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?

On 26 April 2018, the UK announced that it had ratified the UPC Agreement. This was welcome news to those UPC proponents who feared that there would be little appetite in the UK for participation in the UPC following the decision to leave the EU, and/or that the UK might use ratification as a tool in its Brexit negotiations (the UK (along with France and Germany) is one of three members whose ratification is mandatory before the UPC can come into effect). However, despite this important step forward, two significant issues remain.

On 12 July 2018 the UK confirmed in its Brexit White Paper, that it “intends to explore staying in the [Unitary Patent] Court and unitary patent system” and “ will therefore work with other contracting states to make sure the Unified Patent Court Agreement can continue on a firm legal basis”.

First, progress towards the launch of the UPC has been impeded by a recent constitutional complaint in the German courts (see further here). Until the resolution of that complaint, the ratification process in Germany is on hold (and German ratification is required before the UPC can come into effect). The complaint has been included in the relevant court’s 2018 case list, but no hearing date has been set as yet. Moreover, if the case is referred to the CJEU, or if the German court ultimately agrees that the UPC is unconstitutional, this could stall the project indefinitely.

Secondly, if Germany does not ratify soon, it is unlikely that the UPC could come into effect before the date on which the UK exits the EU (29 March 2019). This is not necessarily an insurmountable issue for the Unitary Patent System (see further at Question 2), but is likely to mean further delays to the launch of the system while the legality of the UK’s participation, and any necessary amendments to the agreements under which the UPC and Unitary Patent are established, are debated.

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

Legally, this may be possible – although the legal position is far from straightforward and widely debated.

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

The UPC Agreement is an international treaty and not an instrument of EU law. However, ratification of the UPC Agreement is only open to EU Member States (Art 84 UPC Agreement). Technically, this may not be an issue given that the UK has now ratified that Agreement while still an EU Member State. However, it is important to note that this limitation was introduced following an opinion of the CJEU (Opinion 1/09) in which it found the then-current proposal (whether the parties to it were a mixture or Member States and non-Member States) to be incompatible with EU law, and following which all non-Member States were removed as parties. 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.

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.

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. The full text of that opinion is available here. Counsel’s view is consistent with our own (as set out above).

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.