Saturday, September 24, 2016

Latest thoughts about Brexit and the UPC

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Article #Brexit, Article Opinion 1/09, Article upc, Article UPC Agreement,

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Sudden moments of clarity are always a good look for IPKat
It has certainly been a long time coming and we still can't be sure that a UPC change is gonna come to the UK. We recently saw the unveiling of an authoritative Opinion by Richard Godon QC and Tom Pascoe, to the effect that it is potentially legally possible for the UK to participate in the UPC following Brexit. This is notwithstanding the possible political difficulties surrounding it, and independently of membership of the EEA. In giving their Opinion, Counsel were instructed by, again among others, CIPA - who are lobbying for positive participation in the UPC after putting in so much work in advance of preparing the system. CIPA's impact paper of Brexit is available here 

As we gradually move towards some idea of how the UPC might work around Brexit, it is becoming clearer that a new agreement in some form or other would be a real sine qua non for future UK involvement in the UPC. The real value of the new Opinion, as this Kat sees it, is the thoughtful exploration of what this agreement would need to be and do, and how the UPC Agreement will need to be amended.

 After CJEU Opinion 1/09

Opinion 1/09 from the CJEU is generally cited as precluding non-EU Member States from involvement in the unitary patent. The problems would be in depriving the national courts of the task of interpreting and applying EU law (which of course the UPC Agreement proposes) and the power to make references to the CJEU. Counsel's view of this is that although the reasoning of the Opinion is somewhat opaque, it is possible to overcome the requirements it imposed on the then draft Agreement by implementing measures in a new agreement for the UK. The requirements identified are as follows:
  1. respect for the supremacy of EU law;
  2. the possibility of claiming damages and/or instituting infringement proceedings for breach of EU law;
  3. uniformity through the making of preliminary references. (see para 72 of Counsel's Opinion).
Their view is that it should be legally possible to implement measures safeguarding these EU constitutional principles. No domestic constitutional rules prevent the UK from: subjecting itself to a legal regime like the UPC which requires tribunals to apply EU law,  requiring courts within its territory to make references to the CJEU, accepting individual and collective responsibility for breaches of EU law, or submitting to the supremacy of EU law for patent disputes before the UPC. There is a very important condition that comes with this:
The UK would be required to accept the supremacy of EU law in its entirety as regards all such disputes as fall within the jurisdiction of the UPC. This would include, for example, competition law, fundamental rights arising under the Charter and general principles of EU law, as well as the specific patent rules contained, for example, in the Biotechnology Directive, as well as possible future EU legislation.   (para 76)
So, while it may be legally possible for the UK to overcome the requirements of Opinion 1/09 by a new agreement, it could still be very politically sticky to sell a treaty which proposes the ongoing supremacy of EU law over the UK - even within the relatively limited context of patent disputes before the UPC.

Amendments to the UPC Agreement

As Counsel's Opinion raises, Article 87 of the UPC Agreement - allowing for amendments to it - would not come into force until the Agreement itself does. That is, after the mandatory ratifications have taken place, including ratification by the UK. For this reason, unless UPC Agreement contracting states can be persuaded to unanimously agree amendments to the Agreement itself or a new Protocol could be drawn up, amendments by the UPC's Administrative Committee would have to wait until it comes into force. In light of this, it's safe to say that the amendments required can by no means be guaranteed.

With that caveat taken on board, the extent of the amendments to the UPC Agreement itself that were identified by Counsel are surprisingly brief and few:
  1. The terms relating to 'Contracting Member State' would have to become 'Contracting State' in Article 2(c).
  2. Rather than saying the UPC is subject to the same EU law as national courts, being a court common to Member States, it should be "subject to the same obligations under Union law as any national court of the Contracting a Member States" in Article 1.
  3. In Article 21, a reference to "any national court of a Member State" should replace "any national court".
  4. Similarly, Article 29 which deals with exhaustion should refer to the market in Contracting States instead of just "in the Union".
  5. Finally, various references to “Member States” elsewhere would need to be amended to include the UK (and potentially other non-Member States!?).
This leaves various questions of jurisdiction and enforcement to be dealt with. Counsel float the possibility of joining the Lugano Convention as a perfectly feasible replacement to the Brussels Regulation. 

What is not included in the Opinion's scope are the necessary amendments  for the ratify-and-leave option. Admittedly this scenario feels the most unlikely to this Kat, being quite a lot of effort for short term membership with a palpable expiry date, but it is worth noting that the UPC Agreement does not contain a clause for denunciation, whereas a previous incarnation did (which was gone by 2011). Because of this, Article 56 of the Vienna Convention on Treaties, restricting withdrawal from a treaty without a denunciation clause, could stop the UK embarking on this route before it even starts. An alternative would be to try and stick in some amendments going directly against the policy of removing the denunciation clause by reinstating it between the UK's ratification and foreseeable departure, or finding another justification for leaving - see here for more discussion of this.

Political problems?

Counsel's Opinion puts forward a practical, positive case for the nuts and bolts of UK participation in the UPC after Brexit. They are expressly neutral about the political palatable-ness of the proposals, which many readers of the Opinion may see as the elephant in the room. Dr Ingve Stjerna (whose thoughts on the UPC and Brexit can be found here) among others has pointed out that the continued commitment to Union law was a major bone of contention for the 52% of the electorate which voted to leave the EU, and thus participation in the UPC could be unacceptable to the population.

Dr Stjerna also points to Council Document 15856/11 as warning of the extreme difficulty of incorporating third countries into the UPC and is sceptical of more recent suggestions that the UK could be involved after Brexit as contrived to please UPC supporters. Still, it remains that the UPC is a non-EU international organisation with its own legal personality, expert Counsel have reviewed the legal feasibility and there is currently more than negligible political appetite for ratification.

An aside

One apparently insignificant footnote in the Opinion caught the IPKat’s eye.  Footnote 18 states “Although secondary legislation enacted under section 2(2) of the European Communities Act 1972 will lose its legal basis, and therefore its effect, upon the repeal of that Act.”  No further explanation is given of this assertion.  The IPKat has seen this suggested before, but has also seen suggestions to the contrary.  EU Directives are implemented in UK law either as primary legislation (Acts of Parliament), in which case it is universally agreed that unless amended or repealed such legislation remains in force, or by secondary legislation (Statutory Instruments [Orders in Council]) deriving legal basis from section 2(2) of the ECA. 

In the case of such Statutory Instruments, some commentators believe that they will survive the UK leaving the EU, either because the ECA will not in fact be repealed (and some authors believe that the repeal is not necessary upon the UK leaving the EU, the ECA simply ceases to have any EU legislation to bite on), or because repeal of the ECA does not invalidate SIs that were at the time lawfully enacted under Section 2(2) ECA.  The CIPA impact paper supposes that secondary legislation will remain in force for one or other of these reasons. But the real constitutional status of such secondary legislation seems to be unclear, and so the IPKat wonders whether any readers can provide reasoning or legal basis for whether or not an SI remains in force, once lawfully enacted, if the Act giving it legal basis is later repealed.

In concluion

This Kat is not much of a gambler. As with so many aspects of the progress of Brexit, this seems like something to wait and see for the time being. Is it worth quickly ratifying to get the court up and running before hashing all these details out? Probably it is not, and so the IPO line "there will be no immediate changes" is as good a line as any. Watch this space...


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