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June 24, 2016

Brexit and the Unitary Patent Regime

On 24 June 2016, the future of the European Union certainly became much more unclear following the result of the EU referendum in the UK, where the majority voted to leave the EU. David Cameron has already announced that he will resign as Prime Minister and the full political and economic effect of the referendum is closely monitored by the governments all over the world.

In the world of intellectual property, the most imminent question is the effect of the referendum on the implementation of the new Unitary Patent system.

According to the current time plan, the Unitary Patent system would come into effect in the beginning of 2017. In theory, the plan could still become a reality considering that the UK will be part of the EU until the end of the exit negotiations according to Article 50 of the Treaty of the European Union, which are likely to take at least two years.

Consequently, if the UK would ratify the Unitary Patent Court (UPC) Agreement, the Unitary Patent system could be implemented as planned, provided that the remaining necessary countries would ratify the agreement, i.e. three more member states including Germany. The central division of the Court of First Instance would then thus be established in Paris with divisions in Munich and London according to Article 7(2) of the UPC Agreement. Because a non EU member state cannot be part of the Unitary Patent regime and the UPC Agreement does not include provisions regarding a party leaving the EU, the subsequent UK exit would need to be negotiated, including a likely but perhaps not mandatory re-location of the central division.

Considering the political and practical implications of the UK leaving the EU, it is not unlikely that the planned implementation process of the Unitary Patent system is halted. If the UK does not ratify the UPC Agreement and the UPC Agreement is not amended, the Unitary Patent system cannot come into effect until the UK has left the EU because of Article 89(1) of the UPC Agreement. Said Article sets out the rule that the three member states in which the most number of European Patents had effect the year preceding the year the agreement was signed, need to ratify the agreement before it can come into effect (i.e., Germany, France and the UK). When the UK leave the EU, Italy will replace the UK as the third member state that need to ratify the UPC Agreement together with Germany and France, since it was the fourth most popular country for national validations in the year preceding the signing of the agreement. However, implementation of the Unitary Patent system based on Italy as the third mandatory member state ratifying the UPC Agreement will most likely not be possible before 2018 and maybe not until several years later, following the conclusion of the UK exit negotiations.

In order to implement the Unitary Patent System before the UK has left the EU without the UK ratifying the agreement, a new UPC Agreement needs to be agreed upon. In any event it would seem likely that a re-negotiation of the UPC Agreement will be considered in the near future. This may result in the need for ratification of a new UPC Agreement by all member states, including the ones that had already ratified the current agreement, which may cause further delays in the implementation of the Unitary Patent system. 

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