Webinar Recap: Brexit, The Impact on Your International Patent Filing Strategy

Webinar Recap: Brexit, The Impact on Your International Patent Filing Strategy

RWS inovia and Managing IP Magazine recently presented a webinar about Brexit, the possible effect the fate of the Unitary Patent (UP) in 2017 and future filing strategies throughout Europe. Speakers included Reinhard Ottway, CEO of RWS Group, Gary Smith, Former Director of the PCT at WIPO, Justin Simpson, Founder of inovia, and was moderated by James Nurton, Managing IP Magazine.

Justin Simpson started things off with an overview of the European patenting system and issues applicants might run into when filing in Europe. Problems included the high costs associated with validating and the escalating costs of enforcing throughout a patent’s lifespan. Complicating matters further, courts are not bound by rulings in other filing jurisdictions, contributing to conflicting individual country decisions.

The solution to the current state of patenting in Europe was the UP – a treaty giving a single right to all European countries and a single court with jurisdiction over all EU nations. It was agreed in 2013 and required 13 countries to ratify (including the UK, France and Germany), eventually coming into force across 26 EU countries. With the UK dropping out, this now leaves the question of what other “Big Three Countries” will step in to ratify the treaty in their absence.

Gary Smith, Former Director of the PCT at WIPO, discussed the impact of Brexit on the PCT. For UK residents and nationals, there will be no immediate impact on the filing of international applications since the UK will remain a European Patent Organization member state. The UK will continue to use the EPO as an international search authority and preliminary examination and the UK will still not be allowed to be designated an International Search Authority and International Preliminary Examining Authority.

Reinhard Ottway, CEO of RWS Group, concluded the discussion of when and if the UP might launch and who will use it (if it does). Before Brexit, ratification by Germany, France, and UK as well as 10 other EU members was considered a formality and it was widely agreed upon by most that the UP was expected to come into force in 2017.

The Brexit decision came along, throwing a wrench in this. On June 23, 2016, the British electorate voted in a referendum that Britain should leave the EU. For now, the UK remains and the process to exit the EU is expected to begin in March of 2017 and could take up to two years (possibly longer for them to fully exit). Until then, the UK remains an EU member state.

The future of the UP is unknown because there are so many uncertainties around the agreement. As Mr. Ottway stated, ” it really depends on what tinted glasses you have on – an optimistic or pessimistic outlook.”

Optimistic scenarios: 

  • 2017 still possible: The UK ratifies whilst it is still a member of the EU to help get this off the ground.
  • UK participation still possible: During the two year exit negotiation period all EU members change the UP agreement such that non-EU members can become/remain members of the UP and UPC.
  • Quick replacement of UK: The remaining members amend the current agreement to replace the UK as one of the big three with Italy and proceed without the UK even before or shortly after it exits the EU.

Pessimistic scenarios: 

  • Long delays: The UK does not ratify and everything is held up until it officially leaves the EU. A third country, Italy, replaces the UK and the process is delayed by up to six years. The London court has to be replaced, the fee allocation system has to be renegotiated.
  • Implementation derailed: In view of all the uncertainties, politically, legally and procedurally, the UP and UPC as currently intended are effectively derailed and it will take many years to kick-start this process again to get to where we were prior to the referendum.

Other factors contributing to if and when the UP will come to fruition include political will by the UK Government to prioritize ratification. This seems unlikely in the current climate with talks of a “Hard Brexit” (i.e. no accession to the European Economic Area (EEA) if Freedom of Movement is not curtailed). Others are debating the legal framework as there are differing opinions whether UP membership of a non-EU country is legally possible. Lastly, there is currently no foreseeable timeline for procedural steps to resolve the UK dilemma and move ahead with the implementation of the UP and UPC with or without the UK.

If and when the UP is ratified, is it worth it for companies and firms to file internationally this way? As Mr. Ottway explained, it really depends. For certain industries (automotive), it is not uncommon to seek protection in only four or fewer than four countries in Europe. Here, the UP route is not necessarily financially viable, especially if it does not cover the UK. About 50.6 % of all granted European patents are currently validated only in 3 EU countries or less (including the UK), 70.5 % in four EU countries or less. Portfolio management through abandoning patents in selected countries is not possible.

While the patent industry is clearly keen to see the UP and UPC, everyone RWS inovia has spoken with highly values the fact that the old system is available and there was a long UPC opt-out period, giving applicants the option of holding back. The success of this new system depends on how widely and how quickly it is taken up by applicants. While the pro-UP sentiment was growing pre-Brexit vote, nobody can be sure how cost and risk will influence its success. Although, it is certain  that a UP which does not cover the UK will be less attractive.

While we wait to see the fate of the UP, it’s important to keep all options open. Filing via EP and PCT routes will ensure that the UP is available for these applications if and when it does come in. The national route to Great Britain is also available via PCT national stage entry without going EP regional. Also, for applicants which only require protection in up to four countries in Europe, it may be worth considering national filings. RWS inovia has seen this trend with several of our automotive clients. Even if the UP comes to fruition it will not be a real alternative in terms of costs.

Strategic decisions are hard to make with so many uncertainties. At the moment, there is more that we don’t know compared to what we do. Click here to learn more.

What we know

  • There will be a Brexit and the UK Government will invoke Article 50 of the Lisbon Treaty by the end of March 2017.

What we don’t know

  • Which shape will Brexit take (hard or soft, inside or outside the EEA)?
  • Will there be a UP/UPC?
  • If there is a UP, when will it come?
  • When the UP does come, will the UK be in or out?

Click here to download the webinar slides and listen to the recording

If you have any questions about this webinar, or want to speak to someone about your filing options, contact us here. Also, feel free to leave comments about your views on the UP.