The steps ahead for Britain and the unitary patent

This article was first published in the January 2017 issue of MedNous and is republished with the kind permission of the editor.

One of the most comprehensive reforms of European patent law is expected take effect this year with the introduction of a unitary patent for 25 countries in the EU. This is an instrument for protecting patent rights that will be enforceable in participating countries under the jurisdiction of a new Unified Patent Court (UPC).

The unified patent as a form of intellectual property protection will be a new option for companies, which are currently only able to protect their intellectual property in Europe via a European patent application leading to a bundle of national patents enforceable in the countries in which they are validated or via individual national patent applications.

On 28 November 2016, the UK government announced that it will ratify the Unified Patent Court Agreement (UPCA), even though it plans to start the process of leaving the EU by the end of March 2017. In this article we discuss why the UK might want to support the new system and what measures might be needed to participate after Brexit.

The benefits

Membership of the unitary patent system is expected to reduce costs for UK industry and streamline the enforcement of patents. While filing fees for a unitary patent application would be the same as those for a European patent application, renewal fees would correspond to the sum of the renewal fees currently paid in the four countries in which European patents are currently most frequently validated, namely Germany, France, the UK and the Netherlands. For companies which regularly validate a European patent in more than four countries, this would result in significant cost reductions. For example, in 2015 the cumulative total for maintaining a European patent for 20 years in the 25 UPC countries was almost €159,000, whereas the equivalent cost for a unitary patent would be €35,555, representing a reduction of around 78%.

Similarly, transaction costs such as translator and patent attorney fees would also be expected to be reduced by around 50% compared with a European patent validated in four countries. Patentees would also benefit from the comparative ease of dealing with one centralised patent office, the European Patent Office, for validation and renewals. This reduced financial and administrative burden should make unitary patents more accessible to small and medium-sized enterprises. A word of caution though; the reduction in fees and costs to UK businesses is based on the premise that such patents are to be maintained for their full term in at least four EU countries. For companies that may not require such broad coverage, the system could prove to be too inflexible and more costly than filing a European patent or a national patent.

Another expected benefit of the UPC system is that enforcement of patents will be easier as actions covering multiple countries can be taken via a single infringement claim. The flipside to this is the risk that a single adverse court decision could lead to a patent being invalidated across 25 participating countries. Due to uncertainty over how the UPC rules of procedure will be applied and the quality of UPC trials and judgments, we do not expect all companies to engage with the new system immediately.

Finally, there is a potential benefit to London and to the wider UK economy. On current plans, one of the new UPC courts would be based in London to handle disputes involving pharmaceuticals and medical devices. These are two industries in which the UK already has a leading position.

Securing a place in the new system after Brexit

The UK will need to take several steps in order to remain in the UPC system after Brexit(1). To start, the UPCA would need to be amended to account for the fact that the UK will no longer be a member of the EU. As a result, the UK would need to enter into an international agreement with the other signatories to the UPCA and the EU, implemented by domestic legislation. This international agreement would need to mirror the wording of the unitary patent regulations and contain sufficient safeguards to ensure compatibility with EU law. An additional international agreement would need to be concluded between the UK and the EU to confer jurisdiction on the Court of Justice of the European Union (CJEU) to accept preliminary references from UK divisions of the UPC and to hear infringement actions for breaches of EU law by those divisions. These international agreements could be included in the wider Brexit agreement between the EU and the UK. However it is unclear whether they would be sufficient to allow the UK's participation in the UPC after it leaves the EU. The CJEU, in a recent opinion, did not explicitly say whether non EU member states may participate in the UPCA provided they support EU constitutional principles, or whether they are precluded from participation altogether. Finally, the UK would also need to consider a replacement for the EU regulation which governs the recognition and enforcement of civil and commercial judgements in the Union.

What next?

Given the uncertainty caused by worldwide events in 2016, we should be cautious about making any firm predictions for the current year. The UK government has made its position clear as to its intention to ratify the UPCA. All indications are that the system could be up and running by the summer of 2017. We will have to wait and see whether this will indeed be the case and the extent to which the UK will be able to participate in the short and long term.