What now for UPC? Dismay as UK government rejects participation

The UK government declared it will seek to rescind its ratification of the Unified Patent Court. A press office for the Cabinet Office confirmed to JUVE Patent, “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.”

While the UPC is not an EU body, the links between the institutions remain strong. The government’s rejection of the project is perhaps unsurprising given that the Court of Justice of the European Union is the supracourt to which the UPC is answerable.

Previously, the EU’s Policy Department for Citizens’ Rights and Constitutional Affairs set out the blatant link in its analysis: “The Unified Patent Court must fully respect and apply Union law, in cooperation with the Court of Justice of the European Union as is the case for any national court.”

Alexander Ramsay, head of the UPC Preparatory Committee, says, “Ever since the Brexit referendum in 2016 we were aware that something like this could happen, so the decision of the UK government does not come as a total surprise.”

Turning tides

However, the latest announcement is a departure from the expected direction of the UK government. Boris Johnson himself, as foreign secretary under former prime minster Theresa May, ratified the UPC agreement in 2017. As recently as November 2019, Chris Skidmore, the then-Minister of Universities, Science, Research and Innovation, publicly confirmed the government’s commitment to harmonised intellectual property policy. In the UK, leading IP lawyers reached out to Skidmore, urging him to consider that the UPC be part of the ongoing negotiations between the UK and the EU.

But Skidmore is no longer the minister in charge of IP. He was removed in the government reshuffle on 14th February. The role has now been bestowed upon Amanda Solloway, parliamentary under secretary of state at the Department for Business, Energy and Industrial Strategy. On Twitter, Solloway stressed how much she is “looking forward to working closely with the IPO and the wider community to make the UK’s world leading IP environment even better.” Presumably the first step will be to extract the UK from the UPC project.

Kevin Mooney ©Simmons & Simmons

But this news has been met with a heavy heart by many lawyers and UPC advocates in the UK. Kevin Mooney, partner at Simmons & Simmons, has long been a key figure in the Unified Patent Court project. Both Mooney and his firm have fiercely advocated for the UPC project for at least the past six years.

Mooney says, “Of course, the latest news is a disappointment for all of those who have championed the UPC from the beginning. It remains to be seen what the other UPC member states will decide, following yesterday’s announcement. German ratification is still a distinct possibility, if the states decide there is still an appetite for a unified court.”

“On the other hand,” says Mooney, “UK participation was very important for all member states. It could be that those remaining are less enthusiastic about the project now it is missing a key player. The remaining states will now have to discuss the outcome and see how best to proceed without the UK.”

Still on tenterhooks

The UK government’s decision has no direct influence on the ongoing constitutional complaint in Germany. This is because the subject of the constitutional complaint is not the agreement, but primarily the approval of the law by the Bundestag. A decision by the Federal Constitutional Court has been announced for the first quarter of 2020.

On the other hand, the UK government’s intention to withdraw from the UPC puts more pressure on the remaining UPC member states. James Tumbridge, partner at the London office of Venner Shipley, says, “The future of the UPC is in the German court, legally and politically. It must decide whether it really wants the UPC to operate without the UK. Now the UK is out of the UPC, another country will have to make up the financial shortfall and host the division in place of London. Others will want it, but will parties be as attracted without the UK?”

Alexander Ramsay

A point of contention is also how the UK government can withdraw from the UPC despite ratifying the agreement. Ramsay says, “There are no provisions in the UPC agreement for the case of a member state that has ratified the agreement to drop out. It’s therefore very likely that the UK will have to launch a procedure under the Vienna Convention on the law of treaties.”

The outcome of the UK’s withdrawal is subject to international law. How the remaining member states approach this is a political question. A state can withdraw its consent if an international treaty has been ratified but has not yet been concluded.

One experienced constitutional lawyer explained to JUVE Patent that, for the UK to do so, it must withdraw its declaration of intent from the depositary of the ratification instruments.

Seat at the table

Among European patent lawyers, there was a mood of grudging acceptance as an immediate reaction to the decision. Nonetheless, some lawyers suggest that such is the clout of the UK courts, member states could make future concessions.

