Posted: June 24th, 2016
Does Brexit mean the end of the UPC? By Willem Hoyng, HOYNG ROKH MONEGIER
1. It should be remembered that the UPC is not a European Union instrument but an international Treaty between countries. So this Treaty, like the European Patent Convention, has as such nothing to do with the European Union.
2. It is a widely held misconception in my view that the European Court of Justice has ruled that only EU member states can be a member of the UPC. The European Court of Justice has only held that the Supremacy of EU law has to be recognized. That is now enshrined in the Convention and this means that countries that are members of the UPC accept such supremacy of EU law.
3. What Brexit exactly means is by the way not clear. One thing is clear and that is that the UK for the moment remains a member of the European Union and that it will first have to invoke Art. 50 of the Lisbon Treaty whereafter negotiations will start which will last at least two years (and may take of course longer).
4. As everything is ready for a start of the Court in 2017 nothing prevents the UK to ratify the UPC. Of course it is uncertain what is going to happen. Undoubtedly some will call for new elections in the UK and whatever the vote will be in the present parliament or in a parliament after possible new elections will remain uncertain. So yes, there is uncertainty if the UK has the political will to ratify.
5. However, it seems clearly in UK’s interest to do so. To mention a few reasons:
6. It is clear that there should also be the political will of the other participants in the UPC to keep the UK in but there seems no sign that that is not the case. It is also in the interest of the other UPC members that an important market as the UK market is included in the territory of the UPC and that the project that is now about ready to go goes ahead.
7. So I see no necessity to await the negotiations about a Brexit. During these negotiations the UPC can be (like the Unitary Patent) a subject of discussion but there seems no reason why the UK could not remain in the UPC.
8. My conclusion is that Brexit does not have to delay the entering into force of the UPC and does also not have to lead to an UPC without the UK. However, if there is no political will in the UK to ratify then we will be confronted with a substantial further delay which can last several years.
I am afraid that your “widely held misconception” is in fact not a misconception. After all, the draft litigation agreement that was before the CJEU when it drafted its Opinion 1/09 already contained both a necessity to respect EU law, and an obligation to refer questions on EU law to the CJEU, with the decision by the CJEU being binding for the European and Community Patents Court. The relevant ECPC provisions are quoted in CJEU Opinion 1/09.
Yet, this was not good enough for the CJEU, so that it concluded that the draft ECPC agreement violated EU law. It was essential for the CJEU that only courts of (or, like the Benelux court, common to) EU Member States would have jurisdiction.
After Opinion 1/09, the EU Member States thus rewrote the draft agreement so as to limit participation to EU Member States only.
It does not make sense for GB to ratify the UPC Agreement, as they would have to leave the UPC Agreement as soon as they leave the EU.
Also, we already a lack of legal certainty regarding EU TMs and Community designs and plant variety rights as to what will happen to coverage in GB once GB has left the EU. As a representative of a patentee, I do not want to add to that legal uncertainty a substantial legal uncertainty about the fate, as regards GB, of unitary patents.
In view of the above, I would urge the UPC signatory states to make the only 2 necessary amendments to the UPC Agreement as soon as possible, e.g. at a next meeting of the EU Council. The only 2 amendments needed are a deletion of the need for GB to ratify before the UPC system can start, and another location for the chemical branch of the Central Division. Being Dutch myself, I would prefer The Hague, but I could imagine that the new 3rd most designated EU Member State, i.e. IT, would claim that Milano is a more logical choice.
It would be logical (but not necessary) to also decide that GB diplomas no longer qualify for a European litigation certificate during a transitional period. This is a measure that can easily be decided upon by the UPC’s Administrative Committee.
As regards the unitary patent, the renewal fees need to be reduced by amounts corresponding to the GB national renewal fees. This is a neutral operation, as GB no longer participates in the proceeds. It is necessary to reduce the unitary renewal fees, as if the difference between the unitary fees and the national fees for DE+FR becomes too big, the percentage of EP patents that become unitary patents becomes too low for the unitary patent system having the desired effect of contributing to an Internal Market without internal borders. This measure can easily be effected by the Select Committee of the Administrative Council of the European Patent Organisation at its next meeting.
So, only very few things have to be done, and it is important for European innovators that they are carried out as soon as possible. There is no need to await the exit treaty to be negotiated in the years following GB’s formal submission of its exit declaration. Instead, it is important for users of the European patent system that the unitary patent system and the UPC Agreement start asap.
I am surprised that you do not seem to care if the UK is going to belong to the UPC and it is disappointing that you do not react to the advantages (for us, the other UPC countries, and the UK) which I have put forward.
You agree (albeit implicitly) that nothing prevents the UK to ratify the UPC agreement and for the UPC to start with the UK. Of course it is clear that the UK needs the political will to do so but as I indicated if the UK looks at it in an objective way the UPC is also in their interest.
