Source: http://patentblog.kluweriplaw.com/2018/09/18/future-uk-upca-post-brexit-uncertain-milano-e-pronta/
Timestamp: 2019-04-25 00:40:00+00:00

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A recent study by two eminent scholars from the Max Planck Institute for Innovation and Competition (MPI) on „The Impact of Brexit on Unitary Patent Protection and its Court“, which is available here, casts significant doubts whether it will be possible for the United Kingdom to stay in the UPC Agreement after the UK has left the European Union.
I know that this is to some extent a “hot potato”, and at least a very political topic in patent circles, where different stakeholders hold quite different views, also on this blog. I will try my best to focus on the arguments raised by Professor Dr. Hanns Ullrich and Dr. Matthias Lamping without fury or favour. Before doing so, a note of caution may be appropriate. This „Research Paper“ actually consists of two studies which, as the authors write in their joint General Introduction, have been undertaken spontaneously and independently to reflect such concerns in the authors’ particular field of expertise. Each of them and even more so the paper as a whole is weighty and voluminous: 182 pages in total. Trying to summarize the work that went into this research paper on a blog like this one will inevitably fail to do justice to the authors and their work. Hence, I apologize in advance for all omissions and simplifications and would encourage the readers to read the original source rather than just relying on this „super-executive summary“.
Thus, the authors’ key argument, though by far not their only one, seems to me to be that the EU should retain full control over its legal order, including the UPCA. But the MPI scientists say this would no longer be the case if the UK was allowed to stay in the UPCA. Take Articles 25-28 of the UPCA as an example. These articles are very important if you are interested in shaping or further developing the internal market by using patents. Art. 25-28 UPCA define the effects of the “patent”, which term is to comprise both the future EP with unitary effect and the classic EP patent (Art. 2 g UPCA). Let us assume, just to give an example, that the EU wanted to limit the effects of a “patent” by excluding certain activities, e.g. the production of an active ingredient within the EU during the lifetime of the patent for export to a foreign country where there is no patent protection. The argument could be that those foreign countries would otherwise supply themselves from other states, which could be disadvantageous for European industry. This is just a hypothetical example. But if the EU wanted to support domestic industry in allowing such activities, this would mean that Art. 27 UPCA would have to be amended, as it is currently planned for SPCs.
According to Art. 87(2) UPCA, the “Administrative Committee may amend [the UPCA] to bring it into line with […] Union law”. It adopts its decisions by a majority of three quarters of the Contracting Member States (Art. 12(3) UPCA). According to Art. 87(3) UPCA, however, a decision of the Administrative Committee cannot take effect if a Contracting Member State declares that “it does not wish to be bound” by it. In this case, a review conference would have to be convened, which means that all contracting states, including non-EU states, have a say regarding the UPCA’s envisaged revision.
Consequently, the authors argue that the UK would be in a position to block the transposition of EU directives into the UPCA and effectively obtain a stronger „veto position“ than it has now as an EU member state, for which inter alia the duty of sincere cooperation applies (Art. 4(3) TEU). In their firm view, this would be neither in accordance with the EU Treaties, nor with the CJEU’s opinion C 1/09, which was all about the supremacy and autonomy of EU law, and it would also not be politically desirable from an EU perspective.
With that, I hope that I was able to sufficiently awake your interest in studying the MPI’s research paper in full and reflecting about the authors’ arguments. Brexit is a matter that raises profound concerns, and its effects deserve to be fully studied by everyone affected by it.
By mere coincidence (or rather Karma? ;-), the MPI paper came out while a big conference was held in Milano on “Unified Patent Court: The Coming System Rules And Requirements”. The conference was organised by the EPO and chaired by Marina Tavassi, President of the Court of Appeal of Milan, who has a long and distinguished career as a patent judge. While the first day of the conference was reserved for discussions and panels among members of the European patent judiciary, the second day had a very interesting mix of Italian and European contributions from judges, academic scholars, advocates, and patent attorneys. The speakers touched on many aspects of the UPC, such as the future cooperation with the EPO, sources and hierarchy of the applicable law, the language regime, the opt-out and opt-in possibilities, the code of conduct, concept of claims and methodology of determining identical and equivalent infringement, various procedural questions, and finally the Unitary Patent Package and SPC. (Disclaimer: I also contributed to this conference, but this was certainly not the most remarkable part of it).
