The UK government’s draft EU Withdrawal Bill (the “Brexit Bill“) aims to incorporate EU directives and regulations into UK domestic law in their current form immediately following Brexit (“Retained EU Law“).  This article considers the impact the Brexit Bill will have on some key patent issues.

The Brexit Bill and EU Decisions

In addition to transposing EU legislation into domestic law, the Brexit Bill also provides that pre-Brexit case law of the European Court of First Instance and the Court of Justice of the EU (CJEU)(“EU Decisions“) will remain applicable to interpretation of Retained EU Law.  This is, however, subject to the important caveat that the UK Supreme Court will not be bound to follow such EU Decisions.  Therefore, in time, there is scope for interpretation of Retained EU Law to diverge from the EU interpretation (although UK courts will retain discretion to have regard to post-Brexit EU Decisions).  It is important to note that, while the Brexit Bill purports to maintain the status quo in relation to the application of EU law in the UK, it cannot require EU member states to continue to recognise acts carried out in the UK under Retained EU Law.

The Brexit Bill & Patents

The Brexit Bill will have a limited impact on patent issues because patent law is mostly laid down outside the framework of the EU, either by the European Patent Convention (EPC)(an international treaty) or by national law.

However, there are a number of niche areas of patent law that are currently governed by EU law, and which would consequently be impacted by the Brexit Bill.

Supplementary protection certificates (SPCs): SPCs compensate for regulatory delays to market entry and subsequent patent exploitation, and exist pursuant to four EU regulations (469/2009, 1610/96, 1901/2006, and 1902/2006).

• The Brexit bill means that SPCs will continue to subsist, be recognised, and be granted in the UK following Brexit in the same way that they currently are.  This means that (pending any subsequent change to the law in the UK) a first marketing authorisation in an EEA state will remain a basis for obtaining and calculating the duration of an SPC. However, it seems unlikely that remaining EU member states will recognise UK marketing authorisations as providing a basis for the calculation of the duration of an SPC within the EEA.
• There has been a plethora of UK references to the CJEU in recent years seeking clarity on interpretation of the SPC regulations.  However, an element of the UK judiciary has been critical of the consequent CJEU judgments and a perceived lack of clarity.  The Brexit bill will open up the possibility for the UK’s lower courts to instead seek that clarity from the UK Supreme Court, which will now become the final arbiter of interpretation of Retained EU law in place of the CJEU, and which (unlike the lower courts and Court of Appeal) will not be bound to follow previous CJEU judgments.

Biotechnology inventions: The Biotech Directive 98/44/EC governs the extent to which biotech inventions are and are not patentable based on ethical grounds. The Biotech Directive has already been implemented into UK law through the EPC and in the Patents Act 1977, but the Brexit bill includes express provision retaining the applicability in the UK of such EU-derived domestic legislation.  Pre-Brexit CJEU judgments interpreting the Biotech Directive (such as the 2011 Brüstle judgment C-34/10 on the patentability of stem cells, and 2014 International Stem Cell judgment C-364/13 on the patentability of unfertilised human ova) will continue to be applicable for the time being.  However, the UK will have the ability to diverge from the EU approach, either by amending or replacing the Biotech Directive, of if an appeal to the Supreme Court results in UK case law, taking a new direction with respect to biotech inventions.

Unified Patent Court (UPC) & Unitary Patent:

• Although the proposed UPC is only open to EU member states, it is not established by EU law, but rather by an international agreement, which is not within the scope of the Brexit bill.  There is, however, uncertainty as to whether the UK will be able to participate in the UPC post-Brexit because, to the extent that courts within the UPC will determine questions of EU law relating to patents, the EU system required that CJEU must be the ultimate arbiter of that EU law.  However, the UK government has made it clear that following Brexit the CJEU will no longer have jurisdiction in the UK (in the same way that the CJEU has no jurisdiction over any other non-EEA countries).
• In contrast, the unitary patent (UP) is established pursuant to EU regulation 1257/2012, which is in force, but is stated not to apply until the UPC agreement enters into force.  The Brexit bill makes it clear that an EU regulation will only become Retained EU law if it is both in force and applies immediately before Brexit.  Therefore, the UP regulation will only extend to the UK if the UPC agreement enters into force before Brexit takes place.
• Entry into force of the UPC agreement is subject to ratification by 13 participating EU states, including the UK, Germany and France.  To date twelve EU states have ratified, but the UK and Germany are still yet to ratify.  German ratification has been delayed by a recent constitutional challenge, while the UK is currently in the process of passing secondary legislation that will allow it to proceed with ratification.

However, the key question is what benefit would there be to the Unitary Patent regulation being incorporated into UK law? The whole concept of the unitary patent is that it is a single patent right that covers all participating EU states.  Regardless of the effect of the Brexit Bill, once the UK leaves the EU, there is no certainty that remaining EU states will continue to (or be able to) recognise a unitary patent as extending to provide patent protection for the UK.

Exhaustion of patent rights:

• The existing EU doctrine of exhaustion was established by CJEU case law.  While the Brexit Bill retains application of EU Decisions to interpret retained EU law, the principle of exhaustion is derived from provisions of the Treaty of the Functioning of the EU which will not be retained as part of domestic UK law following Brexit.  This means that the Brexit Bill would appear not to have the effect of retaining the current EU system of exhaustion of patent rights.
• UK domestic law does not have a doctrine of exhaustion per se, but rather recognises that sale of a patented item by a patentee includes an implied licence for the buyer to dispose of the patented item as it sees fit.  Although the exhaustion and implied licence doctrines will often provide the same result, they are not the same, and patentees will need to be conscious of how an implied licence analysis might change their ability to prevent parallel imports of patented goods.
• An important caveat to this position is that if the UK somehow manages to remain within the UPC system post-Brexit, the doctrine of EU exhaustion may be retained in the UK ‘through the back door’ because the UPC Agreement expressly provides for EU exhaustion within respect to European patents and unitary patents.

What happens next?

The Brexit Bill has now reached the committee stage in the House of Commons, where it will face significant scrutiny from MPs. However, the key concern for MPs appears to be the breadth of the powers the Brexit Bill provides to allow the government to deal with deficiencies in the post-Brexit application of Retained EU Law without full parliamentary scrutiny.  It seems unlikely that the scrutiny will focus on the detailed provisions insofar as they impact on patent issues, and we anticipate that the effect of the Brexit Bill will not change significantly in that respect.