“Despite the fact that the judgement will result in further delay the preparatory work will continue, while the judgement and the way forward is further analysed.” Within hours the Preparatory Committee of the Unified Patent Court had published its reaction to the ruling of the German Federal Constitutional Court in the complaint against the ratification of the UPC Agreement.

In the English language press release, explaining the decision, the FCC announced: “The Act of Approval to the Agreement on a Unified Patent Court (“the Act of Approval”) to confer sovereign powers on the Unified Patent Court is void. In its outcome, it amends the Constitution in substantive terms, though it has not been approved by the Bundestag with the required two-thirds majority.”

The constitutional complaint was filed in March 2017, when the UPC bill had already been approved by both chambers of the German parliament. It was yet another blow for the UP system after the Brexit vote of June 2016. At the request of the FCC, German Federal president Frank-Walter Steinmeier refrained from signing  the bill, thereby halting the ratification process in Germany.

The clarity the FCC has given today in its judgement led to optimism in some circles, and to great disappointment in others, as is shown by the reactions Kluwer IP Law gathered.

Europarechtsfreundlichtkeit

Wouter Pors, partner of Bird & Bird a long-time supporter of the Unitary Patent project, wrote: “Today the German Constitutional Court (Bundesverfassungsgericht) ruled that the German ratification act for the Unified Patent Court Agreement (UPCA) is void, because only 35 out of 709 members were present for the vote, which required a majority of two thirds of the members of parliament because the UPCA forms a material change to the German Constitution as it transfers jurisdiction.

The Court also ruled – apparently unanimously – that the other complaints are inadmissible. These relate to the fact that judges are not appointed for life but only for 6 year terms and the procedure for their appointment, the  more substantive complaint that there would be an insufficient justification for interference with the German Constitution and the complaint that the UPCA would be in violation of EU law. Obviously, those complaints could have constituted a much larger problem for the UPC, as the first two would require a revision of the UPCA and the last one, if awarded, could not have been overcome without additional EU legislation.

According to the Court a violation of EU law is not automatically a violation of the German Constitution, even not under the principle of “European law friendliness” (Europarechtsfreundlichtkeit). The Court also states that the UPC can be regarded as part of the program for the integration of the EU and can be seen as a substitute for EU law. The German Constitution doesn’t require that sovereignty can only be transferred to EU institutions.

Although it is unfortunate that the ratification act has been declared void, it is good news for the UPC  that the other complaints have been declared inadmissible, which means that we now do have certainty on all issues raised before the German Constitutional Court.”

A more extensive reaction can be found on the website of Bird & Bird.

Stolmár & Partner IP from Munich wrote: “Interestingly, the Court dismissed the complaint insofar as it claimed that the UPCA violates fundamental democratic rights and the principle of separation of powers. While the respective part of the complaint was deemed to be inadmissible and thus not discussed as to its merits, the court nonetheless hints that the appointment of judges by an administrative council appears legitimate. Likewise, the court does not seem to be concerned with the fact that the administrative council will be responsible for defining the rules of procedure before the UPC.

So, where does this leave the UPC? Actually, not in a bad position. (…) Of course, with the current corona crisis ongoing, the UPCA won’t be the top priority for some months to come. In addition, one question remains: will the other member states still go forward with the UPC, despite UK having withdrawn from the project? But overall, we take this decision rather positively.”

EPLIT

President Koen Bijvank of the European Patent Litigators Association (EPLIT) doesn’t feel the same way:

“Today’s decision of the German Constitutional Court is a great disappointment. After the recent announcement of the UK that it no longer intends to participate in the UPC, the project now suffers another severe setback.

What makes the decision particularly disappointing is that it is on a formal issue, and not a substantive one. Although it may theoretically be possible that the Bundestag quickly votes on the legislation again, the political balance in Germany has shifted and it is not guaranteed that there will be a 2/3 majority in favour of the UPC. Even more importantly, the world has changed and all governments have much more important and urgent topics to deal with. Without the UK, the UPC Agreement will have to be renegotiated and therefore I do not consider it likely that we will see any progress on the project in the next few years.

