Brexit – What now?

On 23 June 2016, the UK voted to leave the EU.

The process for a Member State to withdraw is set out, in fairly short form, in Article 50 Treaty on European Union. Pursuant to Article 50, on 29 March 2017, the UK gave formal notification of its intention to leave the European Union, starting a period of two years to negotiate the terms of its exit, after which, in the absence of agreement, EU Treaty rights and obligations will automatically cease to apply.

In the meantime, the UK remains a member of the EU and EU rules continue to apply to it.

For information on wider Brexit implications, we have gathered insights and briefings for consideration in a dedicated microsite.


What does this mean for the Unitary Patent and the UPC?

Will the Unitary Patent System go ahead in some form?

Yes, the Unitary Patent System is very likely to go ahead with the UK’s participation and should not be further delayed pending the Brexit negotiations. However, the UK’s continued participation after Brexit remains uncertain.

On 28 November 2016, the UK Government announced its intention to proceed with preparations to ratify the UPC Agreement and indicated that it will be working with the Preparatory Committee to bring the UPC into operation as soon as possible.

The UK Government however added that this decision "should not be seen as pre-empting the UK’s objectives or position in the forthcoming negotiations with the EU".

On 11 January 2017, the UK’s new IP minister, Jo Johnson, reiterated the UK’s intention to proceed with ratification of the UPC Agreement. He said that the UPC is “not an EU institution”, but is independent of EU membership, while noting that the Unitary Patent System has “value for UK’s inventors and UK’s businesses”. However, Johnson also acknowledged that the UK’s continued participation in the Unitary Patent System post-Brexit, including its role as a host of the life sciences seat of the central division, remains uncertain, and will form part of wider discussions relating to the UK leaving the EU.

Following the UK's announcement that it will proceed with the ratification of the UPC Agreement, the UPC Preparatory Committee has announced that it is aiming for the Unitary Patent System to become fully operational in December 2017 with the sunrise period for opting out existing European patents starting in September 2017.

 

Can the UK participate in the Unitary Patent System after a Brexit? 

Legally, this could be possible, but the steps required to achieve it may be politically difficult in the UK. 

The Unitary Patent System is based on the UPC Agreement, which established the jurisdiction of the UPC, and EU Regulations relating to the creation of the Unitary Patent and the applicable language regime.

The UPC Agreement is an international treaty and is not an instrument of EU law. However, under the current legislative framework, ratification of the UPC Agreement is only open to EU Member States (Art 84 UPC Agreement). This limitation was introduced following an early opinion of the CJEU (Opinion 1/09), in which it found the then-current proposal to be incompatible with EU law.

However, there is a strong argument that the CJEU’s decision did not prohibit the participation of non-EU Member States altogether, but requires only that all participants recognise the primacy of EU law, and that the Art 267 TFEU process (under which questions of EU law can be referred to the CJEU) is maintained.

So, one potential legal basis for the UK’s continued participation in the UPC in a manner which is compatible with EU law, is an amended UPC Agreement, revised to remove the EU membership requirement, under which, among other things, the UK accepts Art 267 TFEU and the primacy of EU law under Art 20-24 UPC Agreement.

This could, however, prove to be politically difficult. The UK's Prime Minister, Theresa May, has already said (in a speech on 17 January 2017) that bringing an end to the jurisdiction of the CJEU in the UK is among her top twelve priorities. The Government’s subsequent Brexit White Paper, titled “The United Kingdom’s exit from and new partnership with the European Union”, confirmed this approach by stating “We will bring an end to the jurisdiction of the CJEU in the UK”.

Regarding the Unitary Patent Regulation, while it will no longer apply to the UK post-Brexit (as it is an instrument of EU law), Participating EU Member States that are also EPC contracting states could agree, based on Art 142 EPC (under which any group of EPC Contracting States can agree that an EP granted for those States has unitary character throughout their territories) that the unitary effect of a Unitary Patent would be extended to the UK on the same basis. International agreements could also replicate the arrangements in the Regulation relating to the System’s language regime.

