On 22 August 2017 the UK Government published its position paper on judicial cooperation between the UK and the EU after Brexit. IP Partner Tom Lingard and IP PSL Astrid Arnold discuss the issues.
Where commercial arrangements operate across borders it is important for businesses to know which country’s laws will apply to define the parties’ rights and obligations and which country’s courts will have jurisdiction to decide the matter if disputes arise. Equally important is the assurance that a judgment obtained in one country can be enforced in another where the defendant has its assets. Over the six decades since its inception the EU has built up a comprehensive framework for cross-border judicial cooperation between the Member States. A question that arises on Brexit is to what extent the UK will be able to participate in these arrangements after it leaves the EU and what might replace them. On 22 August 2017 the UK Government published its position paper on judicial cooperation between the UK and the EU post Brexit addressing these issues.
The Rome I and Rome II Regulations are central elements in the EU framework: they set out rules about which country’s laws apply to contracts and to non-contractual obligations (such as tort) respectively. Having consistent rules about this across Europe increases legal certainty (and can also significantly reduce legal bills!). The UK Government indicates that it intends to incorporate Rome I and Rome II into UK domestic law post Brexit so that UK courts should continue to apply the same rules on the applicable law as EU courts. A key aspect of the Rome Regulations is that the parties are able to choose the law which should apply in many situations.
Jurisdiction and enforcement
The principal EU instrument on cross-border jurisdiction is the Brussels I (Recast) Regulation, which sets out rules about which courts have jurisdiction; again the parties are able to choose the jurisdiction in many situations, and this choice must generally be respected by other EU courts. Importantly, this regulation also provides for the enforcement of judgments in other Member States. Even if it wished to do so, the UK Government could not unilaterally incorporate the Brussels arrangements into UK domestic law after Brexit as it intends to do with Rome, because the jurisdiction arrangements require reciprocity from EU Member States. However, it states that it will seek an agreement with the EU which “reflects closely the substantive principles of cooperation under the current EU framework”. Like any international agreement, such an arrangement would require a dispute resolution mechanism to resolve disputes between the participating countries about how its provisions should be interpreted. The position paper is not specific about what this should be or what (if any) the role of the Court of Justice of the European Union (CJEU) might be in this regard, stating merely that “where appropriate, the UK and the EU will need to ensure future civil judicial cooperation takes into account regional legal arrangements, including the fact that the CJEU will remain the ultimate arbiter of EU law within the EU”.
The position paper also confirms that the UK will seek continued participation in the Lugano Convention on jurisdiction and enforcement of judgments in civil and commercial matters, which is the basis for the UK’s civil judicial cooperation with Norway, Iceland and Switzerland. Currently the UK participates in this as a member of the EU.
The implications for intellectual property
Both intellectual property licensing transactions and litigation often have a cross-border dimension as it would be rare nowadays for patents, trade marks or other IP to be exploited exclusively in one country. Intellectual property owners and licensees are therefore likely to welcome the Government’s statement that it wishes to achieve an agreement on jurisdiction and enforcement which reflects the current arrangements with the EU because of the business certainty this would offer. As the Government acknowledges, although existing international conventions provide some relevant rules, they would not provide the “more sophisticated and effective interaction” given by the current EU arrangements.
Particular IP issues
So far as IP rights are concerned the position under Brussels is that a UK court may have jurisdiction to decide on infringement of a non-UK right, for example a French patent or trade mark, but it does not have jurisdiction to decide on the validity of the registered right. Under EU case law only the courts of the country of registration (France in this example) can do this, and this also reflects the traditional approach of the English courts. A recent, high-profile case in which, under Brussels, the English High Court decided on infringement of the UK, French, Italian and Spanish designations of a European patent was Actavis UK Limited v Eli Lilly & Co (12 February 2016) which related to Lilly’s cancer treatment, pemetrexed. In so doing the English court applied UK, French, Italian and Spanish law on infringement enabling it to provide an answer in multiple countries in a single action.
However, in many cases, the court is not able to decide on infringement without also deciding on validity as the two issues are intertwined. In such cases, the legal certainty offered by the EU regime is helpful, but there will be many instances in which a multiplicity of actions in different countries is required to resolve what, commercially, is basically a single dispute. It was hoped that this problem would be alleviated to some extent by the proposed new EU Unified Patent Court (UPC) project which would enable a single patent judgment to be given in respect of more than one participating country both in terms of validity and infringement as well as providing for cross-border remedies. The status of this project is currently unclear as a result of a constitutional challenge in Germany. On the assumption that it does go ahead, however, opinions are divided about whether it will be possible for the UK to participate in it after Brexit. What is clear, though, is that a jurisdiction arrangement along the lines of the current Brussels (Recast) Regulation would be a condition of the UK’s participation in the UPC. From the point of view of the UPC, therefore, the UK Government’s position paper is relatively good news.
It should be noted that for trade marks and designs, the unitary EU Trade Marks and Community Design Rights have until now offered the ability to obtain a single judgment and cross-border remedies in certain situations. This is, however, expected to fall away after Brexit and this is not affected by the position paper.
All eyes are now on the UK Government’s negotiations with the EU to see if a solution acceptable to both parties can be found. A key question may be what role the CJEU should play. So far the EU’s position papers on this subject have focused on the mechanism for withdrawal rather than on a future framework for cooperation, so the field appears to be open.