All this means that it is business as usual for patent litigators across Europe. Since the Brexit referendum the field has adjusted to a world in which a UPC became increasingly unlikely. The Dutch jurisdiction has shown healthy activity over the past few years and I expect the coming years to be no different.”

Luke McDonagh: “The project was already reeling from the blow of the the U.K. decision to not participate. With the BVertG ruling the UPC project has taken another hit – and it may be a fatal one. In the midst of the Covid-19 crisis it is unlikely German legislators will prioritise the question of whether German ratification can now be salvaged after the BVertG ruling. A rethink  of the entire UPC May be inevitable.”

JUVE Patent wrote: “It is now unclear if the decision will be the end of the patent court. The Bundestag can now save the situation by voting on the Act again with a two-thirds majority. This could again significantly delay the UPC process. Organising a quorum and a two-third majority in the context of Coronavirus will be a major challenge. A failure of the project is thus also possible.”

IP Watchdog: “The likelihood therefore is that this represents the end of the UPC project, or at least a lengthy delay. The existing system whereby European patents are enforced separately in each member state will continue for the foreseeable future.”

WIPR investigated whether the decision could be ‘a boon for UK patent litigation’. It wrote: “The Law Society of England and Wales has claimed that the potential delay to the implementation of the UPC (or its ultimate death) could give the UK time to mitigate the risks of not participating in the system.”

Only a formal issue?

In the meantime, there have been several reactions, among other from MN below a post on this blog earlier today, in which it is pointed out that the constitutional complaint is upheld by the FCC not only because of the formal issue of the parliamentary vote, which has drawn most of the attention, but that there may be substantive issues as well:

MN: “Last paragraph [paragraph 166, ed]: “Soweit Anhaltspunkte dafür vorliegen, dass die Festschreibung eines unbedingten Vorrangs des Unionsrechts in Art. 20 EPGÜ gegen Art. 20 Abs. 1 und Abs. 2 in Verbindung mit Art. 79 Abs. 3 GG verstößt … abschließenden Entscheidung kann vorliegend jedoch abgesehen werden, weil sich die Nichtigkeit des EPGÜ-ZustG bereits aus anderen Gründen ergibt.” I read this to state that the unrestricted primacy of Union law under to Art.20 UPCA would most likely NOT pass constitutional muster. Hence, even if UPCA’s implementation legislation would be submitted again and pass this time with the required majority, viability would still be doubtful.”

The ruling of the FCC will undoubtedly lead to more discussion and analysis in the upcoming period and it will be interesting to see what the next steps of the UPC Preparatory Committee will be.

Today’s reaction from the man who filed the complaint against the UPCA, Düsseldorf patent lawyer Ingve Stjerna, was very short and neutral. On his website he wrote: “With decision of 13/02/2020 (German language), the BVerfG allowed the constitutional complaint, declaring invalid the Act on the Agreement of 19/02/2013 on a Unified Patent Court (also cf. the court’s press statement of 20/03/2020).”


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16 comments

  1. “Although it is unfortunate that the ratification act has been declared void, it is good news for the UPC that the other complaints have been declared inadmissible, which means that we now do have certainty on all issues raised before the German Constitutional Court.”

    The statement by Mr. Pors seems to me overly optimistic. The BVerfG has not ruled, that the issues raised are inadmissible per se. Rather it held them inadmissible because of insufficient substantiation. To me this leaves (most of) the questions open – unless constitutional experts find definitive hints in the wording of the ruling (which I would expect needs more than just a few hours…).

    And how could the Agreement be ratified by Germany now, after the UK is no longer a member of the EU and London and the UK are hard-wired in it? Would anyone risk a bet, that the necessary re-negotiations would be limited purely to the replacement of London and the UK in the text?

  2. The reactions following the decision of the FCC can be summarised with for some the glass being half full, and for other being half empty.

    One thing is nevertheless very clear. The UPCA is only opened to EU member states. That has a direct effect on Art 7(2) UPCA.

