Considered in Grand Committee
My Lords, the draft order was laid before the House on 26 June. It confers legal status on the Unified Patent Court, as well as providing a limited set of privileges and immunities to the court, its judges and its staff. They are necessary to ensure the effective and proper functioning of the court, and were agreed in the international agreement establishing the Unified Patent Court and its Protocol on Privileges and Immunities.
In its current form, the patent system across Europe is fragmented and expensive. Businesses must maintain a bundle of patent rights, each covering a single country. They must also enforce each patent separately in the national courts of each country. That is costly and burdensome. The Unified Patent Court will offer a way for innovative businesses to enforce or challenge patents in up to 26 European countries with a single court action. That ability to obtain a single judgment is potentially significant and valuable for patent-intensive industries. For example, independent research shows that around a quarter of all patent cases heard in United Kingdom courts were also litigated in other European jurisdictions between the same parties. That is why a single Unified Patent Court is so welcome.
Even better, an important division of the court dealing with disputes in the field of pharmaceuticals and the life sciences will be based here in the United Kingdom. This cements the United Kingdom’s global reputation as a place to resolve commercial legal disputes and reflects this country’s strong role in this important field. It will also generate considerable work for, and help to enhance the global competitiveness of, the United Kingdom legal services sector.
British businesses will still be able to choose national patents and litigation in national courts should they wish, but they will now have the option to use this new court structure, with all the benefits I have described. Being part of this international court will allow us to ensure that it meets the needs of our own innovative businesses, which will be able to use it in the other contracting states. That is why the Government are carrying out their commitment to proceed with preparations to ratify the international agreement that sets up the Unified Patent Court. That commitment should not be seen as pre-empting the negotiations on leaving the EU. Although the UPC is not an EU institution, our future relationship with the UPC will be the subject of negotiations as we leave the EU. Our efforts will be focused on getting the best deal possible.
The Unified Patent Court was established by an international agreement which the United Kingdom signed on 19 February 2013. The Protocol on Privileges and Immunities was adopted in June 2016 and the UK signed it on 15 December 2016. A preparatory committee of the signatory countries to the UPC agreement was established in 2013 and is nearing completion of the work needed to bring the court into operation. The main steps towards UK ratification have already been completed. The changes to our patent law to implement the UPC agreement were made by an affirmative order which was approved by both Houses in 2016.
The draft order is part of the UK’s ratification process. It confers legal capacity on the Unified Patent Court and gives effect to the Protocol on Privileges and Immunities. The draft order provides for immunity from legal process for the court—with some exceptions—and its judges, registrar and deputy registrar. This immunity is also provided for the representatives and staff of the court, but is restricted to the exercise of their official functions. This immunity can be waived by the UPC. The judges and staff of the court will be exempt from national taxation on their salaries and from national insurance once the court applies its own equivalent tax and puts in place its own social security and health system. However, neither exemption will apply to court staff who are British nationals or permanent UK residents. Finally, the draft order provides that the court is exempt from direct taxation in relation to its official activities, as is the case for other international organisations based here, such as the International Maritime Organization.
The draft order applies to the whole of the United Kingdom but some provisions do not extend to or apply in Scotland. Articles 1(3) and 1(4) clarify which provisions do not apply there. A separate order was passed in the Scottish Parliament in October this year which dealt with provisions within its legislative competence.
The draft order confers only those privileges and immunities on the new court, its judges and staff that are necessary for the organisation to conduct effectively its official activities. They are in line with those offered to officers in other international organisations of which the United Kingdom is already a member. Innovative businesses have waited for more than 40 years for a patent system that helps them protect their inventions across Europe in a streamlined and cost-effective way. Moreover, the Government’s industrial strategy emphasises our commitment to fostering innovative businesses. The Unified Patent Court will be integral in achieving that goal. The draft order will enable the Government to be in a position to ratify the UPC agreement and make the court a reality. I commend the draft order to the Committee.
I stand here as a part of history. When I was Minister for Intellectual Property, we went to the European Community to try to get it to understand that the Chinese and Americans could have patents overnight but we were still, after 40 years, having to translate over and again the members of the European Community at that time. We worked very hard during that time. I thought we had eventually got there but it sort of floundered for a while. I am delighted to see it written down that we are going to ratify the Unified Patent Court.
