The UK government has confirmed that it will proceed to ratify the Unified Patent Court Agreement, in spite of Britain’s vote to leave the EU. Many businesses delayed planning their UPC strategy in light of the referendum result. Yesterday’s announcement means businesses must rapidly restart their planning, but it leaves many questions unanswered.

Why did the referendum affect the UPC?

Since the UK’s vote to leave the EU, the long-term viability of the UPC has been called into question. The UK is one of three EU members states that must ratify the UPC Agreement for it to come into force, and the UK was due to host a branch of the court’s central division.

The UPC Agreement guarantees the supremacy of the Court of Justice of the EU over this area of law: it has been generally assumed that a government implementing Brexit would not find that politically acceptable. It is legally unclear whether the UK can remain part of the UPC post-Brexit, and on what basis. That question may be resolved in the exit treaties.

As a result of the uncertainty since the referendum, the appointment of UPC judges has been delayed and there are still many other questions about what will happen to patents that are opted into the new system.

What steps remain before adoption?

It’s interesting to speculate as to what caused the rapid move to signal ratification after a prolonged period when it was generally assumed to be off the table. In any case, the UK decision was announced after the EU Competitiveness Council, in a briefing that suggested that the UPC system would come into effect in early 2017. In principle this is possible: it simply requires the UK and Germany to deposit instruments of ratification. In practice, Germany always intended to hold off ratification until all the preparatory steps had been put in place – appointing judges, completing the IT systems – and an early 2017 timetable seems highly ambitious. On the other hand, there’s a strong incentive to bring the system into force quickly, to show its success and importance before Brexit. Although we can only speculate, it is realistic to plan for implementation in mid-2017.

What does the UK government’s decision mean for businesses?

Given that the post-Brexit position of the UPC has not been resolved, real uncertainties remain as to what the implementation will mean in practice, but the single most important step for businesses is to consider whether to opt patents out of the system.

The question of whether to opt out is a complex, multifactorial analysis that requires detailed strategic thinking.

How can we help?

At Freshfields, we’ve been closely involved in the development of the UPC. We have top-tier patent lawyers in the leading national patent systems on which the new system is most closely based (the UK, Germany and the Netherlands). We’ve acted for businesses in some of the highest profile multi-jurisdictional patent litigation across Europe. We can represent you in all courts and divisions of the UPC (when it comes into force), as well as in national courts and at the European Patent Office. We’re ideally placed to help you plan for, and navigate, the new system.

We have prepared a more detailed briefing for businesses considering their UPC strategy: please contact us for a copy.

The full press release is linked below. The EU press conference is also available as a webcast.