The EU's own in-house policy department for citizens' rights and constitutional affairs said that the outcome would only be possible, however, with "innovative legal solutions".
The policy unit said the UK government would have to accept patent law in the UK being shaped by the EU's highest court if it wants the UK to participate in the UPC system after Brexit.
Patent law expert Jules Fabre of Pinsent Masons, the law firm behind Out-Law, said: "Brexit has cast doubt on the UK's involvement in the UPC system for some time, so confirmation that the EU is willing to investigate legal routes available to secure the UK's participation as a non-EU member state will be welcomed, although this remains a controversial issue. The prerequisite and still open question, in any event, is whether there is the political will on both sides to enable the UK to participate in the UPC after it leaves the EU. While the UK's participation is widely viewed as enhancing a UPC system, a recent poll from Managing IP/Patent Strategy suggests that a majority of businesses would still support a UPC system that the UK is not a part of."
The policy department for citizens' rights and constitutional affairs set out its views in a report prepared for the European Parliament's legal affairs committee. It said: "The question, the UK has to ask itself is therefore: can we participate in a UPC which relies on and refers to the CJEU? One of the main reasons, if not the primordial reason for Brexit was that the UK wanted to take back control of laws and bring an end to the jurisdiction of the CJEU in Britain and that those laws will be interpreted by judges not in Luxembourg."
The new UPC system, years in the planning but yet to become operational, foresees a Europe-wide court system to ensure that businesses have a streamlined process for litigating European patents through a single court – including new unitary patents. The UPC is to include central, regional and local divisional courts across the participating member states. The chemistry, pharmaceuticals and life sciences cluster of the central divisions of the court is due to be seated in London, and would most likely need to be relocated should the UPC goes forward without the UK.
An international agreement, the UPC Agreement (UPCA), was adopted in 2013 by 24 of the then 27 EU member states, and Italy subsequently joined in 2015. Spain, Poland and Croatia – which accessed to the EU after the UPC Agreement was signed – do not currently participate.
For the new UPC system to take effect, at least 13 EU countries, including the three with the most European patents in effect in 2012 – Germany, France and the UK, must pass national legislation to ratify the UPC Agreement. France and the UK have already completed this process along with 14 other countries, but Germany's ratification process has been held up by an ongoing legal challenge.
As currently worded, the UPCA envisages participation in the UPC system by EU member states only and so there is uncertainty as to whether the UK will be able to participate in the new patent framework after Brexit. The UK is scheduled to exit the EU on 31 January 2020 at the latest.
"There is not much time left for the German constitutional challenge to be resolved one way or another – and should the challenge be dismissed, for Germany to complete the ratification formalities – before 31 January 2020, and so it follows that chances that the provisional application period of the UPCA would start while the UK is still in the EU, which would make the UK’s continuing participation upon exiting EU membership much easier, are slim" Fabre said.
There are aspects of the unitary patent regime that need to be factored in too when assessing the UK's participation in the UPC system, Fabre said.
"The EU's unitary patent regulations, for example, are set out in EU law and unlike the UPCA are not an international agreement," Fabre said. "It is generally accepted that a separate agreement between the EU and the UK would be required to extend the unitary patent regulations to the UK. However, this seems less controversial from a legal standpoint, and is not a requirement for the UK to participate in the UPC anyway."
Last year the UK government revealed that it had reached agreement with EU counterparts which would enable the UK to remain as a member of the UPC system during any Brexit implementation period. However, it is unclear whether that agreement continues to stand in light of the change in government and circumstances since, and in any event the agreement would not apply should the UK leave the EU without a deal. It is also unclear what would happen at the end of the implementation period, and in particular whether the UK would be able to continue as a member of the UPC system.
The EU's policy department for citizens' rights and constitutional affairs said: "It seems not per se legally impossible that the UK can stay within the UPCA, even when not an EU member state."
"All EU actors are of the opinion that the CJEU would have the final say about interpretation of existing EU law, that the primacy of EU law has to be respected and that the CJEU is the ultimate guardian of EU intellectual property law," the policy department said in its report. "On the other hand, the jurisprudence of the CJEU is not expressly excluding the possibility to allow a non-EU member state forming part of the UPCA."
"The UPC shall be financed by its own financial revenues and during a transitional period by contributions from the contracting member states. As any UPCA contracting state has the right to nominate judges, any British judge would decide about the interpretation and application of EU (patent) law. It would be only logical that the UK authorities accept the primacy of EU law when it comes to judgments which have been issued by UPC sections with the participation of UK judges, especially from the London specialised section," it said.