    I fail to see that the FCC has decided for good that there is “certainty on all issues raised before the German Constitutional Court.” They were dismissed for formal reasons, but certainly not for substantial reasons.

    In my opinion, the court did not say “that the appointment of judges by an administrative council appears legitimate”. It simply said that the German representative has a veto right. That does not imply that it is as such legitimate.

    The other express their disappointment that it will take a long time to reschedule a vote in the German Parliament. I cannot see the German Parliament recasting a vote for a treaty without any changes in Art 7(2) UPCA, and this point is a problem which is not easy to decide. Too many national interests are at stake. Furthermore there are more urgent problems to be dealt with that the interest of a bunch of big industries and lawyer firms.

    Sorry for the Chairman of EPLIT, but the issue decided is not a formal one. It is a fundamental issue, and the haste by which the UPCA was driven through the institutions has now backfired. It is good so, since it will give the possibility to rethink the whole process.

    For a start, now the UK has left, do we need so much resemblance of the UPC with the UK litigation system? Could we not go along a bit more slowly and carefully?

    That the UPC will be delayed is certain. That this delay may not be favourable to it is also certain. I will not claim that the UPC is dead, but severely injured and the injury inflicted by the Brexit and the decision of the FCC might prove to be fatal to it.

    By the time the problem of Art 7(2) is settled, there will have been the election of another German Parliament and the issue of ratification might take a totally different turn.

    Enhanced cooperation might be an aim worth pursuing, but subsidiarity is also an aspect which should play a role. In view of the few really supranational litigations do we really need such a treaty which only serves some interests and is certainly detrimental to a lot of others, starting with SMEs and European industry at large?

    Enhanced cooperation excluding those not willing to be bulldozed down, I think here of smaller countries and their fragile industry, as well as the SMEs, is something the EU cannot afford. Either there is a EU patent valid for all EU member states, but simply adding a layer of case law for some of them, with all uncertainties going with it, is not an aim worth pursuing.

    To hear in another blog that it might be worth trying to “draft a text that would make it possible for European Economic Area countries and perhaps even other countries to join” is simply showing that this person, another lawyer, who is also fiercely again technical judges (UPC conference in Munich in 2017), has not bothered reading the decision of the FCC. C 1/09 was already clear in this respect and now it is even clearer: it is only open to EU member states.

    To sum it up: if it is absolutely necessary to have a supra-national jurisdiction for patent matters, which I doubt, it could be envisaged, but then its reach should be over the whole of the EU, and not only in part of it. We should not forget that this selectiveness was the birth defect of the UPC.

    It goes without saying that any attempt to create a supranational jurisdiction in patent matters in the EU should be submitted to the CJEU for opinion. It should be avoided to create something which might be killed by the CJEU at the first opportunity.

    Techrights and zoobab: FINGERS OFF!! Even by excerpts on Twitter!

  3. The judges at the BVerfG often give some hints in an orbiter dictum to the lower courts if they feel that it helps a case to move more swiftly in the judicial system – maybe to avoid to have to deal with the same matter on a different issue a few months later.Just read two dozen or so of their decisions dealing with day-to-day matters and you will see this. As this was a high profile case due to the involvement of the Federal President, the Government, the Bundestag and the Bundesrat, I think that they would have given also in this case some stronger hints if they believed that the other issues have merit but are simply not substantiated enough – in particular as all the arguments in the case are public facts and the judges could connect the dots themselves, even if the complaint did not specify them detailed enough.

  4. Given that there is an EU-wide system of Registered trademarks and for Design Patents, ought there not to be one too for utility patents? Or are utility patents categorically so different that the pursuit of an EU-wide system of litigating utility patents should now be abandoned.

    I mean, now that the UK has gone, and at the EPO there has been a change in the nationality of the President, why not step back from silliness and build on the good bits of the present system.

    Validity (obviousness) is the hard problem. Let unchecked, the expense of litigating it gets out of hand (hence the drive in some quarters to push the UPCA through) Given those considerations, the EU should make the EPO the ultimate decider on substantive validity. National courts should offload the issue to the EPO.

