14 April 2020

The demise of the Unified Patent Court is a backward step

Simon Cohen

Simon Cohen (pictured) and Paul England argue that for now 'litigation will have to continue in the same way as it has always done'

Taylor Wessing's Simon Cohen and Paul England ask what will follow the collapse of Europe's plans for a UPC

'Null and void.' 

So held the Federal Constitutional Court of Germany on 20 March 2020, delivering what could be the final blow to the pan-EU Unified Patent Court (UPC) project – nearly 50 years in the making.

In essence, the Bundestag did not use the correct two-thirds majority vote procedure when enacting this agreement into German law. It might be thought straightforward to remedy this problem: just re-enact the agreement using the necessary majority.

However, circumstances have moved on quickly in recent months. Poland and Spain declined to participate in the UPC early in the project, and they have recently been joined by Hungary and the Czech Republic, for constitutional and economic reasons, respectively. 

UK bombshell

Then in January of this year came the bombshell news: following Brexit, the new UK government of Boris Johnson would not be seeking to participate either because of the role, albeit limited, of the European Court of Justice in the UPC. 

The UK was, together with Germany and France, one of the principal jurisdictions of the court, and also host to the life sciences branch of its central division.

Following the Federal Court's decision, this means that the participation of one of the three jurisdictions required to ratify the UPC is now over, with another in serious jeopardy. 

The signatories to the UPC agreement must now renegotiate the UK exit and the relocation of the life sciences branch. Re-ratification must also happen. This will take a long time and there is now serious doubt that the Bundestag will consider the UPC worth attempting to re-ratify without the UK (although the German government has pledged to try).

Add to this situation the change in priorities for national legislators arising from the COVID-19 pandemic, and most consider that the UPC is dead in the water or at the very least not likely to be revived for many years.

Persistent differences in national patent law

The World Trade Organisation, free trade areas, instant digital communication and (until coronavirus) fast and frequent international travel – business obviously operates in a global marketplace more than at any time in history. 

But trade is still not seamless, and invisible barriers persist. For patents, differences between national patent laws across borders and differences in interpretation by national courts are often encountered. This can mean the difference between maintaining a patent for the same technology in one country and not another. 

A number of international treaties have been agreed over the years to reduce differences. In Europe, the most important of these is the European Patent Convention (EPC). 

The EPC set up the European Patent Office (EPO), which grants patents for up to 38 countries. The EPO also has quasi-judicial bodies dealing with oppositions and appeals to the grant of patents, which have built up a significant body of case law interpreting the EPC. This case law has varying degrees of influence in the national courts of Europe.

There have also been two attempts at a Community Patent Convention which, although they were never ratified, still provide the basis for patent infringement law in many European countries. The European Union has also provided harmonising and directly effective legislation of a narrower scope on a number of matters, including supplementary protection certificates (SPCs).

Although European judges will take note of each other's judgments, national differences in patent law and how European patent law is applied persist. 

There are at least three reasons why: firstly, procedural differences in the national European systems can result in foreign judges seeing different evidence in parallel cases; secondly, there are differences in the implementation of international instruments in national law; and, thirdly, there are differences in the way the national courts interpret those laws. 

Why was the UPC the solution? 

The UPC was designed to overcome these differences by providing a single forum for patent disputes as an alternative to the national courts, achieving convergence in the approach to procedural rules and the substantive legal approaches applied. 

In particular, it would use a mix of national judges to achieve consistency of quality in decision making. In turn, it was expected that a body of case law of increasingly uniform approach would develop over time. 

What is the solution now?

The demise of the UPC is therefore a backward step, particularly at a time of pandemic, when there is so much emphasis on the need for international solutions and cooperation. The differences in national patent law risks consolidating silos of innovation and creating trade friction, rather than increasing cooperation of R&D centres around the world.  

For the time being, patent lawyers acting in the national European courts will need to keep an eye on the other leading patent jurisdictions and ask themselves: is the approach of our courts an outlier on this issue? Does another court provide a solution to our problem, or a better solution? In this way, the national courts in Europe can move towards each other - but progress will be slow. 

There is also room for alternatives. One possibility is for the UK to consider creating a seat of international patent arbitration in London, allowing patent disputes in countries across the world to be resolved in one place. 

For now though, litigation will have to continue in the same way as it has always done, with very similar cases and issues being repetitiously litigated in the key jurisdictions in Europe. 

Simon Cohen (pictured) is head of the international patents and life sciences groups and Paul England is a senior professional support lawyer in the patents group at Taylor Wessing

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