Guest author: Rechtsanwalt Dr. Ingve Björn Stjerna, LL.M., Certified Specialist for Intellectual Property Law, Düsseldorf
This article reflects the personal opinion of the author.
I. A reform for a reform's sake
The European patent reform has been long in the making. Although the project has always been treated as highly urgent (for reasons still unknown), it has faced significant fallbacks on a regular basis. These were mostly being dealt with along the lines of the "three wise monkeys principle", pressing ahead with convenient, but poorly considered "solutions" which, over time, made the reform lose much of its initial coherence. If there ever was the desire to make the acquisition of territorially broader patent protection and its enforcement easier in the interest of fostering innovation as it was frequently declared, this motif appears to have long been abandoned in favor of a reform for a reform's sake and regardless of its practical utility for the innovators.
The initially promised affordability of the "unitary patent" and Unified Patent Court (UPC) especially for small and medium-sized enterprises (SMEs), which was repeated almost mantra-like throughout the EU legislative proceedings as one reason why the reform was of utmost importance, ultimately turned out to be pretty much the opposite, with the level of representation costs to be reimbursed by the losing to the winning party amounting to up to more than five times the sum which can currently be claimed in patent litigation proceedings before the German courts (for more details on the cost situation created by the reform, cf. the article "Unitary patent and court system – A poisoned gift for SMEs" here).
Most recently, political operators and those close to them have engaged in reassuring the professional circles that the Unified Patent Court Agreement (UPCA) will enter into force later this year, envisaging its provisional application period to start in May 2017 with the aim of the UPC opening its doors for business in December 2017 (cf. the communication by the UPC Preparatory Committee here).
While such declarations of intent are neither new nor unusual, bearing in mind the function and background of the UPC Preparatory Committee, and also seem to serve the purpose of reassuring the user circles that everything was going as planned, the real situation does not appear to be as bright as these bodies would like to have the public believe.
II. Is "Brexit" going to break it?
The "Brexit" vote of the majority of the British electorate in June 2016 is the latest blow delivered to the patent reform and certainly has the potential to finally collapse it. It should be borne in mind that the UK – together with Germany and France – is one of the countries whose ratification is obligatory for the UPCA to enter into force. Furthermore, it is worthwhile noting that the initial draft Agreement for the creation of a European patent judiciary was rejected as incompatible with Union law by the European Court of Justice (CJEU) back in 2011. As a consequence, it was afterwards decided by the political operators that membership to the UPCA would be limited to EU Member States, with the obvious implications for a UK getting ready to "brexit" the EU.
It does not come as a surprise that UPCA supporters shifted into high gear after the "Brexit" vote, indicating that the UPC had nothing to do with the EU and that it was an international organization (cf. Art. 4(1) UPCA), thus trying to imply that the "Brexit" vote would not hinder the UK from pressing ahead with ratifying the UPCA. Of course, they stayed quiet as to the several obligations from Union law incumbent on the UPC and the inevitable involvement of the CJEU (for more details, cf. the paper "Unitary patent and court system - Squaring the circle after the 'Brexit' vote" here).
Suffice it here to just point out recitals 9 and 10 from the introduction of the UPCA which make it very clear that the UPC's much cited formal status as an international organization primarily serves as a smoke screen used to hide its profound obligations from Union law:
"RECALLING the obligations of the Contracting Member States under the Treaty on European Union (TEU) and the Treaty on the Functioning of the European Union (TFEU), including the obligation of sincere cooperation as set out in Article 4(3) TEU and the obligation to ensure through the Unified Patent Court the full application of, and respect for, Union law in their respective territories and the judicial protection of an individual's rights under that law;
CONSIDERING that, as any national court, the Unified Patent Court must respect and apply Union law and, in collaboration with the Court of Justice of the European Union as guardian of Union law, ensure its correct application and uniform interpretation; the Unified Patent Court must in particular cooperate with the Court of Justice of the European Union in properly interpreting Union law by relying on the latter's case law and by requesting preliminary rulings in accordance with Article 267 TFEU;"
Most recently, certain circles from the UK, involving two associations of patent practitioners and one from industry, all of them interested in making the UPC a reality quickly, commissioned the preparation of an expert opinion by two allegedly neutral barristers on whether the "Brexit" vote and the UK's withdrawal from the EU hindered its participation in the UPCA. In their opinion, which became known as the "Gordon/Pascoe Opinion" and was widely circulated by its initiators, the authors reached the conclusion that "Brexit" was mostly unproblematic for the UK partaking in the UPCA.
Having a closer look at this piece, however, created the impression that it was nothing more than a mere courtesy expertise which, while being based on several doubtful assumptions and containing various contradictions, promotes results favorable to the initiating associations which they can use as a marketing tool to foster their interests. The commissioning associations still deny making public the voluminous written instructions which they had provided to the barristers and based on which their opinion was afterwards prepared, hence creating the impression that there is something to hide.The full review of the "Gordon/Pascoe Opinion" can be found here.
