As with the medical device regulatory system, intellectual property laws are harmonised to a large extent across Europe. The UK leaving the EU in 2019 will throw a complex area currently in a state of flux into even greater confusion.
“Regardless of Brexit we’ve got major changes coming to the patent landscape in Europe, and these are particularly interesting for tech and medtech companies,” says Victoria Bentley, legal director at Pinsent Masons. Medtech companies have been gearing up for the establishment of a Europe-wide unitary patent and a single patent court. These initiatives are the result of prolonged and intricate negotiation – but the result of the Brexit referendum throws them into doubt.
Currently companies have a choice of ways to protect their inventions in Europe. They can have national patents, valid for a single country, but these are generally only worth getting if a company does a great deal of its business in a single state. Alternatively they can obtain a single European patent, which effectively is a bundle of national rights all gathered together, Ms Bentley explains.
“Even though it’s a European patent you still have to treat it as a separate national patent for the purposes of enforcement and litigation.”
This will change with the planned unitary patent, along with a new Unified Patent Court (UPC) to harmonise patent registration and litigation across the EU. The patent would be enforceable in all the member states in a single action – if it is upheld in Sweden it is upheld in France. The downside is it is vulnerable to revocation in a single action as well.
The unitary patent may have been of particular benefit for smaller medtechs, Ms Bentley says, for whom the costs of patent renewals, and of litigation in separate countries necessary under the old system, would be a major consideration.
Negotiations towards this new patent and the establishment of the UPC have taken decades. The new system was expected to come into effect at the start of next year, January 2017, but following the UK’s decision to leave the EU it is under threat.
“Negotiations were in their final stages, but it still needed ratification by several member states to trigger the implementation of the system,” Ms Bentley says. “That had to include the three largest – Germany, France and the UK. But only member states of the EU are able to participate.”
Until the UK is no longer an EU member state, or unless the agreement on these provisions is amended, the UK’s ratification is mandatory. “So we’re in a situation where the system can’t go ahead with the UK and it can’t go ahead without it,” Ms Bentley says.
Worse for medtech
In actuality the new system probably will go ahead, but launch will be delayed. Once the UK has left the EU Italy will replace it as the third country whose ratification is mandatory. But in this case the consideration, particularly for smaller medtechs, shifts: is it worth getting a unitary patent when it no longer includes the UK, the third largest device market in Europe? At the very least these companies will face the additional cost of obtaining a national UK patent in addition to an EU-wide one.
And that calculation will be different for medtechs than it will be for biotech companies, Ms Bentley says, adding that device companies are perceived as being more willing than biopharma groups to have their patents within the unitary system.
“Pharmaceutical and life science companies will see it as more of a risk to have a ‘crown jewel’ patent for a blockbuster drug within this system, because the risk of revocation in all 27 states through a single action is quite high,” she says.
Medtech companies, however, often have thousands of patents that cover different aspects of the technology involved in the device. A surgical robot or a pacemaker or even a relatively simple diagnostic test incorporates many different patentable inventions.
And Brexit’s effects on the Unified Patent Court will be more meaningful for the life science sector than other businesses.
The new UPC is to have three seats, in Paris, Munich and London. London will oversee life science patents, Ms Bentley explains, so the pre-Brexit plan was that cases referring to life science patents would be heard in London. In theory the UK could keep the seat; the new rules specify that the seats will be in Paris, Munich and London, rather than – as with ratification – the three largest participating states.
“There could be an argument that London should keep this seat due to its history of expertise in life sciences,” Ms Bentley says. “But that creates problems, because the UPC won’t have UK judges if the UK’s not participating. It’s hard to see that the other member states would support London in keeping that seat if the UK’s not part of that system.”
As far as intellectual property protection is concerned, the UK government’s decision to trigger the formal exit process by the end of March could barely have happened at a worse time. Just as far-reaching, long-planned changes were about to take force Brexit has swept everything away. And it appears that compared with many other sectors, medtech groups, particularly the smaller ones, will be unusually badly affected.
This is the second in a series of articles on the likely effects of Brexit on the medical device sector. The first covered regulation, and can be read here.