Brexit and the UPC: the Italian perspective
The UK’s exit from the EU is likely to have a variety of effects on intellectual property rights which will affect Italian rights owners and our institutions.
First, the IP rights granted at a European level will no longer be in force in the UK, namely European trademarks, designs and supplementary protection certificates (SPCs). It can be presumed that the UK, in negotiations for its exit from the EU, will adopt mechanisms for the recognition of registered European rights or for their conversion into national rights upon payment of compensation.
For new registrations it will be necessary instead to submit a separate application in the UK for a separate national registration. In addition, some unregistered rights recognised at a European level, such as European unregistered designs, might see their protection diminished as they do not currently have a national equivalent under British law.
From this follows a multiplication of proceedings relating to European-wide rights: decisions taken by the courts of a member state will not have effect in the UK anymore, and it will be necessary to start separate disputes there on the basis of the corresponding national rights. In a nutshell, IP owners that are operating in the UK market will suffer an increase in costs for the registration and enforcement of their rights in that territory.
A separate assessment might apply to protected designations of origin of foodstuffs: Italian producers fear that the UK will decide not to adopt systems of protection equivalent to those of Europe, becoming a breeding ground for products that are ‘Italian sounding’, like the famous parmesan spread in the US.
Finally, less noticed by companies but more discussed among legal professionals is the fate of the European patent with unitary effect (unitary patent) and the related Unified Patent Court (UPC), which should open its doors in 2017.
The new patent system
As is known, the unitary patent will consist of a patent valid in all EU countries (unlike the present European patent that, although granted centrally by the European Patent Office, then requires validation in the individual states of interest and substantially gives rise to a bundle of autonomous national patents). The UPC, on its part, will be a supranational court common to EU member states that will have exclusive jurisdiction in matters of validity and infringement of both the ‘old’ European patents and the new unitary patents.
According to article 89 of the UPC Agreement, the court will start operating once the same agreement has been ratified by 13 member states, including the three states in which the highest number of European patents was validated in the year previous to the signing of that agreement (ie, in 2012). Regulation EU No. 1257/2012, establishing the aforementioned European patent with unitary effect, will enter into force on that same date.
“Tavassi emphasises that the English courts are among the most prestigious in the IP field, so it would be a pity to lose their experience and expertise.”
The three states whose ratification is required are currently France, Germany and the UK, which means that the ratification by the UK is currently essential to starting the unitary patent system and the UPC. In addition, London has been established as one of the three seats of the UPC central division under article 7(2) of the UPC Agreement. Hence, it is unclear what the future will hold for the unitary patent system and the UPC as a result of Brexit.
There are three main potential scenarios:
- The UK might ratify the UPC Agreement and thus allow the timetabled start of the UPC in 2017, remaining part of the system until it formally exits the EU, which could take years. In fact, article 50 of the Lisbon Treaty provides for a period of two years of negotiations following the notification of the exit decision (which has not happened yet), which can be extended by agreement of all member states;
- The UK might ratify the agreement, once again allowing the start of the UPC in 2017, and then try to obtain, in negotiations for its exit from the EU, to continue to be part of the UPC Agreement. Actually, Opinion no. 1/09 of the Court of Justice of the European Union, according to which countries that are not EU member states cannot participate in the agreement, seems to exclude this possibility, but many legal professionals suggest that this opinion can be overcome by making the necessary amendments to the agreement;
- The UK might not ratify the UPC Agreement, thus slowing down the start of the unitary patent system and the UPC. In this case, in fact, the other UPC Agreement contracting member states would have two options:
a) Restart negotiations among themselves to amend the agreement in order to reduce the number of states whose ratification is required under article 89 from three to two, and to move the London seat of the central division to another member state; or
b) Wait until Britain has exited the EU, which would automatically result in its being replaced by Italy as the third state whose ratification is necessary (as Italy was the fourth EU member state for the number of validations of European patents in 2012). After completion of the required ratifications, the administrative committee set up by the UPC Agreement could then move the London seat of the central division elsewhere by amending article 7(2) of the UPC Agreement to adapt to the EU law (given the need for the seat to be established in an EU member state). This could happen without the need to restart the negotiation, signing and ratification process by the contracting member states.
Once the UK has exited the EU, what’s been stated above for European trademarks, designs and SPCs will also apply to unitary patents, ie, the latter will no longer have any effect in the UK. Alongside the national patents, in the UK the ‘old’ European patents will remain available, ie, those granted under the Monaco Convention of 1973, the latter being extended to countries that are not EU member states. As mentioned above for trademarks, designs and SPCs, for IP owners that operate in the UK market there will be higher costs for the registration and enforcement of their patents in the UK.
A seat for Italy?
In this context, the possibility arises for Italy to host the seat of the UPC central division moved from London, which could be set up in Milan in line with Italy’s role of the state with the highest number of validated European patents after the UK, and with the prestige and importance of the Milan Business Court A, which has jurisdiction over IP disputes.
This outcome would certainly be desirable for our country, considering that non-infringement proceedings and a large part of proceedings concerning the revocation of patents belong to the jurisdiction of the central division, and that otherwise they would be handled outside Italy.
In this respect, I sought the opinion of Judge Marina Anna Tavassi, president of Milan Business Court A. Tavassi points out that the transfer of the seat of the central division from London to Milan is purely hypothetical for the time being, given that the professionals in the field today seem more willing to keep the UK within the unitary patent system, making the appropriate adjustments to it. Moreover, Tavassi emphasises that the English courts are among the most prestigious in the IP field, so it would be a pity to lose their experience and expertise.
On the other hand, Tavassi admits that if the London seat were actually to be moved, Milan would be in a position to succeed it. Indeed, the latter collects about 70% of Italian patent litigation, and has particular expertise in the areas that are currently devolved to the jurisdiction of the London seat (particularly chemistry and metallurgy). In fact, proceedings on pharmaceutical and chemical patents are the most important, if not numerically, for market impact and magnitude of the relevant proceedings, and those on metallurgical patents have always been typical of the traditional Italian industrial environment.
Furthermore, Milan has already identified the seat of its UPC local division, and would have no difficulty in finding a more spacious and suitable—not to mention prestigious—place to host the central division: the entire 2015 Expo site, of which several buildings remain standing, is destined to become a scientific-technological centre and might well host the court in one of its new buildings.
Tavassi, however, does not foresee the matter being solved shortly, unless the UK decides to ratify the UPC Agreement (which is not so unlikely, because it’s always been at the forefront of pressing the unitary patent system and the UPC forward). In any case, Tavassi considers it important that Italy ratifies the agreement as soon as possible, as there is no reason to wait. This would grant Italy, among other things, a much stronger position in future negotiations and therefore more chance to succeed as the candidate to replace London.
Elena Martini is a partner at Martini Manna Avvocati . She can be contacted at: elena.martini@martinimanna.com
