UK Withdraws from Europe's Project to Create a Unified Patent Court (UPC)

The new UK government has announced that the UK will not participate in the future Unified Patent Court (UPC) thereby abandoning the policy of Theresa May’s government to play a key role in the UPC. The Johnson government stated that its decision was based on the UK’s need to establish itself as a self-governing state, and the role of the CJEU in UPC proceedings.

The proposed UPC was set to be a vital component of a major reform of the European patent system, the goal of the reforms being to reduce costs for users and harmonise patent law. The participating states, among which the UK was a key player, recognized the need for a unified court to adjudicate over patent disputes in Europe, and eliminate expensive forum shopping. The UPC would also form a counterweight to USA which currently attracts the lion’s share of international patent disputes.

The Unified Patent Court Agreement, an international agreement outside EU structures, was signed in 2013. It foresees a supranational institution with premises across Europe and its own governance framework independent of Brussels. The Cameron government obtained the agreement of the participating states that London would host one of the UPC’s important divisions, which would handle biotech patent disputes.

The agreement was ratified by the UK parliament in April 2018 and a few months later the government lauded the UPC for providing businesses “with a streamlined process for enforcing patents through a single court, rather than through multiple courts”, which, it stated, “can be costly to enforce in multiple jurisdictions.”

Theresa May’s approach has now been abandoned in favour of establishment of the UK’s credentials as a sovereign state in the post-Brexit era. While this approach may, given the UK’s referendum on membership of the EU, combined with the recent Johnson electoral success, appear inevitable, many figures in industry, which had shown widespread support for the UPC, may be disappointed by the decision.

The future of the UPC was already in the balance in the light of a still pending decision by the German constitutional court on the constitutionality of the proposed UPC. Even if Germany dismisses the constitutional complaint and does ratify the UPC in 2020, as expected by many, the British decision puts the viability of the UPC again in some doubt.

The remaining UPC participating states have yet to react to the UK decision: it is uncertain if the UPC project will advance, with some amendments, without the UK’s participation or if the decision by the UK will definitively end the UPC project.

If the UPC project does survive, the pull-out by the British will give Europe’s patent jurisdictional landscape a different complexion: the UK and the UPC area will be two distinct jurisdictions, subject to different rules and procedures. The two jurisdictions (the UPC area and the UK) will be quite different, the UK national courts having jurisdiction only over UK patents and the UPC jurisdiction being considerably larger than the UK in terms of size, population and market value. Litigants may decide to start proceedings in only one of the two jurisdictions, which may compete with each other as dispute venues, in a sort of renewed forum rivalry. Alternatively, litigants may adopt sophisticated strategies in which one remedy is sought from the UPC and another remedy is simultaneously sought from the UK court. The role of cross-border enforcement of judgements is currently unclear. It is too early to predict, but there may be consequences for the UK as a centre for international dispute resolution, as a result of the UK’s decision on the UPC and other Brexit policies.