    Compared with that, deciding what is an infringement is more straightforward. For those unusual cases that require it, let it be judiciable all the way up to the CJEU.

  5. MaxDrei, in view of the quality of the EPO decisions with respect to inventive step being so low and formalistic, the BoA not willing to reverse G1/93 in spite of better arguments from national courts, the independence of the members of the BoA obviously not being guaranteed, and the new RoPBoA, I think letting the EPO be the ultimate decider is the worse what could happen.

  6. Thanks to “Anonymous” for providing a list of reasons why deciding EPC obviousness at the EPO is a bad idea.

    Your list helps my argument more than yours.

    As I said, adjudicating obviousness at the EPO is a more compact, efficient and predictable process than everywhere else. You can call it “formalistic” if you like, but that’s always what the loser says. Losers are the noisy ones. Those who win at the EPO are less inclined to run around singing the praises of the EPO. The big thing about “formalistic” is that it i) informs the patent drafting process and ii) leads to early certainty, which side is going to win, in an obviousness dispute, at the EPO. Some people don’t like that. I do. Let’s debate it.

  7. 1) According to my experience, national patent applications and early European patent applications are far better readable, shorter, and to the point than recent European patent applications. Hence, I doubt that the EPO jurisprudence has helped to improve the quality of the European patent applications.

    2) You assume that a decision on validity is black and white. In my opinion, there are very few cases, where this is the case and those cases don’t end up in court. Obviousness is a subjective assessment and the problem-solution approach is a tool to render it marginally more objective. I regularly read decisions of the BoA, the Federal Patent Court and the Federal Court of Justice (not only decision of cases I have been involved in) and while the process at the EPO may be more streamlined, the reasons provided by the EPO are far less convincing. Streamlined processes are not adapted to find good solutions in the grey area.

  8. Anonymous, I welcome your reply. Here is mine, to yours.

    1. Indeed, the specifications of patent applications these days are unnecessarily lengthy and otiose and a struggle to read. But it is wrong of you to blame for that drift the established jurisprudence of the EPO. Patent attorneys write one specification for world-wide filing, and it is the jurisprudence of the USA that has driven the march towards lengthy and incomprehensible texts. They call it “patent profanity”. One manifestation is that specifications these days never use the dirty word “invention”. Litigators in the USA demand as best drafting practice that one never states what the “invention” is. Lay the blame where it belongs, I say.

    2. You find unconvincing the reasoning of EPO Boards of Appeal on obviousness? You say that you “read” EPO Decisions. That suggests to me that you are not a European patent attorney and do not routinely serve as advocate in EOPO opposition proceedings. I also read EPO decisions and those of national courts (mainly UK and USA). frankly, I find the EPO reasoning far more robust than that of the courts. Was “X” obvious is indeed a binary question, with no answer available other than yes or No. But the framework of argument leading up to that binary finding varies from jurisdiction to jurisdiction. Frankly, the EPO framework which strikes you as formalistic, is infinitely to be preferred to the wishy-washy, woolly, touchy-feely Pozzoli approach of the courts in England. And as for the USA, it’s better not to comment at all.

    As i say, thanks for playing. your turn again now.

  9. 1. I agree that the influence of US patent practice does not help (i.e., the infamous fig. 1 shown a mobile phone comprising a processor, a memory, …), but I am pretty sure that part of the blame is also to put on the EPO jurisprudence (i.e., disclosure of all possible intermediate generalizations to avoid Art. 123 EPC objections, in particular in Chemistry and Bio and use a wording the could in any way imply that a feature is “essential” for the invention).

    2. Sorry, to disappoint you: I do advocate in both German and European cases. Nevertheless, I prefer to make the comparison based on decisions in which I have not been involved to avoid inevitable bias. Your last two sentences might explain our different point of view: you seem to compare EPO with UK/US whereas I essentially compare EPO with DE. I do agree with your statement that the UK approach is fuzzy. In my opinion, this is mainly due to the fact that it relies to much on expert evidence concerning the knowledge / capabilities of the person skilled in the art.

