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Unitary Patent System – Updates

Since our last article on the subject, there has been two major developments in the on-going implementation of the European Unitary Patent System – the German Constitutional challenge has been decided, and the UK Government has reaffirmed its withdrawal from the Unified Patent Court system. Both of these countries are integral to the to the UP and UPC systems.

Unitary Patents (UPs) will make it possible to get patent protection in up to 26 EU Member States by submitting a single request to the EPO, in theory simplifying and making patent protection more cost effective for applicants. The Unified Patent Court (UPC) is court system which aims to deal with the infringement and validity of both Unitary Patents and European patents. The Unitary patent system is to run in parallel to the current European Patent System. More detail about the plans for UPs and the UPC can be found on the European Patent Office’s website.

Why does UK and German Ratification matter?

UK and German participation in the UPC system is key for two main reasons:

Firstly, Article 7(2) of the UPC Agreement locates the seat the central division of the UPC in Paris, but with two further sections in London and Munich. London is due to host one of the themed Courts (or sub-divisions) focusing on chemistry and life sciences cases (“chemistry, metallurgy and pharmaceutical and human necessities”), the Munich sub-division will deal with cases relating to mechanical engineering and all other subject-matter will go to Paris, (including physics and electrical engineering).

If any of these three countries were not to participate in the system, it seems unlikely that the sub-divisions would stay there, but that would require amendment of Article 7(2) of the UPC Agreement. All 3 Courts have been set up and are in theory ready to open their doors.

Secondly, Article 89 of the UPC Agreement stipulates that 13 participating countries must deposit their instruments of ratifications of ascension (a number already reached), but this must include “the three Member States in which the highest number of European patents had effect in the year preceding the year in which the signature of the Agreement takes place

According to the EPO’s 2018 statistics (the latest available), the UK, France and Germany have the highest number of European patents in effect. Then, the 4/5 countries with no validation procedure have easily the next highest number of European patents validated – Belgium, Switzerland / Liechtenstein, Ireland and Monaco. There is then a steep drop off to the next countries.

It seems likely the intention of this provision was to ensure that the UK, Germany and France ratified the agreement. Without all three of the UK, France and Germany participating, this section will have to be re-written, as it is very likely these three countries will maintain the highest number of European patents validated, regardless of any of them withdrawing from, or not ratifying, the UPC.

German Constitutional Hurdles

The UPC has encountered some legal stumbling blocks in the German Courts. Despite passing a law to ratify the UPC agreement in March 2017, passing of the subsequent legislation was halted due to a complaint was filed before the German Federal Constitutional Court. A decision was finally reached on this issue in March 2020 – the German Constitutional Court declared the German ratification of the UPC null and void. This was because they ruled there is an implied relinquishment of sovereignty resulting from the law passing, and the required two thirds vote of the German Parliament was not met in order to allow such relinquishment.

The German Government has since indicated they will attempt to get the law re-passed by the end of the current legislature (by October 2021). However, Germany has yet to ratify the UPC.

UK Government withdraws participation in UPC

The intent behind UK Government’s prior statement indicating that the UK will not be seeking involvement in the UP/UPC system was confirmed in Parliament by Amanda Solloway (Parliamentary Under Secretary of State, Minister for Science, Research and Innovation). Her written statement in the House of Commons was submitted as follows:

UNIFIED PATENT COURT

I am tabling this statement for the benefit of Honourable and Right Honourable Members to bring to their attention the UK’s withdrawal from the Unified Patent Court system.

Today, by means of a Note Verbale, the United Kingdom of Great Britain and Northern Ireland has withdrawn its ratification of the Agreement on a Unified Patent Court and the Protocol on Privileges and Immunities of the Unified Patent Court (dated 23 April 2018) […]

In view of the United Kingdom’s withdrawal from the European Union, the United Kingdom no longer wishes to be a party to the Unified Patent Court system. Participating in a court that applies EU law and is bound by the CJEU would be inconsistent with the Government’s aims of becoming an independent self-governing nation.

[…]  The United Kingdom considers that its withdrawals shall take effect immediately and that it will be for the remaining participating states to decide the future of the Unified Patent Court system“.

This comes as no surprise given the Government’s previous statement. It seems that the Court of Justice of the European Union (the CJEU) having a central and primary role in the Unified Patent Court was the sticking point for the UK Government.

The UK officially left the EU on 31st January 2020, but is currently in a “transition period” until the end of 2020. The UK’s post-Brexit relationship with the EU is still taking shape, and this will not accept the UK’s participation in the current (non-EU) European Patent System.

Is this the end of the UPC?

The German Government has apparently stated they aim to have the instruments of the UP and UPC systems ratified in the next year or so. So, the German issue constitutional issue seems the lesser of the two above discussed issues.

The lack of UK participation proposes some challenges to the system. The German Government has stated they are confident the UK withdrawal will not prevent the UPC coming to life. But, it seems likely there will need to be modifications to the UPC Agreement, which in itself will be a lengthy process.

Alexander Ramsey, the UPC’s Preparatory Committee Chair released a statement in March 2020 regarding the UK’s indication they will withdraw from the system:

Following the UK government’s decision not to pursue remaining in the Unified Patent Court and in the Unitary Patent, work on the implementation of the Unified Patent Court continues. Once Germany will be in a position to ratify the UPC Agreement and the Protocol on the Provisional Application, arrangements will be made to deal with the practical implications of the UK‘s departure. These will be published in due course.”

The Central Preparatory Committee of the UPC has also released a statement in July following the UK’s official withdrawal, registering their disappointment in the UK’s withdrawal but stating that they will “now convene to discuss the consequences of the UK withdrawal and agree a way forward.  Once this has been settled, a further announcement will be made on this website.” They have yet to release any details of how they plan to move forward without UK participation.

There will likely be difficult decisions about where the London sub-division should be located, it seems unlikely to us that it will remain in London. However reaching a consensus on its new home may prove challenging. Milan and The Hague have expressed an interest in hosting the sub-division, or it could be consolidated with one of the other Central Division in Paris or Munich.

We will continue follow the saga of the UPC as it develops.

As we have previously noted, there will be no impact made by Brexit on the UK’s membership of the European Patent Organisation, which grants European Patents.