The Long-Awaited European Patent with Unitary Effect and ad hoc Unified Patent Court: United Kingdom shows goodwill for driving the patent package to entry into force, even though roadblocks may still be lying down the way

P. Marollé (FR), French and European patent attorneyP. Marollé (FR), French and European Patent Attorney

A long, ever-lasting journey

For many decades, the Council of Europe, then the former European Economic Community and eventually the European Union have worked on putting into place a system of a European patent with unitary effect, and on establishing a unified and specialized patent jurisdiction. It has been a long journey initiated in the fifties, which has been passionately debated within the patent community, fiercely opposed by some of the key players, and often subject to unexpected turnovers. Overall, it has severely tested the patience of many people. The journey has not ended yet, but it was expected to cross the finish line early 2017. Tremendous progresses have been made over the past years and months, with the adoption of a legal toolbox known as the "patent package", and the preparation work by the Preparatory Committee. However, the results of UK's referendum last June have thrown a serious pitfall in the way. C'est la vie! claimed many resigned persons. Indeed, the ratification of the Unified Patent Court Agreement - so-called UPC Agreement - was at stake, while it was supposed to be a mere formality. After several months of uncertainty and speculations, the UK government, however, announced last November their indeed intention to ratify the Agreement. There is still, though, a great deal of uncertainty, considering that a "hard Brexit" should prevail. If UK and Germany's ratifications happen, which appears to be likely in light of the latest developments, this should allow the patent package to enter into force and the Court to start business in a foreseeable future. However, depending on the negotiations to be held between the UK and the Union vis-à-vis the withdrawal agreement and the political will of all parties, it is still questioned whether UK would remain a contracting State of the Court, after its withdrawal from the Union. Hence, this project, which has likely been one of the oldest of the Commission, may eventually come to a happy end... with or without participation of the UK in the long run, as time will tell.

Unsuccessful past initiatives

The very first attempt for unifying the European patent system was led by the Council of Europe as of 1949, with the project of a convention on the creation of a European Patent Office, which was never adopted. However, two conventions relating to patent formalities and patent classification were signed respectively in 1953[1] and 1954[2], setting the trend of the harmonisation of standards. A more ambitious convention relating to substantive law including patentability criterion - so-called Strasbourg convention - was also signed in 1963[3], but never entered into force. The European Economic Community relayed the Council of Europe to working on unifying patent laws across Europe. A first draft proposal for a European patent convention was elaborated in 1962[4], which was debated within the Member States. It paved the path for a common procedure for the grant of patents, as enacted by the European patent convention - so-called EPC - adopted in 1973[5], which was an international treaty creating the European Patent Office. In parallel, the community patent convention relating to revocation and infringement proceedings - so-called Luxemburg convention - was signed in 1975[6]. In the absence of sufficient ratification, further negotiations were held, and led to another agreement signed in 1989[7]. Once again, some of the Member States did not ratify it. These successive cul-de-sac­ were challenging people's hopes. However, after a decade of stand-by, the Commission revived the project of a community patent by releasing a Green Paper on the subject in 1999[8]. This led to the first draft of an international agreement establishing a European community patents Court, designed to be concluded by the Union, the Member States and certain EPC contracting third States. However, the Court of Justice of the European Union declared in 2011[9] that such agreement was incompatible with the Treaties of the Union.