Now you write that the UK would have to leave as soon as they leave the EU. First of all, leaving the EU can take a long time (at least two years after the UK invokes art. 50 of the Lisbon Treaty but in all likelihood much longer). So who knows what happens. However, if the UK leaves it is nowhere written that they have to leave the UPC. There is simply no provision in the UPC which states that they have to leave the UPC. It is true that the present UPCA does not allow the participation of non-EU Member States but there is no provision for the situation in which a Member State having ratified the UPCA becomes a non-Member State.
It is incorrect to suggest that the present Chapter IV was already in the draft before Opinion 1/09. The last provision, establishing the liability of the participating Member States for any violation of EU law was missing and this was explicitly mentioned by the CJEU. It is also incorrect to suggest that Opinion 1/09 states that only EU Member States can be a member of the UPCA. The participation of non-EU Member States is not even mentioned as a problem.
The new architecture of the UPCA, including the new chapter on the primacy of Union law and the cooperation with the CJEU, including the liability of Member States in case of disrespect by the UPC of these obligations, has never been the subject of a second opinion of the CJEU. Opinions of the CJEU can be requested only with respect to agreements to be concluded by the EU. This was the case with the former EUCPC which was to be created by a mixed agreement involving the EU, whereas the UPCA is a mere intergovernmental agreement. However, since the Spanish actions before the CJEU were also directed against the UPC, the CJEU by rejecting these actions has implicitly approved the compatibility of the UPC with the EU Treaties.
It follows that if the relevant provisions concerning the cooperation with the CJEU in the UPCA are maintained exactly as they are, there should be no legal problem even if the UK, after it terminates its EU membership, continues to participate in the UPC. Since the obligations concerning Union law and the role of the CJEU are imposed on the UPC and not on UK courts, nothing will change legally speaking with respect to the relationship between the UPC and the CJEU because of the participation of the UK. By participating in the UPC the UK would accept the role of the CJEU and the collective and individual liability of the participating Member States for the respect to these obligations by the UPC. Legally speaking this should not cause any problem.
Legally speaking the UK could not only continue to participate in the UPC but also in the Unitary Patent. This could be achieved by a separate international agreement, an “Extension Agreement”, based on Article 142 EPC between the EU Member States participating in the enhanced cooperation and the UK. By such an agreement the validity of the Unitary Patent and the uniform protection it confers, would be extended to the territory of the UK.
One legal question would be whether the participating EU Member States could engage in such an international agreement with the UK. This could be excluded if the EU with the adoption of the Unitary Patent Regulation has acquired exclusive competence in this field, with the result that such an agreement with the UK could be concluded only by the EU, but not the participating Member States. However, if the extension of the Unitary Patent to the UK would be foreseen in the “Withdrawal Agreement” the EU will conclude with the UK, this could be considered as an authorization of the EU institutions of such an agreement between the participating Member States and the UK.
Once the “Brexit” will take legal effect the UPCA should best be modified in order to positively allow the participation of the UK as a non-EU (former) Member State. To this end the simplified procedure in Article 87(2) UPCA could be used if the participation of the UK in the UPC is foreseen in the “Withdrawal Agreement”. Since the latter can be considered as Union law and since the modification of the UPCA would then be required to bring it in line with Union law, no review, (diplomatic) conference, and no ratification of the modification of the UPCA would be necessary. Instead, the necessary amendments could be simply carried out by the UPC Administrative Committee.
So I cannot agree with your suggestion to change the UPC as soon as possible and effectively kick out the UK. It is my view that that is not at all desirable and not necessary and quite frankly it will lead to more delay than the UK ratifying and the UPC starting some where next year according to the current plan.
I would have loved for GB to participate in the UPC / unitary patent, and I do see its clear advantages. However, the GB voters have decided that they are not interested in our ever closer Union anymore. I don’t believe we should insult those GB voters by now acting as if nothing has happened.
I have not written that the UPC Agreement is identical to the ECPC draft agreement that was the subject of CJEU Opinion 1/09. I did state that the ECPC draft agreement already contained important obligations for the ECPC to take EU law into account, to refer questions on EU law to the CJEU, and to comply with CJEU decisions.
Yet, this was not good enough for the CJEU, which did mention that the ECPC draft agreement is at odds with the idea that EU law (the ECPC would handle Community patents as well) should be subject to the national courts cooperating with the CJEU, mentioning in passing that a court common to EU states like the Benelux court fits in with this cooperation between national courts and the CJEU. As the draft ECPC agreement already contained obligations for the ECPC to refer questions on EU law to the CJEU and to abide by the outcome of that referral, in my view it is clear from CJEU Opinion 1/09 that a consequence of that opinion is really that the UPC agreement must remain limited to participation by EU Member States. This was the most important change from the draft ECPC agreement to the present UPC Agreement.
Please note that one of the entry into force requirements of the UPC Agreement is a change to Regulation 1215/2012. You will have no doubt observed that the amendment regulation 542/2014 describes the UPC as a court common to the EU Member States. If the UPC Agreement is no longer limited to EU Member States, the UPC Agreement no longer fits in with Regulation 1215/2012 as amended.
