From March to September 2016 the team is joined by Guest Kats Emma Perot and Mike Mireles.

From April to September 2016 the team is also joined by InternKats Eleanor Wilson and Nick Smallwood.

Monday, 11 July 2016

Guest Post - Is Brexit breaking the Unitary Patent?

A couple of weeks ago the IPKat published a paper from Prof. Dr. Winfried Tilmann of Hogan Lovells outlining a mechanism by which a post-Brexit UK might still participate in the Unitary Patent and Unified Patent Court.  Other minds have also been addressing this issue, and so the IPKat is again delighted to publish this piece, describing a quite different approach, received from Univ.-Prof. Dr. Thomas Jaeger, LL.M. of Universität Wien (that is University of Vienna to our anglophone readers).

The Brexit vote of June 23rd sent shockwaves throughout both the EU and the UK. Some take the vote as proof of Charles de Gaulle’s age-old observation, that Britain simply does not fit into the EU: “[L’Angleterre] a dans tout son travail des habitudes et des traditions très marquées, très originales. Bref, la nature, la structure qui sont propres à l'Angleterre diffèrent profondément de celle des continentaux.” Others see it as the death knell to the EU and / or the UK as we know them.

Whatever the point of view, one thing is for sure: should Britain overcome its abrupt total loss of political leadership and should someone emerge eventually who is willing to formally notify the European Council of the intention to leave subsequent to Art. 50 (2) TEU, that would be the end of the Unitary Patent Package as originally intended.

The Art. 50 TEU Framework

The procedure under Art. 50 TEU is superficially simple. The intention to exit needs to be formally notified to the European Council, which triggers a two year (extendable) deadline for negotiations over the future relationship between the exiting state and the EU. If no agreement is reached, the exiting state is theoretically kicked out of the EU in an ejector seat, i.e. EU law ceases to apply overnight. But what does that mean?

Overnight ejection is not a very likely scenario. Neither side can afford the chaos of disorderly political and economic disintegration. Nonetheless, the two year deadline improves the EU’s bargaining position in the negotiations. The Brexit referendum reversed Britain’s bargaining advantage vested in the looming exit threat.

Art. 50 TEU does not contain the crucial details for exit negotiations – probably because no one thought it would ever be used anyway. Art. 50 TEU accords the EU institutions wide maneuvering space regarding the future terms of association of the exiting state. However, it contains one important implicit limitation: unlike in the accession process under Art. 49 TEU, no ratification of the agreement by the (remaining) member states is foreseen. Instead, the simple procedure for conclusion of international agreements by the EU (Art. 218 TFEU) is prescribed.

As a consequence, the agreement reached cannot entail any alteration to primary law. Any extras negotiated with the UK that would require amendments to the TEU, TFEU or Protocols, e.g. the right to remain within the enhanced patent cooperation, would go beyond the framework set by Art. 50 TEU and would thus be a Treaty revision (see Art. 48 TEU) rather than an exit negotiation.

Hello EEA?

With the bargaining advantage now with the EU, EU leaders have openly called for harsh negotiation terms. This may have a number of reasons, ranging from an impulse for revenge to hope that the various extras the UK had secured for itself over the last decades could be mopped away in one stroke and to concern that an overly favorable result may set a bad example for other states or political movements poised to exit.

Should this initial push to allow no UK extras in the negotiations persist, the EU’s negotiation target would exclude any type of privileged status between ‘in’ and ‘out’for the UK. Also, as was just highlighted, Art. 50 TEU does not allow for such an in-between status anyway insofar as this would require amendment to primary law.

With EU membership necessarily ending for the UK, the most likely way forward would be its (re-) accession to the EFTA and EEA agreements (cf. Art. 128 EEA Agreement). This would essentially allow for a continued application of internal market and competition law rules in the UK. In turn however, the UK would forfeit its right to co-decide in those matters and would trade that right for a mere consultation status in law-making (see Art. 128 EEA Agreement): EU internal market and competition legislation becomes part of the internal legal order of EEA states through adoption (cf. Arts. 97 et seq. EEA Agreement). In practice however, the possibility to object is markedly limited. Similar in terms of the factual coercion to adopt EU legislation, although somewhat more complicated in detail, is Switzerland’s status vis-à-vis the EU.

Both scenarios, the EEA or the Swiss model, are only attractive for the UK with regard to liberation from the EU’s non-market policies. In legal terms, forfeiture of co-decision powers and factual coercion to parallel EU legislation hardly seem satisfactory prospects for the UK. In addition, the EEA factually also limits jurisprudential independence, because the EFTA Court in practice follows the CJEU’s case law (see also Art. 106 EEA Agreement) and because the CJEU in the EEA Agreement is accorded an indirect decisional competence of last resort in the event of diverging case law (see Arts. 105 (3) and 111 (3) EEA Agreement). 

Bye-bye Patent Package UK

In short, the UK no longer being a member of the EU would very likely be sized-down to the status of any other non-EU state. In the patent context, this is the plain legal status of an EPC state outside the Package: the UK would be necessarily be removed from the substantive patent cooperation under Regs. 1257/2012 and 1260/2012, which is only open to EU members.

Likewise, although it is formally an instrument of public international law, the UK would have to withdraw from the UPC Agreement. Under the Commission’s misguided attempt after CJEU Opinion 1/09 to copy the setup of the BENELUX Court, the UPC is designed to be “a court common to [EU] Member States and thus subject to the same obligations under Union law as any national court” (Art. 1 UPC Agreement). The Commission understood Opinion 1/09 as meaning that the CJEU requires an international law-based patent court to remain restricted to EU members only.

That narrow reading of Opinion 1/09 was the main reason why the well-designed 2009 EEUPC model had been down-sized both territorially and substantively for the UPC proposal, which now affords comparatively less substantive patent law coherence and is intrinsically defunct (see, for example, this paper). If the Commission’s narrow reading of Opinion 1/09 is upheld and no alternative visions for a court model are developed, there is no way that the UK could remain in that litigation system.

Bye-Bye Patent Package Altogether?

