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7 July 2016Big PharmaClaire Phipps-Jones

Brexit and IP: business as usual, for now

On June 24, the results of the UK referendum on membership of the EU were announced: Britain voted to leave by a slim margin of 52% to 48%.

While many aspects of Britain’s departure from the EU remain unclear, a question in many life science companies’ and patent practitioners’ minds is: what happens next?

The first and most obvious answer is: nothing. Unless and until the process in article 50 of the Lisbon Treaty is triggered by the UK, the formal process for the UK to exit the EU will not commence. A legal challenge has been brought against whether article 50 must be invoked by an act of Parliament or not. The negotiations once article 50 has been triggered will last up to two years, longer if agreed by the consent of all member states, and the withdrawing party may be able to pull out of the withdrawal process at any time before the withdrawal agreement is signed. In other words, pulling out of pulling out may be permissible.

In the short term, there is unlikely to be any immediate effect on the existing patent system in the UK. European patent filings are governed by a non-EU instrument, the European Patent Convention, and therefore patentees can choose to file national patents at the UK Intellectual Property Office or European patents at the European Patent Office. The UK designations of such patents will still be litigated in the UK courts—in other words, business as usual.

In the medium to long term, there will need to be some changes to the legislature. In particular, provisions of EU legislation that currently have a direct effect and European rights such as supplementary protection certificates (SPCs) will need to be considered. The UK government will need to decide whether to include the same or similar provisions into national legislation, or else they will simply cease to apply once Britain is no longer a member state.

“The UPC is not yet open for business. It remains theoretically possible for the UK to ratify the UPC Agreement while still being a member state.”

This provides options. The government could simply transpose the existing provisions into national law to ensure harmonisation with the European law. Alternatively, the opportunity could be taken to redraft the terms of existing European legislation that could reasonably be considered to be “broken” (for example, the SPC Regulation) or to ensure the competitiveness of Britain in both global and European markets.

A further change arises only if or when the Unified Patent Court (UPC) opens for business.

As many will be aware, the UPC is not yet open for business. It remains theoretically possible for the UK to ratify the UPC Agreement while still being a member state. This could result in the opening of the court in 2017, and even the opening of the London branch of the central division.

However, it seems unlikely that the UK will ratify, as to take a step towards deepening the UK’s integration with the EU at the same time as the UK is preparing to begin the disengagement process may be politically unpalatable. This means that the remaining UPC zone countries may seek to amend the agreement, perhaps to allow the UPC to open before the UK’s departure and at least to relocate the London branch of the central division. The process of relocation is by no means straightforward.

Were the UPC ultimately still to open, unitary patents will be less attractive due to the absence of the UK. The fees for applying for such patents and for litigating may also need to be reviewed.

With or without the UPC, the UK is one of the world’s largest economies. There is little doubt that it will remain a key jurisdiction for high value and/or strategically important patent litigation.

Claire Phipps-Jones is an associate at  Bristows. She can be contacted at: claire.phipps-jones@bristows.com

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