Following publication of the 'agreed' text of the draft Withdrawal Agreement (the "Draft Text") between the United Kingdom ("UK") and the remainder of the European Union ("EU") on 19 March 2018, our intellectual property ("IP") team has produced a suite of briefings on key aspects of the likely implications of Brexit for IP rights and systems across the EU, to inform our clients what changes they will need to consider making to their existing IP strategies and protocols to continue dealing in post-Brexit UK and Europe. The topic of this note is how Brexit is likely to impact upon patents and related rights.
The European Patent Convention 2000 ("EPC") and its various protocols are not part of the accumulated body of EU law. Accordingly, the EPC will remain unaffected by Brexit. Indeed, the day after the UK referendum, the then President Battistelli of the Munich-based European Patent Office ("EPO") announced "…The Office [EPO] underlines that the outcome of the referendum has no consequence…". This message was reiterated more recently by him, at a meeting with the Chartered Institute of Patent Attorneys ("CIPA", the body for the UK patent attorney profession) on 24 January 2018, when he said that UK membership of the EPO was unaffected by Brexit "…for a very simple reason – the EPO is not an EU agency but an independent international organisation, of which UK is a founding member…".
The current membership of the EPO numbers 38 countries, i.e. a far greater number than the current 28 Member States of the EU. Therefore, as far as the EPO, EPC and UK patent profession are concerned, it is business as usual. To put into context this continuation of the UK in the operations of the EPC and the EPO, it may be recalled that UK patent attorneys comprise one-fifth of the total number of professionals across the EPO signatory states, and they handle one-third of all of the European patent ("EP") applications. Moreover, of the 40,000 EPs filed last year by UK patent attorneys, 90% originated from outside the UK. Consequently, the prosecution of EP applications, whether at the EPO or through the Patent Cooperation Treaty, will not change. New and pending applications will continue to designate the UK and as before, at the grant stage, the applicant will be able to opt for national protection in the UK and other countries, exactly as they do at present.
However, there will be some ramifications following Brexit in such areas as Supplementary Protection Certificates ("SPCs"); Community Plant Variety Rights ("CPVRs"); and the proposed Unitary Patents ("UPs") and Unified Patents Court ("UPC").
Moreover, if the UP system is to come into existence, there is a query as to the extent to which the UK can participate, an issue which this note addresses in greater detail below, along with the issue as to whether, and if so how, patentees might wish to opt out of UPC system.
Supplementary Protection Certificates
SPCs are legislative measures by which pharmaceutical and plant/variety protection products may, by way of compensation for the delays in receiving regulatory approval, receive an additional five years (and in the case of pharmaceuticals up to five and half years) of protection beyond the usual 20-year patent term across the European Economic Area . Whereas SPCs are national rights and the application procedures are dealt with by the relevant agency in the particular EU Member State (in the UK, the Intellectual Property Office ("UKIPO"), they are governed by EU law .
Article 56 of the Draft Text provides that, where a SPC has been submitted to the UKIPO before the end of the Transition Period (31 December 2020), the existing protection shall continue. Beyond this, it is envisaged that, like some other countries which are outside the EU but are members of the EPC (such as Switzerland), the UK will quickly introduce a replacement national regime for the extension of patent rights, particularly because of the importance of the pharmaceutical industry to the UK economy.
SPCs is an area where Brexit might present opportunities for improvement of the existing EU based system which has come into some criticism for being too prescriptive. For example, under the current EU arrangements, the product must not have been the subject of an SPC previously and the authorisation to place the product on the market must be the first. This requirement of first authorisation effectively excludes reformulations of existing active substances where the new product is of a medicine already on the market but where the subsequent development lies in the control or delay of its release. The requirement would also likely exclude the development of the medicine in a different format or under a different dosage regime. A UK regime for SPCs might be less restrictive. Certainly, the UK is keen to remain an attractive location for the pharmaceutical industry when, as a result of Brexit, it has already seen the transfer of the regulatory function of the European Medicines Agency from London to Amsterdam.
Community Plant Variety Rights
The Community Plant Variety Office based in France was set up in 1994 under EU law. As creations of EU law, CPVRs, which provide exclusive marketing rights for the specified variety across the EU for 25 to 30 users (independent of patents and SPCs), will no longer extend to the UK post-Brexit. Article 50 of the Draft Text allows for continuing protection for any CPVRs in existence prior to the end of the Transition Period. Going forward, UK businesses will only be able to participate in the CPVR system if they have designated a procedural representative who is domiciled or has its seat or an establishment within the EU.
