Thursday’s referendum will have far-reaching consequences for EU patent litigation, write Giovanni Guglielmetti and Marco Blei of Italian firm BonelliErede.
On 23 June 2016, British citizens will vote on whether they want the UK to remain a member of the EU. Although UK voters are likely to focus on issues such as the economy, finance, labour and immigration, the outcome of the referendum will also have a significant impact on intellectual property, and particularly on the upcoming Unitary Patent (UP) and associated Unified Patent Court (UPC).
Thanks to the UP and UPC, businesses will be able to obtain a single, EU-wide unitary patent and enforce it on a pan-European basis before a common European patent court. The Central Division of this common court will be in Paris, and additional branches are to be set up in Munich and London. Moreover, the UPC will have jurisdiction on traditional European patents designating countries that adhere to the UPC system. This means that, contrary to the current patent litigation that is carried out on a country-by-country basis, under the UPC system, enforcement and invalidity actions will be decided on by a single decision that has effect in all UPC designated countries. The only exception is transitorily provided for the first seven years after the system comes into force (a term that can be extended up to a further seven years), during which time patent owners may opt out their traditional European Patents from the UPC and remain with the current national jurisdiction.
In the event of a Brexit vote, the UK may also expect that its current favourable position as the preferred forum for litigating traditional European patents covering blockbuster products would be reduced. Indeed, the UPC could well become a more attractive forum for European litigation in patent matters, and patent owners might in many cases consider it sufficient to enforce their rights before the UPC. This is particularly likely scenario, as in Europe patents with more restricted budgets already have a general tendency to only be enforced in some important markets and not in all countries where they are effective. However, when the UPC first comes into force, its attractiveness as a forum would depend on the number of opted-out patents, which is expected to be significant. Although many traditional European patents will remain with the national jurisdiction, the current attractiveness of the UK in cross-border patent litigation might also be significantly reduced for opted-out European patents, because after a Brexit vote EU Regulation No. 1215/2012 on jurisdiction and the recognition and enforcement of decisions in civil and commercial matters would no longer apply in the UK. It remains to be seen whether the rules on jurisdiction, recognition and enforcement of foreign decisions corresponding to those of the above EU Regulation will remain in place in the UK in case of Brexit.
Brexit would not necessarily cause the UPC to fail, as other countries (most likely Italy or the Netherlands) would take the UK’s place in the process, possibly even becoming one of the countries where the Central Division branches are located. However, if the Leave campaign wins, the whole UPC process will be at least significantly delayed. Indeed, the UK would need to negotiate its departure from the EU, and this would take time – many say at least two years. During this transition the UK would still be officially part of the EU, but it would be very unlikely to ratify the UPC agreement, and it would make little sense to ratify after the UK has voted to exit. However, until UK is in the EU the UPC agreement may enter into force only if it is ratified also by the UK. Consequently, it would be almost impossible for the UPC agreement to enter into force before any UK exit from the EU becomes effective. The only possibility to avoid this stalemate would be for the other participating countries to negotiate the adjustments necessary to immediately exclude the UK from the group of three countries (the UK, France and Germany) whose ratification is currently mandatory. But this would also take time.
Finally, the UPC would become less attractive to businesses if the UK were to vote to leave the EU. And if the London branch of the Central Division were to be moved to another location, the question as to whether countries that have already ratified the current UPC would need to ratify a revised post-Brexit version would also arise. Language would, however, not be an issue: English is one of the three official languages of the UPC and, even without the UK as part of the system and without any UK judge in the court, litigating in English would still make sense as the majority of the European patents are granted in English.
Giovanni Guglielmetti and Marco Blei are partner and senior associate, respectively, in the IP department of BonelliErede.