Should the UK really choose to formally trigger the exit procedure and thus be forced to leave the EU and (thereby) the Package, we might not only need to wave bye-bye to the UK within the Patent Package, but to the Package as a whole.

It is true that the EU legislator has in the past shown determination to push the Package through at any cost – even that of leaving major jurisdictions like Spain and Italy behind. De iure, this might also be possible regarding the key patent jurisdictions UK, France and Germany. De facto however, none of them can evidently be done without (as already the ratification requirements in Art. 89 UPC Agreement demonstrate). Even if a single patent right between the remaining participating states was probably still better than nothing even with the UK outside, an attractive and effective patent litigation system under a single court is unimaginable in Europe without the UK. If such a system was implemented without the UK on board, it would trigger substantial evasion and strategic patenting effects between the UK (which would remain within its existing litigation tradition) and the emerging jurisprudence of the UPC. This would multiply the negative effects of fragmentation in European patent law instead of mitigating them.

Looking for A Way Out? Re-open the UPC Agreement

Against that general background, what legal options for a soft Brexit landing do we have? How could the Package be kept from breaking apart and what kinds of exit and post-exit scenarios are we looking at?

A potential way out might be a re-opening of the UPC Agreement. If the UK could at least be kept within the litigation leg of the Package, one of the Package’s major goals and achievements could be saved in spite of a possible Brexit. As we have known since the (marred) EPLA initiatives, this is also the considerably more important leg. Of course, if the Agreement was altered to allow for participation of the UK, all of the remaining non-EU EPC states could be brought back in also as a positive side-effect.

How could this be done? As was said, according to this author, the Commission’s reading of Opinion 1/09 seems misguided in two major respects. Firstly, the CJEU’s mention of the BENELUX Court is only one example of possible litigation models, not the only possible model. The Court has made this quite clear already in the Opinion (paras. 62, 74 and 75). Secondly, the crucial point regarding the legality or illegality of the court model is not whether it is called BENELUX or whether it is concluded between EU member states only, but rather, whether that court has the power to apply EU law directly and if so, under what conditions. Such conditions binding the court in the application of EU law must satisfy the CJEU’s exclusive role under Art. 19 TEU and, consequently, the autonomy of the EU legal order.

Cornerstones of such alternative models were elaborated elsewhere by this author and others (e.g., prominently, the Munich-based Max Planck Institute for Innovation and Competition). There is neither room nor need to go into details here. Suffice it to say here that if the Commission is keen to save the Unitary Patent Package from another – and this time likely terminal – failure, it should start re-thinking its litigation model. Re-thinking does not mean overthrowing it, but modifying some, albeit crucial, details safeguarding the autonomy of EU law. This can be done on the go through another revision of the agreement. Admittedly, this will slow down the ratification process once more. But that might still look like the better option compared to the looming alternative. 

Revision and adaptations might allow to remedy some crucial flaws of compromise present in the current UPC model. If the Commission managed to convert the threat posed by the Brexit vote into a momentum for change, that might not just save the Patent Package, but eventually lead to a better, balanced and coherent patent law for Europe.

62 comments:

Anonymous said...

Additionally, a new UP and UPC package guaranteeing that English is the only "true text" for Spain, could also bring the language-obsessed Spaniards onboard. It would still not be fully satisfactory for them, but at least for Spain, English would be established as the only legal language for these patents.

Glad to be out of the madhouse said...

an attractive and effective patent litigation system under a single court is unimaginable in Europe without the UK

I'm sorry, but I don't quite see why, especially if the UK fell out of the Single Market.

Anonymous said...

I've not heard of a "death knoll" before. Is that what JFK drove past on 22 November 1963?

Darren Smyth said...

Thanks to the last anon. It should have been knell of course and I have now corrected it.

Anonymous said...

Today, Monday 11 July, the European Patent Litigators Association (EPLIT) has urged UK government to ratify UPC Agreement as soon as possible
http://www.eplit.eu/index.php/details/eplit-urges-uk-government-to-ratify-upc-agreement-as-soon-as-possible.html

Anonymous said...

Sorry for the UK.
UPC participating EU countries cannot wait for a UK renegociatiation, neither for other non-EU countries to reenter the negociation (which they are very unlikely to do).
EU law is necessary for the UPC to function properly: many questions are already difficult to solve in this framework. The precedence of CJEU is fundamental. We shall not add non-EU national laws and courts outside EU to it.
Anyway, somthing will have to be done for the UPC agreement as the UK is mentionned in the annex. Removing the London section will be a renegociation (without UK) that will be difficult because of the NL and IT who may want a section.
Scotland may join (or maintain its participation) at some time in the future. Although people voted to stay overthere, we cannot wait for them to solve the issues of their indedendance and money. EU may only consider favourably how such territories could remain / rejoin EU when legally feasible (although one might consider that the English and the Welsh people have voted to leave the United Kingdom, and that Scotland will assume the continuity of the United Kingdom within EU).
Having patents in England, CH and ES will be nice along with a Unitary Patent. A unitary patent is a risk for a patentee. After litigating its unitary patent, and should it become lost, a patentee might decide to reduce its scope "centrally" at EPO (a simple and cheap procedure) for all the remaining EP secoundary countries and keep asking for reduced royalties in such peripheral countries. If such royalties are set to per country sufficiently low levels, licensees will rather pay than litigate due to the high cost of these per country litigations.
Thus having EP peripheral countries add real value to a unitary patent patent schem.
In the UPC system single market, peripheral countries will become minor players where the patentee might extract some additional revenues, even for uncertain patents.

Anonymous said...

Anon 1618,
The U.K. will have a new PM by Wednesday apparently and she has stated that Brexit is Brexit. Hard to imagine that the UPC can sneak through parliament unnoticed (with summer recess almost upon us) and party conference time in September breaking it up further. Soon would only be possible in October I'd guess and by then Brexit may be up and running. Hard ball from some EU states may even risk the UK not being accepted for signing? Hasn't Cameron already been excluded from some EU summit sessions? I wouldn't be surprised if some states (looking at a court) might challenge it.
The author's suggestion that minor reform may be the best (only?) option seems pragmatic and realistic.

