap for patent validity. It is an elegant compromise between continental European civil law (think China, Korea, Japan) and English law (think British Empire, USA) on patent validity. But it offers little for standardisation of what constitutes patent infringement. A pan-European Patent Court could do for patent infringement law what the EPC has done for patent validity law (especially since the UK Supreme Court last year recognised the reality of “infringement by equivalent” and educated the USA how to manage that aspect).

    Multi-national, multi-lingual Europe has much to offer the patent world, in standardisation of matters of patent law. Look, for example, at the distress in the USA, because the courts cannot get their heads around what subject matter is “eligible” for patenting , and what is not. The litmus test “abstract idea” is as far as they have got, so far, in the USA. They are not even at the foothills of a sharp test, what is patent-eligible and what is not, whereas the EPO has explored the ground exhaustively.

    In the argument between sovereign jurisdictions within the EU, in issues of patent law, Europe has much to offer the rest of the world. Come on Europe. Set up a UPC and show the rest of the world how to do patent litigation efficiently, fairly and economically.

    1. You should not forget that the EPO was created almost fifty years ago. Now a completely different, totally self-serving bunch of managers is steering it. If you knew what the boards of appeal have become since the reform, you would not believe it. Half-bred examiners running after their targets! Honestly, I do not think that nowadays Europe could make something worthwhile in the field of infringement. Look at the strange construction known as the UPC. Four places of venue, plus x national branches, everybody cooking their little national stew. People who act as technical judges in the morning and as barristers in the afternoon. Costs that will bring any SME to its knees before long. I sincerely hope that this awful project is behind us. No, these are no good times for building anything solid in Europe or elsewhere. It may be that we have to wait until after the next big war or economy breakdown. Perhaps then some reason and decency will have come back.

      1. Arjan, I appreciate that you are not impressed by the effects of the recent reforms at the Boards of Appeal on the attitude and approach of certain Board members. But do you believe that those effects are such that the patent community in Europe should worry about the performance (and, more importantly, the independence) of the Boards of Appeal?

        1. I can support “Arjan” in its views.

          There is also an unmistakable problem with the quality of work delivered by the examining and opposition divisions. Do not tell me that increasing the number of grants by 82% and the production/productivity by 35% goes without problems. A high production does not necessarily on a par with low quality, but such improvements from scratch have a price to pay.

          But for this it is necessary to give people adequate training. Newcomers have to produce 70 searches in the first year! They are not allowed to deal with replies in the first year. And when the replies come, the training time is nearly exhausted. How can they be well trained in such conditions? Some of the patents granted are not worth the paper they are (virtually) printed on.

          In the boards the insidious quest for production/productivity already present in the first instance makes rapid inroads. Linking the reappointment of a member to a certain performance is not conducive to independence.

          May be not immediately, but in a not too distant future “the patent community in Europe should worry about the performance (and, more importantly, the independence) of the Boards of Appeal”.

          Techrights and zoobab: FINGERS OFF!!!

  2. In less than a week, we have now the third publication about the fate of the UPC on Kluwer blog. And it gets worse from one paper to the next.

    That lawyers, especially those having participated in the drafting of the Rules of Procedure of the UPC, would not like to see the UPC dying is understandable. For any lawyer the perspective of claiming fees not just linked to a national litigation, but to supranational litigation is mouth-watering. It is not to be expected that they will give up the UPC lightly.

    When Mr Pors observes that the UPC “will still cover all the major EU member states and will, therefore, have considerable added value compared to national litigation” he is thinking of the added value for his purse and of nothing else. It is revealing that there is now question of major and minor EU member states. It confirms that the UPC is for major states and major companies acting in those major states, and certainly not for SMEs.

    It is at least clear that the withdrawal of UK will “require modification of the current UPC Agreement” but to “hope that this will not be taken as a pretext to renegotiate the entire system” is more wishful thinking than taking into account the reality of politics.

    Even if the only amendment of the UPCA relates to deleting London and its replacement by any other city, already mentioned in it or any new one, it means that “a new round of ratifications by Member States is necessary”.

    That French lawyers want the Central Division to be located completely in Paris is understandable, and seems logical. The choice is either Paris or Munich, and the Central Division should not distributed over a plurality of locations. As said, opening Pandora’s Box is full of danger.

    It is nice for EPLIT to remain “committed to support the establishment of a pan-European court for adjudicating patent disputes. Ideally, such court would have jurisdiction not only for EU states but also for other European countries, including the UK.”, but this means revival of EPLA, and we all know that this in not on. Why come up with such a proposal?

    The question is: do we really need a pan-European court for adjudicating patent disputes in view of the rather limited number of true supranational litigations? Money should be spent on other projects which could help European people at large and not to the benefit of a small caste of lawyers.

    Hoping that the UK might change its position and merely uses the UPC as bargaining tool is like a person on the verge of drowning clutching to even the smallest piece allowing to stay afloat. It is indeed nothing more than wishful thinking.

    We have now heard for a few years that the decision of the FCC is expected in the next few months, but it sounds like a scratched record, as we are still waiting. There is no certainty that the decision will be the one hoped by the proponents of the UPC, as the questions raised by Mr Stjerna cannot be dismissed easily. There is more at stake than just the necessary quorum in the German Parliament.

    The Tibetan prayer mill of the UPC supporters (and of their purse) might still be turning for a while, but I have reasonable doubts that their prayers will be answered one day.

    I could agree with Max Drei on the usefulness of standardisation of what constitutes patent infringement. But then the UPC should be really covering more than just some of the member states of the EU and at least all the EU member states should participate. It is however manifest that non EU member states cannot participate in view of the very clear Opinion C 1/09.

    As far as validity is concerned, there is a possible overlap between the UPC and the Boards of Appeal of the EPC, and no mechanism has been devised to avoid a clash of case law in matters of validity. In spite of what I have heard from esteemed people like Sir Justice Jacob, the UPC is not there to become the leading court in Europe as it does not even cover all the EU member states. And now a country important in the domain of IP has even left the boat.

    Bifurcation between validity and infringement could be a solution in order to avoid a clash of case law on validity, but then the independence of the UPC and of the Boards of Appeal should be guaranteed and a revision instance on matters of substance should be established in both systems.

    These are two fundamental drawbacks of both systems, and I am far from convinced that in a lot of member states of the EU and of the UPC such a situation is in conformity with the respective constitutions. .

    Techrights: FINGERS OFF!!!

  3. it is not just tactics. Dominic Cummings runs the British Government and dreams of the return of the British Empire.

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