On 25 October, the UK took another step towards the ratification of the Unified Patent Court Agreement (UPCA). The Scottish Parliament approved the Statutory Instrument (Order) establishing the Unified Patent Court (UPC) as an entity within the UK and enabling it to function.
For the UK to ratify the UPCA, both the House of Commons and House of Lords must vote to approve the Order. While both Orders were presented before the Scottish and Westminster parliaments at roughly the same time, the Order has yet to be passed by Westminster. Progress remains slow, with both houses yet to debate it.
German Constitutional Challenge
In June, the German parliament voted to ratify the UPCA. The Federal Constitutional Court of Germany swiftly challenged the constitutionality of the legislation enabling ratification.
The case is complex. It could take until April 2018 to determine if the claim is “obviously unfounded”. The court has invited comments and statements of case from interested parties, and extended the deadline for submissions until 31 December 2017. If the court dismisses the challenge, Germany could ratify soon afterwards.
It’s likely that the legal challenge will pass the “obviously unfounded” threshold. Some questions of EU law may be referred to the Court of Justice of the European Union (CJEU), which could delay matters by up to another two years.
What implications will Brexit have?
While a negative outcome of the challenge would ultimately leave the UPC project dead in the water, a positive ruling dismissing the challenge would still leave the future of the system dependent on how Brexit negotiations progress.
Under the UPCA, countries participating in the unitary patent and UPC system have to be EU members. To what extent would the UK be able to participate in the new system if the UPCA wasn’t ratified prior to Brexit? Would it be able to participate post-Brexit even if the UPCA was ratified pre-Brexit?
There is an air of suspicion that the government may use the prospective ratification of the UPCA as a bargaining tool in its EU27 talks. Or, perhaps, delay ratification until the outcome of the German challenge is known. A unitary patent system without the UK would be far less attractive – and could put the entire endeavour at risk, given London is set to host one of the three central divisions of the UPC.
As Brexit negotiations trundle on at an agonisingly slow pace, the government’s intentions remain somewhat unclear. The government will have to consider the complex issue of the CJEU’s involvement in the UPC, and to what extent this would conflict with the desire to leave the CJEU behind. Allowing a non-EU member to participate in the UPC system would not be straightforward. Ironically, it may provide scope for a referral to the CJEU on this point alone.
The progress of the unitary patent system remains uncertain for now. How things will develop over the next 12 months remains subject to debate in both the business and legal sectors. British and European businesses who have already voiced their support for the UPC system will continue to do so as things develop, but, for now, the ball is very much in the German court.