Anonymous said...

According to Joff Wild at IAM, It would be politically wrong and morally indefensible to ignore the Brexit vote and plough on with the UPC.

Millipede said...

A minor reform of the UPCA seems indeed the best option to deal with a Brexit. However, it would serve all parties if the reform (and the negotiations that go with it) would take place after the system has been set in motion. This means, that it would also be beneficial for the UK to ratify now and to negotiate a UPC-exit alongside the Brexit negotiations.
The advantages for all parties are:
- the system can already start as planned (spring 2017)
- the system can gain momentum in the coming years, while the UK is still in the EU (the new UK prime minister has indicated that Brexit should be done carefully, and thus slowly).
- the UK will have the advantage of the London seat of the UPC
- the UK will have the advantage that once the system is started they will be considered indispensible for the continuation of the system (they are already deemed to be indispensible before the system has started), which will improve their negotiation position.

This thus could be considered a win-win situation. Accordingly, I second the request of EPLIT to the UK government to ratify the UPCA.

MaxDrei said...

Good argument from Millipede. UK ratification improves the negotiating position of the UK, trying to squeeze a good "deal" out of the EU as it negotiates its exit. Who in the UK could be against that?

Further, UK ratification of the UPC is what everybody else is begging the UK to do. The work's been done already. A prime ministerial nod is all it now needs, I am told

Theresa May is a woman who does the right thing, rather than just court popularity. Just the right person needed now.

So Theresa, hold back on Art 50 by all means but, if you care about the UK's reputation in the world, screw your courage to the sticking place and get on and ratify the UPC. There is no reason not to, and every reason positively to do so.

Anonymous said...

"Should the UK really choose to formally trigger the exit procedure..."

But it won't? Surely not? They will change their mind? Say they will. Please, say they will?

A true European said...

It is amazing to see how members of the profession are hoping for a quick ratification of the UPC by the UK or are trying to find ways to keep the UK in the system in spite of the Brexit. Thinking of bringing back remaining non EU- member states in the UPC is simply laughable. EPLA is dead as dead can be.

Millipede’s contribution in this respect is revealing:
- the UK will have the advantage of the London seat of the UPC;
- the UK will have the advantage that once the system is started they will be considered indispensable for the continuation of the system (they are already deemed to be indispensable before the system has started), which will improve their negotiation position.

Having all the advantages but no inconvenient. That has been the UK attitude all along its participation to the EU. The presence of UK would certainly have been good for the system, but to come with the arrogance of being indispensable is going a trifle too far. Enough is enough!

The numerous attempts to salve the participation of UK at any rate is nothing more than a desperate attempt to try not losing the considerable personal profits the promoters of the UPC expected to make with the full UPC. It is clear that a UP without UK is much less interesting. But a Brexit is a Brexit.

Have those distinguished gentlemen thought of the mess their clients will be if the UK ratifies for latter leaving the agreement which is only be open to member states of the union? Probably yes, as it means more need for consultation, hence more fees. Cupidity has limits.

Does all those distinguish gentleman think that the UK parliament has nothing else to do than quickly ratify the UPC? Sneaking in some continued involvement with EU law in spite of the Brexit? I would like to see which explanation a MP will give to his constituency at the next elections if his constituency voted in favour of Brexit. As any MP wants to regain his seat, he would he be foolish enough to brave the opinion of his voters in this respect. A quick ratification is no more than wishful thinking.

Art 87(2) of the UPC Agreement provides that the Administrative Committee may amend this Agreement to bring it into line with an international treaty relating to patents or Union law. The amendments to the Agreement envisaged are of administrative nature, and said committee cannot take decisions which are of political nature. Amending Art 84 to sneak UK in is not in the competence of the Administrative Committee. Art 87(3) Agreement provides a protection mechanism should the Administrative Committee take decisions on a political level.

Instead of running after something which has gone, it would be wiser to put energy in saving what is left from the UP/UPC once UK has gone, but then to look at the matter with fresh eyes. The matter should be simplified and the influence of common law should be thrown overboard. After all, UK has left and the continent is not an area relying on common law.

TreatyNotifier said...

I am not so sure Opinion 1/09 was read too restrictively. The main formal point is the cooperation between national courts and CJEU (which was jeopardised by the EPLA-court as an international organization). The Benelux court of Justice is just one solution, but it seems to follow (IMO) from points 84 and 85 of the opinion that the court should be considered a "national court" in the context of the EU treaties (so: a national court of EU member states).

In the last point of the opinion it is emphasised again that the problem is that it would "deprive courts of Member States of their powers in relation to the interpretation and application of European Union law": a court of (one or more) member states seems thus a requirement!

[that said, I would see a possibility where the court remains a court "common to member states", to which non member states can accede (without it becoming a court common to them in a formal sense)]

Cynic said...

Max Drei and Millipede,
But with time limited after Art 50 notification, might not it be to May's benefit to hold off on ratifying the UPC in return for some other concession? Joining and then (messily) leaving serves her no purpose but eases everyone else's interests so is a good bargaining tool. Why give it up a pawn for free straight off when you have bigger treaties to negotiate from weak positions?

Meldrew said...

Let us hope that "Brexit means Brexit" is good old fashioned UK politics in which success is like rowing, staring fixed.in one direction while moving rapidly in the opposite.

Even if this is a vain hope: law is a servant, not a master, and given political will, much can be made possible.

Anonymous said...

