Brexit and Unitary patent in the EU: An analysis of what has happened so far.

Failure of the first attempt to establish a unitary patent system

Since the conclusion of The European Patent Convention in 1973, there have been several attempts at creating a unitary patent system for the European Union. The purpose of the unitary patent system is to harmonize the patent litigation practices by:

•  introducing a single patent title to be applicable in the participating Member States; and
•  creating a unified judicial system for resolving patent disputes.

This would also allow in solving the problem of legal uncertainty and overcome the divergences in decisions of different national patent courts of the member states.

One of the attempts was an initiative to create the European and Community Patent Court (ECPC) that was supposed to function on the basis of an international agreement concluded between  Member States of the EU and other countries that are parties to the European Patent Convention (EPC). The CJEU (Court of Justice of the EU) C-1/09 made its stand quite clear in March 2011 that: “The envisaged agreement creating a unified patent litigation system is not compatible with the provisions of the EU Treaty and the FEU Treaty”.

Role of the CJEU Opinion C-1/09

This decision of the CJEU is of utmost importance in relation to the consideration of UK’s participation in the Unified Patent Court (UPC) after Brexit. Since the UK’s announcement of withdrawal from the EU, discussions have started on whether UK can remain a member of the UPC system and if yes, then by what means. There is no doubt that Brexit became a significant obstacle in starting of the work of the UPC (although not the only one).

In view of above CJEU opinion, the consequences of Brexit to the UPC can be considered from two perspectives:

1. that the UK ceases to be a member of the EU (primary issue);
2. that the UPC has to be a part of the EU judicial system and thereby ensure the primacy and autonomy of EU law by doing that in cooperation with CJEU.

Introduction of new changes to the unitary patent paradigm. Is a Unitary Patent Court only for EU-Member States?

As a consequence of the CJEU Opinion C-1/09, certain amendments have been made to rebrand ECPC into the UPC Agreement to the effect that only EU member States can be parties. The idea was to introduce a unitary patent (as a supra-national prerogative of the EU under Art. 118 TFEU) and to create in parallel a Uniform Patent Court, often called jointly the “Unitary Patent Package”.

Thus, Art. 2 of the UPC Agreement established the creation of the Unified Patent Court that is a specialized patent court common to the participating Member states, competent to hear disputes on the validity and infringement of the new unitary patents that previously were assigned to national courts and EPO Appeals Boards. Since it is envisaged to be a Member State’s court, it is allegedly “part of their judicial system”, “subject to the same obligation under Union law as any national court of the Contracting Member State” and “has the same powers and duties as national courts to obtain preliminary references from the CJEU under Art 267 TFEU”. Furthermore, Art. 2(a) UPCA provides a definition of Contracting Member State as “a Member State of the European Union”.

Supremacy of EU law and the role of CJEU as a legitimate hurdle to UK’s participation in the UPCA

Some have argued that the CJEU in Opinion 1/09, did not explicitly exclude the participation of non-EU Member States as long as the supremacy of EU law is safeguarded.

However, some concerns have been raised about the legitimacy of the international agreement (such as UPCA) to present an optimal framework for the applicability of EU law by the courts situated outside of the EU. Another point is whether such an agreement could satisfy the UK in its will to have sovereign control and independent policy, while sharing the unitary patent protection with the EU in the same time.

Although one thing is clear here: the CJEU will allow the court of the non-EU country to refer requests for preliminary rulings, as the supremacy of the EU law will have to be ensured by making the references to the CJEU and complying with its judgements.

From the beginning, it was apparent that the continued compliance with EU law after the UK’s withdrawal from further participation in the UPCA would be a challenging political decision for the UK. However, without such clause in the agreement, Brexit will terminate the possibility of the UK’s participation in the unitary patent system.

The general criticism is that by continuing the UPC membership after Brexit, the UK will face the so-called ‘’UPC/Brexit paradox’’. This means that agreeing to the supremacy of the EU law on UPC decisions, it will simply continue to be under the jurisdiction of the CJEU.