Intellectual property is very important for us. It is an area in which we are recognised worldwide as doing the right thing. We have allowed the French, the Germans and the rest of them to choose which bits they would like to have a go at. At the end of the day we have come up with something that works very well. Given that we are working so hard on Brexit—I work on the European Union Select Committee, which is looking at all the Brexit paperwork—it is important that we are actually seeing something coming through. It is nice and clear, we can all hear it; we are all going to do it. This is one thing that is not going to cause us any difficulty over the next few months.
I congratulate my noble friend Lady Wilcox on her contribution to intellectual property. I was honoured to succeed her in an area where Britain is very strong. Obviously, that was a delight. I was intimately involved in the Unified Patent Court discussions in both Brussels and Luxembourg last year—after, as has been said, many, many years of discussion on its establishment and its location here in London, and the other centres. I want simply to welcome it and to congratulate the Minister and the Intellectual Property Office, which is headquartered in Newport. I wish them well in finding a sensible deal for patents in the Brexit negotiations. I have one point of clarification, which I think the Minister touched on: when does the patent court in London actually open its doors?
My Lords, the Minister will be grateful to know that the shadow cast upon the previous debate does not extend this far. I will be a ray of sunlight in his life and he will emerge, if not hopping and skipping, possibly with a little spring in his step at the pleasure we express and the way in which this piece of legislation is coming forward.
In passing, it was unfortunate that the Minister caught what appeared to be a full blast from both barrels from my noble friend. He should have seen him in the earlier stages of that Bill, when the hapless victim was the noble Baroness, Lady Neville-Rolfe. The full wrath that my noble friend Lord Mendelsohn could express at the whole approach that the Government were daring to take to this important area was expressed in many amendments that we had to discuss. The Minister got off lightly; he may not feel that. We certainly look forward to his letter when it comes.
I am going to say absolutely nothing about the substance of the statutory instrument because we agree with it and are happy for it to go through. It shines a light on the way some people manage to live their lives—in tax-free environments, free of all exemptions and penalties; some people have all the luck—but nevertheless that is the way it is done. I am glad that it is coming forward.
Like the noble Baroness, Lady Neville-Rolfe, whose work on this I salute—as well as that of the noble Baroness, Lady Wilcox, who preceded her—I am interested to learn a little more about what is actually happening on the ground. There are rumours of premises having been secured and buildings having nameplates attached to them, and so on. It would be nice to know what exactly is going to happen and what the timing is, if it is possible for the Minister to tell us.
The other thing that might be interesting to find out is whether there is yet any feel for whether there will be a sufficient caseload to warrant other centres being opened. During the passage of the original Bill we talked about the possibility that the Court of Session’s responsibility for patent determinations in Scotland might be echoed by having a similar court based there, if there was sufficient casework, because there is expertise and knowledge in Edinburgh in this area, and it would be sad if those were not able to be expressed. But these are matters that the Minister may not yet have the detail on and I am happy to have that at a later stage.
As I said, I am a ray of sunlight. We support this statutory instrument.
I am not sure that I will necessarily be able to help the noble Lord; I might have to write to him. I am grateful for that ray of sunlight on this issue, even though he took a slightly “It’s all right for some” attitude to the idea that some of those lawyers and others involved with the courts would not pay UK taxes. However, it is always open to him to requalify at this stage in his life and seek to become one of the judges working in that court. I understand that they think that there might be up to six part-time judges there; that is all I can say. I say to my noble friend Lady Neville-Rolfe that I do not know where the court will be and when the doors will open. But again, if there is further information, I will let them know in due course.
There is one further process after the order leaves here, which is that this matter has to go to the Privy Council. I think it has missed the next meeting, so it might not be until the new year. At that point, we will have a better idea as to when, as I said, the doors will open and where it will be. If I have any further knowledge about what the caseload is likely to be, I will write both to my noble friend and to the noble Lord.
I am grateful also to have the support of both my distinguished former colleagues in this role, both of whom dealt with intellectual property when they were in that department. I am obviously not considered bright enough to do that, and they have taken that bit away from me. For all I know, it might be a gender issue—one of those things that mere men cannot do. I simply do not know. However, both my noble friends brought great distinction to that office, I am grateful for what they did, and I thank them—in particular for their warm welcome for this order.