Just where does Mrs May's Speech leave the Unified Patent Court?

Rt. Hon. Theresa May MP

Author: Home office
Source: Wikipedia
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Jane Lambert

In her Lancaster House speech of the 17 Jan 2017 (the transcript of which can be found on The Independent's website) the Prime Minister acknowledged that "Britain might at times have been seen as an awkward member state" However, there is one policy upon which we have always been impeccably communautaire  That has been the scheme to establish a single European patent for the territories of all the EU member states with a single European patent court.

We were one of the few parties to ratify the Community Patent Convention in 1975 shortly after we joined the EEC. Ever since then our government has participated constructively in deliberations and negotiations both for a Community patent within the framework of the EU (see Community Patent on the Eur-Lex website) and a European patent litigation agreement ("EPLA") as an optional protocol to the European Patent Convention (see European Patent Litigation Agreement on the Wikipedia website).  The Gowers Review of Intellectual Property recommended the establishment of a unitary Community Patent (COMPAT) in 2006 to reduce substantially the cost of patent applications in Europe which were then twice as expensive as in the USA. Similarly, Professor Hargreaves urged the government to "attach the highest immediate priority to achieving a unified EU patent court and EU patent system, which promises significant economic benefits to UK business" (see page 8 of Digital Opportunity A Review of Intellectual Property and Growth May 2011).

The reason why different governments of different political parties have always supported these initiatives is that patent litigation is considerably more expensive in England and Wales than it is anywhere else. In The Enforcement of Patent Rights Nov 2003, the Intellectual Property Advisory Committee reported at page 50 that the cost of an action in the Patents Court was £1 million and between £150,000 and £250,000 in the Patents County Court compared to €30,000 - 50,000 in France, €25,000 - 50,000 for Germany and €10,000 - 20,000 for summary proceedings and €40,000 for a simple action in the Netherlands.  According to Taylor Wessing's Patent Map - European Litigation Guide typical first instance costs are between £200,000 and £1 million in England despite the changes to CPR Part 63 (see New Patents County Court Rules 31 Oct 2010) and nearly as much in Finland, France and Ireland but considerably less in Germany, the Netherlands, Italy and Spain while in Poland they are between €2,000 and €25,000 depending on the value of the claim.

The relatively high cost of enforcement in England is often cited as one of the reasons why the UK trails not just Germany and France in the number of European patent applications but also the Netherlands with one third of our population and Switzerland with one eighth.

European Patent Applications 2015
Country	Number
USA	65,754
Japan	50,597
Germany	31,670
China	31,504
South Korea	18,215
France	13,370
Netherlands	8,451
Switzerland	8,354
UK	7,095

Source: European Patent Office

A single European patent for the territories of the UK and the other EU member states with a single court would clearly level the playing field for businesses in the UK.

The initiative for the EPLA stalled in 2007 when the legal service of the European Parliament opined that such an agreement would breach art 292 of the Treaty of Rome. The proposal for an EU patent and patent court failed over a disagreement with Italy and Spain as to the languages that to be used in EU patent proceedings. The remaining member states including the UK decided to press ahead with a European patent for the territories of those states to be known as a unitary patent with a single court to be known as the Unified Patent Court ("UPC").  An Agreement on a Unified Patent Court was reached on 19 Feb 2013 and implementing regulations were adopted by the European Council.

As I reported in Preparing for the Unified Patent Court 23 Jan 2016 the British government acted with considerable alacrity:

"The United Kingdom ....... has passed primary legislation to enable the UK to ratify the agreement (see s.17 of the Intellectual Property Act 2014). The government has recently responded to to replies to a Technical Review and Call for Evidence on Secondary Legislation Implementing the Agreement on a Unified Patent Court and EU Regulations Establishing the Unitary Patent (see Government Response to the Technical Review and Call for Evidence on Secondary Legislation Implementing the Agreement on a Unified Patent Court and EU Regulations Establishing the Unitary Patent of 14 Jan 2016). It has also taken a lease to space in Aldgate Tower for the London section of the Central Division and the British Division of the Court of First Instance. Germany, the last of the three, is thought likely to ratify the UPC Agreement in September (see the interview of Wouter Pors of Bird & Bird by the Kluwer UPC News blogger on January 4, 2016, 2016: Countdown to the start of the Unified Patent Court Kluwer Patent Blog)."

Until the June referendum there was every chance that the UPC would open at the beginning of this year.

The result of the referendum has delayed the launch of the UPC and unitary patent but it has not killed it off altogether. On 28 Nov 2016 Lady Neville Rolfe, the former Minister for Intellectual Property, announced in UK signals green light to Unified Patent Court Agreement that:

"the UK will continue with preparations for ratification over the coming months. It will be working with the Preparatory Committee to bring the Unified Patent Court (UPC) into operation as soon as possible."

However, the problem for the UK is that art 84 (1) of the UPC Agreement makes clear it is open only to EU member states and that disputes shall be resolved ultimately by the Court of Justice of the European Union.

The Prime Minister did not address the question about what to do with the Unified Patent Court in her Lancaster House speech though she did include four short paragraphs into her 10th negotiating principle headed "The best place for science and innovation."  However, she did give two pointers in saying that the UK intends to renounce the jurisdiction of the Court of Justice upon its departure from the EU but nevertheless wishes to remain a close partner of the EU.

Mrs May's negotiating strategy seems to be to exit the EU altogether and then negotiate ad hoc arrangements on such matters as appear to be in both British and the remaining states' interests as she did with justice and crime when she was Home Secretary. That may be what she hopes to do about the UPC if it is on her agenda at all. The possibility of such an ad hoc agreement for the UPC was floated by Richard Gordon QC and Tom Pascoe who were consulted by the IP Federation, the Chartered Institute of Patent Attorneys and the Intellectual Property Lawyers Association.  However, they flagged up several difficulties and concluded that in the absence of such an agreement any divisions of the UPC in the UK would have to close.

Even though it seems likely that the UK will have to leave the UPC it is clearly in the interests of British business (as it is is also in the interests of American, Chinese, Japanese and Korean business) to promote the unitary patent and the UPC since it will reduce patent prosecution and enforcement costs. But if the UK excludes itself from the UPC and unitary patent by its renunciation of the jurisdiction of the jurisdiction of the Court of Justice it will make it very much harder for it to achieve the aim of being the best place for science and innovation.