If the UK is to ratify now, it will be a total mess later on.
Just think of the unitary effect scope when the two years delay will lapse should no agreement be found ? Remember how Serbia and Montenegro separated ? Patentee had to register their former patent to the Montenegro IP office. One could expect that a unitary patent territorial scope be reduced when the UK formally leaves EU, but will it be. Then, hopefully some UK laws would provide for a similar registration at UK IPO (and what about Scotland if a Scottish IP Office is enacted at some point ?). Overall, the british parlement might spend the next two years just adapting all laws to the Brexit. No need to add special legislations for a short lived unitary patent. UK courts would not have juridiction on former unitary patent over the UPC countries territories. Conversely, UPC would not have jurisdiction for former unitary patents over the UK territories. What about pending actions before the UPC Court of first instance in the London section and in other UPC countries ? and before the Court of appeal in Luxembourg ? Think of the clause "as an object of property" if the first applicant is from UK: then, the unitary patent applicable law would change upon the UK leaving with German law applying in a number of instances. This might be bad news for international company having their UK subsidiary applying for EP patents.
If the UK ratifies, it would be such a mess that no one (whether UK applicant or non-UK applicant) would ask for the unitary effect until the UK has formally left EU. Even EP patent bundles might be at risk unless you opt out.
Fortunately, this will not happen because the German will not deposit their accession up until the UK has left EU. Germans are not likely to gamble the whole European patent system on Brexit issues.
EU has to immunize itself from future inescapable UK laws and endless court actions up to the House of Lords. Just think of the SPCs legislation and the european first marketing authorization.

THE US anon said...

The author lost me at the start with the (unnecessary) slight of "loss of leadership"

If one cannot take an objective stance right from the start, I have no interest in reading yet another academic bias induced write-up.

MaxDrei said...

Somebody who styles him (or her) self "A True European" writes above:

"The matter should be simplified and the influence of common law should be thrown overboard. After all, UK has left and the continent is not an area relying on common law."

And there was me, thinking about the 1973 European Patent Convention, a beautifully simple and rigorous model law of patents that has since then swept the world and has been adopted, more or less verbatim, all over the world. It came out of a fusion of (mainly) German and English patent law principles. What a shame, that Europe is no longer a beacon to the rest of the world, about how to live together in harmony.

English common law fact-finding has a role to play, in keeping litigants honest. Discovery and cross-examination are the only effective tools to stop parties in court from trotting out a string of porkies. How sad then, that a mainland European can't wait to see the back of English common law fact-finding procedures.

Observer said...

Do all those promoters for a quick ratification will honestly advise their clients to go along with the UPC knowing well that the Brexit is looming and will have presently unknown consequences? Please let’s be serious and look a bit further than the end of one’s own purse strings.

One thing investors hate is uncertainty. A quick ratification is just promoting uncertainty. The hope of finding some legal trick to keep UK in the UPC, or even bringing in further non-EU members, is not to be taken seriously. What has to be envisaged is anything but a “minor” reform of the UPC agreement.

Should UK ratify, it still would need Germany to ratify for it to enter into force. Nothing more is certain. Do you think they are so stupid to give an ace away just to please the profession? Such an ace is as well a bargaining option, but for the other side. This fact seems have been forgotten.

Should the UPC start in 2017 with UK in it, the only direct effect would be a high rate of opt-out, probably near 100%. No sensible patent owner would embark on such an adventure. The UPC might be in force, but with no or very little effect. Has any of those vehement promoters of quick ratification ever thought of this?

Sorry for Max Drei and Millipede, Brexit is there, and that’s it. I have rarely seen so much cynicism and selfishness being expressed in this blog. As another blogger said, all the advantages but no inconvenient…

To paraphrase Max Drei: dear Angela do not ratify the UPC before the Brexit has taken place. Do not give this ace away to Teresa. It would just bring about a big mess.

Anonymous said...

Some of the suggestions here are laughable. A quick ratification from the UK to get the system up and running, with the option then of the UK leaving the system in due course (as per Millipede's "win-win")? I don't think so.

Someone seems to have forgotten that the UPC is not simply a playground for patent litigators, it is a venue for companies to resolve their disputes. No major patent holder is going to leave its patents in the system under these circumstances. Thus, if everyone opts out, the system is going to be (using the phrase used by a commentator on an earlier post) an ex-parrot from the day it is born.

Back to the drawing board I am afraid....

Anonymous said...

The authors opinion is just wishful thinking of an offended academic who is now a little bit mischievous about the new brexitious UPC problems. But, nevertheles what we need is a pragmatic solution and we have two realistic scenarios:

The first is that the UK wants to participate in the UPC whatever their EU position is. In that case the proposal of Winfried Tilmann advises us whats to do. But, such route is based on the political will firstly in the UK (with a quick decision on that matter to keep that door open) and secondly on the continent in the remaining EU states to deal with UK on that basis as soon as possible and ignoring Mr. Junkers political unwise approach not to undertake any negotiation of the EU with the UK on matters regarding a leave from the EU before an Art. 50 TEU notification.

The second alternative is to enable the system without the UK if there is no political will to follow the aforesaid first approach either on UK or the continents side. In that case there are again two alternatives: The first one is to ask the UK for an early ratification in order not to hinder the start of the package, an alternative that might be possible if the EU side will refrain from Mr. Junckers unwise position as already described. The second one is to ,sit and wait' until the brexit takes effect and to exchange the UK by Italy an option that is also possible. The UPC and the EU patent will also work without the UK. Maybe it is a little bit less attractive, but we will see what will happen with Great Britains economy after a brexit andy maybe after Scotland has left it rejoining the EU a patent for the future ,little England' instead of Great Britain with an archaic costly judicial review system will be much less attractive than the continental patent package.

But, one is sure: No one except academics detached from the world will eve re-open the package to re-negotiate or re-ratify it, otherwise it will enter into force not in 2017, but maybe in 2117!

Anonymous said...

I don't recall JFK driving past a grassy knell.

Anonymous said...

"Hasn't Cameron already been excluded from some EU summit sessions? "

Not like the EU to break its own rules.

Anonymous said...

"Having all the advantages but no inconvenient. That has been the UK attitude all along its participation to the EU."

Someone needs to test the drinking water in Europe. Didn't the Romans have a similar problem once? Look what happened to them.

Proof of the pudding said...

@Observer - I do not think that the "pro-UPC" commentators here are necessarily motivated (solely) by the thought of future profits. Remember, there will be many in the IP profession who will have invested considerable amounts of time and effort (as well as resources) in preparing the way for the advent of the UPC. Not wanting to see all of that go to waste is surely an understandable emotion, so let's not cast aspersions where none are really necessary.

