‘Brexit and the Legal Legitimacy of the Unitary Patent Court’ – A Response

Abstract

In GRUR International 2024, pp. 191-197, Nicolas Binctin (Professor in Poitiers, France) and Craig A. Nard (Professor in Cleveland, USA) come to the surprising conclusion that the conditions for the entry into force of the Agreement on a Unified Patent Court (UPCA), as set out in its Art. 89(1), are still not met. If their opinion were correct, not only would a new ratification by the contracting member states (including referenda in Denmark and Ireland) be necessary (this is what the authors advocate), the Unified Patent Court (as it is properly called) would be up in the air, along with its decisions and orders to date.

In short, the authors assume that effective ratification by the United Kingdom is still required for the application of Art. 89(1) UPCA as long as the said provision has not been amended removing its alleged reference to a ratification by the United Kingdom. They derive this view essentially from the wording of Art. 7(2) UPCA (according to which a division of the central division is located in London) and from Art. 3(1) of the Protocol on the Provisional Application of the UPCA (referring to a ratification of the UPCA by the United Kingdom as a precondition for the entry into force of the Protocol).

I. The legal effects of the UK’s exit declarations

Although the authors present their legal analysis with a brief description of the legislative history, they do not address the UK’s declarations of 27 February 2020 and 20 July 2020 and their legal effects.

1. The declarations of the UK

On 27 February 2020, Prime Minister Johnson’s office announced that the UK no longer wished to participate in the UPCA. The form of this announcement was initially perceived as an affront to the other participating member states. In fact, however, it was a transparent attempt to avoid the consequences of a binding exit declaration under Treaty law by making a low-ranking statement, which was only later followed by the official exit declaration of 20 July 2020 at the request of the EU Council Secretariat.

2. Legal consequences

Through this second declaration, the UK has ‘made its intention clear not to become a party to [the UPCA]’ within the meaning of Art. 18 lit. a of the Vienna Convention on the Law of Treaties (VCLT). Until the entry into force, any state that has signed an international treaty, even if it has already ratified it, can use such an exit declaration to remove the legal effect of its signature in relation to the other states involved for the future application of the treaty.¹ This is even possible after a provisional application has begun (Art. 25(2) VCLT).² In international practice, this act is casually referred to as ‘unsigning’.³

The legal situation after the UK’s exit declaration was therefore as follows. For the future handling of the provisions of the UPCA, in particular of the provision of Art. 89(1) upon entry into force, the UK was to be treated in the same way as a state that had not signed the Convention. With a view towards the special structure of Art. 89(1) UPCA, this was of particular importance: the UK was no longer to be regarded as a signatory state.

3. The mechanism in Art. 89(1) UPCA

The special structure of Art. 89(1) UPCA upon the entry into force of the Convention is characterized by the provision requiring the deposit of 13 instruments of ratification or accession, especially by the three states which each (not taken together) had the highest number of European patents (EPs) in force in the year preceding the year in which the UPCA was signed. Alternatively and as a priority, the first day of the fourth month following the entry into force of necessary amendments to the Brussels Ia Regulation (BReg) was determined as the valid reference date for counting EPs.

At first glance, these general requirements (which do not mention any state) are surprising because it was already clear to everybody involved at the time of drafting Art. 89(1) UPCA that Germany, France and the United Kingdom would be the three states with the most EPs in force on the respective dates. Why were these three states not simply named?

4. Anti-blocking protection

The reason the three states were not named was the instalment of an anti-blocking protection: Germany, France and the UK gained a key position for the entry into force due to the reference to the number of EPs in force in each of them. What should apply if one of them would definitively withdraw⁴ from the Agreement, e.g. because the Agreement had not achieved a majority in Parliament, or because constitutional concerns (as in the case of Hungary and, at times, Germany) precluded ratification, or because its Prime Minister was persuaded to exit even after ratification – and if, nevertheless, its number of EPs at the relevant date was one of the three highest under Art. 89(1) UPCA?

The resulting blockade by one of the three⁵ was to be avoided and the contracting member state with the next highest patent number was to automatically move up.

This protection was achieved by the rule according to which the race for the top three places was to be held exclusively between states that had participated in the signing of the UPCA on 19 February 2013 or signed later when acceding (signatory states). For all of them, the determination of the respective stock of EPs was to be based exclusively on the situation in the year prior to the year in which the agreement was commonly signed (or when the amendment of the BReg went into force for the UPCA signatory states and for all other EU Member States).

That rule could naturally only refer to signatory states, namely to states that had participated in the general signing on 19 February 2013 or signed afterwards. If, later, but before the treaty entered into force, a signatory state lost its status as a signatory state, this state no longer counted in the comparison of the number of EPs.

5. Application of the anti-blocking protection in the case of the UK’s exit

After its exit, the UK no longer counted for the application of Art. 89(1) UPCA because it had lost its status as a signatory state. Italy automatically took its place. This is not due to any ‘retroactive effect’ of the loss of its role as a signatory state (which would be permitted under Art. 28 VCLT: the UK was not bound to the fact of its signature). Rather, the effect of the UK’s exit declaration worked ex nunc and had to be taken into account when the Convention later entered into force, i.e. in the future.

The anti-blocking protection in Art. 89(1) UPCA worked successfully in the case of the UK.

A quick side remark: as far as I know, the UK Parliament’s approval of the patent package has not been withdrawn by a parliamentary resolution and is therefore still available. The UK’s instrument of ratification has not been recalled; it is still with the Council of the EU. So, what is the present situation? A declaration on the part of the UK government under Arts. 18(a), 25(2) of the VCLT that it (the UK) does not intend to become a party to the treaty. Can this declaration, which was effective in the UK’s external relationship with the other contracting member states, be withdrawn one day? Could the UK then still sign again, rely on its ratification and become a member state? These questions must remain unanswered for the time being.

6. Interim result

The central thesis of Binctin and Nard (that the UPCA has not yet entered into force) loses its ground in view of this clear legal situation.

II. Interpretation of Art. 7(2) UPCA against the background of the entry into force including Italy

1. Premature naming of locations for the central division

At first glance, it seems somewhat surprising that even before the result of comparing EP numbers according to Art. 89(1) UPCA was safely known, the tasks of the central division, in Art. 7(2) UPCA, was expressly distributed between Paris (seat) and the locations London and Munich (sections). This was certainly premature. It was by no means certain that the three contracting member states whose locations were expressly named in Art. 7(2) UPCA would remain among the three signatory states under Art. 89(1) UPCA. If they proved not to be, why should they be given a part of the central division?

One reason might have been that the UPCA architects drafting Art. 7(2) UPCA wanted to avoid a cumbersome repetition of the wording of Art. 89(1) UPCA and that they firmly believed that Germany, France and the UK, having the most EPs, would stay on as signatory states.

Another reason for this premature rule was political. The three states indicated by the expressly named locations wanted to be certain in advance that the seat or section of the central division would fall to them at the time of the entry into force of the UPCA.

Certainly, their premature naming was also intended by the architects to persuade the three host states to ratify. It is worth recalling the great jubilation that erupted in the British House of Commons when the then Prime Minister Cameron reported the deletion of Art. 6-8 from the Unitary Patent Regulation and the securing of the pharmaceutical competence for the London section of the central division.

2. Partial invalidity of Art. 7(2) UPCA

Against this background, it would amount to putting the cart before the horse in using the explicit mention of Paris, London and Munich in Art. 7(2) UPCA as means for interpreting Art. 89(1) UPCA, and not the other way round. How should a technical clause like Art. 7(2) UPCA be able to govern or inspire the interpretation and application of the fundamental provision on entry into force in Art. 89(1) UPCA?

Furthermore, such use (proposed by the two authors) would fail to recognise the anti-blocking protection in Art. 89(1) UPCA as described.

The correctly formulated question must be how Art. 7(2) UPCA should be interpreted against the background of the replacement of the UK by Italy in applying Art. 89(1) UPCA.

The solution is obvious: The designation of London as location of a section of the central division was inapplicable and therefore invalid. The central division could not have a section in a non-contracting state. This left, for the time being, Paris as the seat and the remaining section in Munich. However, that created a need for repair: what should happen to the tasks intended for the London section?

3. Repair via Art. 87(2) UPCA

After the entry into force of the UPCA the contracting member states reallocated the London tasks of the central division to Paris, Munich and Milan by amending the treaty in accordance with Art. 87(2) UPCA. They were able to do so because Art. 7(2) UPCA had to be ‘brought in line’ (Art. 87(2) UPCA) with the change to Italy in applying Art. 89(1) UPCA (an ‘international treaty in the field of patents’, Art. 87(2) UPCA).

III. Article 3(1) of the Protocol on Provisional Application

The last argument of the two authors remains: the reference to Art. 3(1) of the Protocol to the Agreement on a Unified Patent Court on Provisional Application (here: Protocol) of 1 October 2015, which makes the entry into force of the Protocol dependent on, among other things, the ratification of the UPCA by (expressly named) Germany, France and the UK, of course, again, in the expectation that all three states would stay on as signatory states for the counting under Art. 89(1) UPCA.

This was, again, a premature formulation which, as with Art. 7(2) UPCA, might have been intended to avoid a cumbersome repetition of the wording of Art. 89(1) UPCA. It is, of course, legally impossible to use this provision of the Protocol, which was signed in Brussels two years after the UPCA was signed, to interpret Art. 89(1) UPCA. Moreover, here, too, the cart would be put before the horse. Incidentally, the two authors do not want to do this either. In their view, however, the UPCA today would not even be at the provisional application stage.

IV. Summary

We need not fear that the European patent package, in particular the UPCA, has still not entered into force, the omen the two authors paint on the wall. The anti-blocking protection in Art. 89(1) UPCA in combination with Art. 18 lit. a VCLT has worked and ensured that the UK (a non-signatory state) has been replaced by Italy (a signatory state). This application of Art. 89(1) UPCA has opened up the possibility for the contracting member states to make use of Art. 87(2) UPCA and to repair Art. 7(2) UPCA by newly distributing the tasks of the central division between Paris (seat) and Munich as well as Milan (sections).

Footnotes

Author notes