The patent package

After the negative opinion from the Court of Justice, the Commission made a revised proposal for the creation of a unitary patent and translation arrangements, via the two regulations n° 1257/2012 and n°1260/2012[10]. In the absence of consensus between the Member States, twenty-five out of twenty-eight of them[11] were authorized to proceed with the enhanced cooperation for the creation of a unitary patent protection. Spain challenged unsuccessfully this initiative[12]. In order to complete the patent package, a separate international agreement[13] - the UPC Agreement - was signed in 2013 between the participating States. Subsequently, a protocol[14] to the Agreement was signed in 2015 for allowing a provisional application, which is conventionally called the "sunrise period". It aims at providing a smooth transition, considering that the Court should become fully operational upon entry into force of the Agreement, and for allowing the Administrative Committee to start its work, including the appointment and training of the judges. A Preparatory Committee has been set-up for establishing the Court, and it has focused since then on several areas including the legal framework[15], financial aspects, and human resources. None of the previous projects ever reached such stage of preparation, and the establishment of the Court was expected to be only a matter of time. Indeed, pursuant to article 89 of the Agreement, the patent package will enter into force four months after the deposit of the thirteenth instrument of ratification or accession, including the three Member States in which the highest number of European patents had effect in 2012 i.e. France, Germany and UK. These three countries were given therefore a pivotal role in the system. So far, twelve countries have ratified the Agreement, including France and lately Italy. The entry into force of the patent package was then expected early 2017, after ratification by both UK and Germany. However, the unexpected result of the British referendum held on 23 June 2016 has suddenly cast doubt on whether UK would - or even could still - ratify the Agreement for both legal and political reasons. Indeed, some of the amendments brought to the revised patent package appear a posteriori to be of paramount importance.

The specifics of the revised Agreement

The patent package as it currently stands aims at establishing a Court, not being an institution of the Union. However, for ensuring that the Agreement would be compliant with the Treaties of the Union, and would not be outside its judicial system, three principles have been enacted i.e.: the application of the Union law and its primacy over the other sources of law; the requests for preliminary rulings and the binding effect of the decisions of the Court of Justice; the joint liability of the contracting States for damage resulting from an infringement of the Union law by the Court of Appeal[16]. In addition, even though the Court has an international competence, it has been designed as a court common to the contracting Member States, which is then solely opened for signature and ratification by Member States of the Union[17]. The exclusion of non-Member States, i.e. European patent convention contracting third States including for instance Norway and Switzerland, went a priori far beyond the opinion of the Court of Justice. Indeed, even though its reasoning is opened to interpretation[18], it is apparent that the Court of Justice did not expressly state that the Unified Patent Court may only be lawfully entered into between Member States. In the future, if the Court of Justice had to consider the question of the participation of non-Member States, it may confirm such interpretation, even though this is mere speculation at this stage.

The scenarios post-referendum

The foreseen Brexit has immediately casted a shadow on the roadmap. There is no debate that UK could not ratify the Agreement after withdrawal, as UK would not qualify anymore as a contracting Member State pursuant to article 2 of the Agreement. However, such withdrawal would be effective only after the UK has notified the Council pursuant to article 50 of the Lisbon Treaty, and after completion of the negotiations and adoption of a withdrawal agreement pursuant to article 218 of the functioning Treaty of the Union. The entitlement[19] between the government and the parliament for notifying the Council has been debated. In a landmark judgment given on 24 January 2017[20], the Supreme Court ruled that the parliament had a word to say. Indeed, a majority of the judges considered that the "change in the law required to implement the referendum's outcome [should] be made in the only way permitted by the UK constitution, namely by legislation", and that "an act of parliament [was] required to authorise ministers to give notice to the decision of the UK to withdraw from the European Union". Hence, UK is not expected to leave the Union at least before 2019. Before such withdrawal, as a full Member State and as a signatory State of the Agreement, UK may still ratify it. Several scenarios appear to be possible, all of them requiring a priori, to a certain extent, an adaptation of the patent package and the adoption of additional legal texts. Indeed, there is no provision relative to the termination of a membership to the Union of a contacting State, and the effects and consequences associated herewith, after ratification of the Agreement and its entry into force. In a first conservative scenario, UK may merely withdraw from the Agreement due to a "fundamental change of circumstances", pursuant to the related procedure enacted in the Vienna Convention[21]. It may then be substituted by Italy as the third contracting country with highest number of European patents having effect in 2012, only after the corresponding revision of the Agreement, which may be difficult to achieve as requiring a renegotiation. In addition, the attractiveness of the Court would be dramatically altered. In a second non-cooperative scenario, UK may decide to neither ratify nor withdraw from the Agreement. This would considerably delay the establishment of the Court, if any, and may require the other signatory States to rely upon the Vienna convention for excluding UK from the Agreement. In a third compromising scenario, UK may decide to ratify the Agreement on the principle of sincere cooperation pursuant to article 4.3 of the Lisbon Treaty, but withdraw from it concomitantly to the withdrawal from the Union. The greatest advantage would be allowing the entry into force of the Court in the near future, without putting its existence at stake after the withdrawal of the UK. However, again, the attractiveness of the Court would be deeply diminished. Eventually, the fourth scenario, supported by a great majority of the patent community, would be the ratification of the Agreement by the UK, and its continued participation after withdrawal from the Union. This would require, however, a significant adaptation of the patent package, and the adoption of new legal texts.

