The March ruling of the Federal Constitutional Court (FCC) in Germany that the German ratification of the Unified Patent Court Agreement (UPCA) was void because it didn’t get the required two-thirds majority, increased the uncertainty about the viability of the project. But the debate is far from over. Patrick Breyer, member of the European Parliament for the German Pirate Party, asked the European Commission earlier this month to confirm that, due to the Brexit, Germany no longer has the right to ratify the UPCA. In the meantime Thierry Breton, commissioner for the Internal Market, urged the EU last week to speed up plans for the single patent system. Kluwer IP Law spoke to Patrick Breyer.

On 5 May 2020 you sent three questions to the European Commission concerning the Unitary Patent project. You wrote: “According to EU case law (Court of Justice of the European Union Case 22/70), Member States must not enter into agreements with third countries that affect EU rules or alter their scope. The UK is now considered a ‘third country’ under Article 216 of the Treaty on the Functioning of the European Union. While the EU may jointly assume obligations with the UK with respect to patent litigation, Member States no longer have a right to do so.” In your questions, you’ve asked the Commission 1) to confirm that Germany no longer has the right to ratify;  2) to advise the German Government not to ratify the UPCA as it stands; 3) Whether it would launch an infringement procedure against Germany if it ratified the UPCA in its existing form. What do you hope to achieve with your questions?

“The Unitary Patent is another attempt to validate and expand software patents in Europe. Software development is a key sector on which whole industries and markets depend. The agreement would reserve to the EU Court of Justice only a say in a few limited technical matters. The UPCA is an attempted takeover of EU institutional powers by external international organizations. This can undermine democratic control and threatens economic development and sustainability in Europe.”

You’ve linked your questions to the Brexit. The UK, however, has announced its withdrawal from the Unitary Patent. Doesn’t this mean that the problem of a participating ‘third country’ has been solved?

“To my knowledge the UK has not formally withdrawn so far, which would mean that Germany must not ratify at present. I also do not think properly excluding the UK from the arrangement is possible without changing the treaty.”

Are you concerned German re-ratification will be pushed through parliament? Is there enough support for the UPC in Germany?

”This will likely depend on the German Greens. In the past they have agreed with the principle of a unitary patent system and voted in favour.”

Just a week after the FCC’s decision, the German minister of Justice and Consumer Protection, Christine Lambrecht, said she wanted to “continue to work to ensure that we can provide the European innovative industry with a Unitary Patent and a Unified Patent Court.” According to a report by law firm Simmons & Simmons a new Act of Approval to correct the deficiency in the German vote is currently being drafted. And last week Thierry Breton, member of the same Commission you sent you questions to, urged the EU to speed up plans for a single patent system. It doesn’t seem likely your questions will lead to the end of the Unitary Patent project, does it?

“Legal certainty is in the interest of all parties involved. The UPCA has successfully been challenged in court before. The actors should not risk this happening again. Union law gives the Commission all tools it needs.”

Who would benefit from and who would be harmed by the Unitary Patent system, in your view?

“Patent trolls that abuse the system to make money would benefit, whereas small and medium sized businesses, as well as innovation as a whole, would be harmed.

Patents often function as a deterrent to innovation rather than as an incentive. The patenting of knowledge in areas like genetics and biotechnology, as well as software, renders it a tangible threat to the future of our society.

Monopolies on plants and seeds and costly legal disputes about often trivial patents already demonstrate how it is both innovators and consumers who have to pay the price.”

Are you in favour of any patent system for Europe that is less complicated than the current system?

“This treaty should be abandoned and substantive reform at EU level taken up.

Patent law needs to be reformed or replaced with an approach that enables freer and fairer markets instead of continuing to further stifle innovation.

Patents should never be granted for ‘inventions’ that are trivial, non-substantial, computer programs, business models or works of nature. These types of patent impede the development of an information society and result in the privatisation of the commons. Small and medium IT companies throughout Europe prove that patents on software are no prerequisite to economic success. Innovation must be fairly rewarded, but this does not necessarily require the granting of monopolistic privileges that stifle innovation and negatively affect the access to
essential goods.

