Surviving Brexit will be a major challenge for the European unitary patent (UP) and Unified Patent Court (UPC).
After decades of pursuing a single patent system covering all of Europe, supporters were awaiting the launch of the Unitary Patent and Unified Patent Court in January 2017. The recent Brexit vote dashed any hope of meeting this deadline.
Instead, the process may be stalled indefinitely, or at least until the practical implications of the Brexit vote become clear.
UK withdrawal from the EU will fundamentally change the basic scope of the patent and the court, which could permanently jeopardise its launch.
Brexit does not affect ongoing operations of the European Patent Office (EPO), which operates under an international treaty separate from the EU. However, a traditional European patent issued by the EPO must be separately validated in member states of choice to have any force, and enforcement must proceed as if one had separate national patents in each member state. In contrast, a Unitary Patent issued by the EPO would have force in all ratifying EU member states, and would be enforceable via a single lawsuit in a court of the UPC.
UK must exit the UP/UPC
In its present form, only EU member states can participate in the UP/UPC. If the UK exits the EU, it follows the UK must also exit the UP/UPC.
The UK will not actually leave the EU for at least another two years. Before the UK exits the EU, the UK Parliament must formally state a decision to withdraw from the EU, and that starts a two-year negotiation period with the EU before UK withdrawal is complete.
In the interim, the UK could presumably retain its participation in the UP/UPC. So perhaps one option would be to move forward with the 2017 launch of UP/UPC and delay action on the likely Brexit until the latter is formalised. The possibility of the Brexit vote being undone has been floated, for example by the UK Parliament declining to act on the vote, or by a second UK vote deciding to remain in the EU.
While this option might seem appealing to those who have put in tremendous effort in establishing the UP/UPC, it would defy common sense to launch a system whose success would depend on such a turn of events.
A more reasonable option would be to put off any action on the UP/UPC until it is reasonably clear that Brexit will occur and then carve the UK out of the system. That may be quite difficult.
UK exit mandates revision of UP/UPC
It seems self-evident that the UP and UPC cannot proceed after Brexit without significant revisions to the basic framework. The UK’s assent is mandatory for the UP/UPC to be ratified, because the UK is one of the three member states with the most European patents in force at the relevant time.
The UK played a major role in developing the UP/UPC and the rules of UPC procedure reflect the significant UK input. The other two major member states, Germany and France, may now seek revisions to omit UK-influenced aspects of the UP/UPC.
As and when the UK exits, another member state must take its place as the third major member state. That might be the Netherlands or Italy, as the next states in line ranked by number of European patents in force. The member state replacing the UK would presumably want greater input into the UP/UPC framework. But Germany and France may believe the UK’s replacement merits less influence than the UK, given whichever country it is will be much less prominent in the number of patents and patent lawsuits.
A lease has been signed in an office in London (in Aldgate Tower at 2 Leman Street) for the Central Division court responsible for pharmaceutical and biotech patent lawsuits. A new location must now be found, which may be a point of contention for the remaining member states. The bio/pharm Central Division was assigned to the UK as one of the three major member states. Will the bio/pharm Central Division be assigned to the UK’s replacement or will Germany and France seek to take it on?
Brexit will generate further requirements for change in the UP/UPC. For example, the fees for the UP were set with UK membership in mind, in that the cost is meant to be competitive with the alternative of obtaining national patents in the major European states, including the UK. After Brexit, the UP fees may need revision to remain competitive, because the UP will not cover the UK.
Also, one might assume that the provisions governing the UPC were significantly influenced by the UK. After Brexit, these would presumably need to be revised to omit the UK influence.
While the Brexit vote may not have killed the UP/UPC outright, it has severely limited any chance of seeing the UP/UPC implemented in the foreseeable future. By essentially precluding the UK from participating in the UP/UPC, the Brexit vote has effectively stopped the new system in its tracks.
The Brexit vote also brings disappointment and inconvenience to those UK citizens who have spent time preparing for UK participation in the UP/UPC. Those who have contributed to developing the UP/UPC must feel a personal loss. UK officials in the UPC Preparatory Committee would presumably be dismissed or, if retained in the short term are likely to find their influence diminished.
Applications for a position as UPC judge were being accepted until 4 July 2016, but UK applicants may now be excluded from consideration. Given the prominent role the UK has historically played in patent law, removing UK citizens as potential UPC judges would be a notable loss of talent.
R. Frederic (Ric) Henschel is a partner at the US law firm, Foley & Lardner LLP