Brexit Briefing - April 2018

Jane Lambert

One European initiative upon which the United Kingdom has been consistently communautaire has been a single European patent for the whole European Union.  Her Majesty's government was one of the signatories to the Community Patent Convention in 1975 and one of the reasons for the Patents Act 1977 was to give effect to that Convention.  The Convention never came into force because other parties failed to ratify it.  Several attempts have been made to revive the initiative or to launch other initiatives through the European Union or the European Patent Convention. The British government has supported all of those initiatives but they have all come to nought.

The reason why the United Kingdom has supported those initiatives is obvious upon consulting TaylorWessing's Patent Map.  There is a comparison of the typical costs at first instance of an action for patent infringement in each of the jurisdictions of Europe and England and Wales is by far the most expensive. The cost of enforcement goes a long way to explaining why the United Kingdom consistently lags behind not only Germany and France with similar populations and GDP to ours in the number of European patent applications but also Switzerland with one eighth of our population and the Netherlands with a third (see European patent applications per country of origin on the European Patent Office website).  A single European patent covering the territories of the United Kingdom and those of its European partners with a single patents court for all those countries would level the playing field for British business.

As it did not prove possible to launch an EU patent because of objections from Spain and Italy the other member states decided to establish a single European patent for their territories by themselves through a procedure known as "enhanced cooperation" (see Jane Lambert The Community Patent is Dead - Long Live the Unitary Patent 29 April 2018 NIPC Law). The result was the Agreement on the Unified Patent Court ("the UPC Agreement") which was signed by Her Majesty's and other governments on 19 Feb 2013. The Agreement establishes a Unified Patents Court consisting of a Court of First Instance and a Court of Appeal and one of the sections of the Central Division of the Court Instance is to sit in London. The British government acquired premises for the new court in Aldgate and began to fit them out long before the Brexit referendum.

Art 89 of the UPC Agreement provides that it will come into force after 13 signatories including France, Germany and the United Kingdom ratify it.  Over 13 states including France have already done that.  On World Intellectual Property Day, which falls on 26 April. the Minister for Intellectual Property announced that the UK had also ratified the UPC Agreement (see Jane Lambert British Ratification of the UPC Agreement - Possibly the best thing to happen on World Intellectual Property Day 26 April 2018 NIPC News). The last remaining condition for the implementation of that Agreement is German ratification but that is delayed by litigation in the German Federal Constitutional Court.  The Alternative for Germany Party has also tried to repeal legislation to ratify the UPC Agreement that has been passed by both houses of the German Parliament and is now awaiting presidential assent.

It is not clear how long it will take for the Constitutional Court to determine the legal challenge to German ratification but it could easily exceed the time in which the UK will remain a member of the EU.  After that it is by no means clear whether the UK can remain a party to the UPC Agreement.  My own view is that it cannot but there is a contrary view held by, among others, the British government that the UPC Agreement is an international treaty that lies outside the EU.  The reason for my scepticism is that such a treaty would be incompatible with EU law for the reasons given by the Court of Justice of the European Union in Opinion 1/09 of 8 March 2011 (see Jane Lambert Court of Justice of the European Union holds European and Community Patent Court to be incompatible with EU Law 8 March 2011 NIPC website).

Our chances of remaining party to the UPC Agreement will depend in large part on whether we leave the EU with a withdrawal agreement and on our future relations with the remaining member states.  Although a lot of progress has been made in negotiations for a withdrawal agreement. Monsieur Barnier warned at the Hanover Trade Fair that it is not a done deal (see Jane Lambert Withdrawal Agreement - Not a Done Deal Yet 26 April 2018). He emphasized at the All-Island Civic Dialogue in Dundalk on 30 April 2018 that a likely stumbling block is the Irish border (see EU press release Speech by Michel Barnier at the All-Island Civic Dialogue of 30 April 2018 on the Commission website). British ideas for "maximum facilitation" and a "customs partnership" appear not to have been agreed even by the British cabinet let alone the EU. There are reports in today's Guardian that British civil servants have drawn up plans for customs checks between Great Britain and Ireland which would be in line with the draft withdrawal agreement (see Daniel Boffey Brexit plan drawn up for border checks between NI and rest of UK 4 May 2018 The Guardian).

Such a plan would be tantamount to the economic partitioning of the United Kingdom which could have all sorts of political and constitutional consequences beyond the obvious such as the withdrawal of DUP support for the Conservative administration and renewed requests by the Scottish government to remain in the single market and customs union. However, if it led to a free trade agreement that covered services it would be welcomed widely by the financial services industry.  Such an agreement is on the table (see the memorandum from the art 50 task force to the EU 27 Topics for discussions on the future framework at forthcoming meetings 4 May 2018). Monsieur Barnier made some encouraging remarks about London remaining an important financial centre after Brexit in his speech to the Eurofi think tank's high level seminar in Sofia on 26 April 2018 (see EU press release Speech by Michel Barnier at the Eurofi High-level Seminar 2018 at Sofia, 26 April 2018 on the Commission website).

Should anyone wish to discuss this briefing, the UPC Agreement or Brexit generally, he or she should call me on 020 7404 5252 during office hours or send me a message through my contact form.