Pirates oppose the frequent abuses of patent privileges, such as introducing spurious changes to medicines with expiring patent protection. Uncompetitive practices such as paying competitors in order to delay the marketing of generics should be actively prevented. Universities and research institutes should be able to carry out scientific research for health and medicine without being encumbered by patents.”

How much time do questions like yours take to be answered? In other words, when do you expect a reaction from the European Commission?

“The Commission should answer my written questions within 6 weeks but often this time limit is not met.”

If the Commission’s answers are not satisfactory, in your view, what will you do?

“We may ask authoritative legal experts to look into the matter.”


_____________________________

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12 comments

  1. “We may ask authoritative legal experts to look into the matter.”

    Back in 2007, the legal affairs committee of the European Parliament (JURI) requested an opinion of the Legal Service of the Parliament about the ratification of the EPLA, which would have made an international agreement with Switzerland or Turkey. The EPLA was rules contrary to AETR (22/70), we are in the same situation with UK as a third country here.

  2. Although I cannot agree with the position of Mr Patrick Breyer in respect of computer programs, there is a lot to be agreed with.

    Let’s just say that when the European Parliament took its decision about software which should not be patentable, it did so under the intense lobbying of the proponents of free software. Now we have an intense lobbying in favour of the UPC. Tables seem turning! The former lobbyist are now fighting new lobbyists.

    I consider however that the case law of the BA of the EPO has found a proper balance between the non-patentability of software as such and its patentability when it has a function which goes beyond the normal working of a computer. For instance, it does not matter whether a rolling mill is controlled by means of a computer connected to sensors and actuators or by a series of classical electronic circuits.

    The situation is slightly different when everything is happening in the computer itself, but as said, there are also situations there when a patent could be granted.

    I would therefore not consider that the UPC is a threat as such and would open the floods as only patents granted by the EPO can be reviewed by it. If the EPO has refused an application this decision cannot be reviewed by the UPC. Only post-grant infringement and validity can be decided (after the opposition period) by the UPC. The situation is thus by no means as bad as Mr Breyer makes out.

    That the UPC is a threat for European Industry is however a matter of fact. EP applications from EU member states represent according to the latest figures published by the EP 35,1% of all applications filed.

    When we take all EPO member states it comes to 45%. 72% of the applications stemming from Europe are filed by large enterprises and the rest by SMEs (18%) and the like (10%). In the end only 10% of the applications are filed by SMEs and the like having their seat or place of business in Europe. This figures valid in 2019 are not really different in the previous years.

    It means thus that 65% of all applications stem from non-EU member states. I fail to understand how this proportion can be favourable to European industry in general and European SMEs in particular, having their seat in the EU! It is thus not a surprise that countries like Poland and the Czech Republic are not in favour of the EPC.

    A recent research paper from Dimitris Xenos, “The Impact of the European Patent system on SMEs and National States and the Advent of Unitary Patent”, published in Prometheus, Vol. 36, No. 1 (March 2020), pp. 51-68, comes to the conclusion that “objective evidence shows that the new legal/institutional developments amplify existing imbalances in technological and economic capacities that are already observed between and within member states, and between them and non-EU states in the current global conditions of technological competition”.

    The figures used in the study, albeit older, are comparable to the actual figures, so that the conclusions in the paper are also valid today and confirm what I have stated above.

    One of the conclusions of the paper is that “the democratic control of industrial property in national markets is an essential responsibility of the state. Yet, the state is being stripped of democratic control by the EU’s new, pseudo-federal patent system”.

    A further one is “Objective evidence has emerged, albeit ex post, showing that the position of SMEs is very weak under the EPO system as their share of annual European patents granted is less than 10% and 17% in patent applications. These statistical results contradict the official justifications of the UPP, which focus on benefits for SMEs”.

