UPC: businesses still on hold despite Judge Huber announcement

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Sceptical of a UPC breakthrough, counsel at Bracco, Johnson & Johnson, Amadeus and elsewhere say they’re grateful for a timeframe, but that they won’t be ramping up preparations until the new common patent system is closer to establishment

Despite Justice Peter Huber announcing to Managing IP last week that he will probably rule on the constitutional complaint against the Unified Patent Court early next year, businesses are holding tight until they have more certainty on the new patent project’s establishment.

Six in-house attorneys at Johnson & Johnson, Amadeus, Bracco and elsewhere say that while the new timeframe is a step in the right direction, there are still too many variables for them to justify putting more time and resources into preparations.

They note that the UPC Agreement (UPCA) might need to be revised if a post-Brexit UK is unable or unwilling to join or remain in the common patent system, and that it is possible that Huber will rule in favour of the complaint in the first quarter of 2020.

“In virtually every way, the constitutional court judge’s announcement is more of the same,” says Paul Coletti, associate patent counsel at Johnson & Johnson in New Jersey.

“We have known that there would be a date of the decision. Naturally, we deal with this all the time as litigants when we are waiting to find out what a court will do, and will prepare for the contingencies once the decision is made.

“Our advice to internal clients is no different now than what it was at the start of the year.”

Following this line of thought, one industry source tells Patent strategy he will simply “believe it when he sees it”.

Francesco Macchetta, IP strategic adviser at Bracco in Italy, adds that the UPC has already been “close to starting” several times, so most businesses have done the basic preparations needed.

“I do not think there is a need for more preparation,” he says. “People are waiting for the first sign that the system will definitely start, and after that they will start to look at possible strategies.”

He adds, however, that he is optimistic for a 2020 UPC launch. “I welcome the direct information from the German Constitutional Court. This fact alone is, to me, a signal that the UPCA may finally come into force sometime next year – at long last.”

Huber’s interview might cause some businesses to revisit and revise outdated UPC strategies. Cassandra Derham, senior IP attorney and technical head of IP at Amadeus in France, says many companies started preparing for the UPC when it began picking up momentum five years ago.

She points out that technology has moved on since then, so many businesses’ plans for which patents they will designate as unitary and which they will keep as European registrations will probably no longer reflect their IP and competitive landscapes.

“We are likely to revisit some of our plans and then wait and see what happens with the UPC,” she says. “We will have to readjust our thinking based on what the portfolio and competitor landscape now looks like, and I’ll probably rely quite heavily on external counsel to continue the momentum there.”

UK in or out?

In-house counsel are right to be sceptical. Considering that the UK’s departure from the EU is set for January 31 – barring a Conservative Party loss in December’s general election and/or a long extension – and that the German federal government has previously indicated that it will hold off on ratification, a pre-Brexit UPC kick-off still seems unlikely.

Bristows partner Greg Bacon, based in London, says it would take six to eight months for the court to come into being after German ratification – so there is a small chance of a late 2020 start – but that the firm is not convinced that the Brexit question can be easily solved.

Not only is there a question of whether the UK will want to be a part of the UPC after Brexit when it would have to hand over some legal power to the Court of Justice of the EU (CJEU), there is the matter of whether the EU is now as keen for the UK to participate.

“Boris Johnson as foreign secretary did not have a problem with the UPCA and CJEU oversight under Theresa May because he gave the order to ratify it, and it may be that he still does not have a problem with it if he wins the election and no longer has to take a ‘Faragian’ line .

“But there is a question of whether the EU’s appetite to have the UK involved is as strong when Johnson is saying he will probably go down a different free trade agreement route from that envisioned by the previous government.

“For example, if the UK chose to introduce grace periods for patents in line with the US, which is something almost no EU country recognises, the EU may feel that UK domestic law risks becoming too different for continued participation in the harmonised UPC system.”

He notes that patent attorney firms and businesses need a new commitment from the future or current UK government that it is happy to be bound by the CJEU for unitary patents.

In either case, UPC establishment will probably have to be put off for a while longer until the UPCA is revised so that the UK can participate as a non-EU member state or that the new common patent system can function without the UK as a member.

Urgency for some

For those working to set up the UPC, Huber’s announcement has created a renewed sense of urgency.

Kevin Mooney, partner at Simmons & Simmons and chairman of the committee tasked with drafting the rules and procedure of the UPC, says the new timeframe means the interim working groups will be working with a greater degree of determination on matters such as translating the rules of procedure into the case management system (CMS).

“That has been a complex process,” he says. “Now we are going to have to work to ensure that when the court does open, the CMS is fit for purpose.”

While Huber’s comments last week caused quite a stir among patent attorneys, it hasn’t changed very much.

Though many attorneys assume that the constitutional court judge will dismiss the complaint, he may not – and Brexit may still throw a spanner in the works at any moment.

Businesses and law firms are therefore unlikely to start making any meaningful preparations for the new common patent system until something more substantial happens.