26 June 2016

What Will ‘Brexit’ Mean for European Patents?

Brexit VoteOn Thursday 23 June 2016, around 72% of eligible UK voters turned out and decided, by a narrow margin of 52%-48%, to leave the European Union (EU).

This outcome has left the nation deeply divided, along numerous lines.  First, there is a division between England and Wales, which voted to leave, and Scotland and Northern Ireland, which voted to stay.  Then there is a socioeconomic division between the most affluent and highly educated, who are dominant in the South East and who favoured remaining in the EU, and those who feel disenfranchised by the existing system and voted for the UK to reassert its sovereignty. 

I am most concerned, however, about the generational divide.  Pre-election surveys indicated that 57% of Britons aged between 18 and 34 who intended to vote supported remaining in the EU, while that proportion rose to around 75% in voters under the age of 25.  As one 27 year-old reportedly commented, ‘we're the ones who've got to live with it for a long time, but a group of pensioners have managed to make a decision for us.’

Although I would prefer that the UK stay in the EU, I must say that I have some sympathy for those people who feel that Britain has allowed itself to become too subservient to an ‘undemocratic’ pan-European government, if the immediate reaction of the European Commission president, Jean-Claude Juncker is anything to judge by.  Juncker has said that he wants to ‘get started immediately’ on the process of separation which, he says, is ‘not an amicable divorce’.  These are more the words of a petulant child than a committed democrat, who should realise that such a close outcome is hardly a resounding endorsement of the ‘Brexit’ by the British people, and that neither that fractured nation, nor the world at large, will be well-served by rushing into what is likely to be a messy, painful and disruptive process.  There are actual, real people, as well as companies and entire nations, who are shocked, uncertain and in need of reassurance and guidance as to what an EU without the UK ‘means’.  So if this is what passes for ‘leadership’ in the EU, then maybe Britain is better off ‘out’!

But enough of the general socio-political commentary – you came here to read about patents!  So what does all this mean for patents in Europe?  There are actually two separate answers to this question. 

Importantly, for existing patentees of, and applicants for, European patents the first answer is ‘pretty much nothing’, where we are talking about the established European patent system. 

However, the second answer is ‘possibly quite a lot’, where we are talking about the nascent ‘Unitary European Patent’.

Impact of ‘Brexit’ On the Current European Patent System

There is, as most readers will doubtless be aware, an existing European patent system.  This system is founded upon the European Patent Convention (EPC), which was originally signed on 5 October 1973, and thus predates what we now know as the EU.  There are 38 countries that have signed up to the EPC, whereas the EU currently includes only 28 countries.  Notable EPC members that are not also EU members include Switzerland, Norway and Iceland.

There is, therefore, absolutely no requirement for a country to be an EU member in order to participate in the current European patent system.

EPC members retain their own national patent offices, and can continue to receive and examine applications, and to grant patents, independently of the central European application and examination process undertaken by the European Patent Office (EPO).  Indeed, it is essential that each member country have its own patent laws and enforcement system, because the role of the EPO largely ends once a European patent is granted.  Patentees must then ‘validate’ their patents in the individual nations in which they want them to be enforceable, and any legal action for infringement is subsequently taken through the relevant national courts.

For this system to work, EPC members are obliged to harmonise their national patent laws with the substantive provisions of the EPC.  However, there remain areas – such as the treatment of employee inventions, and the scope of ‘indirect’ infringement, to name just two – in which members remain free to legislate independently of the EPC.

A British exit from the EU will therefore have no significant effect on European patents applied for and granted under the EPC.  All existing patents granted by the EPO and validated in the UK will remain registered with the UK Intellectual Property Office and enforceable in the applicable UK courts.

Most importantly, ‘Brexit’ will have no impact on existing and future patent applications filed through the EPO.  These will continue to designate the UK and, once granted, be capable of validation with the UK IPO, for as long as the UK remains a member of the EPC.  There is not now, and never has been, any suggestion that the UK would consider withdrawing from the European patent system.  Furthermore, this is clearly not the kind of issue on which anyone is likely to run a referendum!

Impact of ‘Brexit’ on the Unitary European Patent

There is another type of European patent currently in the works.  This is known as ‘the European patent with unitary effect (EPUE)’ or, more simply, the Unitary European Patent (or just Unitary Patent).

Once the unitary system comes into effect, it will be possible to register a European patent as having ‘unitary effect’ upon grant, either instead of, or in addition to, validating the patent in EPC member countries that are not part of the EPUE system.  Unitary effect is intended to simplify maintenance and enforcement of a European patent, by providing for a single annual renewal fee of a single object of property which is enforceable within a single court, known as the ‘Unified Patent Court (UPC)’.  Furthermore, an EPUE will provide uniform protection, according to which infringement and revocation proceedings will be decided for the unitary patent as a whole rather than for each country individually.

Unlike the EPC, the EPUE is a creation of the EU.  Formal agreement on EU regulations that made the EPUE possible through a mechanism known as ‘enhanced cooperation’ was reached between the European Council and European Parliament on 11 December 2012.  Accordingly, even though the UK has been a supporter of the EPUE, and is a signatory of the Agreement on a Unified Patent Court, it will not be eligible to participate once it exits the EU.

Furthermore, a ‘Brexit’ is almost certain to slow the introduction of the EPUE.  The current plan for the UPC is that it would comprise a court of first instance (i.e. where unitary infringement and revocation actions would be commenced) sitting at three locations, in Paris, London and Munich.  There would also be a Court of Appeal in Luxembourg, while Lisbon and Ljubljana would host Patent Arbitration and Mediation Centres.  Training of judges would take place in Budapest.  For the UPC to come into effect, the Agreement on a Unified Patent Court must be ratified by at least 13 of the 25 signatories, which must include the UK, France and Germany.

A UK exit from the EU thus leaves the UPC without one of its seats at first instance, as well as without one of the three countries that must ratify the Agreement in order for it to come into effect.  Clearly, then, ‘Brexit’ throws a spanner in the works of the EPUE.

The general view among European patent attorneys (bearing in mind that it is still very early days) seems to be that ‘Brexit’ will not spell the end of the EPUE and the UPC.  It will, however, require that new arrangements be made for the UPC and ratification of the UPC Agreement.  This will inevitably take time.

Conclusion – What’s an EPUE Without the UK?

In summary, when it comes to patents in Europe, current owners of, and applicants for, European patents can breath easy, and can continue to file new applications at the EPO with confidence.  A UK departure from the EU will have absolutely no impact on the EPC  and the existing European patent system.

On the other hand, those who have been looking forward to the implementation of the Unitary European Patent will most likely have to wait longer for it to become a reality.  What is more, when it does come into effect it will not cover the UK, which may make it a less attractive option than it might otherwise have been.  While it seems unlikely, at this stage, that a ‘Brexit’ will scuttle the EPUE entirely, the absence of the region’s second largest economy from the system will almost certainly have an impact.  Time will tell just how much.


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