European business urge continued UK involvement in UPC on eve of Competitiveness Council meeting

Last time the AmeriKat wrote about the
Competitiveness Council and the UPC
she was a mere kitten

It was November 2011.  The AmeriKat was spending her post-trial downtime reporting on the pending unitary patent proposals and the frenetic activity at the Competitiveness Council (see posts here).  Five years later, the UPC looked like it was ready to happen. Then Brexit.  And now, with a sense of déjà vu, the Competitiveness Council is back.  Tomorrow at around 2:30PM CET, the Competitiveness Council will be discussing, as AOB, the unitary patent and UPC (and also the review of the SPC system - for those who are less in love with the UPC).  It looks to be a public session so should be webcast here, with a press conference to follow here.  The background brief published yesterday states that:

"The Council will take note of a report on the progress made towards setting up the unified patent system and the situation concerning ratification of the Unified Patent Court agreement." 

The report from the Presidency to the Council dated 19 September 2016 provides a succinct summary on the state of play of the unitary patent and UPC.  The key section can be found in the Annex to the report which was prepared by the Chairs of the Select Committee of the Administrative council of the EPO and of the UPC Preparatory Committee.  The Annex states:

"According to the official timetable of the Committee the Court could be operational in early 2017. This was based on the assumption that the required ratifications where received during the fall of 2016.  

The outcome of the UK referendum has had consequences on the UK ratification process. The time-plan, therefore may have to be revisited.  

It is highly desirable to keep any delay of the entry into force of the system to a minimum in order to provide the business community with the clarity and the swift entry into operation of the new patent system they require."  

In advance of the tomorrow's meeting, numerous organizations have written to the Council as follows:

• Letter from Business Europe - click here
• Letter from UJUB - click here
• Letter sent by Michel Guilbaud (DG MEDEF) to Philippe Léglise-Costa, Secretary General of SGAE  - click here
• Letter by several companies (including Air Liquide, Boehringer Ingelheim, Bayer, Audi, Bosch, SAP and VW) to Mr Kris Peeters (Deputy Prime Minister, Belgium) - click here  

A theme that emerges in the letters is that (i) politicians need to find a way to get the system up and running and, with respect of some of the communications, (ii) politicians need to find a way in which to retain the UK in the system "that remains sustainable even after the Brexit" (to quote BusinessEurope).

The letter to Deputy Prime Minister Peeters states:

"In the wake of the political unrest seen in Europe in the summer, we find it timely to give a clear message to responsible politicians that we, the signing companies and industry associations, welcome the new patent system and urge that it should enter into force as planned, without delay. 

The attractiveness of the system would increase with a long-term participation of the United Kingdom. Therefore we also urge that solutions for such inclusiveness are considered."

The letter from MEDEF states:

"Pour les entreprises, l'attractivité du système serait accrue si la participation du Royaume-Uni pouvait être assurée sur le long terme et ce point devrait faire partie des solutions recherchées."

BusinessEurope's letter continues:

"Member States should make all possible efforts to bring the Unitary Patent package into life in 2017 as planned and to immediately start working on any necessary changes or additions to the legislative framework."

The German Bar Association's recent position paper took a harder line stating that "a quick decision of the UK is needed" on whether it will ratify the UPC Agreement with the view that if there is no quick ratification, then "an alternative solution should be found to allow the court system to start its work as planned".

The IPKat recently wrote on the legal opinion from Richard Gordon QC and Tom Pascoe of Brick Court on the legal feasibility of the UK's post-Brexit UPC participation (see here).  Legal feasibility is one hurdle, but the higher one in this landscape is politics.  Will the political hurdle of the UK's participation in the UPC post-Brexit be lowered in light of these comments? In a political environment where Prime Minister May is applauded for her "under the radar" approach, it seems unlikely to Merpel that any noise, no matter how positive, from European industry will make the UPC politically palatable to the current UK regime, at least publicly.

Against this background, the AmeriKat's words in a May 2012 post on the timing of the UPC seem oddly fitting now:  

"The AmeriKat cannot say whether the hands on the unitary patent clock that are ticking away as she types are counting down to an expected implementation of the patent proposals that have preoccupied the patent community for the past year [over 40 years] or to yet another legislative death when the proposals for the Utopian ideal of a unified European patent system fail to bring fruit."

The countdown has seemingly begun again, but the stakes seem to be even higher.   The IPKat will be back tomorrow to report on the Competitiveness Council's session tomorrow and future debates on this topic.

Wednesday Whimsies

Eleonora has keeping IPKat in the loop
as the new rules emerged

IPKat's very own Eleonora Rosati has been featured in a recent Financial Times piece, "Old media hopes to benefit from new EU copyright rules" available here [behind a paywall -- alternatively accessible via a search for the article title on the search engine of your choice]. The piece tackles the proposed EU copyright reforms from policy, consumer and content hosting perspectives. For more of Eleonora's own coverage of the new copyright package, it can be found here.

