Hatching Europe's Unified Patent Court: who will pay for the chickens and eggs?

Imminent patent reform "delayed".  Only three months after (most of) Europe's finest attached their signatures to the Unified Patent Court (UPC) proposal, the official view on the likely start date has slipped by a year from early 2014 to early 2015, says Alan Johnson, IP partner at Bristows, whose own best-guess "not before" estimate has itself been put back a year to early 2016. According to Alan:

Unlike a cake, ratification
can't be delivered on a plate

“First, the timetable for UK ratification is now clearer, it being recalled that the UK is one of the three mandatory countries who must ratify for the UPC (and unitary patents) to come into existence. The new Intellectual Property Bill [click here for the Bill, here for the Intellectual Property Office's Bill page] contains a new section for the Patents Act which aims at starting the ratification process. The plan is that this section will enable the Secretary of State to take a power to enable the UK law to be made UPC-compliant by the passage of a Statutory Instrument (SI) implementing further (as yet undrafted) changes to the Patents Act. Then once the SI is approved by Parliament, the Foreign Office will seek separate Parliamentary approval for the UPC Treaty itself via a “command paper”. It is not likely that the SI will be approved until summer 2014, and the command paper will not be presented until April or May 2015. If one then adds four months, as required by the UPC agreement, this means an earliest start date of autumn 2015, even allowing for no slippage in current planning, and even if all other ratifications have been completed by then. 

What‘s more, the April/May 2015 date for laying the command paper before Parliament is suspiciously adjacent to the time the next General Election is anticipated [the previous election being held in May 2010, both parties to the ruling coalition promising that Parliament would run for a full five-year term], and raises the question as to whether there is a connection here: will ratification in fact be stood over until the next Parliament? Does the Government (or at least one coalition partner in it) have in mind the potential for a UK in/out referendum in the next Parliament? 

Ready to cleave?

There are also two, more mundane possible reasons for this leisurely timetable. The Government may have in mind the complicating effect of the Scottish independence referendum with its potential to cleave the UK [there being uncertainty as to whether Scotland would remain part of the EU or, as seems more likely, would have to apply for membership]. There is also the second Spanish legal challenge to the legality of the new regime to be decided, where the decision may be expected in early 2015. Again, is there a connection? Is the plan to await that outcome of the Scots' referendum and the Spanish challenge decision?"

But there's more to come and it's a chicken-and-egg conundrum: the UPC can’t exist until it has been ratified. Alan continues:

Life as a model for IPKat weblog
illustrations can be so embarrassing ...

“The second reason for there being more delay in the schedule is that it has become apparent that there is a chicken and egg problem with the UPC. It does not exist as a legal entity until four months after the final relevant ratification. Until then it cannot (in particular) hire judges and other staff, nor procure a computer system. But without that having been done, it cannot open for business. The result is that some other legal entity must take on these responsibilities and then effect a handover to the UPC on day one of its existence. This entity, moreover, must commit to paying judicial salaries (and pensions) and to funding the computer procurement (a process likely to take an absolute minimum of 18 months) [Merpel is sure that the Europeans will take a principled stance on this matter, since she regularly hears tales of less fortunate countries where the judges are paid by the litigants ...]. 

But if a legal entity is to be created, who will own and fund it? Will it be the Governments of (say) the UK, France and Germany? How can each state commit to such an undertaking until it knows that its own legislature will, in fact, ratify, still less with the uncertainty of the ratification by the other two (and a further 10 states)? Remember also that the UK has said that it will undertake an economic impact assessment before ratification. If that is required, how could the UK sensibly commit to major expenditure and liability beforehand? Germany (at least) is also likely to want to “do the sums” and be sure of the commitment of other states before getting its cheque book out. 

Does this point to a lengthy period of awaiting the requisite numbers of ratifications, with one (or all) of UK, France and Germany holding back from depositing their instruments of ratification so as to ensure that the UPC does not then start automatically four months later, and these Governments only then committing to the expenditure required?” 

So, looking beyond the mere reality, what does Alan see in terms of principle?

“One can sense that the degree of political commitment to the UPC project has not diminished at all in the last three months [the IPKat has seen a lot less evidence of commitment, but assumes that this is because the battle has been fought and won/lost, so that statements of political commitment have become less necessary], but one can also see that the realisation of how much there is to do, and the financial commitment this will entail, may, at a purely practical level, cause more delay than the Commission envisaged, even privately [It's curious that, a year or so ago. many warnings about how much would have to be done were seen as expressions of obstruction from industry and the professions. Now such expressions must be taken on board]. My sense is that this project will not be derailed. However, there is so much to do, and it needs to be done well - something that has not escaped the notice of those responsible in the UK at least for the practical implementation of this project. Realistically, therefore, we believe that the first half of 2016 is now the date users should have in mind as the earliest likely start date”.

The IPKat wonders how many cycles of chicken and egg production will have taken place before the UPC opens its doors to its first litigant.  Merpel reminds readers that it is unwise to count one's chickens before they have been hatched.

What do readers from other jurisdictions think? Is Alan being pessimistic or realistic?  Do other countries have time-table issues too? Do let us know.

Which came first? The chicken or the egg? Here
Counting chickens before they are hatched here
Ballad of the unhatched chicks here
Playing chicken here