Articles 50(6) and 55 of the Draft Text (agreed provisions) provide that, where a person has filed for a CPVR before the end of the Transition Period, that person has a priority right in the UK for six months from the end of the Transition Period, whereby the CVPR application shall count as the date of the application for the plant variety in the UK. Nevertheless, the parallel national system under the Plant Varieties Act 1997 will continue for the UK.
Unitary Patent System
The establishment of the UPC has been stalled by a challenge brought before the German Constitutional Court, which is not due to be heard until the autumn of 2018. Even if this challenge were to be overcome, the UPC is now unlikely to open its doors until the middle of 2019 at the earliest, after the date for Brexit.
It has nevertheless been stated by the UK Government that, regardless of Brexit, the UK wishes to participate in the UPC. With this in mind, the UK ratified the UPC Treaty on 26 April 2018. However, as aspects of the UPC will be subject to EU law, the UK's participation post-Brexit will require an amendment to the UPC Treaty, as its provisions only cover 'Member States'. Encouragingly, there appears to be willingness on all sides that such an accommodation will be made in order to allow the UK to participate.
If the UK is unable (or unwilling) post-Brexit to participate in the UP system, a UP will cover only those EU Member States within the EPC system that have ratified the UPC Treaty. As at the date of publication, 16 Member States had ratified and three more are on track to have ratified by the time that the UP system commences (if such should occur in mid-2019). If the UK does not join, it will continue to be possible to validate 'classical' EP application in the UK as is the case today.
Practical tip – opting out of the UP system: In the lead up to Brexit and the introduction of the UP system, all EP patentees need to give urgent attention as to whether they want to opt out of the jurisdiction of the UPC. For seven years after implementation (unless an action has already commenced before the UPC), it will remain possible to bring an action for infringement or revocation of an EP before the national courts. However, the UPC will have exclusive jurisdiction over both UPs and 'classical' EPs where no opt out has been exercised by the patentee. One reason for giving this serious consideration is central attack, i.e. patentees might wish to opt out of the UPC because its orders would be multi-territorial, meaning it can revoke the EP/UP for the all participating Member States. Set against this possible downside of the UP system will be the effectiveness, quality, speed and relatively inexpensive processes of the UPC. It is to be hoped that the UPC will become the forum of choice for resolving pan-European patent disputes.
Patentees will need to consider the implications of opting out, and co-owners must agree to the opt out. Equally, licensees of EPs should consider whether any obligations or restrictions on exercising the right to opt in or out should be contained within any licence arrangements. With the clock running on both Brexit and the possible introduction of the UP system in mid-2019, these discussions and deliberations about whether patentees should participate in the UP system, should be taking place now so as to avoid a huge rush in March 2019.
 This note has not required any amendment following publication by the UK Government on 24 September 2018 of its guidance to businesses, organisations and individuals on the protection of patents and related rights in the event of a ‘No Deal’ Brexit.
How did we arrive at Brexit?
A truly unprecedented process began on 29 March 2017, when the United Kingdom invoked Article 50 of the Treaty for the Functioning of the European Union ("TFEU"), in response to the referendum held in June 2016.
Never before had a Member State left the European Union.
Since it joined in January 1973, the UK has operated under the fundamental principle that European laws are supreme and have precedence over, if not direct effect on, national law. Brexit therefore presents, both for the UK and the EU, an enormous legislative challenge in that it is estimated that the accumulated body of European law and rules comprises over 12,000 regulations on top of other forms of legislation.
In few areas will Brexit be more disruptive than for IP rights. There has been considerable harmonisation of IP rights and remedies across the 28 Member States. Moreover, European wide trade mark and design registrations have been created, the first truly multinational unitary property rights.
Brexit will change all of this.
At the time of publication, many questions remain about the possible impact of Brexit whether in the sphere of IP or otherwise. Certainly, before the publication of the 'agreed' text of the Draft Text on 19 March 2018, it had not been realistic to provide much by way of constructive advice and detailed guidance.
Following its release, the IP team of Womble Bond Dickinson analysed the published Draft Text in order to produce this suite of briefing notes on key aspects of the likely implications of Brexit for IP rights and systems across the European Union, to inform our clients on what they will need to consider changing in their existing IP strategies and protocols to continue dealing in post-Brexit UK and Europe.
It should be noted the Draft Text confirms the intention of the signatories that, although the UK will leave the EU on 29 March 2019, there will be an extensive transition period lasting until 31 December 2020.