UK's goodwill

For more than four months, the UK government remained silent about its intention relative to the ratification of the Agreement. Several observers and actors of the patent community argued about the possibility - and the necessity - for the UK to take part to the Court. Concerns were expressed that, independently to the legal feasibility, UK may decide not to ratify for political reasons. Indeed, the application and primacy of the Union law, as well as the authority of the Court of Justice on the Unified Patent Court, have been seen as potential insurmountable roadblocks, especially in the event UK would contemplate a "hard Brexit", which is apparently the case. Some pro-Brexiters may indeed argue that the ratification of the Agreement would lead to UK devolving further sovereignty to a Court, that may be considered de facto a Union body. In August 2016, the UK Intellectual Property Office announced that the UK remained a signatory State of the Agreement, that they would continue to attend and participate in meetings, and that there would be "no immediate changes"[22]. While showing UK's goodwill for not blocking the on-going preparation work, this announcement was laconic enough for being opened to interpretation and speculations. In September 2016, a comprehensive opinion[23] relating to the effect of Brexit on the patent package was released. On one hand, this opinion shows the strong support from the UK's patent profession and stakeholders[24] for a continued cooperation of the UK. On the other hand, it confirms that "it would be constitutionally possible for the UK to continue to participate in the UPCA after 'Brexit'", even though reserves were emitted about the adaptations needed to the patent package, about the fact that the Court of Justice may come to a different conclusion, and about the political will. In October 2016, the UK's Labour Party sent a letter to the government addressing a list of one hundred and seventy questions about the government's plan regarding Brexit. Two questions ranking one hundred ten and one hundred eleven were relating to the Court. Even though this reform is not on the top-list of the items to be dealt with, these questions show that it is still on the radar of the politicians of both sides, which is a positive sign. As a side remark, it should be noted that it was unfortunate that a reference was made to the "ratification of the EU agreement to establish a Unified patent Court", as the Agreement is instead an international agreement. It was intended that the UK would render their final decision, which many expected to be negative, at the Competitiveness Council meeting hold in 28 November 2016. Ahead of this meeting, the Council pointed out that several delegations had requested "to speed up the process of ratification of the UPC agreement in the member states that have not done yet with a view to a swift entry into force"[25]. Despite a general scepticism, several organisations representing the future users of the Court also lobbied for having the UK ratifying the Agreement[26]. At the surprise of many, the UK announced that it intended indeed to ratify the Agreement. In a concomitant press release[27], then UK Minister of State of Intellectual Property, Baroness Neville Rolfe, stressed out that "the UK will continue with preparations for ratification over the coming months", in line with the Prime Minister's general declaration that "for as long as [they] are members of the EU, the UK will continue to play a full and active role". The patent community has broadly welcomed the UK's cooperative and pragmatic attitude. It should be underlined, however, that this announcement does not preclude the continued participation of the UK after withdrawal from the Union, as it was explicitly stated that "the decision to proceed with ratification should not be seen as pre-empting the UK's objectives or position in the forthcoming negotiations with the UE". Interestingly, this announcement finally stated that "the UPC itself is not an EU institution, it is an international patent court", and that "the judiciary appointed include UK judges". This concluding note can be seen as precautionary, for avoiding criticism based on the misunderstanding about the Court being a new Union institution. As many others, the President of the European Patent Office has welcome the UK's decision to ratify the Agreement[28]. In the following weeks, further progresses were made, as UK signed on 14 December 2016 the Protocol on privileges and immunities[29], which is required to allow the Court to operate in London. In addition, the UK IPO formed a dedicated team. On 11 January 2017, Jo Johnson MP was newly appointed as minister responsible for intellectual property. On the same day, during the session devoted to "managing intellectual property and technology transfer" before the Science and Technology Committee[30], the new minister reiterated UK's intention to ratify the Agreement. At present, it can be expected that the third or fourth scenario would prevail, and that in any case the Court would enter into business in the coming year. However, even though there are good reasons to be optimist, there are quite a few difficulties down the road to be overcome, especially considering that a "hard Brexit" is expected. On 13 March, the parliament has passed the government’s Brexit bill, and the bill should now be examined by the House of Lord. A notification of the Council should likely happen therefore in the coming weeks.

