UPC: legislative work remains for the UK and Germany

When, in January 2017, the Unified Patent Court (UPC) Preparatory Committee stated that it was working towards a timetable in which the UPC would open in December 2017, it was clear that this timing was conditional on a number of factors. There were, however, two factors that the Committee could not have expected.

First, there was the snap general election in the UK, the result of which is likely to delay the opening of the UPC and the start of the unitary patent until February 2018, at the earliest. Second, there is now the request addressed by the German Federal Constitutional Court—the Bundesverfassungsgericht (BVerfG)—to the German president, to stay the signing of two of the bills necessary before the UPC system can be ratified in Germany.

This article explains the current status of the UPC and the unitary patent system and what these events might mean for it.

Ratifying the UPC Agreement

Before the UPC Agreement can come into force, a minimum of 13 countries (out of the 25 contracting states) are needed to ratify it, by depositing their relevant national instruments at the European Council. So far, 12 members have ratified the UPC Agreement (see  here), but these do not include Germany and the UK, whose signatures are mandatory.

In Germany, the bills necessary for ratification of the UPC Agreement have been approved by the Bundestag and the Bundesrat (see the BVerfG request, below).

In the UK, the Intellectual Property Act 2014 makes provision for the secretary of state to ratify the UPC Agreement and contains enabling legislation to allow the government to make the necessary changes to national law using a statutory instrument (SI). This  is SI 2016 No. 388, which was signed on March 12, 2016.

However, this SI is only one of two required to enable the UK to complete ratification of the UPC Agreement. The other SI is required to implement the UPC Protocol on Privileges and Immunities (PPI). Ratification of the UPC Agreement by the UK will not be completed until the SI legislating for the PPI is in place. Germany also needs to ratify the PPI (again, see below), as do a number of other countries:

The Protocol on Privileges and Immunities

The  PPI is necessary to give the UPC the privileges and immunities it needs to operate, such as certain immunities from suit for its judges and staff, special tax arrangements and the protection of the court’s documents and assets. As well as the UK, the PPI must be ratified by France and Germany (where the three sections of the central division will be located) and Luxembourg (the base for the Court of Appeal).

“Approval of three more countries, including Germany, of the PPA is required before the provisional period can begin.”

To date, although they have signed, the ratifications of several countries of the PPI are all outstanding (see  here), although Germany has got as far as passing its bill for this purpose through the Bundestag and Bundesrat. In the UK the implementing legislation for the PPI must be approved in both the UK parliament and the Scottish parliament.

The procedure that will be used for the PPI orders is the ‘Affirmative Procedure’. This means the order for the UK will be debated in both Houses in Westminster (in committee rather than on the floor of the chamber) and a separate affirmative order is also to be debated in the Scottish parliament. The UK Houses of Parliament have 40 days in which to consider the order. The affirmative procedure in Scotland takes 56 days. However, with the UK parliament being dissolved for the snap General Election in May and June, the laying down of the  order for the PPI was delayed until June 26. With recesses for the summer holidays and the political party conference season to follow, the likelihood is that the very earliest the PPI could be approved in the UK is the autumn of 2017.

Protocol on Provisional Application of the UPC

There is yet another instrument that needs to be approved before the UPC can come into force. This is the Protocol on Provisional Application of the UPC (PPA), which enables a provisional period to begin before the full opening of the court.

As stated above, the  PPA establishes a provisional period in advance of the full opening of the UPC, in order for it to be fully set up in advance of the first day of operation. This includes final steps in the practical setup of the court, such as the recruitment of judges and testing of IT systems. Importantly, it also brings the registry into being, allowing for early registration of European patent opt-outs (the ‘sunrise period’). The provisional protocol does not come into force until the day after 13 contracting member states to the UPC Agreement have either ratified it or have informed the depository that they have received parliamentary approval to ratify it. Not only is it dependent on this, but also on these same 13 having either signed the PPA or declared that they consider themselves bound by it.

Of the countries that have deposited their instrument of ratification of the UPC Agreement or informed the depository that they have the necessary approval, not all have signed the PPA or declared themselves bound by it (see  here). European Commissioner Elzbieta Bienkowska stated in a press conference after the meeting of the EU Competitiveness Council on May 29 and 30, 2017 that approval of three more countries, including Germany, of the PPA is required before the provisional period can begin. This was confirmed by the chairman of the UPC Preparatory Committee, Alexander Ramsay,  on June 27.

What has happened in Germany?

For the UPC Agreement to come into force and the UPC and the unitary patent to begin, the ratification instruments of the 13 countries must be deposited with the European Council. As discussed above, apart from the UK and Germany, there are currently a number of other ratifications and signatures/declarations still necessary for all of this to be achieved.

Assuming that these will be in place soon, it is expected that either the UK or (more likely) Germany would be the last to deposit their ratification instrument at the European Council, timed in such a way as to make sure that the UPC and its registry are completely ready.

The UPC and the unitary patent then come into force on the first day of the fourth month after this deposit. Without any other delays, if the UK ratification can be deposited by this autumn then the earliest the UPC and the unitary patent could come into force and open for business would be February or March 2018.

It is in this context that there has been another development: the BVerfG has requested the Office of the President of the Federal Republic of Germany (Presidential office) not to sign the laws on the ratification of the unitary patent system, which had only recently been approved by both houses of the German parliament. Behind this request (which is not published yet) is an apparent constitutional complaint lodged by an unknown private individual challenging the constitutionality of the German laws on the ratification of the UPC Agreement. The request suggests that the BVerfG holds this challenge not to be prima facie without merit. However, this does not necessarily mean that the BVerfG has conducted a more substantial assessment of its merits yet.

As the Presidential office has agreed to meet this request by postponing the signing of the laws until the BVerfG has reached a decision in the above-mentioned expedited proceedings, and given that Germany is one of the three member states whose ratification is mandatory, the ratification of the UPC and unitary patent in Germany will be delayed by at least a few months. If the BVerfG comes to the conclusion that the constitutional complaint is successful, the delay is likely to be even more substantial, as a way forward for the UPC and unitary patent project is sought.

Taking into consideration all the above factors, in his update of June 27, Ramsay stated:

"Under the current circumstances it is difficult to maintain a definitive starting date for the period of provisional application. However, I am hopeful the situation regarding the constitutional complaint in Germany will be resolved rather quickly and therefore I am hopeful that the period of provisional application can start during the autumn 2017, which would mean that the sunrise period for the opt-out procedure would start early 2018, followed by the entry into force of the UPC Agreement and the UPC becoming operational."

By this assessment, the UPC and unitary patent would be coming into force in the summer of 2018. However, given earlier attempts to be more specific, and the unpredictable events that have followed, this time Ramsay adds that the Preparatory Committee will provide a more detailed timetable on its  website as soon as the picture is clearer.

Paul England is patents senior professional support lawyer at Taylor Wessing, London. He can be contacted at: p.england@taylorwessing.com

Britta Bröker is patents and pharma knowledge management lawyer at Taylor Wessing, Hamburg. She can be contacted at: b.broeker@taylorwessing.com