Plus ça change? How UK patents will be affected from 1 January 2021

Briefing

Patents provide exclusivity rights that underpin the business models and strategies of life sciences and tech companies in the UK and the EU.

As the UK approaches a turning point in the Brexit process on 31 December 2020, let's look at whether these important assets will be affected.

The current status of Brexit

Has Brexit actually happened already? Well, No.10 Downing Street insists it has (and some say the Prime Minister's office has even banned the word).

This is because the UK actually left the EU at 11pm on 31 January 2020. On this date the European Union (Withdrawal) Act 2018 (2018 Act) repealed the European Communities Act 1972, by which EU law ultimately takes effect in the UK.

But, at the very same time, the similarly titled European Union (Withdrawal Agreement) Act 2020 (2020 Act) implements in UK law the Withdrawal Agreement – that is, Boris Johnson's "oven-ready deal" – agreed between the UK and EU on matters including the "Northern Ireland Protocol".

This "saved" much of EU law (including that relevant to patents and the regulation of life sciences products) so that it continues to apply in the UK until the end of an "Implementation Period".

The Implementation Period ends at 11pm on 31 December 2020 and the application of the great majority of EU law in the UK ends with it.

UK patents obtained through the EPO

The grant and enforcement of UK European patents will be relatively immune to the end of the Implementation Period.

This is because the system by which they are granted by the European Patent Office is governed by the European Patent Convention – which is an international treaty, not EU law.

Consequently, the UK's participation in the system by which the EPO examines and grants European patent applications centrally is going to remain unchanged.

That means patents granted by the EPO will continue to be registered in the UK from 1 January 2021, if so designated, and will remain subject to potential opposition in the EPO within the first nine months of grant.

It follows of course that the substantive law of the EPC, upon which much of the validity law in the Patents Act 1977 is based, also continues to apply in the UK.

EU derived law that applies to patents

A small number of issues of patent law are based on EU law. Key examples are:

Biotechnological inventions: this area of UK patent law is derived from the EU's Biotechnology Directive and implemented domestically through Schedule 2A Patents Act 1977.
The Bolar exemption: this legislation in the Patents Act 1977 has its origins in the EU's Medicine's Directive.
Enforcement: the UK's Intellectual Property (Enforcement, etc) Regulations 2006 was modelled on the EU's Enforcement Directive.

However, section 2(1) 2018 Act provides that domestic law derived from EU law and which is in effect in domestic law immediately before 31 December 2020, will continue to have effect in domestic law on and after that day.

As a result, those matters listed above will continue to apply in the UK in their domestic form.

Exhaustion of patent rights

As matters stand, the UK will no longer be recognised by the EU as included in the territory to which exhaustion of patents applies.

In other words, the EU will not recognise as exhausted in its territory goods protected by a patent that are first placed on the UK market with the patent owner's consent.

The UK government has, nonetheless, legislated to unilaterally recognise the exhaustion of goods first placed in the market in the EU and EEA, which will allow parallel trading of products into the UK from the EU and EEA to continue.

Cross-border patent actions

Although relatively rare in patent matters, cross-border patent actions prior to 1 January 2021 were governed by the Brussels Regulation 1215/2012 (recast), which applies generally to the jurisdiction and the recognition and enforcement of civil judgments in the EU.

As a replacement, the UK has applied to join the Lugano Convention, which for patent purposes contains provisions closely resembling those of the Brussels Regulation. This requires the assent of the EU, however, and may come only as part of a wider settlement.

Without the Lugano Convention, the UK will return to national rules on jurisdiction, recognition and enforcement.

Where cross-border relief – largely limited to declarations of non-infringement and FRAND declarations in patent matters – is concerned, this means the English jurisdictional rules on justiciability and forum non conveniens would now extend to decisions applicable in the European Union.

Seeking assistance from foreign courts using letters of request (under the Hague Evidence Convention) will remain possible from 1 January 2021, because the UK is already a member of that Convention in its own right.

The Unified Patent Court (UPC) and Unitary Patent

In July, the UK withdrew its ratification of the UPC Agreement that would create the UPC and bring in the Unitary Patent.

Earlier in the year, the German Federal Constitutional Court had ruled that the German Act needed to ratify the UPC was "null and void", because the Bundestag had not passed it using the two-thirds majority vote required.

This leaves the UPC now facing two major hurdles.

The first is that the UPC Agreement must be re-ratified in Germany and avoid any further constitutional complaint that would prevent it coming into force.

The more immediate problem, however, is that UPC Agreement requires not just a mandatory ratification by Germany, but also the UK. But there is no UK ratification – it was withdrawn.

It's therefore difficult to see how the UPC and Unitary Patent can legitimately proceed without breaching the terms of the UPC Agreement. Instead, it would seem the Agreement needs to be renegotiated by the signatory states, which include the UK, to agree the UK’s removal.

Plus ça change, plus c'est la même chose

Unlike in many areas of UK law and commerce, the end of the Brexit Implementation Period heralds little change for patent practice. The essentials of the European patent system – central prosecution, grant, registration as the UK part of a European patent, and opposition – will continue as before.

UK patent law will remain as it is, with the possible exception that the English rules on cross-border relief may replace those of the Brussels Regulation (recast).

The biggest impact of Brexit on patent matters may prove to be on a system that does not even exist yet: the UPC and Unitary Patent. Not only is this system unlikely to apply in the UK in its current form; without renegotiation it may not come into force in the EU either.