Possible Roadmaps

Independently to the scenario prevailing, and even though the patent package has still not entered into force, the latter already needs to be amended. Skilful commentators[31] have attempted to provide some realistic solutions for allowing the continued participation of the UK to the Court after withdrawal. It should be underscored again that it remains a great uncertainty about the UK participation to the Court on the long-term, as Baroness Neville Rolfe's announcement is silent about it. It is expected that it will be part of the wider Union withdrawal negotiations. Some commentators are even challenging UK's need or will to ratify the Agreement, considering that these negotiations should follow the path of a "hard Brexit". Anyhow, the patent community should stay optimistic and believe that the following scenarios would come true. Firstly, the UK and Germany should ratify the Agreement, hence allowing its entry into force on the first day of the fourth month after the last deposit of the instrument of ratification or accession pursuant to its article 89, and the immediate commencement of the "opt-out" sunrise period. Secondly, legal solutions should be found for compensating some of the deleterious effects of the withdrawal from the Union. Indeed, on the very day of the withdrawal, European regulations - including both regulations n° 1257/2012 and 1260/2012 - would cease automatically to be binding to the UK, and to have effects on its territory. A substitution tool would be necessary. A protocol relative to the extension of the unitary effect of the European patent to UK may therefore be established. This protocol would be considered as a special agreement pursuant to article 142 EPC. The regulation n°1215/2012[32] - so-called New Brussels I - would face the same fate, and an alternative solution should be found, likely in a similar way as the Lugano convention[33] between the Union, Norway, Switzerland and Iceland. In addition, the continued participation of the UK may be envisioned in an additional protocol to the Agreement. In such protocol, it may be introduced a new provision enacting that the loss of the quality of Member State of the Union would not prevent that State from remaining a contracting State to the Agreement. This protocol would be considered as a special agreement pursuant to article 149a EPC. The adoption of such protocols should not require negotiation between the contracting States and the obtaining of a consensus between them. Indeed, pursuant to article 86, the Administrative Committee is granted with the power to amend the Agreement to bring it into line with an international treaty relating to patents or Union law. Both articles 142 and 149a EPC provide a suitable legal basis. To avoid any disruption, it would be advisable to have both protocols adopted and annexed to the withdrawal agreement between UK and the Union, so that they would be part of the Union law. In addition, they should enter into force on the day of the withdrawal of the UK from the Union, meaning that the UK would be party to these protocols as a contracting non-Member State. With such legal framework, it is not foreseen that the Court of Justice would disapprove it. However, this is mere speculation. Obviously, whatever the solution endorsed for allowing a continued participation of the UK to the Court, the application and the primacy of the Union law and the authority of the Court of Justice should be preserved. At present, it is hardly impossible to predict whether UK would be ready - politically speaking - to be bound to these principles. As an alternative, if the UK does not continue participating to the Court after withdrawal of the Union, an amendment of the Agreement would still be necessary, especially for relocating the London section of the central division. Italy has already shown interest in hosting this section in Milan[34].

