Innovation Insights

Westminster Legal Policy Forum Summary: The future of the UK’s patent framework

Written by Hejab Azam on Feb 6, 2017 12:15:00 PM
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An image of the Westminster Legal Policy Forum brochure

This event was held to discuss the Unified Patent Court (UPC) and how it would affect patent law throughout the UK. The major issues discussed were whether the UK will still be part of the UPC after Brexit and the implications leaving the EU will have on our patent system.

As well as Baroness Bowles of Berkhamsted who chaired the event, the key speakers included:

  • Dr Luke McDonagh, lecturer at the School of Law, City, University of London
  • Dr David Harris, Senior Policy Advisor, HMRC
  • Ian Wood, Head of Intellectual Property, Charles Russell Speechlys
  • Elizabeth Bain, IP and Licensing Manager, Science and Technology Facilities Council
  • Dr Tony Raven, Chief Executive, Cambridge Enterprise, University of Cambridge
  • Kevin Mooney, Partner at Simmons & Simmons, Drafting Committee of the Rules of Procedure for the Unified Patent Court and Member, UPC Expert Group
  • Margot Fröhlinger, Principle Director of Patent Law and multilateral Affairs, European Patent Office

Current system and priorities post-Brexit

Dr Luke McDonagh used his seminar to explain the UK’s current context and emerging priorities post-Brexit. He discussed that, since the Intellectual Property Enterprise Court’s (IPEC) reform in 2013, the main outcome has been more active case management. This means that judges can add a short hearing before a trial to clarify what will be arguable during the subsequent trial.

This significantly speeds up the trial process and, with a cost cap of £50,000, makes it especially suitable for SMEs; costs before the reform were essentially unlimited. This encourages SMEs who previously may have avoided embarking on genuine litigation due to the costs. Most companies are looking for injunctions rather than damages which makes IPEC suitable.

Under the European Patent Court (EPC) system there are major changes happening. Currently if there is any litigation under the EPC, it must be taken nationally in each member state, this can be significantly costly as it involves litigating across borders. With the new patent system, the UPC will be the sole venue for unitary patents, offering potential for bifurcation between infringement and validity.

According to Dr Luke McDonagh, the advantages of the UPC are due to it being able to:

  • Obtain injunctions
  • Revoke patents centrally and ease backlog of EPO
  • Prevent fragmentation of outcomes of European cases
  • Potentially reduce litigation/enforcement costs through fees

The disadvantages are:

  • The potential to lead to more patent trolls
  • The potential uncertainty for SMEs -  whether pan-25 member states injunctions could have a disproportionate impact on SMEs

Scott Roberts, patent attorney at British Telecom, added a noteworthy comment stating “from an applicant and a proprietary point of view, there is no certainty and therefore no benefit for us yet until we leave the EU when hopefully there will be more clarity and certainty”.

Impact for SMEs:

The UK Patent Box system was discussed by Dr David Harris; the Patent Box offers a reduced rate of corporation tax for patents to encourage innovative companies to exploit patents. To qualify for the patent box, one must hold qualifying IP which has been both approved and granted. It also covers IP licensees not just the IP that a company owns. This is especially useful for SMEs.

Current structures and the options ahead for facilitating innovation in the UK

Ian Wood, head of IP at Charles Russell Speechlys assessed the current structures for different types of organisations. He questioned that while the UK has the UK Intellectual Property Office (IPO) as well as international arrangements and the enforcement of IP rights goes through several courts like the EPC, how does UK compare with other countries? For patent applications through the IPO for national protection and through the EPO for international protection has historically been expensive to enforce but the quality of it was high. Now it is less expensive however we still have the high quality.

The options the UK have available currently are the High Court and IPEC; the High Court is the traditional forum for bringing patent disputes while the IPEC is more effective for SMEs and private individuals.