  10. Anon, I welcome your answer. We are converging. here a few afterthoughts.

    1. Yes, I agree with you on the “undisclosed intermediate level of generality” issue. Some (most?) EPO Boards take an overly formalistic (that word again) and artificial approach to what is “derivable” (directly and unambiguously) by the skilled addressee from the as filed disclosure. You put your finger on the issue which I criticise most about the way the EPO Boards enforce their own established case law. A dose of real world thinking and less “jobsworth” uncreative fact-finding is urgently needed. But I see that as a complaint that will diminish with time, not get ever worse.

    2. That you compare EP and DE whereas I compare EP and GB caselaw is interesting. UK attorneys never expect the EPO to try cases anything like the courts in England. But some German attorneys might suppose that whenever the EPO diverges from established case law at home in Germany, it is the EPO that is drifting astray and off line. For an attorney, it is only natural to be loyal to the home jurisdiction’s legal way of thinking. The English cases show how difficult it is for a judge to avoid a subjective view of obviousness. They need the EPO-PSA (TSM) form of reasoning, to “keep them honest” as it were. I prefer to exclude impermissible ex post facto analysis by using the EPO’s PSA. but it has to be done strictly and formalistically. Otherwise hindsight creeps in, weakening the authority of the judgement.

    That said though, how else is the court to inform itself as to what is absolutely key to the judgement, what was the common general knowledge of the skilled person at the date of the claim? Is there a better way, than setting two expert witnesses against each other and let each cross-examine the other as to their position, in court, under oath, and in front of the beady eye of the judge, watching like a hawk for any uncertainty from the witness when being cross-examined over hours, on the content of their own written report. If there is, please tell. Thanks in advance, Max.

  11. I am inclined to side with Max Drei as I find the attitude of German courts much too patentee friendly. This can be seen with the present discussion about primary injections and the instillation of of dose of proportionality in those. From what I have read, there is only lip service to proportionality.

    I find personally that the decisions on inventive step delivered by the Federal Court, may be not as woolly as UK or US decisions, but overall very patentee friendly. The same goes with the interpretation of Art 123(2). At least the Boards of Appeal have tried to bring in some system and above all some certainty in this matter.

    To come back on the UPC: we do not need a further layer of case law which might complicate matters unduly. Either it is valid for all EU member states, or for none. But the patchwork added by the UPC will not help, and certainly not European SMEs which should be the great beneficiaries of the UPC, but will be the great looser in the long run.

    Techrights and zoobab: FINGERS OFF!!!

  12. Attentive Observer, I do not share your point of view that the German courts are much too patentee friendly, but I think that the EPO is much to patentee unfriendly. However, I think a discussion on this point leads nowhere.
    With respect to injunctions, many comments focus on the EU directive allegedly allowing a proportionally factor into account. However, let’s not forget that it’s the CJEU which interprets the EU directive. Reading the Huawei/ZTE decision and the opinion of the attorney general, I come to the conclusion that the adding a proportionally factor is not in line with EU law for patents. If there are further CJEU decision concerning the extend of the enforcement directive with respect to time limited IP rights (designs, patents), I would welcome a reference.
    MaxDrei, one of the main problems is that “no witness tells the truth”, even if the witness has the best intention to do so and the other one is that the person skilled in the art is a fictional person. Thus, the common general knowledge of said person can never be determined with certainty, but requires a legal assessment.

  13. Dear Anonymous of 24.03., 07:04 AM,

    I can certainly agree that a discussion on a comparison between DE courts and the EPO leads nowhere. But I would not say “that the EPO is much to patentee unfriendly”.

    If you think at the way Art 123(2) is applied by the EPO and by the BGH, there is indeed a big difference. The position of the EPO has the advantage of being clear and easily understandable for everybody wanting to understand. The criterion goes like a red thread through a lot of decisions of the EBA, which gives coherence to the whole system. And it applies in examination, in opposition and before the Boards.