En route to the UPC

After several decades of aborted projects, and in spite of the UK's plans to withdraw from the Union, the preparation work for the establishment of the Unified Patent Court has started again. The results of the UK's referendum made the patent community fear that it would be the ultimate pitfall leading to the burial of the "unitary patent" for good. However, the announcement made at the Competitiveness Council meeting held on 28 November 2016, and reiterated since by the new minister responsible for intellectual property, shown that there is hope. Since then, as indicated hereinbefore, the UK has actively engaged into ratifying the Agreement, by signing e.g. the protocol on privileges and immunities, and the UK IPO has set-up a dedicated team. In parallel, Germany has initiated again on December 2016 the ratification process, with the German Federal Ministry of Justice and Consumer Protection submitting to the Federal Council a new draft of the legislation to authorise ratification of the Agreement. Eventually, the Preparatory Committee published mid-January a new agenda - still speculative though - stipulating that the provisional application phase may start as soon as May 2017, with a 3-month sunrise period commencing next September, and then the Court becoming operational by next December. In the past weeks, further promising progresses were made. Without being exhaustive: Italy deposited its instrument of ratification on 10 February, before signing UPC Provisional Application Protocol; UK is progressing further the legislation work, e.g. lately with the publication of an Order relative to the Isle of Man[35]; and Germany recently passed the draft legislations necessary for ratifying the Agreement, those bills now needing to progress through the next steps including before the Bundesrat and the Federal government. Even in Spain, which has been a fierce opponent to the UPC project for years, the opposition socialist party has made a non-legislative motion before the Parliament in favour of Spain signing and ratifying the Agreement, even though it should not lead to any change for the time being. Eventually, on 15 March 2017[36], the Preparatory Committee will hold its final meeting. It is expected - hoped - that UK and Germany's will to ratify promptly the Agreement, and that the latest agenda envisioning the kick-off of the system, will be confirmed. Hence, the patent community has now good reasons for being optimistic, and it can be expected that 2017 would be the year when the finish line was reached.