    The UPC opens a boulevard for litigation from non-EU member states and is primarily for the benefit of large industry, for instance represented by Business Europe. Has this ever been explained to all the Parliaments having ratified or intending to ratify the UPC?

    That Mr Breton wants to push the UPC is not a surprise. It is a good friend and a political buddy of the former president of the EPO.

    To be very blunt, the UPC is pushed by the “Big” industry and lawyers who hope to fill their pockets when litigating before the UPC. Both represent a very active lobby which is more interested in its own profits as in the well-being of European industry in general and European SMES in particular. The lawyer’s fees are not on the low side when it comes to litigate before a national court, but imagine what it could be, when litigation is before a supra-national jurisdiction!

    In a second comment I will approach the problem caused by the non-participation of the UK in the UPC and the legal consequences it might have.

    Techrights and zoobab: FINGERS OFF!!!

  3. A word here, in support of the notion that the EPO is competent to set the limits of patentability, particularly in the field of “software inventions”.

    GATT-TRIPS sets the limits of patentability as “all fields of technology”. The EPO interprets this as inventions manifested as a combination of technical features that solves a problem in the technological arts, in a way that isn’t obvious. The only inventive activity that “counts” for patentability is inventiveness in technology. This approach from the EPO squeezes out cleverness in fields other than technology far more efficiently than any other jurisdiction can do. What does anybody in their right mind find problematic with any of that?

    It hardly need be aid that there are fine judgements to be made, at the limit of patentability. What is “technical” and what is not? But with the EPO approach (unlike in other jurisdictions) ad with every further hundred hard-fought and marginal inter Partes disputes over validity at the EPO, that boundary gets ever sharper, with every succeeding year of EPO Boards of Appeal case law.

    Anybody who values legal certainty and a correctly functioning patent system should cherish the EPO case law on the substantive law of patentability, and not let any new patent court interfere with it or over-rule it or replace it with something having a lower degree of hard-won, consistent, rigorous and steadily increasing legal certainty

    1. “Anybody who values legal certainty and a correctly functioning patent system should cherish the EPO case law on the substantive law of patentability, and not let any new patent court interfere with it or over-rule it or replace it with something having a lower degree of hard-won, consistent, rigorous and steadily increasing legal certainty”

      Couldn’t agree more.

      However, G3/19 clearly indicated how the Board of Appeal can be unduly influenced by the Administrative Council and/or President.
      IMO, the BA must become institutionally separated from the Administrative Council and/or President (becoming another “organ” under Art.(4(2) EPC?). Furthermore, the BA should also be given the power of judicial review of any Decisions of the Administrative Council or any Decisions by the President whether such are in agreement with the EPC.

      Not only might the Bundesverfassungsgericht require such but also the desired TRIPS compliance requires the BA to be a “judicial or quasi-judicial authority” authorized to review final administrative decisions, and not being a mere extension or another layer of the administrative authority.

      The Administrative Council still has the power to prepare and convene a conference to revise the EPC, i.e. to legislate, should it feel the need to correct the EPC in view any its decisions be struck down by such an empowered BA.

      1. What an interesting observation, MN. I do hope that Attentive will see it and then feel the urge to offer his perspective on it.

        Personally though, I have more or less given up hope of seeing in my lifetime the shameless, spineless and venal AC ever stirring itself enough to actually do the job it was set up to do.

        1. Dear Max Drei,

          As far as G 3/19 is concerned, the EBA eventually bowed to the pressure of the president and the AC. Would you expect the CJEU rewrite a prejudicial question referred to, in order to come at a given conclusion, not to say a conclusion requested by the executive?

          It is amazing how the EBA twisted and turned, so that it could say that the conclusions of G 2/12 are still correct and not questioned by the present EBA, in order to end in a spin by coming up with the notion of “dynamic” interpretation.

          It seems that the decision is the work of the president of the boards, and even more of the rapporteur. Evil tongues even claim that the rapporteur would like to take over the job of president once the latter will end his period.