III. Contradictions in recent UK government statements
Nonetheless, the UK government seems to be eager to ratify the UPCA, relying on said concept of emphasizing the UPC's formal status as an international organization and rather closing their eyes on the Union law obligations inevitably tied to it. After a statement on how the UK intended to proceed in terms of the UPCA after the "Brexit" vote had been long in the waiting, it was announced at the end of November 2016 at the EU Competitiveness Council meeting that the UK "is proceeding with preparations to ratify the Unified Patent Court Agreement", pointing out that "The UPC itself is not an EU institution, it is an international patent court." (cf. the press statement here).
This approach was also followed in a recent meeting of the Science and Technology Committee of the UK House of Commons in a statement by the new "Minister of State for Universities, Science, Research and Innovation, Department for Business, Energy and Industrial Strategy", Joseph Johnson, who is also responsible for intellectual property aspects (cf. footage here, starting at 11:07.22). Indicating once more that the UPC was "not an EU institution" and describing it as being "independent of our membership in the European Union", Mr Johnson started to flounder when asked whether non-EU members could remain members of the UPCA and just answered: "These are questions which will form part of the bigger discussion around the Brexit negotiations."
In short, the plan of the UK government appears to be ratifying the UPCA without knowing whether a continued membership will be possible after a withdrawal of the UK from the EU. Bearing in mind the industry's overarching fundamental need to be provided legal certainty on questions like these, this is a remarkable approach and reaffirms the impression of a reform for a reform's sake.
In order to take the confusion even further, Prime Minister May's speech on "The government's negotiating objectives for exiting the EU" (cf. here) given on 17 January 2017 to some extent contradicts the path described by Mr Johnson and casts doubt on whether the UK government will truly be able to follow it. In this speech, Mrs May named the following as a central objective of the "Brexit" negotiations:
"That means taking control of our own affairs, as those who voted in their millions to leave the European Union demanded we must. So we will take back control of our laws and bring an end to the jurisdiction of the European Court of Justice in Britain. Leaving the European Union will mean that our laws will be made in Westminster, Edinburgh, Cardiff and Belfast. And those laws will be interpreted by judges not in Luxembourg but in courts across this country. Because we will not have truly left the European Union if we are not in control of our own laws."
While it may be unclear what "our laws" in fact refers to, the desire to end the jurisdiction of the CJEU in the UK seems to be clearer. However, if the plan is to abolish the legal authority of CJEU decision for the UK as announced by Mrs May, how can the UK government even consider ratifying an international Agreement like the UPCA which will create a new court which is bound by Union law and subject to the jurisdiction of the CJEU, while its decisions are binding in all the UPCA Contracting States (Art. 34 UPCA)? At first sight, the positions taken by Mr Johnson and Mrs May appear difficult to reconcile. There will need to be further political explanations on how they intend to align the further with the latter. From a legal point of view, this will not be a straight-forward task, but considering the various legal twists and turns applied in the procedure so far some sort of more or less convincing theory can be expected to emerge sooner or later.
IV. Violation of German Constitutional law?
Apart from the "Brexit" implications, further obstructions to the UPCA's entry into force may well happen in the ratification procedure in Germany, the German ratification, as indicated, also being required for the UPCA to come into effect. The ratification procedure was initiated by the German government at the end of May 2016, with the first reading in the German Parliament taking place in the late evening of 23 June 2016, the day of the "Brexit" vote in the UK, only to be suspended immediately afterwards. Despite its limited practical use due to its apparent bias, the mentioned Gordon/Pascoe Opinion has – unintentionally, as it would seem – underlined the UPCA's doubtful compatibility with Union law by noting that the political approach to align the two after the aforementioned CJEU decision in 2011 is merely an unworkable legal fiction, thereby joining sides with a number of commentators who have been arguing that the UPCA was incompatible with Union law for a number of reasons all along. More details can be found in the aforementioned article "Unitary patent and court system – The Gordon/Pascoe Opinion and the UPCA's incompatibility with Union law" here.
The specific relevance of the German ratification proceedings for this aspect lies in the fact that, in Germany, it is, in principle, possible to directly subject any legislative act approving an international Agreement to judicial review by the German Constitutional Court for its compatibility with the German Constitution before it will be allowed to enter into effect. The UPCA's doubtful compatibility with Union law is only one of a number of aspects on the basis of which its compatibility with the German Constitution might be challenged. Should judicial review indeed be requested on this basis, the German Constitutional Court will usually request a preliminary ruling from the CJEU on the Union law issues in question. Should the CJEU confirm the understanding that the UPCA is incompatible with Union law, this could well be the end of the UPCA, at least in its present form. As the legal effectiveness of the two European regulations on the "unitary patent" and its translation regime is bound to the UPCA's entry into force, the whole reform would be affected by such finding. Thus, such judicial review procedure could well constitute yet another major obstacle on the way to making the UPC a reality.
Ultimately, different from what political circles and the usual UPC proponents want to make the public believe, the UPCA's entry into force is not at all secured. Major political as well as legal decisions may still have to be made before the UPCA, and with it the European patent reform, will be allowed to come into effect.
[Update on February 3, 2017] The author of this guest post has now published a new article on the recent political statements as regards a ratification of the UPCA in the United Kingdom and their legal implications. [/Update]
Share with other professionals via LinkedIn: