Dr Thomas Prock, Patent Attorney and Partner at Marks & Clerk, considers exactly what impact will Brexit have on intellectual property and the Unified Patent Court
Considerable investment flows into the research and design of new medical devices. The regulatory burden on manufacturers is significant and it would be costly to a manufacturer if they were forced to make changes to a device’s design during or after regulatory approval has been secured. Manufacturers are consequently very aware of competitors’ intellectual property rights that can prevent market entry of the new device. Many undertake invalidation challenges to problematic patents in an attempt to ‘clear the way’ for new products.
At present, most patents valid in Europe are granted by the European Patent Office. Once granted, patent proprietors undertake procedural steps to validate the granted patent in the countries of their choice. The patents then need to be enforced locally (country by country), making parallel court proceedings in multiple European countries common for high-value patents. This system, although operating in Europe, is a multilateral agreement and not an EU vehicle. As such, it will not be affected by Brexit.
Negotiations to supplement the current European patent system with a system in which a granted European patent covers all EU member states (a Unitary Patent (UP)), enforceable for all these countries in a single court (the Unified Patent Court (UPC)) have been going on for decades. After many false starts, an agreement had at long last been reached, albeit not involving Spain or Poland – news eagerly welcomed by the industry. For the UPC Agreement to come into force 13 countries, amongst them the UK, France and Germany, have to ratify the agreement. To date, 11 countries (including France) have ratified. With ratification by the UK and Germany (expected to ratify before this year’s autumn elections), the agreement will come in force. To general surprise the UK government announced, late last year, that it plans to ratify the UPC agreement despite the outcome of the June referendum on the UK’s membership of the EU. If the UK does ratify as stated, the UPC would come into force and the courts are currently expected to start operation in autumn 2017.
The Unified Patent Court, once in operation, will also have jurisdiction over those European patents that are currently subject to the courts in the various national jurisdiction unless patent proprietors explicitly elect against this. This is advantageous for companies introducing new products as they can try and invalidate a European competitor’s patent rights centrally through single (UPC) court proceedings.
The UPC court structure was created before the Brexit vote. Conveniently for UK-based medical devices companies, the seat of the branch of the court designated to hear validity challenges in the medical devices field is in London. Whilst the jurisprudence of all UPC branches, irrespective of their seat, is supposed to be unified, much speculation has circulated regarding the influence of early court decisions. It seems likely that medical device decision originating from London would be amongst those early decisions. These cases will also be heard in English, not least so because most European patents are granted in English. Given the popularity of invalidity proceedings in the medical devices field the London branch of the Unified Patent Court would be likely to gain experience rapidly and shape the future of the court system throughout Europe in the process.
The system as set up thus far looks set to provide an effective way for UK companies trying to introduce new products in Europe to ‘clear the way’ of competitors patents. The question is: How will Brexit affect this system?
The key concern is that the Court of Justice of the European Union is part of the UPC system and has the final say in questions of interpretation of patent law. This is of course anathema to statements made repeatedly by PM Theresa May that the UK will no longer be subject to decisions by the CJEU. Nobody knows how this particular circle is likely to be squared.
It may of course be possible that the jurisdiction of the CJEU will be accepted by Britain even after Brexit in this very narrow area of law. This may well be considered a pragmatic solution, given that British companies stand to benefit from this arrangement. Alternatively Britain may seek to re-negotiate the UPC agreement with the aim to remove the influence of the CJEU. This approach is fraught with difficulty, given that competing interests across Europe may well seek to use renegotiations to change other parts of the agreement. Nevertheless, the idea that the CJEU should have jurisdiction over patent matters (it already has powers over EU Trade Marks) has, however, not found unanimous acceptance even during the original negotiation of the agreement. As such, the possibility that the UPC Agreement may be renegotiated in this regard should not be discounted. Of course, Britain may simply choose to leave the UPC, despite having contributed to its creation and set up, leaving a system in which companies would use the UPC to clear the way across most of the rest of EU and the UK courts to do so in the UK.
If the UP and UPC went ahead without the UK, in the long term patent proprietors would be forced to obtain separate patent protection in the UK while still being able to rely on the UP for almost pan-EU protection. This will inevitably be more costly than having a Unitary Patent that also covers the UK. For cost reasons, patent proprietors are presently extremely selective in choosing the countries in which their current European patents are validated. They tend to focus on a limited number of key jurisdictions and not extend protection to more marginal markets. Companies not considering the UK as one of their key markets will be likely to continue with this practice and simply refuse to spend the funds required for protection in the UK.
Some companies wanting to enter the UK market might consider it advantageous not to have UPs covering the UK. However, these businesses will often also be looking to trade with the rest of the EU, which would be inhibited by UPs. The parties most disadvantaged from an exit of the UK from the UP/UPC will likely be UK companies. This is because their key market is their own domestic one, so they will need to obtain appropriate patent protection at home in addition to seeking pan-European patent protection.
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