Unified Patent Court project at risk, warns Munich lawyer

Peter Koch of Pinsent Masons, the law firm behind Out-Law.com, said that despite some positive news on the UK's ratification process in recent times, an ongoing legal challenge in Germany is threatening to derail the whole project – even if the challenge is unsuccessful.

Germany's Constitutional Court is to consider whether legislation approved by Germany's parliament to ratify the UPC Agreement is constitutional after a complaint was filed last year.

The Karlsruhe court has published a list of cases that it forecasts it will hear during 2018. The list includes the constitutional complaint raised against Germany's proposed UPC ratification laws, but there is no indication when the hearings in the case might take place or when a decision is likely to be reached.

However, Koch said that the fact the case has made the list suggests that the court will not dismiss the complaint as obviously unfounded. He said it is possible that the outcome of the case may not be determined until sometime in 2019.

The UPC would serve as a new judicial enforcement framework to underpin a new unitary patent system. Businesses would be able to apply to the European Patent Office for unitary patents which, if granted, would automatically confer on them patent protection for their inventions which will apply across every country that gives recognition to the unitary patent regime, which at the moment looks set to be 25 of the 28 existing EU countries.

For the new UPC system to take effect, at least 13 EU countries, including the three with the most European patents in effect in 2012 – Germany, France and the UK, must pass national legislation to ratify the UPC Agreement that the countries behind the new system finalised in 2013. France is one of the 15 countries to have completed ratification to-date.

Koch said that, even if the constitutional complaint is dismissed by Germany's Constitutional Court, it is likely to be 2019 at the earliest before Germany would complete ratification of the UPC Agreement. A negative determination by the Constitutional Court would effectively kill the UPC project at least in its current guise, he said.

The Constitutional Court has issued guidance on how decisions on cases before it are reached.

Koch said: "The court will pay respect to the importance of this case. It will likely do its best to act quickly, but on the other hand it will take the time it needs to reach a thoroughly reasoned decision, particularly since the case is in the spotlight."

Koch said that it is likely that, even if the legal challenge fails, Germany's ratification of the UPC Agreement might not come prior to the UK leaving the EU. This would have implications for the whole project, he said.

The UPC Agreement currently requires countries participating in the new unitary patent and UPC system to be EU members. This calls into question whether the UK would be able to participate in the new system if it did not ratify prior to Brexit, and indeed whether it would be able to continue to participate in the regime post-Brexit even if ratification takes place prior to the date the UK formally exits the EU – currently scheduled for 29 March 2019.

The UK's own ratification process has moved forward in recent times. The Privy Council approved UK legislation needed for ratification earlier this month.

The Unified Patent Court (Immunities and Privileges) Order 2018 confers legal capacity and grants immunities and privileges on the UPC and its representatives, judges, registrars and staff. It is the final piece of legislation that needed to be passed for the UK to ratify the UPC Agreement.

The actual date and process of UK ratification is subject to discussion within the UK government, a spokesperson for the UK's Intellectual Property Office (IPO) told Out-Law.com in December.

At the time, an IPO spokesperson said: "The UK's decision to proceed with ratification of the UPC Agreement is without prejudice to the UK's position on the jurisdiction of the CJEU once the UK has left the EU. Our future relationship with the Unified Patent Court will be the subject of negotiation as we leave the EU."

Deborah Bould, a UK patent litigator at Pinsent Masons, said: "It is positive news that the UK is now ready to ratify the UPC Agreement. UK business groups such as techUK and the IP Federation support introduction of the proposed unitary patent system. The UK is ready to host a specialist section of the UPC Central Division in London; the Court is fully fitted out."

"It is now for the UK government to pursue participation in the unitary patent system as part of the Brexit negotiations. If this can be agreed, and provided that the German constitutional complaint is dismissed, it seems inevitable that changes to the UPC Agreement will be needed to secure the UK’s participation. This is because launch of the unitary patent system will likely take place after Brexit when the UK is no longer an EU member state," she said.