It’ll be UK in the end

The referendum on the UK’s EU membership is fast approaching. How could an exit affect the unitary patent system?

The UK’s position within the upcoming unitary patent system is unclear as the referendum on jurisdiction’s EU membership looms ever closer. With Brits going to the polls on 23 June, the opposing sides are pushing their arguments as to why the UK should stay in or leave the EU. But an EU-wide patent is far from top of the agenda.

“The unitary patent system and the UK being in [the EU] are heavily linked,” argues Edward Nodder, partner at Bristows. “UK participation in the Unified Patent Court (UPC) is pretty fundamental—there is an expectation that English judges will be important and the English language will be dominant, and common law parts of the rules are critical.”

Adam Cooke, partner at DLA Piper, says: “If the UK were no longer to participate in the unitary patent system/UPC, the viability of the whole project could well be at stake as about half of European patents are only validated in the UK, France and Germany.”

The economical argument for the UK’s continued membership of the EU has been front and centre for the Remain camp, with the Treasury predicting that the country would lose at least £2,600 in GDP per household after 15 years.

The monetary value of the unitary patent system should not be underestimated either, according to Paul Chapman, partner at Marks & Clerk.

He says: “If the UK votes to leave the EU, it will increase costs for companies wanting to obtain patent protection in the UK.”

The unitary patent system is primarily aimed at reducing the cost of securing patent protection in Europe, so that EU member states can compete with the US.

Without EU-wide protection and a court in which to protect it, that aim is being forgotten.

Nodder says: “At the highest level, it was thought that obtaining patents and enforcing them in Europe was currently too expensive, slow and complicated, compared to the US (and how things were likely to become in China and other rising economies). Not having the unitary patent and UPC will perpetuate those disadvantages.”

There is also a chance that a UK exit could put the whole project at risk. The agreement behind the UPC will not be ratified until 13 signatories give their approval and, as it currently stands, the UK, France and Germany must be among them.

Nodder says: “It’s more likely people would say that the UPC just does not make legal or economic sense without the UK, and maybe countries won’t bother ratifying, and the unitary patent system and UPC will just die.”

Not all negative

There are some who would prefer the UK to stand outside of the unitary patent system, given the size of the market.

Nodder says “For companies that expect to be attacked under patents like generic drug companies, I think they would prefer a system where the UK was separate and the attacking party had to bring two lots of proceedings—one via the UPC and one in the UK Patents Court.”

This also probably true of licensing companies whose patents are their only business. Costly and repetitive litigation makes invalidating patents more than most can stomach. A standard European patent must be litigated in every jurisdiction it has been validated in, so a finding of invalidity in one country does not affect the patent in another. The UPC and unitary patent, on the other hand, offer the opportunity to knock out a patent in one fell swoop.

“It’s probably going to be more patent-friendly compared to the UK courts (some give the UK the nickname of the patent killing field). So for those who are worried about having valuable patents cancelled, being outside the UPC would not be a problem,” says Nodder.

But the UK would be much better off if it could participate in the unitary patent system, argues Cooke.

He summaries: “If the UK votes against Brexit and remains in the EU, the unitary patent system/UPC could well become a reality by early May next year. As the UK is one of the largest markets in the EU, its participation in the unitary patent/UPC is not only crucial for the project but also represents an invaluable opportunity for businesses, whether located in the UK or elsewhere.”

“Brexit would also be bad for UK lawyers as they would not be able to represent clients before the UPC. And the UPC would also be deprived of the participation of UK judges.”
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