Upcoming events

UKAEL Seminar 13 March 2017
The Unified Patent Court and the UK. A Glimmer of Hope for a Softish Brexit?
Seminar Slides

What is the UPC?
Dr Christopher Stothers

Arnold & Porter Kaye Scholer LLP All Rights Reserved.

‘I sent the [Friar’s Club of Beverly Hills] a wire stating,
Groucho Marx, Groucho and Me (1959) Privileged & Confidential

! Prologue: EPC litigation
! What is the Unified Patent Court?
! Will the UPC still accept us as a member? ! Will we still want to belong to the club?
! Epilogue
Privileged & Confidential

Prologue: EPC litigation
European Patent Convention 1973
38 Member States
–  All 28 EU
–  All 4 EFTA (Iceland, Liechtenstein, Norway, Switzerland)
–  Turkey
–  Albania, Former Yugoslav Republic of Macedonia, Serbia
–  Monaco, San Marino
Not an EU body
Centrally grants a bundle of national patents (EP(UK))
Central opposition possible
National litigation typical (but not mandatory)
– C-4/03 GAT v LuK (but Actavis v Lilly [2015] EWCA Civ 555)
Privileged & Confidential

What is the Unified Patent Court?
Allows patent litigation in a “single” court
–  Central divisions (validity/declaratory)
–  Regional and Local divisions (infringement)
Litigation covers:
–  new “unitary” EPs
–  Existing or new national EPs (unless opted out)
London is set to host:
–  Central division (pharma/biotech)
–  Local division (infringement)
References to ECJ
Privileged & Confidential

Will the UPC still accept us as a member?
UPC Agreement is limited to EU Member States
– Previous draft allowed non-EU countries, but ECJ found this problematic in Opinion 1/09 due to need for ECJ primacy
Legal representatives must be EU/EU qualified – Although European Patent Attorneys can act even if non-EU
However, strong political will for UK (and UK judges/lawyers) to participate
! "Amendment?
Privileged & Confidential

Will we still want to belong to the club?
UK IPO Announcement (November 2016)
–  “it is proceeding with preparations to ratify the UPC”
–  “[The UK] will be working with the Preparatory Committee to bring the Unified Patent Court (UPC) into operation as soon as possible.”
UK signed the ‘Protocol on Privileges and Immunities of
the Unified Patent Court’ (December 2016)
– Necessary for Unified Patent Court and judges to carry out their activities
White Paper on Brexit (February 2017)
–  Principle 2: Taking control of our own laws
–  This includes “ending the jurisdiction of the CJEU in the UK” Privileged & Confidential

Question: It is a lovely thought that the UPC is not a national court and that the CJEU therefore won’t be ruling over a UK court, but will the Daily Express see it that way?
Kevin Mooney: (laughs) Certainly not, no...It’s a fine distinction, I agree...I’m just hoping that [the] Immunities Protocol manages to creep through without anybody noticing
Privileged & Confidential

Thank you for listening
Christopher Stothers
Partner, Arnold & Porter Kaye Scholer LLP, London Visiting Professor, University College London
Privileged & Confidential
+44 (20) 7786 6226

What is the substantive role of the ECJ in the UPC?
Dr Luke McDonagh

Analysing the Impact of Brexit on Patents
- What is the CJEU’s role within the Unified
Patent Court?
- What patent questions could the CJEU decide?
Dr. Luke McDonagh (City, University of London)

■ New book!

European Patent Litigation in the Shadow of the Unified Patent Court (Edward Elgar, 2016) https://www.elgaronline.com/abstract/9781784714734.xml?rskey=RpmfMR&result=7
- Examines four major European patent jurisdictions – UK, Germany, France, The Netherlands – and considers the current state of patent litigation in these states
- Assesses the rationale behind the reforms to the European patent litigation system - the Unified Patent Court and the Unitary Patent – as well as how the system is proposed to work in practice
- Includes qualitative insights into legal and business perspectives on the reforms