One interesting observation during this conference was how many speakers emphasized the importance of high-quality patents to be granted by the EPO as a prerequisite for both national courts and the UPC to work properly. The speakers would not have mentioned this so often, if this was already reality or could be taken for granted. It was also emphasized by some speakers that the current speed of the EPO appeals is still unacceptable, although the recent improvements at the Board of Appeal level did not pass by unnoticed.
The conference was accompanied by a reception by the Mayor of Milano in the historical Palazzo Marino, and it clearly had one overriding goal: To show the European patent community that Milano is ready (“Milano é pronta”) for the UPC and has both the requisite modern facilities and more than sufficient intellectual capabilities to host the central division of the Unified Patent Court, if and when London has to drop out. Which is not what the speakers advocated for in the first place. As Prof. Cesare Galli put it, his main and essential wish would be that the UK stays in the EU and the UPC enters into force as planned. But if the UK continues on its way to Brexit, then Italy, and specifically Milan, is definitely ready to substitute London as the seat of the central division for chemical and pharma cases. And the Milanese have good arguments.
I understand that the organizers are planning the issuance of conference proceedings in English and I welcome this idea. Whether the UPC will ever come into force or not, and whether or not the UK will then be part of it, remains to be seen. The MPI authors certainly have a point in arguing that uncertainty is not good for the UPC system, and that it would be better to clarify the compatibility of the UPCA with EU Law through the CJEU sooner rather than later. But whatever the outcome of such deliberations, it is good that the patent judges of Europe work together and develop a consistent methodology how to approach their respective cases. The various contributions made during this meeting and the attendance of leading judges from many European countries can be expected to help in this harmonisation process and to enhance the mutual understanding of patent practices all over Europe.
It is nice to (finally!) see a report covering the MPI articles reach an IP blog. I believe that it will be very interesting indeed to see what happens next.
Predictably, there have already been attempts by those firmly in the “pro-UPC” camp to dismiss / minimise the significance of the articles. However, to date, this has been done solely by attempting to infer that the MPI authors are somehow lacking in EU law expertise, at least compared to Gordon & Pascoe. In my view, that amounts to nothing more than an unprofessional (and ad hominem) attack upon the credentials of the authors. Frankly, I expected better. Indeed, the whole of the patent profession across Europe DESERVES better. This means addressing the SUBSTANCE of the concerns raised by the authors.
I have to say that I am not going to hold my breath waiting for credible answers to the substantive points raised in the articles. This is not least because one of the main concerns raised relates to Article 267 TFEU. That is precisely the concern that I have repeatedly raised (in this forum and others) over recent years, and to which I have NEVER received a credible answer. No matter how much I would like to be surprised on this point, I do not see a credible answer emerging any time soon … though there will no doubt be a plentiful supply of smoke and mirrors to help the politicians to continue to cling to the belief that there is nothing to worry about.
Thanks to Thorsten Bausch for making the study from MPI available to a large audience.
Whether one agrees or not with the conclusions draw in the study, the situation is by far not as easy and simple as some vehement proponents of the UPC want us to believe.
Even the Gordon/Pascoe report made clear that a post Brexit participation of UK could be possible, but there were lots of problems which should be dealt with beforehand.
The study makes clear that what the Profs Ohly and Streinz from the LMU published in GRUR Int. 2017, 1 ff. has to be taken, not just with a pinch of salt, but with a bucket of it. Claiming that “the necessary amendments of the UPCA [in order to keep post Brexit UK in the UPCA] are of a minor, technical nature” is at best wishful thinking or taking people for a ride.
It is not the first time that the MPI has shown some reservations about the UP/UPC system. I refer to the MPI Law Research Paper No. 12-12: THE UNITARY PATENT PACKAGE: TWELVE REASONS FOR CONCERN, 17 October 2012.
The more one looks into the matter, the more it is clear why the UPC had to be pushed through as quickly as possible. It was simply to create a fait accompli. Once started it would be difficult if not impossible to stop the machinery and everybody would have to cope with the disagreements, which would be denied anyway.
Brexit on the one hand, and the complaint before the German Federal Constitutional Court (GFCC) have put a halt to this endeavour. It might be for the better, as some of the inherent drawbacks built in the presently envisaged system could be dealt with seriously and proper solutions found.
As “There is a good chance that it [the UP/UPCA system] will end up on the CJEU’s agenda” why not take the lead and start with this important aspect. May be a task for the GFCC?
