The UPC is dead, long live the UPC!

European patent attorneys have been getting excited about the Unitary Patent (UP) and Unified Patent Court (UPC) for years, writing articles, and giving talks and presentations about the ins-and-outs and twists-and-turns of the whole thing. So what is the current situation? What has happened now?

On 27th February 2020, IAM got a quote from a UK Government spokesperson who stated: "I can confirm that the UK will not be seeking involvement in the UP/UPC system. Participating in a court that applies EU law and bound by the CJEU is inconsistent with our aims of becoming an independent self-governing nation." This same quote was subsequently given to JUVE by a press officer for the Cabinet Office. Tim Moss (the CEO of the UK IPO) also placed a call to Richard Mair (the President of CIPA, the UK Chartered Institute of Patent Attorneys) to say that "the Government will no longer seek to participate in the Unitary Patent or Unified Patent Court system."

In light of that, it seems that the UK is definitely not going to be part of the UPC

Does that mean that the UPC is dead?

In its current form, yes. However, the whole question of UK involvement has been on-going ever since the results of the UK's Brexit referendum on 23 June 2016 were announced. The basic issue here is that Article 89 of the UPC Agreement says that in order for the agreement to enter into force, the three EPC member states with the highest number of European patent validations in the preceding year must ratify the agreement. That translates to the UK, France and Germany. Without the UK, it would be impossible for the UPC Agreement to enter into force. The UK has already ratified the agreement, but will presumably withdraw that ratification.

If that happens then the UPC Agreement will need to be amended to overcome this problem and the whole process of ratification will need to begin again. One of the courts which is supposed to be located in the UK will also need a new home, and the Italian Foreign Ministry has previously supported Milan as a potential host city for that court. There have also been suggestions that it could be located in the Netherlands.

What’s going on at the German Federal Constitutional Court?

Another big issue is that the German Federal Constitutional Court is looking at a complaint, and this resulted in the Court asking the German Federal President to hold back from signing the UPC Agreement. The exact nature of the complaint is unknown, and the exact impact (or even potential impact) of any decision will of course be unknown until a decision in the case has issued. However, one potential scenario is that the European Patent Convention has to be amended to address the findings of the court. So that could potentially delay things for a number of years.

Are there any other problems with the UPC?

One big issue is that without the UK (and the presence of UK judges), Unitary Patents and the UPC are a lot less attractive. In particular, the prospect of centralised attack on a key patent across the whole of Europe is known to be of great concern for owners of high-value patents (e.g. in the pharmaceuticals sector). In addition, the Unitary Patent annuity/renewal fees are pitched as being equivalent to the total for the top four European patent validation countries in 2015, with the total for years 1-10 coming in at less than EUR5000. However, many large filers validate their patents in just one or two countries (e.g. the UK and Germany), and in that case the fees work out at more than double the costs for the UK and Germany. With the UK outside of the Unitary Patent and the need to pay separate renewals in the UK, the cost of Unitary Patent renewal fees may become much more of an issue. The Unitary Patent will, of course, result in reduced costs from annuity service providers (since only one annuity, and one service fee, will have to be paid for all Unitary Patent states), but the bonus of patent protection in the other Unitary Patent states might not be enough to swing things, at least not at first.

So what will happen now?

The UPC Agreement isn't totally dead, but it will need to be amended, the location of a new court agreed, renewal fees updated, and the agreement ratified again. The German Federal Constitutional Court could have a significant impact, but again might not be terminal. Overall, we should expect delays - potentially years - before things proceed any further. Whether the political desire for the Unitary Patent and Unified Patent Court will remain and survive this is another question altogether.

If you have any questions then please get in touch with your usual Wynne-Jones contact.