European Patent Litigation: Why the need for change?
- Currently under the non-EU European Patent Convention system patent litigation takes place on a national basis, with potential for divergent rulings on validity (and infringement)
(i)  between EPO and national jurisdictions, and
(ii)  between national jurisdictions e.g. UK and Germany
-  Complexity - fragmented outcomes
-  Costly to litigate across borders
-  Potential for single market problems
Germany is the main current venue for European patent litigation – seen as speedy and fairly cost-efficient
UK’s PHC has major niche for complex pharma/life sciences cases – seen as ‘thorough but costly’ jurisdiction
France & The Netherlands have their own particular advantages

UPC referrals to the CJEU
■ The UPC will have its own jurisdiction to issue rulings on substantive patent matters e.g. validity and infringement
■ The CJEU will not possess this jurisdiction (unlike in Trade Mark law, for example, where it does)
■ But the CJEU will play a role...
■ Article 21 of the UPC Agreement provides that a
referral can be made by the UPC to the CJEU in much the same way as an EU MS national court would made such a referral i.e. where there is an issue covered by EU law
Areas of law where UPC referrals to the CJEU may occur
■ Where there is an issue of EU patent law governed by Directive 98/44/EC (biotechnological inventions) and/or Regulation 2100/94 (plant variety rights) .
■ Where there is an issue governed by the Enforcement Directive 2004/48/ EC.
■ Where there is an issue covered by Regulation 469/2009/EC (SPCs for medicinal products).
■ Where there is an issue covered by one of the other EU Directives explicitly mentioned in the UPC Agreement under Article 27; that is, Directive 2001/82/EC (veterinary medicinal products); Directive 2001/83/ EC (medical products for human use), Directive 2009/24/EC (computer programs), Directive 98/44/EC (biotechnological inventions) and Regulation 2100/94 (plant variety rights).
■ Where there is a question of how to the interpret Regulation 1257/2012 (UP Regulation).
The CJEU’s role
■ Thus, the CJEU will undoubtedly have some judicial input within the UPC system, though every effort has seemingly been made by the planners to keep this role to a minimum with regard to substantive patent matters
■ The experience of the CJEU's expansive interventions in the areas of Trade Mark Law and Copyright law within the EU may have had an influence in this respect
■ So, what kinds of questions might be referred to the CJEU by the UPC?
Biotech: Brüstle v Greenpeace (C-34/10) (2011)
■ The Biotechnology Directive (98/44/EC) rules out patentability for inventions that involve "uses of human embryos for industrial or commercial purposes"
■ Rationale behind this exception - the ethical, moral, philosophical and religious variances of opinion on when human life begins
■ However, the legislators did not give an answer to the politically loaded question - exactly what constitutes a ‘human embryo’?
■ Thus, in the Brüstle case the CJEU had to answer a series of questions on the meaning of "human embryo" without the benefit of a clear legislative definition
Biotech: Brüstle v Greenpeace (C-34/10) (2011)
■ Greenpeace, citing the Biotech directive’s exclusion, applied to revoke a patent held by Mr Brüstle, who had invented a way to produce, from embryonic stem cells specialised cells for treating neurological diseases such as Parkinson's
■ Case referred to the CJEU by the German court under the Directive
■ What does ‘Human Embryo’ mean?
■ What is the meaning of 'industrial and commercial uses‘ ■ What is the extent of the exclusion?
Biotech: Brüstle v Greenpeace (C-34/10) (2011) ■ CJEU ruled that Article 6(2)(c) of the Biotech Directive must be interpreted
as meaning that:
“The use of human embryos for scientific research purposes is not patentable. A ‘human embryo’ within the meaning of Union law is any human ovum after fertilisation or any human ovum not fertilised but which, through the effect of the technique used to obtain it, is capable of commencing the process of development of a human being”
- It is for the referring court to ascertain, in the light of scientific developments, whether a stem cell obtained from a human embryo at the blastocyst stage constitutes a 'human embryo' within the meaning of Article 6(2)(c) of the Biotech Directive
SPCs: Arne Forsgren v Österreichisches Patentamt (C-631/13) (2015)
■ Protein D is present in a vaccine for paediatric use - Synflorix - where it is a carrier protein conjugated by covalent bonds. However the SPC application was for Protein D per se, not in the conjugated form found in Synflorix
■ Application for SPC rejected on the basis that Protein D is not present in Synflorix other than as a conjugate of other active ingredients as well as fact that in Synflorix it is an excipient rather than contributing to the activity of the vaccine
■ The applicants argued that Protein D has active properties of its own, albeit that these were not covered by the marketing authorisation
SPCs: Arne Forsgren v Österreichisches Patentamt (C-631/13) (2015)
■ CJEU had to consider:
■ (i) whether an SPC could be obtained to a product per se in ‘separate’ form when the marketing authorisation was for a medicine in which the product is covalently bonded to other ingredients
■ (ii) whether the SPC could rely on a marketing authorisation which only described the product as a ‘carrier protein’ and did not provide any information about an independent therapeutic effect
SPCs: Arne Forsgren v Österreichisches Patentamt (C-631/13) (2015)
■ The CJEU found that the ‘covalent bonding’ issue should not prevent the granting of an SPC
■ On issue of whether the marketing authorisation was adequate to support the grant of the SPC, the court stated that for Protein D to be an ‘active ingredient’ as required by the Regulation it must produce ‘a pharmacological, immunological or metabolic action of its own which is covered by the therapeutic indications of the marketing authorisation’
■ It left that determination – whether to grant the SPC - to the referring court
Enforcement Directive: OTK v SFP (C-367/15) (2017)
■ Does the Enforcement Directive (Directive 2004/28) prevent Member States from providing in their legislations the possibility to award punitive damages in IP cases?
■ Polish Supreme Court sought guidance from CJEU
■ CJEU ruled that the fact that Directive 2004/48 does not entail an obligation on the Member States to provide for ‘punitive’ damages cannot be interpreted as a prohibition on introducing such a measure
- Conclusion –
UK Gov: UPC is an international court not an EU one Everyone else: But it must accept remit of the CJEU! UK Gov: (shhh!)
■ CJEU will certainly have a role in setting the limits of EU law as applicable in patent cases
■ The UPC can refer to the CJEU
■ Important referrals will occur in the major areas of biotech,
SPCs, Enforcement, and the UP Regulation itself
■ Will the UK be willing to participate in the UPC despite this?

