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Brexit and the Uncertainty Principle Conundrum (UPC)

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GB+EU flagSince the result of the UK’s referendum on the EU there has been much discussion about what will happen to the unitary patent system in the period before Brexit and also once Brexit has occurred.

Prior to the EU Referendum, many articles that discussed Brexit (including on this blog) referenced the CJEU Opinion 1/09 as the basis for saying that only EU Member States could take part in the UPC Agreement. Following the EU Referendum however a number of commentators posted articles that presented potential mechanisms for the UK’s continued participation in the unitary patent project (UPP).

The future prospects for the UPC and the unitary patent project as a whole have looked somewhat uncertain following the Referendum.

Last week, an opinion (herein the “UPC Opinion”) by Richard Gordon QC and Tom Pascoe of Brick Court Chambers was published which considers the UK, Brexit and the UPP in great detail. Can the UK continue to be a part of the UPP? The short answer seems to be “yes, but…” and further detail on the opinion and the issues discussed is summarised below.

The UPC opinion has been commissioned by CIPA (who have stated they want the UK to ratify the UPCA), IP Federation (who don’t want ratification to occur without certainty of the UK’s role post Brexit) and the Intellectual Property Lawyers Association.

CJEU Opinion 1/09 – the elephant in the room

In a previous incarnation the UPC Agreement contained a mixture of EU Member States and non-EU States. Then along came CJEU Opinion 1/09 (herein the “CJEU Opinion”), the UPC Agreement was amended and non-EU States were stripped out of the equation.

As a result, a fair chunk of the UPC Opinion is given over to an analysis of the CJEU Opinion 1/09 (see paragraphs 14-17 and 50-102). The UPC Opinion notes that the CJEU Opinion does not explicitly state that only EU Member States can be part of the UPCA. This gives rise to two interpretations that can be made of the CJEU Opinion: (A) that the CJEU Opinion precludes non-EU Member States in the UPCA and (B) that the CJEU Opinion would allow non-EU Member State participation as long as there were sufficient safeguards to ensure “the supremacy and uniformity of EU law”.

The UPC Opinion actually provides six reasons for thinking that interpretation option (B) is the correct one, namely:

  1. the CJEU Opinion doesn’t explicitly rule out non-EU member states (paragraph 53);
  2. the CJEU is focused on safeguarding EU law, not the status of the member states (paragraphs 54-58);
  3. The UPC is an international tribunal. If the CJEU Opinion was interpreted such that courts outside the Union legal set up could not decide disputes relating to EU law then the UPCA would be unlawful (see paragraph 59);
  4. Interpretation option (B) is consistent with the ECJ approach to EEA and EFTA Courts (see paragraphs 60-64);
  5. The CJEU does not in principle object to the application of EU law outside the territory of the Member States (see paragraphs 65-68);
  6. There would be some interesting consequences if Member States couldn’t enter into agreements which require international tribunals to decide on EU law disputes (see paragraphs 69-70).

So the UPC Opinion suggests that interpretation option (B) above is the correct one. As to what safeguards would be required then it is suggested that a respect for the supremacy of EU law is required, the ability to bring infringement proceedings and/or obtain damages for breach of EU law and uniformity through preliminary references (to the CJEU).

This last safeguard introduces a complicating factor in that the basis for accepting references from the UK courts will disappear on Brexit (see paragraph 85). In order to satisfy this third requirement the UK would need to agree an international agreement with the EU, possibly as part of the Article 50 exit agreement.

The upshot of all the above though is that the authors regard that it would be legally possible for the UK to sign up to the safeguards required for the UK to take part in the UPCA.

The UPC Opinion details a couple of mechanisms by which the UPCA could be suitably amended. A knock on effect of all this tinkering however is that the EU would seem to need to become a party to the UPCA as well (see paragraph 119).

Can the UK take part in the unitary patent project post Brexit?

Based on the above analysis the answer appears to be “yes” though there are significant strings attached. The UK would need to submit to EU law as it relates to patent law disputes at the UPC, the UPC Agreement would need amending (see paragraphs 104-120), the Union would seem to need to become a party to the UPC Agreement and the UK would also need to sign up to a replacement for the Brussels Regulation (the Lugano Convention is a candidate for this but would need amendment as well!). International agreements with the existing member states and the EU would also be needed to continue with the unitary patent regulations.

What happens if the UK ratifies before Brexit?

There’s nothing stopping the UK ratifying the UPCA before Brexit. If Germany follows suit this would then bring the unitary patent project into being. However, upon Brexit, the UK would cease to be a contracting member state within the context of the UPCA and the UPC divisions in the UK would cease operating. This would potentially cause a number of consequences (e.g. case reallocation) and would need to be included within the EU exit negotiations.

So in summary, the UPC Opinion sees the potential for a way forward for continued UK participation in the unitary patent project. It would not however be a simple matter to achieve. Additionally, as the UPC Opinion points out, the CJEU may opt for interpretation option (A) above which would negate the entire line of thought. Getting an advance opinion from the CJEU would also require the EU to sign up to the UPCA.

Of course, the above legal arguments are only part of the story. There’s obviously a large political element to be considered as well and signing up to the safeguards envisaged above may be too bitter a pill for the UK to swallow in this Brexit means Brexit world.

So, the uncertainty conundrum that is the UPC  still remains. It just seems that now the barriers to the UK’s continued participation may not be legal but political.

Mark Richardson 20 September 2016

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