  1. European convention relating to the formalities required for patent applications, signed in Paris on 11 December 1953
  2. European convention on the international classification of patents for inventions, signed in Paris on 19 December 1954
  3. Council of Europe's convention on the unification of certain points of substantive law on Patents for Invention, signed in Paris on 27 November 1963.
  4. Avant-projet de convention relatif à un droit européen des brevets élaboré par le groupe de travail « brevets », drafted in 1962
  5. European patent convention, adopted in Munich on 5 October 1973
  6. Convention for the European patent for the common market (community patent convention), signed in Luxemburg on 15 December 1975
  7. Agreement relating to community patents, signed in Luxemburg on 15 December 1989
  8. European Commission, communication entitled "Promoting innovation through patents - Green Paper on the Community Patent and the Patent System in Europe", released on 5 February 1999
  9. Court of Justice of the European Union, Opinion 1/09 of 8 March 2011
  10. Regulation (EU) n° 1257/2012 of the European Parliament and of the Council implementing enhanced cooperation in the area of the creation of unitary patent protection, signed on 17 December 2012; Council regulation (EU) n° 1260/2012 with regard to the applicable translation arrangements, signed on 17 December 2012;
  11. Croatia, Italy and Spain did not participate to the enhanced cooperation, however Italy eventually signed the Agreement
  12. Court of Justice of the European Union, Judgments C-274/11 and C-295/11 of 16 April 2013 ; Judgment C-146/13 of 5 April 2015
  13. Agreement on a unified patent Court, signed in Brussels on 19 February 2013
  14. Protocol to the agreement on a unified patent Court on provisional application, signed on 1st October 2015
  15. The patent package has been completed with additional legal texts and documents, including the Decision on the scale of recoverable cost ceilings (draft dated 16 June 2016), Rules of procedures (18th draft dated 19 October 2015), Rules on the European patent litigation certificate (revised draft), Proposal for a code of conduct (4th draft dated 22 June 2016), Protocol on privileges and immunities signed on 29 June 2016
  16. Articles 20 to 22 of the UPC Agreement
  17. Articles 1, 2 and 84 of the Agreement
  18. Council of the European Union, annex II to the note n° 10630/11 relative to "Creating a unified patent litigation system - Orientation debate", released on 26 May 2011 - cf. page 7, first paragraph, "As a result of opinion 1/09 of the CJEU, it appears that the participation of third countries must be excluded"; page 8, first paragraph, "The only possible solution identified is the conclusion of an international agreement between the Member States to set up a unified patent court with jurisdiction for the Member States only"; for opposite opinions, see Pr. Dr. Tilmann's article and the opinon from Gordon and Pascoe (cf. infra).
  19. London High Court of Justice, Judgment « R (Miller) -v- Secretary of State for Exiting the European Union », n° CO/3809/2016 et CO/3281/2016, 3 November 2016
  20. The UK Supreme Court, Judgment « R (on the application of Miller and another) (Respondents) v Secretary of State for Exiting the European Union (Appelant) », [2017] UKSC 5, 24 January 2017
  21. Articles 54, 62, 65 to 67 of the convention on the law of treaties concluded in Vienna on 23 May 1969
  22. UK Intellectual Property, announcement "IP and Brexit: The facts", released online on 2 August 2016
  23. R. Gordon QC and T. Pascoe, Brick Court Chambers, opinion "Re the effect of 'Brexit' on the unitary patent regulation and the unified patent court agreement", released on 12 September 2016
  24. The influential IP Federation, Chartered Institute of Patent Attorneys and the Intellectual Property Lawyers Association have taken the initiative of this opinion
  25. Council of the European Union, note n°12612/16 relative to the outcome of the 3485th Council meeting on competitiveness, released on 29 September 2016
  26. UJUB, T. Sueur's electronic mail addressed particularly to Baroness Neville Rolfe, dated 28 September; MEDEF, M. Guilbaud's letter addressed to M. P. Leglise-Costa, dated 27 September 2016; EuroChambers & UEAPME, A. Abruzzini & P. Faross' letter addressed the Council, dated 22 September 2016; BusinessEurope, M.J. Beyrer's letter addressed to P. Ziga, dated 26 September 2016; A letter from twenty large corporations addressed to K. Peeters, undated
  27. UK Intellectual Property Office and Baroness Neville-Rolfe DBE CMG, press release "UK signals green light to Unified Patent Court Agreement", 28 November 2016
  28. EPO, press release "EPO President welcomes UK decision to ratify UPC Agreement", 29 November 2016
  29. European Council, dedicated webpage about the ratification details, including the signatures, of the Protocol on privileges and immunities.
  30. Video of the fourth oral evidence session on "managing intellectual property and technology transfer on 11 January 2017, available on institutional website www.parliament.uk
  31. R. Gordon QC and T. Pascoe (see supra); Prof. Dr. W. Tilmann, article "A possible way for a non-EU UK to participate in the Unitary Patent and Unified Patent Court?", The IPKat website, published online on 28 June 2016; DeutscherAnwaltVerein, Position Paper "Despite Brexit the preparatory work on the UPCA should continue as planned, UK will be able to stay in the Agreement after a legal exit", released in September 2016
  32. Regulation (EU) n° 1215/2012 of the European Parliament and of the Council on jurisdiction and the recognition and enforcement of judgements in civil and commercial matters, adopted on 12 December 2012
  33. Convention on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters, signed in Lugano on 30 October 2007
  34. Ordine dei Consulenti in Proprietà Industriale, Letter requesting the bid for Milan to replace London as the location of a section of the central division, published on 23 August 2016
  35. The Patents (Isle of Man) (Amendment) Order 2017, laid before Parliament on 22 February 2017
  36. After submission of this article
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