How can we make it work post-Brexit?
Prof Duncan Matthews 

Can the UK continue to participate in the European Patent with Unitary Effect?
•  UK participation in the EU Regulation on Creation of Unitary Patent Protection would end automatically with the UK losing the status of an EU Member State.
•  UK participation in the European Patent with Unitary Effect would consequently have to be secured by means of an international agreement.
•  Such an international agreement is possible under Article 1(2) of the Regulation and Article 142 of the EPC.

Article 1(2) of the EU Regulation on Creation of Unitary Patent Protection
This Regulation constitutes a special agreement within the meaning of Article 142 of the Convention on the Grant of European Patents of 5 October 1973, as revised on 17 December 1991 and on 29 November 2000 (hereinafter “EPC”).

Article 142 of the European Patent Convention
1) Any group of Contrac1ng States, which has provided by a special agreement that a European patent granted for those States has a unitary
character throughout their territories, may provide that a European patent may only be granted jointly in respect of all those States.
2) Where any group of Contrac1ng States has availed itself of the authorisa1on given in paragraph 1, the provisions of this Part shall apply.

Can the UK continue to participate in the UPC Agreement?
•  UPC Agreement is an international treaty.
•  Withdrawal of a party from an international treaty is governed by Arts. 54-64 of the Vienna Convention on the Law of Treaties (VCLT), unless the treaty provides otherwise.
•  UPC Agreement does not contain an exit clause so the provisions of the VCLT apply.

Can the UK continue to participate in the UPC Agreement?
•  Art. 18 VCLT: obligation not to defeat the object or purpose of the treaty prior to its entry into force - so arguably UK ratification is an obligation.
•  Art. 62 VCLT: a fundamental change of circumstances which was not foreseen by the parties can (in specified circumstances) be invoked as a ground for terminating or withdrawing from a treaty.
•  Arts. 2(c), 22, 84 UPC Agreement: all contracting parties are EU Member States. Hence a UK exit from the EU would constitute a fundamental change of circumstances unforeseen by the parties.

