UK patent litigation in the light of Brexit
20 October 2016
In the months since the UK Referendum on membership of the EU there has been much discussion about the impact on IP rights in the UK. Part of this discussion concerns patent litigation, bearing in mind that prior to the Referendum the UK had been a major driver of the UPC/UP project. So what does the future look like for patent litigation in the UK?
Can the UK continue to participate in the UPC?
An immediate response to the Referendum result was to examine whether the UK can stay in the UPC regardless of Brexit. This derives from the fact that the UPC Agreement is not an EU Treaty, even though as currently drafted it is only open to signature by EU Member States. At the same time, there were calls for the UK to ratify the UPC Agreement in any event, to enable the long awaited system to begin, as planned, early in 2017.
As the realisation sinks in that the legal and political position is very complicated, ideas of early UK ratification have faded. Industry organisations such as IPFed have expressed a clear view to the UK Government that without a guarantee of UK participation in the UPC post Brexit, the UK should not ratify the UPC Agreement. Such a guarantee requires legal certainty, which is simply not the case at the moment. It is likely to take some considerable time to assess that, leaving the future of the UPC, and its form, unclear for the time being.
UK patent litigation with or without the UPC
With the UPC at least delayed, and participation by the UK in doubt, focus has shifted to UK national patent litigation. As the second largest economy in the EU and with a highly regarded legal system (including specialist courts), the UK has always been an important forum for patent litigation. This is particularly true for larger value cases in both the pharma and tech sectors, which typically take place in the context of a wider dispute across a number of jurisdictions in Europe and beyond. The UK courts have a well-deserved reputation for thorough and detailed analysis in patent cases, and their decisions are respected and observed outside the UK.
This will not change with Brexit, whether the UPC goes ahead or not, with or without the UK. Indeed, if the UPC goes ahead without the UK, national UK litigation may be necessary to enforce rights in a major European market, or as a strategic step in a multinational dispute involving the UPC. In that sense, the position is essentially the same as it is now where there may be parallel national litigation.
The importance of keeping costs under control
It is also true however that the UK is perceived to be an expensive jurisdiction, especially when compared to the civil law jurisdictions on the European continent. Historically this perception has been largely correct, at least as regards the 'senior' Patents Court in London. There are various reasons why the UK has been expensive but mostly it derives from the different systems involved. The UK's common law, adversarial system, tends to lead to labour intensive litigation, although arguably with a more thorough analysis and assessment compared to a civil law, inquisitorial systems.
However, this perception is already out of date. For a number of years the UK courts have been striving to reduce costs. There have been streamlined procedures and active case management in the Patents Court for several years, which have closed the gap costs-wise with continental litigation in many cases. Increased competition in the legal marketplace, with a greater number and diversity of firms conducting litigation, has also helped to drive down costs. That trend will continue.
In addition, since October 2015 the Patents Court has been participating in shorter and flexible trials schemes. These are aimed at cases with short trial estimates or which are suitable for a flexible approach, where the expensive parts of UK litigation – disclosure (discovery), oral evidence and lengthy trials – are restricted.
The growing and renewed importance of the Intellectual Property Enterprise Court
Perhaps the most significant development in fact happened as long ago as 1990 when the Intellectual Property Enterprise Court (IPEC) was created (known then as the Patents County Court). The IPEC was intended to provide a forum for smaller entities, and therefore had to be inexpensive. After a disappointing beginning, it has become very successful, especially following major reforms in 2010. It is now efficient, effective and popular. Interestingly, the UPC might have negatively affected the IPEC but with focus shifting back to national UK procedures, the IPEC is firmly back in the spotlight.
The procedure in the IPEC is very streamlined, with most of the case in writing and very short trials, making it much less expensive than the Patents Court. Crucially, costs recovery is limited to a maximum of £50k, which significantly reduces the risks for claimants. The principal drawback is a damages limit of £500k but if an injunction is the desired remedy, which it often is, these are available from the IPEC.
The UK will remain an important market regardless of leaving the EU. With the possibility that the UK may not participate in the UPC should it go ahead, it is reassuring that national UK patent litigation will remain high quality as well as offer increasing flexibility and cost efficiency.