Having said all of that, I have to say that I view the proposals for saving the UPC as akin to grasping at straws. Perhaps not completely hopeless, but not all that far from it.

It is certainly sad that yet another attempt at "harmonising" patent litigation in Europe looks set to be consigned to the waste bin of history. Nevertheless, at least from my perspective, there are some silver linings. Foremost amongst these is the possibility to re-open the issue of harmonisation of national patent laws. One of the biggest failings of the current UPC Agreement (and associated EU Regulations) is the fact that it leaves too many issues open with regard to applicable laws (for infringement and other matters). This can only lead to the kind of uncertainty that litigants so dislike.

From this perspective, those who are truly interested in a harmonised patent litigation system across Europe really ought to grasp with both hands the opportunity presented by Brexit (to properly address the issue of harmonisation of national laws). There will no doubt be political hurdles to overcome, but it is surely worthwhile taking on those challenges to secure a noble objective, namely the delivery of a robust and harmonised patent litigation system.

Is there anyone out there who is up for the challenge?

Meldrew said...

Lots of discussion on what companies will do - mainly from the point of those in the profession.

What drives companies' decisions? Money.

The unitary patent provides a significant value for money option whether the UK is inside or not.

The UPC provides significant extra power over having to separately litigate in each country.

Even if the UK has to leave on the worst possible terms [no membership of the UPC, no membership of the unitary patent]:-
- does anyone believe the UK will not provide transitional provisions to ensure continued effect of unitary patents in the UK either by unilateral extension (unlikely) or deemed resumption of national effect of the European patent (more likely)?
- does anyone believe the UK will not provide for suitable transitional provisions for cases underway at the UPC?

Contrary to the impression given by recent events in the UK, politicians are not blind to money either. Something that is good for industry (and cannot be characterised as tax dodging) attracts political attention. This applies whether it is the UK government seeking to assist UK industry by having the UPC (and particularly the UP) open as soon as possible - or the German government seeking to reduce costs for German companies doing business in the UK.

The money says ratify. Will the politicians listen?

Where there's a will, there's a way: and where there is wonga, there is will.

Ah-No Nym said...

To be honest, do we not all overestimate the importance of the UPC in a Brexit scenario ?

If Brexit really happens, there is a long list of topics to be dealt with in negotiations and I sincerely doubt that the UPCA will be a "pawn" in this game.

There are thousands of issues more important to be negotiated. Law in general is just a part of those matters, IP is just a small part of the overall law package, patents a small part of the overall IP package and the UPCA just one part of the overall patent package.

I can understand that people having worked on this project for a good bit of their lives will stay optimistic.

But having already an EU project in IP, for which a solution needs to be found, i.e the EUIPO businesses, I sincerely doubt that anyone wishes to create another complicated "EU" project like the UPC with the UK leaving...

So a quick ratification is out of the question in my view...

Anonymous said...

But, of course the Ah-No Nyms point of view as a German patent attorney is of no relevance. Of relevance is the political will in UK and remaining Europe. And in view of the politicians taking the decisions the UPC is already a main topic. For instance a government conference with British industry and other relevant circles has already been scheduled for Thursday, 14th of July. Maybe the UPC or better the patent package will be a cornerstone for the future economic relationship between UK and EU to avoid more damages from the referendum outcome than absolutley necessary!

Anonymous said...

@Meldrew
Did you talk to any VC? Any SME? Anybody outside Europe?

Our VCs wouldn't spent a dime with the UPC even with the UK on board.

Legal Security? Nope! - Does that mean we could loose the IP (=our investment) in ONE court that nobody knows how they are deciding (and by which exact rules)?!?

Really cheaper? Not unless you were suing in at least 2 countries.

Experinced Judges? No Brits, nobody who is or was employed at the EPO! Who shall fill in all the positions? In Europe nobody would want to have German judges sitting everywhere.

SPC? Don't even start!

True European? Nope, at least Britain, Switzerland and Spain are missing from the "imoportant" or "big" countries.

South Korean colleagues were already asking on how to file national again...

So what money wants to ratify? Which industry?
Even Pharma was like "Well, we might test the sytem with one or two less important families".

If one wants to promote "European Patents" cut the annual fees! They are what is responsible for the biggest part of the costs.

The UPC is dead in the water and all (academic) discussions are just there for saving face (and not having to confess to themselves that all that money and time was wasted).

Anonymous said...

Trust me when I say that Pharm will not touch the UPC with a bargepole, irrespective of membership, location, or even tasty nibbles.

Those that say "we may test the system..." aren't really part of the decision-making processes. Hence why they spend their time hob-nobbing at conferences on the UPC.

Only a fool would put their pharma eggs in the UPC basket, irrespective of the quality of the judges.

Meldrew said...

Anonymous at 12:05:00 BST

Yes I have spoken to those outside the UK - and found the greatest interest outside Europe to be from the USA, particularly from CFOs of small to medium sized companies who want as big a portfolio as they can at the lowest price.

Lawyers tend to be cautious, but those who control the purse strings seem enthusiastic.

I started as an extreme sceptic on the UPC/UP package, simply because there is so much that is wrong with it. A better system could have been devised, but a better system might not have achieved the political impetus for agreement.

However, by talking to some of those who control the purse strings, I have become convinced that there is a real demand. Buy four, get perhaps 20 free, is a message that stirs the accountant's soul (if they have one).

Millipede said...

I can second Meldrew's information. Most of the US companies are happy to exchange having to go to several separate European courts (all of these unknown to them) to one central European Court (also unknown to them).
Also on a European level the interest for the unitary patent and the UPC is large and although some may choose to opt-out from the start, many will trust the experience of the UPC courts (which next to British and German judges will also have experienced French, Austrian and Dutch judges).

I further agree with Meldrew that indeed the UP and UPC system may have been better. But this was the best we could get it at this moment and along the way I have become convinced that it will be a workable system and better, much better than what we currently have.