International Workshop on “IP-Protection of Biological Inventions" This workshop is recommended to academics and practitioners in the field of biological inventions. Amongst the topics to be covered are the Budapest Treaty, disclosure requirements and equivalent national law provisions. This will all take place on 10 November in at the University of Basel  in association with VIPS (Federation of industry patent attorneys in Switzerland). For more information, please see here. Registration will close on 28 October.

Like the cats from the old poem, IPKat is
incurably given to roam.

WIPO Roving Seminars. Free WIPO seminars about their Services and Initiatives rove all over the world. The next seminar is taking place on 13 October  in Ikast, Denmark. As well as featuring topical panel discussions and presentations, these are a great opportunity to network over coffee or lunch. More information is available here. Upcoming seminars will take place in Oslo (here) and Bologna (here).


Brexit update. In a recent post about the UPC after Brexit (here), IPKat queried what happens to statutory instruments made under the European Communities Act 1972 (ECA) if the ECA is repealed? A big Kat pat of gratitutde goes to Scott Wortley for his detailed answer here, and to everyone who eng@ged with us on twitter. It seems that the repeal of the ECA will by implication repeal the secondary legislation. However, this is only the case to to the extent that there is no "contrary intention" to save the legislation made under the ECA.

Latest thoughts about Brexit and the UPC

Sudden moments of clarity are always a good look for IPKat

It has certainly been a long time coming and we still can't be sure that a UPC change is gonna come to the UK. We recently saw the unveiling of an authoritative Opinion by Richard Godon QC and Tom Pascoe, to the effect that it is potentially legally possible for the UK to participate in the UPC following Brexit. This is notwithstanding the possible political difficulties surrounding it, and independently of membership of the EEA. In giving their Opinion, Counsel were instructed by, again among others, CIPA - who are lobbying for positive participation in the UPC after putting in so much work in advance of preparing the system. CIPA's impact paper of Brexit is available here 

As we gradually move towards some idea of how the UPC might work around Brexit, it is becoming clearer that a new agreement in some form or other would be a real sine qua non for future UK involvement in the UPC. The real value of the new Opinion, as this Kat sees it, is the thoughtful exploration of what this agreement would need to be and do, and how the UPC Agreement will need to be amended.

 After CJEU Opinion 1/09

Opinion 1/09 from the CJEU is generally cited as precluding non-EU Member States from involvement in the unitary patent. The problems would be in depriving the national courts of the task of interpreting and applying EU law (which of course the UPC Agreement proposes) and the power to make references to the CJEU. Counsel's view of this is that although the reasoning of the Opinion is somewhat opaque, it is possible to overcome the requirements it imposed on the then draft Agreement by implementing measures in a new agreement for the UK. The requirements identified are as follows:

1. respect for the supremacy of EU law;
2. the possibility of claiming damages and/or instituting infringement proceedings for breach of EU law;
3. uniformity through the making of preliminary references. (see para 72 of Counsel's Opinion).

Their view is that it should be legally possible to implement measures safeguarding these EU constitutional principles. No domestic constitutional rules prevent the UK from: subjecting itself to a legal regime like the UPC which requires tribunals to apply EU law,  requiring courts within its territory to make references to the CJEU, accepting individual and collective responsibility for breaches of EU law, or submitting to the supremacy of EU law for patent disputes before the UPC. There is a very important condition that comes with this:

The UK would be required to accept the supremacy of EU law in its entirety as regards all such disputes as fall within the jurisdiction of the UPC. This would include, for example, competition law, fundamental rights arising under the Charter and general principles of EU law, as well as the specific patent rules contained, for example, in the Biotechnology Directive, as well as possible future EU legislation.   (para 76)

So, while it may be legally possible for the UK to overcome the requirements of Opinion 1/09 by a new agreement, it could still be very politically sticky to sell a treaty which proposes the ongoing supremacy of EU law over the UK - even within the relatively limited context of patent disputes before the UPC.

Amendments to the UPC Agreement

As Counsel's Opinion raises, Article 87 of the UPC Agreement - allowing for amendments to it - would not come into force until the Agreement itself does. That is, after the mandatory ratifications have taken place, including ratification by the UK. For this reason, unless UPC Agreement contracting states can be persuaded to unanimously agree amendments to the Agreement itself or a new Protocol could be drawn up, amendments by the UPC's Administrative Committee would have to wait until it comes into force. In light of this, it's safe to say that the amendments required can by no means be guaranteed.

With that caveat taken on board, the extent of the amendments to the UPC Agreement itself that were identified by Counsel are surprisingly brief and few:

1. The terms relating to 'Contracting Member State' would have to become 'Contracting State' in Article 2(c).
2. Rather than saying the UPC is subject to the same EU law as national courts, being a court common to Member States, it should be "subject to the same obligations under Union law as any national court of the Contracting a Member States" in Article 1.
3. In Article 21, a reference to "any national court of a Member State" should replace "any national court".
4. Similarly, Article 29 which deals with exhaustion should refer to the market in Contracting States instead of just "in the Union".
5. Finally, various references to “Member States” elsewhere would need to be amended to include the UK (and potentially other non-Member States!?).