    One should however not forget that after all problems of Art 123(2) are created by the applicant/proprietor himself. If a patent has been granted and suffers of a major problem which leads the proprietor to be caught in an inescapable trap, he has approved the text in which the patent has been granted! And why give him then an undue advantage?

  14. Anonymous, you are right to say that every witness of fact, even when sincerely doing their best to report the facts, can only deliver a subjective view, and every one of those is different. But it’s a bit different with the expert witnesses in patent cases in England.

    If you, as professor of chemistry at (say) the University of Oxford) know that every word you write in your Report will be scrutinised by (say) the Professor of Chemistry at Cambridge University, in the team on the other side of the dispute and then you will be cross-examined on it by that very professor (the barrister as their mouthpiece) over several hours, and you know this will take olace one meter in front of the judge to whom you have already promised to serve, your duty being to the court, not the litigant, AND you know that the written decision of the court will state whether it finds you “a reliable witness” or not, I can assure you, you will try your best to be a reliable witness.

    And if both experts are doing that, it is relatively easy for the judge, after all that, confidently to state what was the knowledge set of the imaginary skilled person on the date of the claim.

    The hard part is then to say without doing it subjectively) whether the claimed subject matter was obvious.

    For me, the best way to “do” obviousness is to combine English fact-finding with the EPO-PSA thought process. Has it ever been tried? Not yet. I live in hope.

  15. MaxDrei, I think the problem is less that the (expert) witnesses do not try their very best to be as honest as possible, but more the fact that the person skilled in the art is a fictional person. Questioning (expert) witnesses is also necessarily involves hindsight. Thus, the knowledge of the person skilled in the art should not be considered a matter of fact but a matter of law in my opinion. From a practical point of view, cross-examination takes too much time and is too expensive. I agree with your statements however insofar that I rarely see a statement in EPO office actions / decisions defining the person skilled in the art (e.g., technician having X years background…, pharmacists, researcher,…) even if the PSA requires to do so. I see such statements however in German office actions and decisions.

    Attentive observer, throughout the profession of patent attorneys, I am not aware of any single person agreeing that the approach with respect to Art. 123(2) and the inescapable Art. 123(2)/(3)-trap is justified (Admittedly, I never met someone agreeing with the USPTO approach either). Even the representatives of generics will tell you so in private. Probably very, very few members of the BoA have ever written a patent application themselves. Accordingly, they assume it’s possible to write a perfect patent application. However, this is not possible, because upon drafting the complete state of the art is not known. Let me rephrase your last question: Is there a legitimate interest for third parties that patents covering a valuable invention are revoked for merely formal reasons? In particular, it is justified that generics profit from the substantive contributions of the patent owners to the state of the art by attacking patents based in Art. 123(2)/(3)?

  16. Interesting assertions from Anon at # 15. I feel compelled to reply.

    On x-exam of experts, yes it’s slow and expensive but litigation is a last resort and it goes to full trial in England only in extreme high value cases. The others all settle earlier. Why that? Precisely because the parties can work out for themselves who will win at trial. How that? Because they know that, at trial, all that slow and expensive x-exam will reveal the true facts.

    As to the 123 2-3 trap at the EPO yes it is brutal but there are compensations. It encourages proper drafting of patent applications, to the benefit of all. Article 69 EPC is key: it commands the judges to balance fair protection with legal certainty, and forces a Doctrine of Equivalents to deliver justice in really hard cases. Recall the recent case that went to the UK Supreme court, in which the only reason that the asserted claim was limited to the sodium salt was poor original drafting, lacking the intermediate generalisation that any competent patent attorney would have written, almost as the very first claim to go down on paper. Was the US-style drafting in that case beneficial for the inventor, the applicant or the public? Answer: it was no help to anybody.

    I’m not thrilled by your requirement that the decision include a statement of the skilled person’s number of years of post graduate experience. For me, that does nothing at all for legal certainty or for my confidence in the fact-finding and legal reasoning going on inside the judge’s head.

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