The negativism towards the UP and UPC reminds of old times at the start of the EPC, when everybody was negative and wanted to keep with the old national system. Or, if you want a stronger comparison, at the time of the introcution of the car or the train or any technological development. People tend to be quite conformistic and don't want a change. I predict here, that if the system starts, after ten years everybody will say that it has been an enormous success.

Lastly, to come back to the above discussion on Brexit, or rather UPC-exit negotiations: to my opninion it is better to start the system as soon as possible and only when it is running discuss the exit of the UK. Otherwise we will run the risk that the whole UPC will be re-negotiated, which probably effectively will mean that it will be impossible again to come to an agreement.

Observer said...

To Millipede:

I have always been told that the UPC has been set up for the benefit of European Industry and especially it’s SME’s. UPC may be good for big industry in or outside Europe, but certainly not for European SME’s. The best proof of this is the idea to create an insurance in case of litigation for European SME’s, which by the way still needs to be put together.

It is interesting to see now that the prime beneficiary will be, inter alia, US SME’s. And for sure they will chose to be represented by UK lawyers and representatives for a large part. When this is not an incentive to push the UPC in UK for its own benefit, then nothing will ever be an incentive. As already said by another blogger, cupidity has limits.

I agree that the fears expressed towards the UPC remind one of the fears raised before the opening of the EPO. But this fear bears no relationship whatsoever with the Brexit. Please do not confuse the issues.

In any case, in view of the solid national traditions and the way some mock UPC trials proceeded, the biggest role will be for the Court of Appeal of the UPC in order to harmonise those different national approaches. In any local court with two judges from the same country this is bound to happen. Not in the Central division, but then with the Brexit why should there be a division in London? The answer is simply no. All the advantages and not any inconvenient……

One commenter said if there is a political will, there is a way: should the UPC have to be renegotiated, this does not mean that it will never be possible to come to an agreement. It could be strapped from all the wrong things which presently have been put in the agreement. But with the Brexit, UK does not have to put its nose in it.

Anonymous said...

There is a big difference between the EPC and the UPC. Does it need to be spelt out? One system gives pan-European rights in one swoop and the other takes them away.

I work for a mutlinational company, so luckily, our US comrades will received advice from within Europe that represents their interests.

I have to say, I find the tone of the introduction patronising and xenophobic. but then I'm English, so I'm in the European minority.

Anonymous said...

I agree, the author writes in a smug and supercilious register.

Proof of the pudding said...

@Anon 13 July and 12 July 19:04

Lay off the personal comments guys, they are really not called for

Unlike you, I really do not pick up any kind of unpleasant tone in Thomas' article. I therefore suspect that your perception regarding that tone has a lot to do with your viewpoint on the subject of the UPC. That is not to dismiss your views, but rather to warn you against dismissing / minimising the views of others simply on the grounds that they are very different from your own.

Of course, if you have something constructive to add to the debate...

Anonymous said...

That is the way of the Kat in recent years.

Anonymous said...

Proof of the pudding: you are talking poppycock. I do not have a view on anyone else opinion or attitude based on my own personal opinions, such as those of the UPC. It is not that big a deal for those of us whose industries actually rely on IP protection to exist. I have no problem with its existence, or how it operates or where the shiny new courts are, or which nations elite are chosen to sit in fancy leather chairs. I just won't be using it. My advice and my employer's choice. Choice = something lemmings fear.

You choose not see the 'unpleasant tone', but even an American could spot it (no offence intended US Anon, but Europeans appreciate anti-US based analogies. I find most Americans quite supportive of Britain's right to self-determination, but Europeans always want to be led and welcome self-appointed dictators with open arms).

Comments such as the following are inappropriate:

" Some take the vote as proof of Charles de Gaulle’s age-old observation, that Britain simply does not fit into the EU:"

Aside from the fact the author clearly has no idea of De Gaulle's beliefs regarding any "European Union", the future of a whole continent is not to be left in the hand of a bigot. De Gaulle had conveniently forgotten who the real enemy was a few years earlier. But then, it was impossible for him to accept what France had gone through and how it had survived.

"(that is University of Vienna to our anglophone readers)"

Yep, us Anglophones are too anti-Europe to understand a little bit of any foreign language.


" one thing is for sure: should Britain overcome its abrupt total loss of political leadership and should someone emerge eventually who is willing to formally notify the European Council of the intention to leave subsequent to Art. 50 (2) TEU,"

The comment of a jilted continent. Puerile. Guess what Europe? Britain has a new Prime Minister this morning. How is Spain getting on forming that government? Any IP practitioners want to discuss Spain's inability to form a government? It's anti-UPC stance? Very un-Euoropean. Personally, I have no problem with Spain taking an age to form a government or being unsupportive of the UPC. That is their right.

Respect that nations have a right to independent existence. Forget about a one-nation Europe formed by the self-appointed political elite. We don't do that.

THE US anon said...

Proof of the pudding - your "proof" is a bit of logical fallacy.

Sometimes ad hominem may be a substitute for having anything to say on the merits.
But only sometimes.

Other times, it may be an accurate reflection of an aspect other than the merits per se.

But those times does not equate with the content being meritorious. Further, your ability to gauge "any kind of unpleasant tone" is only a reflection of your ability to pick up nuance, and is no basis for ascribing what others can pick up to a different motivation, one that has no evidence of being in play. Implicitly you are seeking to dismiss what others pick up in nuance because of your own predisposition on the topic - a bit of the thing that you are accusing others of doing.

THE US anon said...

Anonymous @9:09,

No offense taken - I see what point you are striving for - and it is one that I myself have stressed often (especially dealing with those that would gloss over the fact that IP law itself is a sovereign-centric concept).

Respect for individual national sovereignty tends to be lost for "ease" or "convenience" or just the idea of a "one world order," but trans-nationalism has its own pitfalls, and very often one of the two most virulent anti-patent forces comes from the Big Corp trans-national views. Transnational corporations are not beholding to any one sovereign, and thus do not respect the notion that IP law is at its foundation a law meant to promote the interests of the sovereign.