Mr Wood also listed some considerations to bear in mind in the face of Brexit:

  • Needing to maintain the quality of enforcement by prepping lawyers and judges
  • Have more factual input available
  • Cost - no cost penalty leads to more trolls but having high cost deters taking any action
  • Injunctions - an important part of relief that is wanted in the UK, but in the US, they monetary relief is substituted for injunctive relief
  • The UK’s framework is moving towards greater unity and enforcement, but not necessarily quick enough

Tech transfer and licensing considerations

Tony Raven from Cambridge Enterprise discussed the challenges that tech transfer face. Technology is long term and disruptive yet the aim of tech transfer is to make research public as soon as they can and make students successful.

Although the UK hs one of the highest rates of successful tech production from universities and are highly active in IP, when it comes to spin outs and licensing, most of it is done in other jurisdictions. Usually, researchers who find it difficult to license their technology form spinouts. Universities need to do more to encourage researchers to form companies in the UK and increase the innovation rates further.

Elizabeth Bain of the Science and Technology Facilities Council adds that when licensees are found, they are unlikely to invest their own money so collaboration or some form of agreement is important. Inventors also need to consider other forms of protection such as copyrights and design rights.

Challenges and opportunities for the UK

Kevin Mooney, partner at Simmons & Simmons and chairman for the Drafting Committee of the Rules of Procedure for the UPC, explained that for the UPC to be ratified, it must be done while the UK remains part of the EU. It is expected that this will be done before Article 50 is triggered and therefore aligning the UK with the UPC. Provisions are expected to be put in place to compensate for Brexit and allow the UK’s continued alignment.

Germany must ratify again as they did not complete the process correctly. At present, we have 11 ratifications and we need two more to take it to 13. However, at present, 11 countries of the 13 needed have ratified although Germany must ratify again. It is likely that the provisional UPC will start in May and the court will come into effect in December.

Margot Fröhlinger, principle director of Patent Law and Multilateral Affairs at the EPO clarified some of these issues:

“Italy will ratify this week and will sign the provisional protocol. Lithuania will ratify by 1st of July and Latvia have launched a bill in their national parliament and will ratify before the summer break.” Margot Fröhlinger, Principle Director at EPO

Ms Fröhlinger confirmed that the UPC is expected to come into effect in December and 17 or 18 counties will ratify although the UPC can continue even if some countries have not ratified yet and they can join later.

Global protection

There are companies operating globally who need patent protection worldwide. Divergence in patent laws makes this very costly and there have been four attempts to compensate for this:

In Europe, there will be a major boost to harmonise with the Unified Patent (UP) which will offer a broader scope of protection and lower cost and complexities. For the first time, it will offer uniform protection which means there will be uniform post grant administration.

According to Ms Fröhlinger, it is clear that, legally, a long-term participation in the UPC is possible although  necessary legal arrangements need to be made to ensure a smooth transition. There is a lot of legal uncertainty if the UK wants to leave the UPC after Brexit and there has been little information as to whether this may be the case.

In such a situation, the UK and member states would have to make legal arrangements to not affect pending cases to prevent any involuntary loss of protection in the UK. Ms Fröhlinger ended her speech stating that for the time being, people should focus on the enablement of the UPC to come into operation and make it a success.

Mr Mooney meanwhile explained that other non-EU members in Europe are unlikely to join now. Although the UK will no longer be a member of the EU,  they will ratify as a member state of the EU.

Conclusion

What we can gather from this seminar is the consensus that the UPC will be a positive change to the patent system, making filing patents easier and more cost efficient.

However, there is uncertainty due to a completely new and unknown patent system, untested and with no previous case law so no precedence set. This will be increasingly difficult for patent lawyers and judges.

We can hope a variety of judges from technical backgrounds will be chosen to arbitrate so throughout any judgements, the judges will have sufficient grounding to appreciate the challenges of skilled workers in a variety of fields.

With any new system there is uncertainty but the UPC is am attempt to harmonise laws across different nations to provide a patent system that can be relied upon without conflicting decisions. It is a start of a new era for patents and this robust structure will drive innovation across the UK and Europe, regardless of Brexit.

Summary:

  • UPC agreement will be ratified by the UK before Brexit
  • UPC will come into effect in December 2017
  • Current system with IPEC is good for SMEs
  • The UK Patent Box will promote innovation in the UK

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