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Insight

With referendum in the air can the show still go on for the Unitary Patent Court?

28/05/2015
The recent election of a Conservative Government in the UK has brought with it the promise of a referendum in 2017 on the UK's membership of the European Union. Some are concerned about the The recent election of a Conservative Government in the UK has brought with it the promise of a referendum in 2017 on the UK's membership of the European Union. Some are concerned about the repercussions for the Unitary Patent Court ("UPC") if the UK was to opt out of the EU and in the lead up to the referendum.

Recap on the UPC

The creation of a unified European patent court and a European patent with unitary effect ("unitary patent") have been the subject of much discussion between Member States for decades.

Currently questions of infringement and validity of European patents are resolved at a national level by national courts and authorities of the contracting states of the European Patent Convention. This leads to a number of practical difficulties when parties wish to enforce or revoke a European patent in different Member States such as potentially differing decisions, a lack of certainty and the high costs that result from a multiplicity of proceedings.

The UPC would be a single patent court covering 25 countries with exclusive competence in respect of European patents and unitary patents. It would be part of the judicial system of Member States who signed up to it, and it follows that a country cannot participate in the UPC if not part of the EU.

A unitary patent would be a European patent granted by the European Patent Office under the provisions of the European Patent Convention with unitary effect for the territory of the 25 participating states.

In 2012 the European Parliament voted in favour of proposals for two draft EU regulations on a unitary patent for Europe. The following year, the Agreement on the Unified Patent Court ("UPC Agreement") was signed by 25 EU Member States. To enter into force, the UPC Agreement needs to be ratified by at least 13 states, and some reports have indicated that this could be achieved by 2016.

A Conservative Government

The UK elections on 7 May 2015 brought in a majority Conservative Government. It was a key part of the Conservative party's election manifesto that if they were elected, there would be a referendum on the UK's membership of the EU by 2017. Since their victory, David Cameron has confirmed that they intend to stick to that promise, and yesterday's Queen's speech at the opening of Parliament reiterated this.

What effect could a Conservative Government have on the UPC and unitary patents?

To date, seven nations have fully ratified the UPC Agreement: Austria, Belgium, Denmark, France, Malta, Sweden and Luxembourg. The important courts of the Central Division are due to be located in Paris, Munich and London and the understanding has been that France, Germany and the UK must ratify the UPC for it to go ahead. The approaching UK referendum has therefore caused serious concern as to whether the UPC can be implemented if the UK decides to leave the EU.

It has been suggested, however, that the UPC can proceed without the UK ratifying it. This is because the UK gains its status of being one of the three Member States that must ratify by virtue of Article 89 which requires ratification by the three Member States where the highest number of European patents took effect the year before. Therefore if the UK left the EU, the place could simply be taken by the next Member State with the highest number of European patents, which is likely to be the Netherlands which has already taken steps towards ratification. This would mean that technically, if the UK did leave the EU, the UPC could still go ahead.

However, even if this interpretation is correct, the UK's departure from the EU would produce several practical difficulties. As mentioned above, the UK is currently set to host one of the central division courts. It seems that an amendment to the UPC would be needed to move that central division to another Member State, which could mean a yet further delay to implementation. Alternatively, as the UPC Agreement does not spell out that the court must be located in a member state, one solution (albeit a somewhat surreal one) would be for the court to remain in London despite the UK not being in the EU or part of the UPC system and with UK lawyers not having rights of audience.

A smaller hurdle is that the UK currently has various responsibilities on the preparatory committee. If the UK left the EU, these duties would need to be reassigned.

Further, if the UK voted to leave the EU, the protection of unitary patents would then not extend to the UK. Unitary patent holders who also wished to have protection in the UK would have to obtain either UK national patents or classical European patents, with the extra time and costs involved. As a result, a unitary patent could therefore be less appealing to some businesses.

Conclusion

It seems doubtful that the new UK Government will take any steps towards ratification of the UPC until after the referendum, meaning there will almost certainly be delays to the implementation of the UPC. However, even if the UK draws the final curtain on its membership of the EU, it seems that the show could still go on for the UPC, albeit with several obstacles to overcome.

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