For over 40 years, resolving European cross-border disputes about patents in one proceeding has been a dream. The solution, by way of a new European Unified Patents Court ("the UPC"), was until the summer of 2016 within touching distance. Following the Brexit vote, that vision has become more of a mirage.
Why is this so? Many people, in business, in-house and private practice lawyers around the world and members of the European judiciary, plus civil servants, invested a huge amount of time and thought in producing a pan-European litigation system which had a good chance of working. It would not be suitable for every dispute, but it had excellent prospects of working for many. The reason is that it was a creative and practical blend of the civil law and common law systems which underlie the EU. The national civil law jurisdictions typically have no live witnesses, no cross-examination, no discovery. The national common law systems, or ones like them as in Denmark, have all of those. The genius of the UPC was to introduce fact and expert evidence, cross-examination of witnesses and limited discovery of documents in a targeted way. And to get to trial in twelve months.
The impact of Brexit
A central court would have three divisions: in France, the UK and Germany. The UK had influence and an ultimate participation in excess of its geographical size: because of its greater experience in forensic litigation, which cross-border disputes covering more than 500 million citizens demanded and merited. The Brexit vote may have put an end to all of this.
Although the legal status is unclear, most commentators consider the UPC to be an EU vehicle but it is an open question whether this is strictly so. It is true that only EU states are currently participating in it, and the CJEU is going to be the ultimate court of appeal on the construction of its instruments. This latter point could be a sticking point in the UK House of Commons when it comes to ratification of the Agreement.
Is there a hope? There is. This is why:
- The threatened "hard" Brexit may be modified during negotiations for good, pragmatic commercial reasons. Article 50 of the Treaty on European Union (as amended by the Lisbon Treaty of 2007) has to be triggered to start the process of withdrawal and to negotiate on what terms. The English Supreme Court ruled in January 2017 that the UK government may not trigger Article 50 without the consent of the UK Parliament. Members of both Houses were heavily in favour of Remain. Nevertheless, the House of Lords finally voted (on 13 March 2017) in favour of the triggering of Article 50, as the House of Commons had already done. UK Prime Minister Theresa May had already announced she would do this by the end of March 2017.
- The UPC may survive – IF it is no longer treated as an engine of the EU, but (like the European Patent Office) is created by convention (or treaty), the UK can continue to be a participant.
- Pan-European patent disputes may be resolved by arbitration. The week after the Brexit vote I was in Germany. I was expecting a frosty reception from German patent lawyers and others. Not a bit of it. They were dismayed and sad. They regard UK as their strongest collaborator, both in the EU generally and in the planned UPC in particular. Two German lawyers, quite separately, said to me that this was a real opportunity for pan-European patent disputes to be resolved by arbitration using, if the parties wished to, procedures similar to those envisaged for the UPC.
Options one and two could take some years. In the meantime, and possibly in any event, option three deserves serious consideration by parties who want a resolution across Europe, and beyond.
There have been further developments in this long-running saga. On 28 November 2016, the UK's IP Minister, Baroness Lucy Neville-Rolfe, made a statement to the EU Council's Competitiveness Commission. Before the European unitary patent and the UPC can come into force, 13 EU countries have to ratify the founding Agreement. Of those, France, Germany and the UK must all ratify or the system will not come into operation.
In her statement on 28 November, Neville-Rolfe said that the UK is set to ratify the Unitary Patent and the UPC. However, she did not say when the UK would ratify. Until that happens, the new system will be on hold, In practice it is likely it will be put in the mix with all the other many issues the UK and the EU have to resolve once the negotiations start. Those negotiations will only start once the UK gives notice under Article 50 of the Treaty.
On 10 March 2017, the Bundestag (the German parliament) passed legislation paving the way for Germany to ratify the UPC Agreement. The bill now goes to the Bundesrat (Federal Council) for approval, then for signature by the Federal government, certification by the Federal President, and, in the end, for publication in the Federal Law Gazette. While all this is going on, uncertainty continues. For business this is unsatisfactory. For some parties to patent disputes spread across Europe and indeed beyond, arbitration provides a business solution which may be attractive and which is available to all.
In any event, watch this space!
An earlier version of this article first appeared on the JAMS ADR blog.