          The BA are anything but independent. The president of the boards has only the powers delegated to him by the president of the office. The president of the boards can propose a budget, but the budget of the boards is merged in the general budget of the EPO, and only the president of the EPO is enabled to present the overall EPO budget to the AC.

          If a member misbehaves, he can be put on hold for 24 months; if he is not productive enough, he will not be reappointed. And on top of this the criterions for reappointment are not even public! The boards have also lost their independence when it comes to their rules of procedure. They are heard, but the decision about them lies in the hands of the board of appeal committee composed of external judges and members of the AC. Just look at the history of Art 11RPBA2020 to realise what it means.

          We are presently at the EPO in the same situation as it was in Germany before the creation of the German Federal Patent Court. A kind of court, was interspersed with the German Patent and Trademark Office (DPMA). A decision from the highest Administrative Court forced the legislator to review the situation and to insure the proper independence of the organ revising decisions of the DPMA.

          The conference provided in Art 4a EPC2000 has never been organised. It is not of the president of the EPO to decide whether such a conference has to be convened or not. But the AC has accepted to be the dog waged by the tail.

          R 28(2) has taken precedence over Art 53(b). This was never envisaged by the fathers of the EPC. The situation is actually similar to that of the PCT, where Rules change the meaning of the Articles.

          The big difference is that the PCT does not end up with a patent or a refusal, but this is the case at the EPO. A bit more decency would be advisable, as it means that the national parliaments are short circuited, as any amendment in substance of the EPC has to be ratified.

          Art 33(1,b) is of very limited application, and presupposes an agreement of all the contracting states.

          Techrights and zoobab: FINGERS OFF!!!

          1. “The situation is actually similar to that of the PCT, where Rules change the meaning of the Articles”

            “Attentive Observer”, I know that is a bit off-topic, but would you mind to elaborate on this. (I am currently writing an article about the PCT.)

            I am aware that originally in Chapter I, as also currently stated by the articles, only an international search report was to be established by the ISA. The PCT Regulations have changed this that now an International Preliminary Report on Patentability is to be established by the ISA.
            The rules do go beyond what was originally intended by the articles but I see no conflict with the articles or, using your words, change the meaning of the article.
            MN

        2. “shameless, spineless and venal”

          Thumb up (Shame, can’t reply here with emojis!)

          I wonder whether this was one reason Article 4a [Conference of ministers of the Contracting States] was introduced with EPC 2000!

  4. @ Jan Van Hoey: Here are the conclusions of the opinion of the Legal Service of the European Parliament about the ratification of the EPLA (1 February 2007):

    “1) The purpose of the Agreement on the establishment of a European patent litigation system (“EPLA”) is to set up the European Patent Judiciary to settle litigation concerning the infringement and validity of European patents.

    2) Where common rules have been adopted, the Member States of the European Community no longer have the right, acting individually or even collectively, to undertake obligations with non-member countries which affect those rules.

    3) Directive 2004/48/EC harmonizes national legislation on the enforcement of intellectual property rights. Not only would EPLA govern matters already dealt with by this Directive, but there are also contradictions between the two instruments on a number of matters.

    4) EPLA aims to lay down rules in certain areas governed by Regulation 44/2001 concerning jurisdiction and the recognition and enforcement of judgements. Notwithstanding the specific provisions of EPLA governing its relations with that Regulation, the conclusion of EPLA would affect the uniform and consistent application of the Community rules on jurisdiction and the recognition and the enforcement of judgements in civil and commercial matters.

    5) Compliance with Article 98 of EPLA would prima facie constitute a breach of Article 292 EC Treaty.

    6) It follows that the Community’s competence is exclusive for the matters governed by EPLA and Member States therefore are not entitled on their own to conclude that Agreement.”