Can the UK continue to participate in the UPC Agreement?
•  CJEU Opinion 1/09 found the draft agreement on the creation of a unified patent litigation system - European and Community Patents
Court (between a mix of EU Member and non-Member States) - contrary to EU law.
•  Many commentators and the European Commission interpreted the Opinion as rejecting a patent court common to EU Member States and non-Member States.

Opinion 1/09 CJEU
Consequently the envisaged agreement, by conferring on an interna1onal court which is outside the ins1tu1onal and judicial framework of the European Union an exclusive jurisdic1on to hear a significant number of ac1ons brought by individuals in the field of the Community patent and to interpret and apply European Union law in that field, would deprive courts of Member States of their powers in rela1on to the interpreta1on and applica1on of European Union law and the Court of its powers to reply, by preliminary ruling, to ques1ons referred by those courts and, consequently, would alter the essen1al character of the powers which the Trea1es confer on the ins1tu1ons of the European Union and on the Member States and which are indispensable to the preserva1on of the very nature of European Union law.

The UPCA post-Opinion 1/09
In Opinion 1/09, the CJEU identified three requirements that the UPC Agreement needed to meet in order to comply with EU constitutional law:
(i) respectforthesupremacyofEUlaw;
(ii) the possibility of claiming damages and/or instituting infringement
proceedings for breach of EU law; and
(iii) uniformity through the making of preliminary references.

Can the UK continue to participate in the UPC Agreement?
•  Opinion 1/09 does not preclude the participation of non-Member States in the UPC Agreement, provided that the Court is subject to sufficient safeguards to protect the principles of EU law.
•  Is participation of the UK in the UPC system after leaving the EU inconsistent with EU law?

Creating a unified patent system compatible with the provisions of the EU Treaty and TFEU
•  The UPC is a "court common to the Contracting Member States" and "thus subject to the same obligations under Union law as any national court of the Contracting Member States" (Art. 1(2) UPCA).
•  The UPC is bound to apply EU law in its entirety and to accept its primacy (Art. 20 UPCA).
•  The UPC has the same powers and duties as national courts to obtain preliminary references from the CJEU under Art. 267 TFEU (Art. 21 UPCA).
•  When the UPC infringes EU law, Contracting Member States are jointly and severally liable for damage (Art. 22 UPCA).
•  Actions of the UPC are directly attributable to the Contracting Member States individually, which are hence responsible for infringements of EU law by the UPC according to Arts. 258-260 TFEU (Art. 23 UPCA).

Article 21 UPC Agreement
As a court common to the Contracting Member States and as part of their judicial system, the Court shall cooperate with the Court of Justice of the European Union to ensure the correct application and uniform interpretation of Union law, as any national court, in accordance with Article 267 TFEU in particular, Decisions of the Court of Justice of the European Union shall be binding on the Court.

What changes to the UPC Agreement would be required?
•  Article 1: “The Unified Patent Court shall be a court common to the Contracting Member States and thus subject to the same obligations under Union law as any national court of the Contracting Member States.”
•  Article 2: amend definitions of “Member State” and “Contracting Member State”.
•  Article 21 “... the Court shall cooperate with the [CJEU] to ensure the correct application and uniform interpretation of Union law, as any national court of a Contracting Member State, in accordance with Article 267 TFEU in particular”.
•  Article 29: amend provisions on exhaustion of rights conferred by a European patent to refer to a product that has been “placed on the market in the European Union Contracting States by, or with the consent of the patent proprietor...” will need to be amended to extend the principle of exhaustion beyond the territory of the EU to the UK.
•  Various references to “Member States” in Articles 84 (Signature, ratification and accession) and 88 (Languages of the Agreement) would need to be amended to include the UK as a non-EU Contracting State.

How would the amendments to the UPC Agreement be made?
Article 87 - Revision ...
(2) The Administrative Committee may amend this Agreement to bring it into line with an international treaty relating to patents or Union law.

•  The UK could continue to be a party to the UPC Agreement after withdrawal from the EU has become effective.
•  However such an arrangement would have to be both politically acceptable to the UK and the other UPC Contracting States, as well as legally acceptable to the CJEU.

Thank you for your attention
Duncan Matthews
Centre for Commercial Law Studies Queen Mary University of London








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