The UK’s statement of non-participation

The aforementioned “UPC/Brexit Paradox” was the reason for the statement made by the UK Government on February 27, 2020 in paragraph 5 of the United Kingdom’s Brexit negotiating objectives (“The UK’s Approach to Negotiations’’). This document expresses the UK’s uncompromising disagreement with the CJEU to continue having jurisdiction over the UK after the end of the transition period. During the transition period, (until the end of 2020 while the UK and EU negotiate additional arrangements) the current rules on laws, trade and business for the UK and EU continue to apply. New rules will take effect on 1^st January 2021 and from that date the UK does not intend to extend the jurisdiction of the CJEU.

Such continuation of the Brexit scenario was envisaged as predictable.  By participating in the UPCA, the UK would subordinate itself to the primacy of the EU law (Article 20 and 21 of the UPCA) and would ensure the supremacy of CJEU decisions over its national courts. This in turn contradicts what the majority of UK citizens voted for in the June 2016 referendum. Thus, while rejecting the supremacy of CJEU decisions and EU laws, the UK implicitly briefed that it will not seek to remain part of the UPC system.

This was further explicitly confirmed by spokesperson of the UK Prime-Minister Office, Baylee Turner, who stated: “I can confirm that the UK will not be seeking involvement in the UP/UPC system. Participating in a court that applies EU law and bound by the CJEU is inconsistent with our aims of becoming an independent self-governing nation.”

Needless to say, the above statements bring to an end any encouraging discussion that the United Kingdom can still participate in the unitary patent system.

In the event that one day the UPC comes into force, for the UK this would mean that their business can still use the UPC to obtain a unitary patent in the EU, but only national and EPO patents will be available for business in the UK.

Additional hurdle: German ratification of the UPCA

Even imagining a scenario where the UK, after signing the UPCA, recognises the supremacy of CJEU decisions and EU law in general, the UPCA would still not come into force. The same is also the situation today, where the UK has stated that it will not participate. The reason for this is that the UPCA has to be signed by the three Member States with the highest number of granted European patents. Excluding UK, the three Member States with the largest number of patents in force are Germany, France, and the Netherlands. Of these countries, only Germany’s ratification procedure has been halted due to legal uncertainty.

This uncertainty stemmed from a complaint filed against the Unified Patent Court Agreement to the German Constitutional Court in March 2017 and was considered to be a major “stumbling block for the Unitary Patent project”. The main concerns of the complaint were:

• “Breach of the requirements of the qualified majority under Article 23(1) of the Basic Law. (German parliament ratified first draft bill of the UPCA but no qualified majority was present on voting);
• the incompatibility of the UPCA with EU law;
• lack of independence of the judges of the UPC;
• impermissible blanket authorization with regard to procedural costs and their reimbursement”.

On March 20, 2020 the German Constitutional Court upheld the complaint against the ratification of the UPCA. However, only its first element was found to be valid and admissible. The German Constitutional law considered the patent dispute settlement by the UPC to be a “transfer of the adjudication authorities which implicates the constitutional rights of the German populace, such a transfer of authority requires a two-thirds majority in the German federal parliament. Therefore, the recognition of international adjudicatory authority requires strict constitutional safeguards, which were not met in this case”. This decision, thus highlights a problem related to the voting procedure, which was not properly adhered to in 2017, and therefore, did not receive two-thirds majority for legitimate ratification of the UPCA.

Meanwhile, other elements of the complaint (the incompatibility of the UPCA with the EU law etc.) were held inadmissible. This decision, thus, leaves the hope that once the relevant amendments to the UPCA have been made (taking into account the UK’s statement on non-participation), the ratification procedure can be repeated. Later, Germany’s intention to move forward with the creation of the UPC was confirmed by Christine Lambrecht, the Minister of Justice and Consumer Protection, who stated: “I will continue my efforts to ensure that we can provide European innovative industry with a unitary European patent with a European Patent Court”.