Brexit

The end is nigh: 50 days until Brexit

It is 50 days until Brexit and the European patent community is on tenterhooks. No-one has an idea of what will emerge from ongoing talks between the UK government and the EU. In the world of patent litigation, considerations are being made for any eventuality. The impact of Brexit on cross-border litigation, and how a no-deal Brexit might affect firms from a business perspective, is at the forefront of current concerns.

8 February 2019 by Amy Sandys

Clocks at Canary Wharf, London. ©Andreas Anhalt

One group working constantly on all available scenarios is the Brexit Committee of mixed patent-attorney and lawyer firm Marks & Clerk in London. With eight members, it has “been contingency planning before we believed Brexit would happen,” says Thomas Prock, a German and European patent attorney at the firm. While no-one yet knows the likely outcome on 29 March, strategies to mitigate client and employee impact are developing in the London patent litigation sector.

War room

How pan-European litigation will be conducted has become the driving question in the London market. Yet, from a business perspective, IP firms themselves also require a contingency plan. Although consensus among IP firms is that the immediate impact of Brexit may be mitigated by a slow transition period, many London offices are in the midst of implementing strategies to reassure clients and employees.

As well as the impending regulatory issues a hard Brexit might produce, at the forefront of many IP lawyers’ minds is how to manage a staff base compromised of EU citizens. The market is by its nature international, attracting high numbers of overseas applications and involving intense cross-border cooperation. “Communication is key,” says Graham Burnett-Hall, partner at Marks & Clerk. “Marks & Clerk is an international firm with an international make-up of partners and staff, whether EU or non-EU nationals. Our first priority was to ensure there’s no last-minute panic, and all staff and family residencies were looked after.”

In fact, says Burnett-Hall, rather than staff, it is clients with international supply chains which have more potential to be impacted by Brexit. Another solicitor supports this view, saying that in the short term, Brexit has in fact been beneficial by allowing firms like Marks & Clerk to plan strategically for its future. Burnett-Hall says, “The best policy is to plan for the worst, in this case a ‘no-deal’ Brexit, and hope for the best. There are means of protecting EU-derived IP after March 29, but preparation is key.”

Brexit has been beneficial by allowing firms to plan strategically for the future”

The same is true at Simmons & Simmons. The biggest potential impact of Brexit is currently around its trademark business and the partners obtaining trademark protection for professions and industries in the EU. While Brexit will not affect the ability of European patent attorneys based in the UK to continue to file and prosecute patents at the EPO, European trademark attorneys are likely to be required to be based in an EU country to file and prosecute trademarks at the EUIPO.

Post-Brexit, UK-based trademark attorneys will have fewer options for relocation and UK firms might be required to funnel European trademark litigation applications through offices based in the EU. Post-Brexit, firms like Simmons & Simmons which have offices throughout Europe will be able to move work from the UK into the EU. But firms based only in the UK will not have that option. Many commentators consider it “very unlikely” the EU’s trademark registration system will cover the UK beyond the transitional period.

In patent practice, solutions to a hard Brexit include close coordination between firms and more clients using overseas companies in parallel to London-based firms. However, one commentator suggests that some boutique and mixed firms without offices in Europe could face problems in terms of business strategy. There is simmering concern that clients could choose a boutique firm in a country with less regulation around the distribution of services. This might then shift specialised litigation away from London and fuel demand for the opening of offices in other European countries.

The UPC question

As well as Brexit, litigators across Europe are baffled about the current situation regarding the UPC. The German Constitutional Court in Karlsruhe has still not issued its ruling, which would set the wheels in motion for the new court system. Currently, decisions made in London patent courts are highly influential but have no direct legal effect in other countries. In this respect, says Michael Burdon, partner in the London office of Simmons & Simmons, the British position will be much stronger in the event of UPC participation – but will potentially decline without

Michael Burdon, partner at Simmons & Simmons, says it is more likely that the UPC, rather than Brexit, will affect the future of patent litigation in Europe.

Simmons & Simmons is known among peers for its vehemently strong anti-Brexit stance. Its partners, particularly the indefatigable Kevin Mooney, are key players in the ongoing development around the UPC.

“In general, London litigators want the UPC to happen because it’s a good thing,” Burdon told JUVE Patent. “But if there’s a hard Brexit, it may make it harder for the UK to be part of the UPC. There’s a better chance of UK involvement and a functioning effective and popular UPC if the system begins with the UK as part of it. We are hopeful and supportive of ongoing attempts.”

However, a change in IP enforcement regulation could affect the ability of London courts to enact enforcement rulings. Although Burdon says this is unlikely in practice, “If the UPC without the UK succeeds, there may be less interest in the UK as a litigation destination.” While both patent protection and patent disputes should not be immediately affected by Brexit, the question mark over the UPC remains part of contingency discussions.

