Is London about to lose the European Patent Court due to Brexit relocation?

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Last year London already lost the European Medicines Agency to Amsterdam and the European Banking Authority to Paris, in one of the first concrete signs of Brexit as the UK prepares to leave the European Union.

The Dutch capital beat Milan in the lucky dip after three rounds, while Paris won the race to take the European Banking Authority, beating Dublin in the final, after the favourite Frankfurt was knocked out in the second round.

However, another success may be around the corner for the Italian industrial capital. The Unified Patent Court is about to relocate as well.

What is the European Unified Patent Court?

The Patent court is part of the long-awaited unitary European Patent System to protect new inventions, which started in 2017.

The system aims to cut red tape by automatically validating a single patent in all countries that have signed up. This is a huge advantage for businesses that in the past had to spend money applying for separate patents in different territories.

As part of the plans, a Unified Patent Court in Paris deals with legal disputes about new inventions while another in Munich deals with engineering issues.

A third court division opened in Aldgate Tower, London, in 2018 dedicated to disputes in pharmaceuticals and life sciences, a sector in which the UK is seen as a world leader.

However, the Brexit vote and the uncertain negotiations have cast doubt on whether the UK can host the court in the future, or even sign up to the unitary principal after it leaves the EU.

The system involves accepting EU law and rulings from the European Court of Justice in Luxembourg which is unpalatable for Brexit-supporting politicians.

Milan questioned the decision to establish the court in London already in 2017 when L’Ordine dei Consulenti in Proprietà Industriale (the professional body) published a letter from its President to Italy’s Prime Minister and others urging them to bid for Milan to replace London as the location of a section of the central division of the UPC.

The letter argued that the section of the central division should be in Italy rather than in London because Italy is the fourth EU state (after France, Germany and the UK) in which the highest number of European patents had effect. The reasoning is that it should, therefore, under the UPC Agreement, by default replace the UK as one of the three mandatory ratifying countries. 

Another reason put forward is the fact that Italy is one of the main countries in the EU applying for not only European patents but also trade-marks and designs, yet it currently does not host any EU IP institutions. Regarding the choice of Milan as the particular location in Italy, the letter explained that most of Italy’s IP applications are from companies or firms located in the Lombardy region, and that a prospective new Unified Patent Court would bring benefits such as employment growth and an enhanced reputation in innovation and creativity.

However, despite the Brexit referendum, the agreement was rectified and the Unified Court was established in London in early 2018 – even though it is not yet operating. In the past Britain stressed many times that its intentions are to remain part of the EU patent framework and in May 2018 the British government confirmed that the UK would join the new system.

What is happening now?

Things may change after the summer, as a new British Prime Minister will be announced and the Brexit negotiations will start again. What will happen in the case of a ‘no deal’?

Well, the court will have to relocate pretty quickly and this time Milan is determined to win the battle.

A meeting was held at the end of June at the Ministry of Foreign Affairs and International Cooperation on the Unified Patent Court (UPC), which was established by the 25 member states of the European Union to act as the judicial body with exclusive competence in respect of disputes involving European patents. 

The Minister of Foreign Affairs and International Cooperation, Enzo Moavero Milanesi, the President of the Lombardy Region, Attilio Fontana, the Mayor of Milan, Giuseppe Sala and the President of the Milan Court of Appeal, Marina Tavassi attended the event. 

The meeting was an opportunity to exchange views on the agreement establishing the Unified Patent Court, and in particular the location of the Court's Central Division which originally was assigned to London but which may be now transferred due to Brexit. The Municipality of Milan and the Lombardy Region confirmed their interest in hosting that section of the UPC and therefore announced that they would submit the formal candidacy of the City of Milan to the government.

Is it good or bad news for start-ups and small businesses?

Small and medium-sized enterprises are a pillar of the European economy, and are key to ensuring economic growth, innovation and job creation across Europe. One in four applications received by the EPO (European Patent Office) comes from an individual or small and medium-sized enterprise.

Having a Unified European Court to deal with patents across the members state is a huge step forward that will allow organisations to register a patent just once making it valid across the European Union. 

According to a recent study, while patents already have a positive effect on trade in Europe, their impact is currently hindered by the lack of truly barrier-free EU-wide patent protection. Today companies are still faced with a fragmented system following the grant of a patent by the EPO. These include national validation and maintenance fees payable in each country in which protection is desired. In addition, patents are subject to uneven levels of national protection and to the risk of parallel litigation, with the potential for different outcomes in different countries.

The Unitary Patent will address these shortcomings. By cutting overall costs dramatically, it will facilitate access to the European technology market, particularly for SMEs, universities and research centres.

In conclusion, a Unified Court for Patent is a much-needed innovation that will bring the possibility to boost business and creativity across Europe. Whether it will be London or Milan to win the battle for where the court should sit after Brexit, it is still too early to say.

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