Importantly, because EU Member States have no competence to conclude treaties with non-EU states on matters overlapping with EU law, the EU itself too would be a party to the ECPC agreement. For example, the EU itself rather than its Member States is a party to the new Lugano Convention, which relates to the same subject as Regulation 1215/2012. So, participation in the UPC by a non-EU state like GB would necessitate EU participation in the UPC Agreement, which would result in that the CJEU would become competent to interpret the UPC Agreement, which would seriously slow down the UPC procedures and may not necessarily result in clarity, while the efforts to remove substantive patent law from the unitary patent Regulation 1257/2012 would have been in vain.
So, post-Brexit participation by GB in the UPC also has clear disadvantages and – to the extent it is possible notwithstanding CJEU Opinion 1/09 – would require fundamental changes to both the UPC Agreement and Regulation 1215/2012, which are much more fundamental than the 2 small edits I proposed: just change entry into force conditions and location of chemical branch of Central Division.
We agree that it is very desirable that the UK participates in the UPC. We agree also that the CJEU has not stated that the UPC agreement must remain limited to the participation by EU Member States let alone that the CJEU has ruled that a EU Member State which has ratified the UPC and thereafter makes an Art. 50 application could not remain a party to the UPC.
The only question is if the UPC (with the changes which as I indicated can be made by the Administrative Committee) is EU law compatible. Also in view of the decisions of the CJEU in the Spanish cases, I think it is.
Finally, we do not know what the future brings: When will the UK invoke Art. 50, how long are the negotiations going to last and what will the outcome be also with respect to all the Regulations which are applicable in the UK at the moment?
What we know at the moment is that the UK is a member of the EU and can ratify the UPC and that the UPC can start without delay. I realize that that requires political will. So let us encourage the UK to ratify and then not think of all kind of clever ways why they would have to leave the UPC in the (uncertain) future but how to keep them in. Herewith I stop this discussion and go back to work for my clients but everybody who is interested in the consequences of Brexit should come to the Munich Conference on July 7 organized by Premier Cercle in cooperation with the EPO where among others Margot Fröhlinger will speak.
As the UPC Agreement is a treaty between states, all the parties would need to agree to amend it. Art 87 on Revision is some way from being effective. It seems unlikely that the UK would agree to remove the London court. While all the states (whether in the EU Council or otherwise) other than the UK might agree to change the location by means of a new treaty that would result in a breach of the UK’s treaty rights under Art 7(2).
The main point, seen from London, is that matters are far from being crystallised, and there is a long way to go. IP rights are unlikely to be top of any government’s list.
Is not an alternative approach which does not depend upon the consent of, or any action by, the UK, for the other parties to the UPCA to enter into a UPCA Mark II which is identical to UPCA Mark I apart from those aspects of UPCA Mark I which prevent its entry into force without UK ratification? Germany can block entry into force of UPCA Mark I by not ratifying it. In order that the European Patent with Unitary Effect also come into effect amendments to EU Regulations 1257/2012 and 1260/2012 would be required to link these instead to UPCA Mark II (and perhaps enhanced cooperation on which these are based would need to be restarted) but, as the Court of Justice has told us, unanimity is not required for these. Similarly the Brussels II Regulation would need a further minor amendment to refer to UPCA Mark II but again unanimity is not required for this.
The reference to Brussels II in my earlier post should of course have been to Brussels I.
Everyone should get on with this and see how it goes. The parties should ratify now and let the system should roll. The UK will be a Member State for two and a half years at least and there will be long enough for people to begin to get a feel for the new system.
Given the will that has been exhibited so far to make it work, a localised difficulty should not put it off. If it is the success hoped for then the amendments that might be required to accommodate changes in status will be much easier to agree.
As Ian has commented, it seems highly unlikely that the UK would voluntarily forfeit their current right to a court in London. Accordingly, the envisaged amendment of the UPCA (for the sake of eradicating the two (possibly) problematic references to the UK — the London court and the necessity for UK ratification) in advance of the UK’s actual exit from the EU (as opposed to their triggering of Art. 50) would presumably require a new instance of Enhanced Cooperation among a new group of EU countries excluding the UK (presumably all current EU countries except the UK and Spain).
However, I do not recognize how such Enhanced Cooperation (excluding the UK) could be justified under such circumstances, let alone completed faster than simply awaiting the UK’s actual exit.
So the powers that be seem to have two choices. They can either await the UK’s actual exit from the EU, amend the UPCA and restart the ratification process or they can make the UPC a political priority in the UK and push forward, ironing out the wrinkles later when negotiating the “divorce” agreement.
The UPC enjoys tremendous support in the UK. We are inches from the finish line. Do we now want to have to rerun half the race?
I think all of us in the profession should be following Willem’s example and raising our voices to make ratification of the UPC a political priority in the UK.