Yes, treaties are made in order to reach a degree of comity between sovereigns. But that comity should not be misunderstood to be something that it was never intended to be.

Anonymous said...

UK industry has announced a position on Brexit at http://www.ipfederation.com/activities.php?news_id=133

"Without a guarantee of continued UK participation post-Brexit, the UK should not ratify the UPC at present."

Anonymous said...

Anon @ 9:09

"but Europeans always want to be led and welcome self-appointed dictators with open arms"... By trying to rebuke the arguments of proof of the pudding you indulge in some (hidden) xenophobia? Let's not start with History lessons here as everyone has something to be ashamed of in this continent (including the British Isles). The British Empire was not known to be a beacon of humanism.

Can we stick back to IP? I do agree that the tone of the article is condescending but let's remember that this is a guest post.

And yes, IP is basically a sovereign right. However, in Europe, due to our trade links we have decided to share some of this sovereignty. We should try to salvage what is possible from this unitary patent mess in order to have the best possible outcome for all involved.

Anonymous said...

Please note, IP Federation is not synonymous with UK industry [see the very short list of members] and the position does not appear to be unanimous even among that self-selected group.

The declared position is either extremely naive (on the part of those who believe there can be any guarantees in the present political climate), or extremely devious (on the part of those who never liked the whole idea anyway and rather hope it will just go away).

If the UK does not ratify now, the whole UPC/UP project may simply evaporate. The benefit to that part of UK industry that is not part of IP Federation's self-selected cabal will be lost.



Proof of the pudding said...

@(US) Anon

Looks like I touched a nerve. Apologies if I misrepresented your motivation, though - it looks like my suspicion was unfounded.

Still, I would urge you to re-read the article a little more carefully. The comment relating to Charles de Gaulle looks to me to be nothing other than scene-setting, and signifying no more than an acknowledgement of views that others may hold. In this sense, I do not see that Thomas is in any way asserting "ownership" of those views (in the same way that he is also not advocating that Brexit represents the "death knell to the EU and / or the UK as we know them").

Also, don't be ridiculous about the reference to "anglophone readers". That forms part of Darren's introduction, not Thomas' article.

Not sure what you find so objectionable about the sentence relating to Article 50 either. Instead of finding reasons to be offended, how about contributing to possible solutions? For example, now that it is looking unlikely that the UK will ratify the UPC, can you think of any workable alternatives?

Anonymous said...

(a) The author, like the spurned EU leaders, is accusing the UK of cowardice in not immediately triggering Article 50. Everyone knows this is the right of the UK to do so when it is ready, and it would be foolish to start it unnecessarily.

(b) What is a workable alternative? Ans = the current system.

The unitary patent may be beneficial to some if it was significantly cheaper. It is of benefit to non-patentees, because they can clear Europe with one bullet. This is why it is not of benefit to patentees who can afford the current system.

Marcus said...

Strange comments about the IP Federation. The IP Federation represents a significant part of British Industry. Not many SMEs I grant you, but significant nonetheless.

In any event, their position seems to me to be pretty sound. Why would anyone want a patent that may not be valid in one (or more) jurisdictions? That's exactly what those who insist on ill-conceived quick ratification are asking for. There are so many questions that cannot be easily answered and, for which, the answers may be challenged in future even if they are answered that certainty is required. The easiest way to be certain is to NOT ratify. Status Quo maintained. If the UPC system can be adapted to make it certain (unchallengable) that the UK is/can be clearly in or out then all well and good.

Anonymous said...

The IP Federation positions are almost always taken up by the CBI (who don't have much expertise in the relevant areas) and they DO represent all of British industry.

Proof of the pudding said...

@ Anon

(a) Erm, no. At the time of writing of the article, it was clear that Cameron was not going to trigger Article 50. It was also uncertain whether the next prime minister would do it either (remember, it is still not impossible that a snap general election could yield a ruling party that has been given a mandate to not withdraw from the EU). Thus, it seems to me that Thomas' statements amount to nothing more than an acknowledgement that, whilst Brexit is certainly the most likely outcome, nothing can yet be taken for granted. I really do not see any implicit accusation of cowardice in his statement. Methinks you are being a touch over-sensitive.

(b) Well yes, clearly. That was not the point, though. I was more asking for an alternative that provides for some or all of the benefits of the UPC (e.g. a reduction in the costs for pan-European litigation). Any thoughts?

Anonymous said...

May i suggest that someone might like to check what the EPO management's line on all this is? Rumour had it that top mgt may be preparing for a delay in the EU patent with consequences for other projects/roadmaps. That may be an indicator of what is going to happen. The EPO won't dictate matters but will be reliant and perhaps well informed.

Anonymous said...

(a) "...its abrupt total loss of political leadership and should someone emerge eventually who is willing to formally notify..."

Either I am a "touch over-sensitive", or I appreciate meaning and intent in a clearly critical statement. It is also un-original, having been made by unelected President Juncker as soon as he heard the news, and repeated by other EU lemmings. Maybe if it was an original comment, I would construe it differently.

(b) You want only justification for the existence of the UPC. You are a true European. President Juncker will add you to his Christmas card list.

Anonymous said...

"Let's not start with History lessons here..."

If the blogger refers to De Gaulle to support their anti-British sentiments, do not criticise a commentator for challenging their ignorance of the man. I fail to see where the British Empire comes into this. You need to think first before diving in with an irrelevant point.

As to history lessons, these would be a good idea across Europe. Some countries (i.e Germany)(sorry I lied, it's just one country) prefers to forget rather than teach and learn. Britain considers history an important subject in school. I remember very clearly learning about our role in the slave trade when I was 9/10 years old.

My apparently veiled xenophobic comment is directed to the ongoing desire and willingness of European nations to be led by the unelected. I don't believe they dispute this as they are critical of the UK for not wanting to be a part of this great EU vision. This is an observation, not xenophobia.

I'm at a loss to understand why a guest blogger, as opposed to an entrenched EuroKat, is immune to their patronising remarks being queried.