For Burnett-Hall, however, the UPC matter is almost superfluous until Brexit is sufficiently dealt with. “When it comes to the UPC, it may or may not happen depending on Germany. But now we’ll be dealing with this after Brexit – for us, planning to mitigate the impact on staff and clients has taken priority.” This is not to say, however, that Marks & Clerk is without strategic planning around the potential launch of a UPC. “This means,” says Burnett Hall, “we have the right people in the right places. Whatever the outcome, our European network should serve us well.”

Even without the UPC, and with the addition of Brexit, many solicitors are determined it will be business as usual for the London patent courts. The choice of where to litigate, says one partner at a leading London law firm, comes down to basics. “Economy size, quality of the court, location of the infringing activity, and the location of manufacturers and industry. With the UK still able to deliver on these things, there’s no reason why the London patent courts will see a drop in the amount of litigation – even if we’re not in the UPC.”

View from the sidelines

When one is in the eye of the storm, the restoration of calm is hard to imagine. Take a step back, and perhaps the potential outcome of a hard Brexit will have less impact on the London patent litigation market as some fear. An in-house litigator working at a European telecommunications company told JUVE Patent, “For us it makes no difference if the British courts and lawyers have access to the European single market after a hard Brexit or not. We usually mandate London lawyers to negotiate in advance of a dispute.”

“If we have to sue, we would still consider using the London Patent Court”

“The judgments continue to carry weight because of the expertise of the judges. The German, French and Dutch judges will take a close look at the judgments from London and will also follow them after Brexit if necessary.”

And this spirit of collaboration is not confined to overseas solicitors. It is oft-heard among the judiciary in London, not least by High Court judge Colin Birss who told JUVE Patent, “I regularly meet judges from other countries – both in Europe and all over the world. Even though our legal systems may be very different, the challenges judges face are often very similar.”

The speed and effectiveness of London courts, says Thomas Prock, partner at Marks & Clerk, will play a key role in attracting litigation after Brexit.

Brexit may be divisive politically, but professionally it could create opportunities for international cooperation.

Despite the doom and gloom currently plaguing UK headlines, JUVE Patent research suggests a certain level of optimism among European patent lawyers, who suggest that it is not being in, or out, of the EU which will drive levels of patent litigation in London firms. Rather, the recognition that London’s patent courts is one of the fastest jurisdictions available for patent litigation in Europe will propel the industry after Brexit.

Prock says, “In the London courts, a patent case can go from initial registration to judgment in two to three years. In Germany, this process takes four to five years. While the patents boards still have attractive potential, the European patent is granted at the EPO – this won’t change.”

Fair and reasonable

Optimism regarding the prowess of the UK court system is particularly relevant given recent decisions, handed down by the High Court and Courts of Appeal, surrounding FRAND and global licencing. Some commentators argue that UK courts are becoming increasingly friendly towards patent holders, with the upholding of Colin Birss’ May 2018 judgment on applying global FRAND rates to SEPs resonating in recent court cases such as Conversant v. Huawei and ZTE. This alone makes the London courts more attractive, says one London patent solicitor.

Similar to the view from in-house, Guy Burkill, barrister and QC at IP chambers Three New Square, says that the respect earned by London’s courts is a key factor in determining the location of future patent proceedings. Despite the decisions handed down in London being territorially-limited, the courts’ “reputation for high-quality decision making” means high value litigation is likely to seek London as its preferred destination. And such decisions can have a pan-European impact.

“A defendant sued in Germany has, from time to time, sought a speedy UK hearing on the validity of the UK equivalent patent, with the object of exporting a revocation decision here to the German infringement court as a strongly persuasive reason not to grant an injunction there,” says Burkill.

“The English court has held that actions with such a motive are perfectly proper. More generally, a decision of the English court will often promote a worldwide settlement without the need for multiple actions.”

Simplicity and effectiveness in the UK courts could, ironically given the political quagmire, be the reason London’s patent litigation business goes from strength to strength. Law firms are putting their heads together and background work is being done.

Promise of posterity

Despite the contingency planning, however, many solicitors feel posterity will be kind. The eminence of the London courts, and the resonance with which judgments from the capital are received, all act in favour of London’s IP community. “The British patent courts and lawyers have the least to worry about with Brexit,” says a European in-house solicitor.

And while the potential outcome remains uncertain, the likelihood of the UK leaving the European Union with no deal is still regarded by some London lawyers as small. In two years’ time it could be business as usual, with the London patent community speculating over what all the fuss was about. Or maybe the lawyers will still be waiting on the decision from Karlsruhe. Either way, it is 50 days until Brexit and still no-one knows what will happen.