Reflections on LJ Birss’s speech at UPC Munich event: whose loss is it that the UK is out of the UPC system due to Brexit?

To begin with, I personally believe Brexit was the right idea, even if it was unrealistic to believe that it could be implemented without friction. The problem is that the UK failed to strategically leverage Brexit. Not being in the UK is actually a major advantage in many ways, given that the EU is an economic policy failure of major proportions that often works against its own economy and its own citizens, and will end as an open aior museum because tech has been growing at twice the rate of the overall global economy for a few decades and the EU can’t compete in tech. But a country has to play it smart if it leaves the EU and then wants to attract foreign direct investment, spur innovation und create jobs. For lack of government stability and capability, pretty much the opposite happened. The only respect in which the UK performed better post-Brexit than many predicted is that only a modest number of jobs was lost in the City (financial services industry). But even despite Brexit, the UK has recently experienced more growth than stagnant Germany.

Brits voted for Brexit for various reasons, but one of them clearly was to ensure that British judges would have the final say, as opposed to the European Court of Justice (ECJ) in Luxembourg. That is understandable. The ECJ is clearly not at a level with, for example, the Supreme Court of the United States (SCOTUS). Appointments are rather political, and the judges aren’t truly independent, unlike their U.S. counterparts. The ECJ legislates from the bench all the time, lets the EU institutions get away with almost anything (such as the flagrant violation of the prohibition of government financing by the European Central Bank (ECB), which the ECJ then sought to rationalize in ways worthy of a dictatorship), and the only principle it really upholds consistently is that the EU should acquire ever greater powers, even though it doesn’t use them wisely.

The UPC has so far declined each and every invitation to refer a question of EU law to the ECJ, and I would not be surprised if ten years from now it still hadn’t happened. But formally the UPC must follow the ECJ, and that’s a no-go for Brexiteers. That’s why the UK can remain in the European Patent Organization (EPOrg), which is governed by the European Patent Convention (EPC), not the acquis of the EU.

LJ Birss’s speech was brilliantly crafted. He also came across as far more likable than one might think after watching him at court hearings. I say so even though I still think his penalization of Apple for its design rights assertions against Samsung (affirmed by a judge who later worked for Samsung as a paid expert witness) was outrageous, his insistence on implementers taking global standard-essential patent (SEP) licenses was disproportionate (given that Huawei had only a minuscule percentage of its sales in the UK at the time), and the way he made the royalty determination in Unwired was not merely unscientific but downright antiscientific. I’ve seen a number of FRAND (fair, reasonable and non-discriminatory licensing) determinations from different jurisdictions over the years and his stands out as the most terrible and least sophisticated one. But that was then, and his recent decision in Optis v. Apple (Unwired actually is part of the PanOptis group) was way better (May 1, 2025 ip fray article).

So let’s talk about what he said on Thursday. First, a picture:

A proud Scotsman, he quoted his nation’s poet, Robert Burns, and told the story of a poem about a mouse seeing its nest accidentally destroyed by a plow. He made it clear at the end that he considers himself such a mouse, given that he contributed to the UPC’s RoP (i.e., took part in building that house), only for Brexit to tear it down.

Definitely bad for UK judges

There is no question that not being eligible for the UPC is a loss for patent-specialized UK judges. And it must hurt even more now that, as a result of BSH Hausgeräte v. Electrolux (February 25, 2025 ip fray article), the UPC as well as national courts of EU member states can order remedies with respect to the UK parts of European patents if the defendant or at least an anchor defendant (May 25, 2025 ip fray article) is based in the EU. As a result, there will be less patent enforcement in UK courts than otherwise. That is now also a problem for countries that are EU member states but not UPC contracting member states (such as Poland and Spain), and even for countries that never joined the EU in the first place (such as Turkey).

For some smaller countries such as the Principality of Monaco (where I live and work), it is potentially a good thing because it will make it more attractive to register European patents there as well (and enforce the Monegasque parts in a unified lawsuit of multi-country effect, with hugely more favorable litigation economics). But not for the UK. The only reason to sue a company separately in the UK now is if a plaintiff doesn’t want to put all eggs in one basket: the UPC.

Systemic differences would have been manageable

At the EU level, whether in legislative proceedings or in ECJ decision-making, the systemic differences between Anglo-Saxon common law and continental European civil law have sometimes created friction.

In the specialized field of patent law, and not least thanks to the EPC, it would probably have worked.

The UPC already has a diversity of case management approaches, with long hearings of expert witnesses (including cross-examinations) in the Nordic-Baltic Regional Division and rather short hearings in the German LDs (though not as short as in German regional courts).

Understanding of commercial realities and dynamics

It is potentially an advantage that British judges normally work in private practice before becoming judges. Even though a rather stable business such as legal services is not comparable to the situations faced by startups or even by very large companies in a rapidly-evolving industry, it means at least that they have experienced what it means to depend on fee earnings (as opposed to being paid by the government all life) and to pay for one’s staff (instead of the government providing for that, too).

Unfortunately, just potentially.

It is shocking to what extent the EWCA failed to understand the simplest economics, even when explained to the court, concerning interim license fee payments. The difference between a recognized revenues and a refundable posit is a difference like day and night. They didn’t get it, and I’m convinced that a high percentage of federal judges in the United States actually would understand those concepts. In fact, most of them could explain economic concepts such as price elasticity. If they make major mistakes in that area, it’s typically because of single judges deciding super complex cases like Epic Games v. Apple (where the decision essentially said Epic proposed smartphone operating systems for the relevant antitrust market because Apple’s market share is higher than in smartphones, but no iPhone is sold without iOS and iOS cannot be purchased with any smartphone other than an iPhone).

What’s going on in Samsung v. ZTE also looks pretty bad, for now at least (June 6, 2025 ip fray article). An argument like “look, in India SEP holders push for ‘pro tem’ payments, so it must be very desirable” would not be taken seriously by someone who really understands the issue. Patentees don’t seek those interim payments because they’re useful to them, but because Indian litigation takes years before you get any serious remedies (if ever; normally you will settle before) and pro tem payments are just meant to be a little bit of a pain in the neck of an unwilling licensee (rather than nothing).

So it’s not clear whether UK judges would have added a great deal of economic understanding to the UPC.

Judicial leeway

UK judges are accustomed to having tremendous wiggle room when it comes to crafting and enforcing remedies. The UPC is just developing its case law on remedies at this point, but most of those decisions are made by German judges applying typical German concepts. UK judges might have been able to make some interesting contributions in that regard.

However, a decision like the above-mentioned one in Apple v. Samsung (imposing extreme sanctions on someone who simply sought to enforce design rights) would have had a chilling effect on UPC litigation.

Evidence gathering and preservation

It was accurately noted on Thursday that the UPC’s case law on evidence gathering and preservation is actually novel and not modeled after any one existing body of case law.

In situations in which product-process disclosures are desirable, some plaintiffs might indeed have preferred to sue in a London LD. However, there are some developments, such as in the Hague LD, that also enable patentees to obtain certain information that is necessary to substantiate infringement allegations.

Conclusion

All things considered, the fact that the UK had to leave the UPC system before its operations commenced was clearly a loss to UK judges, but UK judges could do a better job proving that it is a loss for the UPC.