It is often said that ‘tomorrow never comes’. Likewise, a recurring theme for some years has been that ‘the UPC will start next year’. As 2019 is now well under way, it is time to consider whether this year we can be more optimistic than this, and how the turmoil in the UK Parliament affects that.
By Alan Johnson, Bristows
In answering this question we must look at two major factors. The first is the decision of the German Federal Constitutional Court (Bundesverfassungsgericht – BVerfG) on the constitutional challenge by Dr Stjerna to the legislation necessary to allow German ratification of the UPC. The second is Brexit. Both are expected to happen quite soon. However, neither is in fact at all certain.
In particular it is now anyone’s guess as to what will happen about Brexit, following the UK House of Commons’ decisive rejection of the draft Withdrawal Agreement on 15 January and the subsequent failure of the vote of no confidence in the UK Government on the following day. It is looking increasingly likely, however, that the UK will remain a member of the EU beyond 29 March 2019. There are even reports from Brussels that it may be postponed until 2020 to allow the British to continue to buy, unburdened by WTO tariffs, EU goods (of which we buy considerably more than vice versa) most notably perhaps German cars – the UK buys over €20 billion of VWs, BMWs etc a year – until a new deal can be reached which will pass through the UK Parliament.
The German constitutional complaint
One possibility is that the BVerfG upholds Dr Stjerna’s complaint in some fashion, but its decision requires some action to be taken in order for Germany to participate in the UPC: it has been said that parliamentary re-approval at least could be achieved relatively quickly. Hence, if any problem is fixed, or better still if the BVerfG rejects the complaint, Germany would then be able to ratify the UPC Agreement and consent to its provisional application.
Apart from Germany, only one more state must consent in order for the provisional application phase (PAP) to start, and several states appear to be in, or almost in, a position to do so. The PAP, during which final preparations for the start of the UPC system, such as recruitment of judges, would be completed, is expected to last six to eight months. Three months before the end of the PAP, Germany would then deposit its instrument of ratification of the UPC Agreement to allow the Agreement to commence immediately after the PAP and the Court to open. But the question even then is whether Germany would do all this, which brings us back to Brexit, since its decision as to whether to go ahead may depend also on whether the UK can be a part of the new system. Indeed, it might be considered irresponsible for Germany to cause the system to go ahead with major uncertainty hanging over it.
The UK/EU relationship
Although the UK ratified the UPC Agreement in April 2018 and the UK government has consistently confirmed since then that it intends to seek to remain in the UPC system after Brexit, there are differing views on the legality of the participation of a non-EU member state. However, it is clear that for so long as the UK is in the EU it can participate. The prospect of a delayed Brexit, therefore, is highly significant for the UPC as well as German car manufacturers.
Whilst some vehemently disagree, there is a good deal of consensus also that if there is a post-Brexit transition period during which EU law will continue to apply in the UK (as was included in the draft Withdrawal Agreement), the UK would be able to participate for that period at least. One reason for that view is that the EU Unitary Patent Regulation (creating Unitary Patent protection) requires a court (the UPC) in which to litigate Unitary Patents, and hence consent to all EU Regulations continuing to apply to the UK impliedly requires UK participation in the UPC.
The question of whether the UK, as a non-EU member state, could participate after, or without, any such transition period, can only be answered by the CJEU, but there appears no mechanism to ask the CJEU unless and until the system starts and is challenged. The fact that the UPC Agreement refers to a ‘Member State of the European Union’ could be solved by a simple protocol providing that by that term the parties meant a ‘Member State of the European Union as of the date of signature of this agreement’. The main issue is whether a UPC with the UK as a member could still refer matters of Union law to the CJEU?
Further, absent certainty on the legality of the UK’s ongoing ability to participate, would Germany, which holds the key to the project starting, be willing to proceed to start up the system with no certainty as to the legality of the UPC? Would it be confident that solutions could be found to this and other potential legal issues, such as the UK dropping out of the Brussels Regulation and not being a member of the Lugano Convention – one of which is a seeming necessity under the UPC Agreement (Article 31)?
This is where political will remains vital. With the possible exception of Italy, motivated perhaps by the opportunistic desire to see Milan seize the London branch of the Central Division, all UPC participating countries appear still to wish the UK to remain a part of the system. Critically, so too does European and British industry. And in the much repeated words of Dr Margot Fröhlinger on this topic, ‘where there’s a will, there’s a way’.
In summary, the future of the UPC project remains unclear but a late 2019 start is still possible and a 2020 start all the more so, in both cases with a possibility – unthinkable a week ago – that the UK might actually be a full EU member state at that time.