Open eyes said...

It would be interesting to obtain from the Max Plank Institute for Innovation and Competition)a similar statement after the Brexit than the one of October 2012 in which twelve reasons why the UP Package is not the best possible treaty were clearly stated.

When reading this document, anything but a quick ratification would be better. The Brexit can be taken as an opportunity to rectify what went wrong the first time. Why not? It means the entry in force will be delayed, but what is more beneficial, an agreement with lots of loopholes whereby forum shopping will be promoted, or something solid which can be upheld and might not fall apart the first time the CJEu is asked a prejudicial question.

In any case trying to smuggle in UK after it has left the EU is a no go. The same goes then with bringing in further non-EU member states. This would be a kind of revival of EPLA. Any more stupid ideas?

A quick ratification would only bring about further uncertainty, and uncertainty is not something favourable to investment.

It is certainly bitter for those having invested a lot of time and money in the hope to recoup those, but this is the reality which has been created by the Brexit.

By the way, when reading the position now defended by Mr Tilman, published on this blog before the present one, the only qualification to be attributed to this person is a German expression: "Wendehals"= turncoat. It boils down to: anything but please save my future profit. Why not go an international arbitration chamber and sue UK for the Brexit, as it has jeopardised his investment and that of his companions, and thereby reduced his hopes for gains?

Anonymous said...

And once again, Godwin's law is proven right again. It doesn't matter whether it is an IP blog, a newspaper article or a literature review. Godwin is always right.

Anon @21:26 has just proven this point... Sad!

https://en.wikipedia.org/wiki/Godwin%27s_law

Meldrew said...

An expression of hope for an early message from the UK.


“The UK hereby ratifies the Unified Patent Agreement, a long awaited agreement aimed at providing legal certainty through reducing inconsistent judgements between European courts, and reducing costs for those who seek to assert, or to challenge, European patents throughout the participating states.

In doing so the UK recognises that, in its present form, the UPC is only open to Member States, but is persuaded that continued participation by the UK is possible after withdrawal of the UK from the EU.

The UK will strive for withdrawal arrangements that legally permit continuation of the full effect of the UPC Agreement after UK withdrawal, and various models for doing this are under consideration.

Should such a withdrawal arrangement not be achievable, the UK will ensure that no person loses patent rights in the UK through UK withdrawal, and that transitional provisions will be in place to deal with litigation already underway in the UPC at time of withdrawal. The UK is in no doubt that should this arise, the remaining EU states would do likewise for rights arising there.

Of course, withdrawal without continuing effect of the UPC Agreement will result in higher costs for patentees, and for those seeking to challenge patents, and so it is to to be hoped that withdrawal negotiations will proceed in the spirit of ensuring that the outcome is the best possible for both the UK and its European partners.”

Anonymous said...

"Why not go an international arbitration chamber and sue UK for the Brexit, as it has jeopardised his investment and that of his companions, and thereby reduced his hopes for gains? "

It is certainly a directly related loss, but was it forseeable? The EU still hasn't seen it even though it has already come.

Martin said...

@Anonymous Thursday, 14 July 2016 at 21:26:00 BST;
"Let's not start with History lessons here..."

[...]

As to history lessons, these would be a good idea across Europe. Some countries (i.e Germany)(sorry I lied, it's just one country) prefers to forget rather than teach and learn. Britain considers history an important subject in school. I remember very clearly learning about our role in the slave trade when I was 9/10 years old.


As German, I can tell you we learn a lot about the dark times Germany has sparked. And also about the German involvement in the Heroro and Nama genocids in History lessons at German schools. And the Boxer Rebellion in China (and Emperor Wilhelm II.'s "Hunnenrede").
Also about German participation in the slave trades. Although that seemed to me more like something my specific teacher did. But the rest was all in our History Lessons school books.
About other failings of the Germans with regard to wards their "colonies" and neighbours.

Please do NOT say Germans do not teach History.


A lot of why "we" want Europe to federalize has to do with our desire to prevent this from ever happening again. To recognize we have more in common than separates us. To recognize that terms which only benefit Germany will on the long term endanger peace and thus Germany. (Yes, I personally see a lot things going wrong right now. But Britain also made errors in that regard, and the British press bashing of Germany and Europe is neither based on facts nor helpful. - I left Britain because of their newspapers and the sparked and lingering hatred of Germans in England.)

Anonymous said...

Is that President Godwin, unelect? Dear Leader?

Lemmings are sad.

Anonymous said...

@Anonymous

"they DO represent all of British industry."

Sorry, my company was not part of it.

The UPC will create a single point of failure for software patents in Europe, and those patent crooks can hardly deny that.

In fact, we should go in web demonstration mode against the UPC like my company did for the past failed software patent directive.

Anonymous said...

"Sorry, my company was not part of it.

The UPC will create a single point of failure for software patents in Europe, and those patent crooks can hardly deny that.

In fact, we should go in web demonstration mode against the UPC like my company did for the past failed software patent directive."


What are you on about? It isn't clear to me whether you want or don't want software patents. I wouldn't want you representing me...

Proof of the pudding said...

@Anon, 14 July 19:48

(a) Other people (e.g. me) have not read any implied criticism into the passage that you quote. I am perfectly capable of spotting such criticism and yet I still struggle to understand how you can see it in Thomas' statements. This would appear to make it impossible for you to argue that Thomas' statement is "clearly critical".

Conclusion: yes, you are definitely being "a touch over-sensitive".

(b) Erm, no. I just wonder if there is another system that might improve patent litigation in Europe. Because of its numerous (and serious) flaws / loopholes, I was never particularly sold on the UPC. However, that does not mean that I am blind to the fact that the status quo is also imperfect.

Anonymous said...

We can't have a discussion PotP. It is not permitted.

Be the one said...

Instead of running after something which has gone, it would be wiser to put energy in saving what is left from the UP/UPC once UK has gone, but then to look at the matter with fresh eyes. The matter should be simplified and the influence of common law should be thrown overboard. After all, UK has left and the continent is not an area relying on common law.

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