Brexit - the end of Pan European Patent Dispute Resolution?

For more than 40 years, resolving European cross-border disputes about patents in one proceeding has been a dream.

Why is this so? Many people, in business, in-house and private practice lawyers around the world and members of the European judiciary, plus civil servants, invested a huge amount of time and thought in producing a pan-European litigation system which had a good chance of working. It would not be suitable for every dispute, but it had excellent prospects of working for many. The reason is that it was a creative and practical blend of the civil law and common law systems which underlie the EU. The national civil law jurisdictions typically have no live witnesses, no cross-examination, no discovery. The national common law systems , or ones like them as in Denmark, have all of those. The genius of the UPC was to introduce fact and expert evidence, cross-examination of witnesses and limited discovery of documents in a targeted way. And to get to trial in 12 months.

A central court would have three divisions: in France, the UK and Germany.  The UK had influence and an ultimate participation in excess of its geographical size: because of its greater experience in forensic litigation which cross-border disputes covering more than 500 million citizens demanded and merited.  The Brexit vote may have put an end to all of this.  The UPC is an EU vehicle. If the UK is out of the EU, it cannot be part of the UPC.

Is there a hope?  There is and this is why:

1. Brexit may be reversed or watered down – the vote in favor is often described in the media and by politicians as “clear;" but in fact it was relatively tight at 51.9 to 48.1 percent (whereas the vote to join in 1975 had been by 67 percent of the votes cast ). It was also was advisory, not mandatory. Article 50 of the Treaty on European Union (as amended by the Lisbon Treaty of 2007 ) has to be triggered to start the process of withdrawal and to negotiate on what terms. The English High Court ruled (November 3, 2016) that the UK government may not trigger Article 50 without the consent of the UK Parliament. Members of both Houses were heavily in favor of Remain. The appeal to the UK Supreme Court is due to be decided in January 2017.
2. The UPC may survive – If it is no longer an engine of the EU, but (like the European Patent Office) is created by convention (or treaty), the UK can continue to be a participant.
3. Pan-European patent disputes may be resolved by arbitration – the week after the Brexit vote I was in Germany. I was expecting a frosty reception from German patent lawyers and others. Not a bit of it. They were dismayed and sad. They regard UK as their strongest collaborator, both in the EU generally and in the planned UPC in particular. Two German lawyers separately said to me that this was a real opportunity for pan-European patent disputes to be resolved by arbitration using, if the parties wished to, procedures similar to those envisaged for the UPC.

Options 1 and 2 could take years. In the meantime, and possibly in any event, option 3 deserves serious consideration by parties who want a resolution across Europe, and beyond.

There has now been a further development in this long-running saga. On November 28, 2016, the UK's IP Minister, Baroness Lucy Neville-Rolfe, made a statement to the EU Council's Competitiveness Commission. Before the European unitary patent and the UPC can come into force, 13 EU countries have to ratify the founding Agreement. Of those, France, Germany and the UK must all ratify or the system will not come into operation.

In her statement on November 28, Neville-Rolfe said that the UK is set to ratify the unitary patent and the UPC. However , she did not say when the UK would ratify. Until that happens, the new system will be on hold. In practice it is likely it will be put in the mix with all the other many issues the UK and the EU have to resolve once the negotiations start. Those negotiations will only start once the UK gives notice under Article 50 of the Treaty. Whether or when will depend on the Supreme Court decision expected in January 2017.

While all this is going on, uncertainty continues. For business, this is unsatisfactory. For some parties to patent disputes spread across Europe and indeed beyond, arbitration provides a business solution which may be attractive.

In any event, watch this space!

Richard Price is a panelist with JAMS, based in London. He can be reached at rprice@jamsinternational.com.