By the way, even a reputable firm of attorneys like Bardehle/Pagenberg has in a recent publication doubted that Germany would ratify the UPC before Brexit becomes effective, but this would not really help as the problems of post Brexit participation would remain without any solution.
“Those who predict that the GFCC will soon reject the constitutional complaint expect Germany to ratify it before the Brexit becomes effective.
However, the court has a long list of pending cases. The proceedings may also be burdened with a question which the complainant did not raise, but which is the subject of other pending proceedings before the GFCC. There, the independence of the Boards of Appeal has been questioned and they are the last instance to decide on the validity of the unitary patent in opposition proceedings.
Nothing against cooperation between European Jurisdictions, on the contrary. This is an aim which has absolutely to be pursued, and the more they talk to each other, the better it will be.
The fallacy that the UP/UPC system is an absolute necessity for European Industry in general, and SMEs in particular, should stop being heralded. Who needs a patent in 25 member states of the EU when the average of validations for an EP is around 7? When you compare the costs when validating in all UPC member states with the level of fees now retained (4 big ones) the comparison can only be in favour of the UP/UPC, but this is comparing apples with pears.
Techrights: FINGERS OFF!!! Be it by direct poaching or by quotation. I do not want to see my thoughts on the UPC misused by your platform.
Non-legally binding automated translation for italians, only the french/english/germans have the legally binding version!
There are 2 kind of companies: the ones that have a legally binding translation in their language, and the other ones that do not have this privilege.
I’ve heard a speaker from the MPI in the past confident the Spanish challenge would be successful.
To me they have always seem unnecessarily hung up on the decision for the Regulation to reference to the UPCA for infringement rather than place infringement within EU law under the CJEU. That still seems to be in the cases in the second essay.
On the essays themselves the point about directives is an interesting one-and Id be interested in hearing views from experts in EU law. Presumably if the EU really wanted to change any aspect patent law it could do so through a Regulation and the UPC would implement it by virtue of Arts 20 and 24 which the UK could not veto.
The notion of the the UK involvement in the UPC/UP impairing the ability of the EU and UK to diverge in patent policy does not hold up in my opinion. As the essays point out the EPC is more relevant to patent policy, already includes non-EU members and no-one is realistically suggesting the UK will leave the EPC. Laws regarding infringement have always been outside both EU law and EPC and yet from a legislative point of view there has been no real divergence between states and (Bolar exemptions aside) and countries have pretty much stuck to the provisions of the CPC even though it never came into force.
but I cant see any explanation for why they consider that must be the case.
I haven’t spotted the legal analysis for why they consider that t Art 1 UPCA would no longer apply.
Your attempt to rely upon Articles 20 and 24 UPCA to argue that the UK would not have a “veto” position post-Brexit is a nice try, but in the end amounts to nothing more than clutching at straws. This is because, if you were correct, then Article 87(2) and (3) would be rendered essentially meaningless. I mean, why bother having a revision procedure to update the UPCA (in view of changes to Union law) if the Agreement will already effectively incorporate those changes? More to the point, why bother providing the Contracting Member States with the veto provision of Article 87(3) if the UPC will apply the contested law change regardless of the wishes of any Member State?
I think that it is time to lay to rest the fantasy that the UK can participate in the UPC post-Brexit. Whilst this may not be a palatable scenario for UK litigators it is, quite frankly, an inevitable consequence of Brexit.
Another thing: why on earth would previous “negative views” on the UPC expressed by the MPI make any difference to the SUBSTANCE of the arguments that are made in the new articles (i.e. whether those arguments are correct or not)?
As you have totally failed to address the substantive arguments raised in the articles (on the basis that you profess not to understand them), it seems to me that – as I predicted – you are seeking to achieve nothing more than add to the supply of smoke and mirrors. More worryingly, by attempting to imply that the MPI has always had it in for the UPCA, you appear to be straying into ad hominem territory.
With regard to the MPI’s original 12 concerns, may I remind you that the issue of compatibility with EU law of the UPCA (as opposed to the UP Regulation) has NEVER been addressed by the CJEU. Indeed, the court went out of its way to side-step that issue when dealing with the challenge by Spain. Thus, whilst the CJEU may have effectively dismissed one (out of 12) of the MPI’s original concerns (regarding Article 118(1) TFEU), the MPI may still be right to worry about the other 11, especially their concern about “persisting incompatibility” with EU law.

References: Art. 25
 Art. 27
 Art. 87
 Art. 87
 CJEU 
 Art 1
 CJEU