Guylène Kiesel Le Cosquer, European trademark and design attorney and managing partner at the Paris office of Plasseraud IP and president of the CNCPI, an organisation of IP lawyers in France, says “We have always said that the UPC should be with the UK. But if the UK is no longer willing to cooperate, the remaining European countries must move forward with the construction of the UPC.”

Guylène Kiesel le Cosquer

Kiesel le Cosquer says, “The UK cannot hold the future of such an essential project for Europe in its own hands. The UPC will happen without the UK, which will, nonetheless, be welcome to return to the negotiating table if it changes its mind again.”

One partner at a German patent firm agrees that the UK’s withdrawal should not determine the unified court’s future. It will take time to decide on the best course of action, given fundamental differences in the two viewpoints being put forward. The lawyer says, “The UK’s non-participation in the UPC is consistent. It makes no sense that British judges who no longer belong to the EU can issue rulings that can hinder companies in the EU internal market.”

“But the remaining states should stick with the UPC. A continental version would also make sense. Whether states such as the UK or Switzerland should then participate in the UPC can be clarified once the uncertain situation caused by Brexit has been resolved.”

Gordon Harris, partner and co-head of IP at Gowling WLG in London, corroborates this view. He says it seems unlikely that the UK opting out of the UPC will see other states follow suit. Indeed, Harris says, “There have been mutterings to the contrary. If the German Constitutional Court gives the UPC the ‘all clear,’ there will then be a scramble as countries vie for the ‘third seat of the Central Division.’ That debate may slow the actual introduction of the UPC in practice.”

Milan – or Paris – calling

Previously, the UPC had designated the UK as being host of the UPC’s pharmaceutical division. The government identified Aldgate Tower, located near the City, as the building to be used and renovated for this exact purpose. For now, the building will remain empty. Many in the European patent community speculate that the pharmaceutical division will relocate to Milan. Indeed, the Italian government has previously expressed keen interest in more active participation in the project. The Netherlands is also a potential new location for a UPC central division.

However, there has since been an election in Italy and the current government’s stance on the UPC is less clear. Whether the Italian government is willing to invest the money necessary to host a central division of the UPC is also under scrutiny.

In France, some lawyers are arguing that the UK central division be returned to Paris instead. Kiesel Le Cosquer says, “Originally, the UPC’s headquarters were to be in Paris only. The division of the UPC’s headquarters into three countries is the result of a political compromise that only dates back to 2012. It does not live up to the vision of a strong and united Europe around common projects. Therefore, personally, I think that France has to defend the return of the responsibilities of the central London division within the Paris division.”

New road ahead

Despite the disappointment emanating in patent circles today, most lawyers who spoke to JUVE Patent had a pragmatic view of how to proceed. More distressing for many UK and European patent lawyers is the amount of time and energy spent on the UPC project in the UK. Kevin Mooney, for example, has been an avid advocate from the beginning. The UK judges remain firmly on the side of the UPC. Many patent firms have dedicated swathes of website content, conferences and client discussions to what the UPC would mean for the UK. Now it seems to be for nothing.

Gordon Harris says, “After all the effort and contribution by so many UK-based professionals to build the UPC rules and system into something which bridged the civil/common law divide so effectively, we will not be participating in it going forward. All the IP professional organisations supported the UPC, as did the IP Federation.”

Some lawyers suggest this is a political issue, rather than one driven solely by policy. There is speculation that the announcement forms part of the broader negotiation between the UK and the UPC. Given the UK’s renewed calls for an IP chapter in any new trade deal, clearly patent holds clout as a bargaining tool. As such, many lawyers say it is not the last to be heard on the matter.

Nonetheless, not every patent lawyer is despondent. Tumbridge says, “I was for the UPC project. But I’m not worried. We can compete with the UPC – the UK has good judges, good lawyers and an exceptional reputation for handling patent cases. We’re match-fit, and companies will still look the UK for high-quality judgments on validity and infringement. There’s no reason why the latest decision will compromise the UK’s future in European patent litigation – we can very effectively compete with the UPC.” (Co-authors: Christina Schulze, Konstanze Richter and Mathieu Klos)