So, in our view, while the legal position is far from straightforward and widely debated, if there is political will, in both the UK and continental Europe, it appears very likely that a legal solution will be found.

Through its participation in the UK’s Intellectual Property Lawyers' Association, Linklaters (along with the IP Federation and the Chartered Institute of Patent Attorneys), instructed leading counsel Richard Gordon Q.C. and Tom Pascoe, both of Brick Court Chambers, to consider whether the UK can participate in the Unitary Patent and UPC after a Brexit. Counsel’s view is consistent with our own (as set out above). In particular, the CJEU’s Opinion 1/09 does not necessarily rule out the UK’s continued participation. The full text of the opinion is available here.  

More uncertain is whether the political will continues to exist. The remaining EU Member States may not agree to the UK’s continued participation in the Unitary Patent System post-Brexit if this could be seen as allowing the UK to “cherry pick” its involvement in EU initiatives following its exit. Moreover, the Unitary Patent System is unlikely to be high on the UK’s agenda in its Brexit negotiations.

So, while it is likely to be legally possible for the UK to participate, this may not be achievable politically.

What will happen if the UK does not remain in the Unitary Patent System after a Brexit?

If the UK leaves the EU with no political agreement in respect of the UPC, amendments to the UPC Agreement would probably be required, and would need to be agreed between the remaining EU Member States for the continuation of the UPC, including the new location for the life sciences seat of the central division.

Moreover, if the UK does not remain in the Unitary Patent System, that means that Unitary Patents will no longer have effect in the UK and the UPC will no longer have jurisdiction over EP(UK)s.

Accordingly, provisional measures may have to be adopted, notably with respect to pending actions before the UPC involving EP(UK)s.

Also, as the UK is an important market for many international companies, this would make Unitary Patent System less valuable - as they would have to file separate national patents in the UK and bring separate actions to enforce them. However, to what extent the system would remain attractive if the UK no longer participates is uncertain, and will depend on each user and/or sector’s economic interests, geographical footprint and patent strategies. That said, even without the UK, the remaining 24 Participating EU Member States (i.e. all Member States except UK, Croatia, Poland and Spain – see our interactive map) together represent hundreds of millions of people and a very significant economic area. In addition, the new system will offer injunctions (including preliminary injunctions) across the whole of that area, and promises lower costs, less administrative burden and shorter timeframes for enforcement than the current regimes.

However, as the UK's IP Minister has acknowledged the value of the Unitary Patent System, and as there will be a significant outlay of resources by the UK in launching the UPC, we expect that the UK intends to reach political agreement in respect of the UPC (as part of the wider package of negotiations) before Brexit takes effect.

How is Linklaters analysing the ramifications of Brexit?

Through its EU Referendum Legal Working Group Linklaters has been considering the many potential legal and business impacts of and outcomes arising from the UK’s referendum decision to leave the EU, including in the IP field. Its impact on the UPC is a particular focus. We are actively engaging in this debate, with a view to communicating our clients’ views to the UK government group responsible for assessing the priorities of the businesses operating in Europe in the context of Brexit negotiations.

Our work includes active participation in legal industry bodies such as European Patent Lawyers Association (EPLAW), the International Association for the Protection of Intellectual Property (AIPPI), the UK’s Intellectual Property Lawyers' Association (IPLA) and the various French IP associations forming the French Union for the Unified Patent Court (UJUB).

Through its participation in the UK’s Intellectual Property Lawyers' Association, Linklaters (along with the IP Federation and the Chartered Institute of Patent Attorneys), instructed leading counsel Richard Gordon Q.C. and Tom Pascoe, both of Brick Court Chambers, to consider whether the UK can participate in the Unitary Patent and UPC after a Brexit (opinion available here).

We are therefore well placed to assist with any Brexit-related IP (including UPC) related questions and concerns you may have in the coming weeks and months. Our key contacts for such inquires are listed here, and we encourage you to raise your questions with any of them, or any of your usual Linklaters contacts.

We have also gathered insights and briefings to help you consider, and deal with, the wider implications of Brexit in a dedicated microsite.