Unified Patents and Brexit: Britain’s Back on Board

By Seán Finan

After several failed attempts, years of protracted negotiations and a glacial ratification process, it seemed as if Brexit would finally put an end to the nascent European Unitary Patent. Last week, however, the UK confirmed its intention to ratify the Unified Patent Court Agreement and to move forward with the plans for the creation of a single European Patent. If the UK goes ahead, the agreement would only be a German ratification away from coming into force. This means that we could see a single European patent by 2017.

So, what is the European Unitary Patent? How would it interact with the current patent regime in the EU? What would its introduction mean for the future of pharma and biotechnology in Europe?

Over the last fifty years, European countries have come to recognize the dangers that disharmonious regimes pose to intellectual property rights. As a result, there have been concerted efforts to harmonize IP regimes across the continent. This harmonization process has two distinct strands. For clarity, I’ll refer to the European continental strand and the European Union strand.

The European Continental Strand

The European continental strand began with the 1963 Strasbourg Convention. This multilateral treaty harmonized the three substantive requirements for patentability (novelty, inventive step, industrial application) across all the countries that signed up. The next step came ten years later. The 1973 European Patent Convention (the “EPC”) harmonized more aspects of the substantive requirements for patentability and created the European Patent Office (the “EPO”). Instead of applying directly to several individual national patent offices, an inventor could make one application to the EPO .

The EPO centralizes the examination process and issues bundles of national patents. Here, it is important to note three things. First, neither the European Patent Office nor the European Patent Convention are institutions of the European Union. They are (at least, in theory) entirely independent entities. Second, there are more Contracting Parties to the EPC than Member States of the EU (38 and 28, respectively), though the overlap between the two groups is significant. Third, the EPO only issues bundles of national patent rights: it cannot issue a patent that is valid in more than one jurisdiction. The validity and enforcement of any of these patents is subject to the individual courts and patent offices of the Contracting Parties.

The European Union Strand

The European Union strand was conceived in the 1970s but not born until the late 1990s. In 1975, the Community Patent Convention was signed. It tried to establish an internationally valid patent for the European community. The project failed, however, when Ireland and Denmark failed to ratify. The EU remained cautious in the IP sphere until 1998. Recognizing the importance of emerging biotechnologies for the future of the single market, for the EU and for humanity in general and cognizant of the role of IP protection in the biotech industry, the EU issued the 1998 Biotech Directive. The Directive set out to harmonize large areas of intellectual property law as it relates to biotechnology. Its provisions are mandatory for Member States and the Courts of Justice of the European Union (the “CJEU”) is empowered to make authoritative interpretations of the Directive. These interpretations are binding on the courts and patent offices of Member States. That said, the patents in question are still national patents of member states and have no trans-jurisdictional effect.

The Unified Patent Court Agreement

In 2012, in the wake of the signature of the Unified Patent Court Agreement (the “UPC Agreement”), the EU issued Regulation 1257/2012. The Regulation creates a third option for inventors seeking a patent in Europe, besides a national patent and a bundle of national patents issued through the EPO. It creates a Unitary Patent: a single, pan-European patent, valid in all participating Member States (Spain and Croatia declined to participate). It also creates a single administrative office at the EPO and a single court structure (the Unified Patent Court) for challenges and enforcement.

The Unitary Patent project combines the two strands of EU patent law: Unitary Patents are to be issued to EU Member States and governed by the EPO under the EPC. The Unified Patent Court is a key element of the edifice. Patent proprietors will no longer have to pursue multiple infringement claims in multiple jurisdictions: a judgement of the Unified Court will have effect across all participating Member States. This single, authoritative source of EPC interpretation will hopefully eliminate forum shopping in European patent disputes.

The Impact of Brexit

Brexit threatened to torpedo the entire agreement. Although it was signed in 2012, the Agreement has yet to take effect. It requires that ten EU member states, plus the three largest patent jurisdictions (France, Germany and the UK) ratify before it could come into force. However, the Agreement stipulates that only EU member states can be party to it. After the Brexit referendum, it seemed as if the Agreement would have to be put on hold for at least two years so that the UK might exit and Italy might take its place as the next largest patent jurisdiction.

The announcement that the UK intends to continue with the ratification process raises a number of questions. First, if the UK ratifies and the Agreement takes effect soon, what will happen if and when the UK exits the grand European experiment? A UK Counsel’s opinion suggests that although the participation of a non-EU UK is not impossible, the UPC may have to be renegotiated, in part, to account for the transition. Second, the current UPC Agreement locates one of the three major divisions of the new Unified Patent Court in London. It remains to be seen whether the remaining EU member states will agree to housing such an important EU institution off EU soil. Third, the Unified Patent Court will be subject to the rulings of the Courts of Justice of the European Union, applying the law of the European Union. How does UK participation in this gel with British Prime Minister Theresa May’s insistence that the post-Brexit UK will be “a fully independent, sovereign country – a country that is no longer part of a political union with supranational institutions that can override national parliaments and courts.”

The Future of IP in Europe

Much of the controversy and confusion surrounding biotech patents in Europe over the last decade or so has been caused by inconsistencies between the approach of the EPO and the CJEU (see, for example, the WARF and Brustle/International Stem Cell decision of the EPO and CJEU respectively). One might assume that the UPC would just add another voice to the mix. However, it seems more likely that a Unified Patent Court would create more stability and certainty. If the Unitary Patent is successfully established, national patents and bundles of national patents are likely to fall largely by the wayside. This seems particularly likely in biotech, where protection across multiple jurisdictions is crucial to a proprietor’s IP strategy. Moving forward, the clarity created by one authoritative interpreter of the provisions of the EPC and the incorporated provisions of the Biotech Directive, as well as any future EU legislation could be of huge benefit to the market and the industry.