Posted: June 27th, 2016
EPUE-Reg and UPCA after Brexit, by Prof. Dr. Winfried Tilmann, Hogan Lovells
The British voters have voted for a Brexit. What does that mean for the EPUE-Reg and for the UPCA?
There is no immediate effect, since Art 50(2) EUC provides for a two-year period for agreeing on the details of an exit. During that period, the details of any UK participation in the patent package must be agreed upon for the time after the legal effect of the exit has taken place (legal exit).
What are the options for the EPUE-Reg and for the UPCA if a continuing participation of the UK in the patent package is desired?
In case the UK leaves the EU, not having found a solution for the EPUE-Reg, the UK participation in the EPUE-Reg would end automatically with the UK losing the status of an EU Member State (EU-MS).
However, since one of the two bases of the EPUE-Reg is Art 142 EPC, an agreement may be reached between the EPC member states being UPCA signatory states, including the UK, in the form of a Protocol to the UPCA agreeing that a unitary effect of an EPUE would be extended to the UK on the basis of Art 142 EPC. That agreement would be binding on the PMS and the UK on the basis of international law only. It would lead to two parallel unitary effects of the EPUE (1) in the participating member states of the EPUE-Reg (PMS) on the basis of the EPUE-Reg and (2) in the UK on the basis of the agreement pursuant to Art 142 EPC.
Union law would not definitely prohibit such internal agreement between EPC member states. The blocking effect of an EU competence used by the EU normally includes external agreements of the EU-MS on the same matter. But this is not the case, if the EU decides not to make use of its competence or even allow the external agreement by endorsing it. It could be envisaged that the endorsement would be included in the exit-agreement EU-UK. The unitary effect in UK would still be only a matter of international law. The endorsement is only needed for securing the competence of the contracting member states of the UPCA (CMS) to agree on that extension.
a) Art 84 UPCA provides that only EU-MS may ratify the UPCA. If the UK has ratified at the time of the legal exit, absent any change of the UPCA, the UK (or the other CMS, being the other party) may theoretically cancel the adherence of the UK to the UPCA pursuant to Art 62, 65, 67 of the Vienna Convention, because a fundamental circumstance has changed (Art 62 Vienna Convention).
b) What kind of change of the UPCA would admit an adherence of the UK to a modified UPCA after the legal exit?
(1) The CJEU, in its Opinion 1/09, has decided, that the UPCA may be concluded only if the referral procedure under Art 267 TFEU is not jeopardized. Pursuant to Art 21 UPCA and its referral to Art 267 TFEU the UPC is obliged to refer all questions on the construction of EU law applied by it to the CJEU. Therefore, the requirements of Art 267 TFEU are met to a full extent.
It is true that under Art 267 TFEU only the courts of EU-MS are permitted to refer questions pursuant to Art 267 TFEU, but the UPC is a common court of EU-MS (Art 71 a Brussels Ia-Reg) and would not lose that character, if a non-EU-MS (UK) who has ratified the UPCA being an EU-MS would continue to participate in the UPCA after leaving the Union, because that state, in ratifying, had fully accepted Art 21 UPCA and Art 267 TFEU and is bound to accept the Union law as defined by the CJEU. A statement to that effect could be included in the agreement based on Art 142 UPCA and also be endorsed in the exit-agreement EU-UK.
(2) Therefore, Union law would allow a change of the UPCA permitting a CMS, who had been an EU-MS at the time of ratification, to remain as a member state of the UPCA (CMS). This change could be made by the Administrative Council of the UPC pursuant to Art 87 (2) UPCA, if the exit-agreement (having the legal status of Union law) would contain a parallel text. In that case, no ratification by the CMS would be necessary (see 3. a below).
The possibility of an extension of the unitary effect of an EPUE to the UK could be provided for by a Protocol of the Administrative Committee prepared by the Preparatory Committee. The competence of the Administrative Committee for that part of the proposed Protocol could be based not only on Art 142 EPC but also later on the exit-agreement UK-EU. If the Protocol were based (also) on the exit-agreement UK-EU, the competence of the Administrative Committee could be based on Art 87(2) UPCA, because the Protocol would bring the UPCA into line with Union law. In that case ratification by the CMS or by the UK would not be needed.
The same applies for the part of the proposed agreement of the CMS according to which a CMS who, at the time of ratification, was an EU-MS but does not continue to be an EU-MS may stay within the UPCA. This change may be brought about by a Protocol to the UPCA based on Art 149a(1) lit a EPC and later on the exit-agreement UK-EU, in combination with Art 87(2) UPCA, because the Protocol would bring the UPCA into line with Union law. Ratification by the CMS and by the UK would not be needed.
4. The way forward (timetable)
a) The UK should use its present position as EU-MS and deposit its instrument of ratification of the UPCA as soon as possible. In that case the UPCA could enter into force well before the exit-agreement becomes operative.
b) After the entry into force of the UPCA, the Administrative Committee of the UPCA should amend Art 84 UPCA in saying that a CMS will not lose its contractual position if it leaves the EU.
c) The Administrative Committee should, at the same time, establish a Protocol containing an agreement of the EPC-MS providing for an extension of the unitary effect of an EPUE to the UK.
c) Both agreements should be endorsed in the exit-agreement EU-UK. With the exit-agreement becoming operative, the two agreements (b and c) would be covered by Union law (the exit-agreement being of such quality) thus providing the basis for a retroactive application of Art 87(2)) UPCA.
d) At the date when the exit-agreement becomes operative, the UK will stop being an EU-MS but its further adherence to the UPCA would be based on the amended Art 84 UPCA. The UK would be ready to receive the unitary effect of an EPUE on the basis of Art 142 EPC.