This briefing note is only intended as a general statement of the law and no action should be taken in reliance on it without specific legal advice.

The Unitary Patent and Unified Patent Court: What now after Brexit?
13 July 2016

The Unitary Patent and Unified Patent Court: What now after Brexit?

It has been some 40 years since European leaders first discussed the idea of a single European Patent. Following several aborted attempts over the intervening period, it had been hoped that a new ‘EU Patent Package’, comprising a Unitary Patent and a Unified Patent Court (UPC) would become a reality from mid-2017.

However, the recent vote in the UK's Brexit referendum will have a significant impact on the new system and could even mean it will never come to life at all. Such an outcome would be extremely disappointing, not least given the extensive negotiations and preparations in recent years, but also in view of the benefits the new regime would have brought; albeit holders of standard European Patents were expected, at least in the early days, to opt their patents out of the new system. However, the current position is unclear as political negotiations will take some time to resolve and it is possible that some agreement may be negotiated which will allow the UK to continue to participate in the new regime. 

At the very least, the majority vote to leave will lead to substantial delays in implementation, and possible changes to the framework of the new system.  And, even if it goes ahead without the UK's involvement, the absence of a major market will mean that businesses may simply decide against using it.

In the meantime, the UK is and will remain a member of the European Patent Convention and standard European Patents will continue to have effect and be enforceable in the UK. 

As the position relating to the UK and its relationship with the EU develops over the coming months, we will report further on developments in relation to the impact on the proposed new regime.


The Unitary Patent

The Unitary Patent will be a single patent applied for following one central application at the European Patent office (EPO).  It will have effect in all EU Member States that ratify the UPC Agreement, which will govern the UPC regime. Even before the Brexit vote, however, not all Member States had intended to participate in the Unitary Patent, most notably Spain which unsuccessfully challenged the Unitary Patent before the European Court of Justice (CJEU).

The Unitary Patent will be available alongside the existing regime for standard European Patents granted under the European Patent Convention and national patents (subject to national rules relating to 'double patenting').

Since 1977, it has been possible to obtain (potential) EU-wide protection by filing a single application at the EPO. If granted, however, the applicant does not obtain a single unitary patent; instead, it obtains a 'bundle' of national patents covering those member states of the European Patent Convention (EPC) which they designate. The EPC is made up of 38 states, including all EU Member States, and a number of other European countries. If the UK does leave the EU, it will remain a member state of the EPC; therefore Brexit will have no impact on the system for obtaining standard European Patents.

Securing protection via the EPO is not without its challenges. Costs can be significant and, because the patentee obtains a bundle of national patent rights, it must enforce them on a country by country basis. Not only does this mean that enforcement can be expensive, it gives rise to potentially inconsistent judgments between national courts. A key selling point of the Unitary Patent is its pan-EU effect (or, more accurately, across those Member States that sign up). This means that it can be enforced across participating Member States through a single court action; but it can also be invalidated in those same Member States in one fell swoop. The other key benefit is the potential for significant costs savings, although in practice whether the Unitary Patent will be cheaper than a standard European Patent designated in relevant states will depend upon the number of Member States where protection is sought.  In many cases, applicants will prefer to obtain standard European Patents or, indeed, national patents.  

The Unified Patent Court

The UPC will exclusively govern disputes concerning the Unitary Patent (and related Supplementary Protection Certificates) from day one. However, it will also have jurisdiction over existing and future standard European Patents. Ultimately, it will have exclusive jurisdiction over standard European Patents but there is an important transitional period which means that this exclusive jurisdiction may not kick in for some time.

The transitional period is for seven years after the UPC Agreement comes into force (it may be extended by a further seven years). During this period, the UPC will share jurisdiction over standard European Patents with the national courts, provided those patents have not been opted out of the UPC. During the transitional period, holders of existing standard European Patents (and ones granted during the transitional period, together with related SPCs) can opt those patents out of the UPC regime for the life of the patent. Significantly, they can potentially opt those patents back in again when it is to their advantage e.g. when they wish to obtain pan-EU relief.  

Timescales for implementation pre-Brexit

The Unitary Patent will only become available once the UPC Agreement is in force: this will occur once the UPC Agreement has been ratified in at least 13 EU Member States. The ratifying states must, presently, include France, Germany and the UK (on the basis that they are the three Member States with the highest number of European Patents in the year preceding the UPC Agreement being signed). The process of scrutiny and ratification of the UPC Agreement has been ongoing at the Member State level over the last couple of years, with ten Member States having ratified as at July 2016 (including France). Despite the prospect of the EU referendum, the UK had been progressing its preparations for ratification. Indeed, both the UK and Germany had expected to be in a position to ratify in early 2017, once the system was ready to 'go live' (i.e., in relation to key issues such as IT, Court facilities and training of judiciary).  

Will the UPC/Unitary Patent be derailed by the Brexit vote? 

Following the outcome of the UK's EU membership referendum, the future of the project is in serious doubt.   However, it is not possible to state with certainty at this stage how things will progress as there are a number of significant political issues to resolve, including the model that may be negotiated and agreed for the UK's ongoing relationship with the EU.  In particular, one of the potential exit options is for the UK to join the Economic European Area (EEA) which may then provide scope for some negotiation over continued involvement in the UPC system. 

If the UK does leave the EU, there will be no impact on the current system of obtaining and enforcing standard European Patents, as it will remain a member of the EPC. However, there will be major implications for the Unitary Patent. 

First, as a non-EU country, unless there is some negotiated agreement in place, the UK will not be able to participate in the Unitary Patent (and the Unitary Patent will therefore not extend to the UK).  However, until the UK leaves the EU (which could be at least two years away, if at all), it remains possible for it to ratify the UPC Agreement and join the UPC regime, so as to get it up and running, even whilst in the process of negotiating its exit from the EU. Further, it is possible that the UK could seek to enter an arrangement which would allow it to participate in the UPC, at least in respect of standard European Patents (albeit this would involve recognising supremecy of EU law). As noted, in advance of the referendum, the UK Government had been proceeding on the basis that ratification of the UPC Agreement would still take place, and was on track for early 2017. However, these presently seem like unlikely outcomes.

If the UK does step out of the picture, its role of mandatory ratifying state could be taken by Italy. Accordingly, once 13 Member States have ratified, the new regime could still come into effect without the UK being involved but this would not be straightforward.   At the very least, there would be further delay in implementation, and many aspects (e.g., fees) are likely to need further consideration and re-negotiation. More significantly, with a major market no longer included, both the Unitary Patent and UPC will simply not be as attractive as they would have been.  

A further complication is that the UK had been the intended location for the section of the Central Division dealing with cases relating to pharmaceutical patents. This will have to be the subject of further discussion and consideration. 

All of this tends to suggest that the UPC/Unitary Patent faces significant hurdles before it can now come into effect. Even if it can do so, 2017 is very unlikely as a start date. The EPO President Benoît Battistelli has recently published a statement on the implications of the Brexit vote. Whilst his message is that "whatever decisions are taken at a political level it can be expected that the system will go ahead", he suggests that a "best case scenario" would be for the UK to ratify the UPC Agreement and then, in its exit negotiations, to seek to agree its continued participation in the new regime. We will continue to provide updates as information is made available. 

Please click here for a detailed overview of the proposed Unitary Patent and Unified Patent Court regime.

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