One relative certainty is that there should not be any delay to the system’s start due to practical problems: the various delays since the signature of the UPC Agreement in February 2013 having given plenty of time for preparations. The UPC Preparatory Committee recently reported: ‘the technical and operational preparations for the Court are continuing allowing for the project to move at pace in the event of a positive outcome from the German Constitutional Court’, such that one may hope that the immensely complex IT issues the UPC presents will have been sorted.
Such is the level of preparedness, that even such faintly ridiculous topics such as the colour of the judges’ robes are apparently now under discussion, with blue (one wonders EU blue minus yellow stars) being proposed. Hopefully even if we do not see the start of the UPC in 2019, we shall at least know by then whether next year will actually see the UPC, or whether this is a case of being all dressed up with no place to go.
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Dear Mr Johnson,
That Brexit might come soon is not to be denied. It is actually tragic to see what is happening in Westminster, but when looking at the situation the roots of Brexit appear to reach very much in the past. W. Churchill is meant to have said: Great Britain is in Europe, but not part of it. No more need to be said.
As far as the decision of the German Federal Constitutional Court is concerned, it is not risky to think that it is far from deciding, and any speculation in this respect is useless. There are also the complaints against the independence of the Boards of Appeal to be dealt with. And those have been deemed admissible.
We have all seen what the rumours spread at the end of 2018 were worth! Wishful thinking at its best. That all the proponents of the UPC have high hopes that the complaint will be dismissed, is well known and the reasons for those hopes as well. To say it directly and unambiguously: to obtain a return on investment. It seems realistic to think, like T. Bausch, that even if the complaint is dismissed, Germany would have no reason to rush the ratification of the UPC until the situation with UK is clear.
I would agree that in case of a deal of whatever kind, UK might stay in the UPC at least until the end of the transitional period. Any further stay would be dependent on the acceptance or not of the jurisdiction of the CJEU, which does not seem to be on table.
It is worth noting that it is the first time that I see a strong promoter of the UPC accepting the fact that the CJEU should say something about the post Brexit stay of UK. It looks may be easy to merely add to the UPC a “simple protocol providing that by that term the parties meant a ‘Member State of the European Union as of the date of signature of this agreement’”. If this is legal is another story.
I would like to hear what all the people constantly referring to the Vienna Convention on interpretation of International treaties have to say on this topic. Such a protocol would go clearly against the original meaning of the UPC that is to be limited to EU contracting states! We all know how Mr Tillmann as twisted his interpretation of C 1/09 with time. We would need something more compelling. It is true that ‘where there’s a will, there’s a way’, but the way should remain legal and not merely to satisfy vested interests.
Discussing the robes of judges or of representatives before the UPC seems indeed ridiculous at the present time. Some people appear to have a lot of time to spare on ancillary causes. Let’s stay serious.
Techrights: FINGERS OFF!!! It will not be said that there was no reaction on Mr Johnson’s paper, but you are not authorised to use it.
Alan,
Whilst I applaud the realism and pragmatism of your post, I would ask you to carefully consider whether the “where there is a will there is a way” aphorism really applies in the present situation.
The trouble for the UPC is that it has to operate within the bounds of EU law. Thus, even the best will in the world cannot overcome legal principles that have been firmly entrenched by EU courts, including the Court of Justice.
In this respect, a more appropriate parallel would be with the difficulties faced in squaring the Irish border circle. No one can claim that, with the possible exception of the DUP, there is a lack of political will to find a solution that works for all parties. However, all “creative” solutions to the conundrum that have been proposed have been shipwrecked on the jagged rocks of (legal) reality. That reality is, and always has been, that there is simply no way that a “hard” border can be avoided unless Northern Ireland remains within the EU single market.
In a similar fashion, there is simply no way that the UPC can comply with EU law if its Participating Member States include non-EU countries. Despite “creative” attempts to suggest otherwise, Opinion 1/09 is quite clear that the principle of sincere cooperation (which only applies to EU Member States) is indispensable to ensuring compliance of the proposed court with EU law.
This is not to suggest that I am happy with the conclusion that the UK might be excluded from a “pan-EU” patents court. That would be a bad outcome. However, the downsides to such an outcome would pale into insignificance compared to the impact of a “no deal” Brexit on the UK … yet it seems that the UK government is prepared not only to accept that outcome but to fight tooth and nail against those seeking to avoid it.
So, instead of “where there is a will there is a way”, may I suggest a different aphorism for the UPC? It is one with which the Rolling Stones will be familiar, namely “You can’t always get what you want …”.