Green light for the UPC

01/03/2017

GO

Alan Johnson

Contrary to most expectations, and despite the result of the Brexit referendum, the UK will be ratifying the UPC Agreement. Announcing the news, UK Minister of State for Energy and Intellectual Property, Baroness Neville-Rolfe, said:

“The new system will provide an option for businesses that need to protect their inventions across Europe. The UK has been working with partners in Europe to develop this option... As the Prime Minister has said, for as long as we are members of the EU, the UK wil continue to play a full and active role. We wil seek the best deal possible as we negotiate a new agreement with the European Union. We want that deal to reflect the kind of mature, cooperative relationship that close friends and alies enjoy. We want to involve free trade, in goods and services. We want it to give British companies the maximum freedom to trade with and operate in the Single Market – and let European businesses do the same in the UK.”

Does this really mean the UPC will go ahead, and if so when? Could it yet be derailed, and will the UK remain in the system when it leaves the EU? What will happen to the London branch of the Central Division (so important to the Biotech and wider Pharma sector) if the UK does not remain in the UPC? These are just some of the questions arising in the immediate aftermath of the announcement.

To answer these questions, we need first to consider what has already been achieved, and what remains to be done. From a practical perspective, the system is almost ready. In the nearly four years since the UPC Agreement was signed, the Preparatory Committee has driven the project forward to great effect. For example, the Court Rules are all but finalised, including setting the levels of Court fees. Likewise, the EPO has agreed the unitary patent rules and renewal fees, and agreed how those fees will be distributed to participating states. The main tasks remaining therefore are to complete the process of appointment of the judges and iron out the last remaining bugs in the IT system. This will need several more months’ work, but should be achievable within the timescales we can now foresee from a political perspective. These timescales are that both the UK and Germany – the last two countries needing to ratify – will complete ratification by late spring 2017, and will be sufficiently near completion to allow the “Provisional Phase” of the UPC to begin by about April. Then within about six months, the UPC will open its doors for business and the EPO will be able to grant its first unitary patents.

The long term participation of the UK is less certain. The last thing anyone wants is to find that having joined the system, the UK then leaves again, meaning a yet further set of transitional arrangements being required to deal with things such as how pending actions are to be completed as regards the UK, and what happens to unitary patents in terms of their UK coverage. Uncertainty can only be bad for the system as users exercise more caution than they otherwise would have done. Unfortunately, there is little prospect of immediate clarity from the political perspective as the fate of the UPC becomes just another aspect of the Brexit negotiations. Happily there seems a real willingness among the participating states to find a way to allow the UK to continue as part of the venture. What is lacking, however, is any consensus as to how (from the perspective of legality of such an arrangement) this is to be achieved. Opinions range from the need for only minor adjustments, to it being impossible. Neither is there any mechanism in the UPC for a country to leave the system. Both of these issues need to be addressed quite urgently in the coming months. This is not being negative about the system, but is so that users of the system can have confidence in its future and to have answers to the inevitable questions.


What then of the future of the London branch of the Central Division of the UPC should the UK decide it must leave the UPC? On this, there seems actually to be no legal reason why any part of the Court could not be outside the EU. As Margot Fröhlinger (EPO, formerly of the Commission) has put it: there’s no reason it could not be in Honolulu. Whether that is politically acceptable is another matter, but at least there would be no urgent need to find a new home for the Division should the UK leave the system on Brexit.

Finally for the politicians, there is one other issue which should not be overlooked. The future of SPCs derived from unitary patents remains uncertain. The present scheme would seem to be that unitary patents could be used in the same way as conventional European patents, as basic patents, and hence give rise to essentially national SPCs as at present. That seems very unsatisfactory for a unitary system. Hence, another matter which needs to be looked at again now that the UPC has been rescued from an early grave is the work on how to create a unitary SPC.

Hence there is a long political “to do” list, the main points being: find a way to keep the UK in the UPC and unitary patent system over the long term, cover off the possibility of the UK having to leave, and sort out unitary SPCs. For users also there is a “to do” list: decide upon future use of the unitary patent system, decide on opt-out strategies for existing and future “classical” European patents and their SPCs, and consider in conjunction with licensors and licensees how licensed-in and licensed-out patents should be treated (opted out or not). Suddenly time is short.

Contrary to most expectations, and despite the result of the Brexit referendum, the UK will be ratifying the UPC Agreement. Announcing the news, UK Minister of State for Energy and Intellectual Property, Baroness Neville Rolfe, said:
Back to Brexit