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Corporate Counsel Connect collection

September 2016 edition

Is the UPC Brexit Proof?

Paul Reeskamp, DLA Piper

Brexit sign postIntroduction

The UK’s vote to leave the EU in a so-called Brexit referendum has triggered the question of whether or not the Unified Patent Court (UPC) project and the Unitary Patent is dead. The short answer is: It is too early to take a stance. The longer answer shows why that is.

Political will

First, the success of the UPC project depends on the political will to pursue it. Many other topics will be high on the political agenda, so the UPC may not be at the top of the pile. On the other hand, the wasted investment in the UPC should it not be realized creates an incentive to go on with the project after all. Anyway, would it be within his power: The chair of the UPC preparatory committee, Alexander Ramsay, expressed that all preparations will continue.

Different legal views

Second, there are different legal views as to whether the UPC is “Brexit-proof.” Some refer to the UPC Agreement (UPCA), which states in Article 84 that only Member States can ratify the UPCA. They say that as long as the UK is a Member State it can ratify. After the UK triggers Article 50 of the Lisbon Treaty, it will take at least two years, and likely some additional months, before a Brexit will be reality. The new prime minister of the UK, Theresa May, indicated that negotiations with the EU on the terms of a Brexit are unlikely to start in 2016. Since the UPCA does not hold a provision covering an exit, Brexit will not automatically kick the UK out of the UPC. At least – still according to this view – provided that the UK is able to and would acknowledge the supremacy of EU law (Article 267 TFEU).

There are others who doubt that the UK can participate in the UPC after a Brexit. They point to the Opinion 01/09 of the CJEU essentially saying that only courts of EU Member States can have jurisdiction in a UPC system, and to the fact that, in order to meet Opinion 01/09, Article 84 UPCA has been redrafted explicitly to stipulate that only Member States can ratify. The UK could perhaps ratify the UPCA and then withdraw, but there would need to be cogent reasons for it to do so.

Another legal complication

Third, there is a possible legal complication, in that according to Article 89 UPCA, the UPCA will enter into force only after it has been ratified by the three Member States in which the highest number of European patents had effect in the year preceding the signature of the UPCA. Since the UK is one of those three Member States, along with Germany and France, the UPCA cannot enter into force without ratification by the UK. This might be different if one disregards the UK retroactively. In that case, the third Member State is Italy. Another solution suggested to solve this problem is to amend Article 89 UPCA (although that would take time and may open the floor to renegotiate other issues as well).

Still appealing for industry?

Last but not least, a decisive factor in going forward with the UPC project is whether the potential users of the system – industry – still want to adopt it without the UK. Is it sufficiently attractive if one of the key jurisdictions does not participate? Might the Brexit uncertainties be too much next to the existing uncertainties including the opt-out regime, the language of the proceedings, the quality of the judges, and the availability of preliminary injunctions?

How to deal with it?

The UK will most likely remain an EU member until late 2018 or early 2019. Since stranger things have happened, following the Brexit and the Bregret, a Breturn cannot be completely ruled out. It seems wise, therefore, to monitor the relevant developments and maintain the status quo before taking any decisions based on either a UPC or no UPC. Besides, the prosecution and filing of European patents are not affected by a Brexit, since the European Patent Convention is not an EU instrument.

The territorial scope of Supplementary Certification Certificate’s (SPC’s), however, may well be effected as a consequence of a Brexit. It is fair to expect that the UK legislator will come up with a legal instrument equivalent to the current SPC protection.

Other IP rights

Besides the UPC and the Unitary Patent, a Brexit will effect other IP rights as well, in particular Community Trademarks and Community designs. Legislative developments in the UK should be monitored as to how the UK will deal with the territorial carve out in these Community IP rights. Also here, it is fair to expect that the UK legislator will provide an equivalent protection.

Existing IP license agreements may need to be reviewed, in particular the territorial clauses thereof. For example, a license for the whole EU territory needs to be redrafted to clarify whether this will include the UK after an actual Brexit. This is relevant also with a view to the current EU first-sale doctrine.

It could be more alive

It is too early to make any meaningful statements on what will happen with the UPC in a post-Brexit era. The international patent litigation group of DLA Piper, however, will continue monitoring the situation and keep you posted also with regard to other IP rights. Although the UPC is not dead, it could be more alive.

No legal advice intended. The contents of this article are intended to convey general information only and not to provide legal advice or opinions.