This leaves various questions of jurisdiction and enforcement to be dealt with. Counsel float the possibility of joining the Lugano Convention as a perfectly feasible replacement to the Brussels Regulation. 

What is not included in the Opinion's scope are the necessary amendments  for the ratify-and-leave option. Admittedly this scenario feels the most unlikely to this Kat, being quite a lot of effort for short term membership with a palpable expiry date, but it is worth noting that the UPC Agreement does not contain a clause for denunciation, whereas a previous incarnation did (which was gone by 2011). Because of this, Article 56 of the Vienna Convention on Treaties, restricting withdrawal from a treaty without a denunciation clause, could stop the UK embarking on this route before it even starts. An alternative would be to try and stick in some amendments going directly against the policy of removing the denunciation clause by reinstating it between the UK's ratification and foreseeable departure, or finding another justification for leaving - see here for more discussion of this.

Political problems?

Counsel's Opinion puts forward a practical, positive case for the nuts and bolts of UK participation in the UPC after Brexit. They are expressly neutral about the political palatable-ness of the proposals, which many readers of the Opinion may see as the elephant in the room. Dr Ingve Stjerna (whose thoughts on the UPC and Brexit can be found here) among others has pointed out that the continued commitment to Union law was a major bone of contention for the 52% of the electorate which voted to leave the EU, and thus participation in the UPC could be unacceptable to the population.

Dr Stjerna also points to Council Document 15856/11 as warning of the extreme difficulty of incorporating third countries into the UPC and is sceptical of more recent suggestions that the UK could be involved after Brexit as contrived to please UPC supporters. Still, it remains that the UPC is a non-EU international organisation with its own legal personality, expert Counsel have reviewed the legal feasibility and there is currently more than negligible political appetite for ratification.

An aside

One apparently insignificant footnote in the Opinion caught the IPKat’s eye.  Footnote 18 states “Although secondary legislation enacted under section 2(2) of the European Communities Act 1972 will lose its legal basis, and therefore its effect, upon the repeal of that Act.”  No further explanation is given of this assertion.  The IPKat has seen this suggested before, but has also seen suggestions to the contrary.  EU Directives are implemented in UK law either as primary legislation (Acts of Parliament), in which case it is universally agreed that unless amended or repealed such legislation remains in force, or by secondary legislation (Statutory Instruments [Orders in Council]) deriving legal basis from section 2(2) of the ECA. 

In the case of such Statutory Instruments, some commentators believe that they will survive the UK leaving the EU, either because the ECA will not in fact be repealed (and some authors believe that the repeal is not necessary upon the UK leaving the EU, the ECA simply ceases to have any EU legislation to bite on), or because repeal of the ECA does not invalidate SIs that were at the time lawfully enacted under Section 2(2) ECA.  The CIPA impact paper supposes that secondary legislation will remain in force for one or other of these reasons. But the real constitutional status of such secondary legislation seems to be unclear, and so the IPKat wonders whether any readers can provide reasoning or legal basis for whether or not an SI remains in force, once lawfully enacted, if the Act giving it legal basis is later repealed.

In concluion

This Kat is not much of a gambler. As with so many aspects of the progress of Brexit, this seems like something to wait and see for the time being. Is it worth quickly ratifying to get the court up and running before hashing all these details out? Probably it is not, and so the IPO line "there will be no immediate changes" is as good a line as any. Watch this space...

Book Review: European Patent Litigation in the Shadow of the Unified Patent Court

There is a perverse incentive in research that it is not in a scholar's interests for a problem to be solved. If your pet problem is solved, what do you do next? Therefore, publishing a UK book on European patent litigation in the year of the Brexit vote can be surprisingly fortuitous and lead to interesting reading. Brexit adds an (un)expected plot twist to the development of European patent litigation, and Luke McDonagh's new book is possibly the prequel to whatever-comes-next.

The book has three main chapters; one chapter looks at European patent litigation under the European Patent Convention, and includes a comparative analysis of key jurisdictions. Another chapter examines the UPC and Unitary Patent reform packages. The book provides a lot of practical information in its examination of litigation in the UK, Germany, France and the Netherlands.

In Chapter 4, the author reports on a survey of the UP/UPC-interested legal and business communities. Interviewees were predominately UK-focused. Here a discussion on renewal fees, perhaps one of the more interesting economic levers of the UP, suggests that the community prefers renewal fees to be set at the equivalent of three member states existing fees (namely the UK, Germany and France.) However, this view was not unanimous, as one interview noted that, "her company 'would like to see a higher renewal fee because higher fees discourage spurious patenting.'" [Merpel thinks this interviewee is very economics-friendly.]  Other sections address trolls and forum shopping, the opt-out and SMEs.

At the time of writing, the UK IPO has not changed its stance on the UPC. Time will tell.

European Patent Litigation in the Shadow of the Unified Patent Court, by McDonagh, Luke.  Cheltenham: Edward Elgar Publishing, 2016. ISBN: 978 1 78471 473 4. Available here for £70. Rupture factor: Low, a back-friendly 200 pages.

Disclosure: In my previous role at the UK IPO, I was involved in the underlying research project discussed in the final chapter.