    Source: https://www.ipeg.com/_UPLOAD%20BLOG/Interim%20Legal%20Opinions%20Legal%20Service%20EP%20Feb%201%202007.pdf

  5. Here is my second comment:

    Whilst the EPC provides the possibility to leave it, cf. Art 174 EPC, no such provision is to be found in the UPCA. It is only foreseen that the UPCA can be revised under certain conditions, but nothing more, cf. Art 87 UPCA.

    The situation of the UK with respect to the UPC is thus quite interesting. It has one foot in the UPC and one foot out. It has one foot in, as it has ratified it, but it has one foot out, as HM government has declared that it will not participate in the UPC, as at the end of the line the CJEU can decide and the Brexit was just to avoid being subjected to the jurisdiction of the CJEU.

    Having ratified, the UK is thus bound by its ratification and it is difficult to see how Germany could ratify the UPCA so that it can enter into force, with a member state refusing to accept the supremacy of Union Law as expressed in Art 20 UPCA. I cannot see a better catch 22 situation.

    The questions of Mr Breyer to the Commission are thus justified.

    Let’s envisage a possible scenario. As there is no clause in the UPCA permitting the UK to leave the UPC, the only possibility is to look at the Vienna Convention on the Law of Treaties.

    Art 25(2) VCLT could be possibly come into play. According to Art 25(2) VCLT “Unless the treaty otherwise provides or the negotiating States have otherwise agreed, the provisional application of a treaty or a part of a treaty with respect to a State shall be terminated if that State notifies the other States between which the treaty is being applied provisionally of its intention not to become a party to the treaty”.

    For Art 25(2) VCLT to come into play, the treaty should at least be provisionally applied, which is not the case for the UPC. Provisional application of the UPC is submitted
    1) to the ratification of at least FR, UK and DE as specified in Art 89(1) UPCA (….including the three Member States in which the highest number of European patents had effect in the year preceding the year in which the signature of the Agreement takes place).
    2) The entry in force of the protocol on the provisional application of the UPC, which also requires the FR, UK and DE to be signatory. UK has made a reservation on the application on Art 4 UPCA. DE has not yet signed the protocol, and might only do so after a new ratification.

    There are thus still some conditions to be fulfilled before the UPCA enter into force, be it provisionally or not.

    It seems thus that Art 25(2) VCLT is not directly applicable. It could be so, provided the UK would at least accept to file the notification foreseen in Art 25(2) VCLT, but this is not even sure. The question is however would it be in the interest of the UK to do so?

    Without filing the notice, and not clearly withdrawing from the UPCA, but at the same time declaring it does not want to participate, means that the UK could stall the whole UPC. Further than even stalling it, it could, in my humble opinion, even blow up the UPCA. It might be still member state, but by not accepting the jurisprudence of the CJEU, any decision taken by any local or regional court, or by the Central Division could not be enforced as the UK would not any longer be bound by Brussels 1.The UPCA would become a paper tiger.

    This would allow the British legal profession to set up a litigation system which would come into competition with the UPC. This possibility has clearly been envisaged and is thus not merely theoretical. This is also one of the reasons why the proponents of the UPC want it to enter into force as quickly as possible, so as to block the way envisaged by the British profession.

    A big proponent of the UPC has written in a recent article – Tilmann: Zur Nichtigerklärung des EPGÜ-Ratifizierungsgesetzes, GRUR 2020, 441- that under the condition that the UK files the notification under Art 25(2) VCLT, the United Kingdom would therefore no longer be one of the three Contracting member states in which, at the time of signing the UPCA, most of the European patents were effective (Art. 89(1) UPCA), and Italy would automatically takes over this role, cf. 2.a) in the article. .

    This appears correct, but the proviso that the UK withdraws, and not merely not participate, has to be fulfilled. And nothing is more certain.

    Mr Tilmann goes further and even claims that the status of the London Section of the Central Division does not have to be decided beforehand and the UPCA could be amended later in time, see Point 2,b) of the article.

    For Mr Tilmann the London Section would be de facto cancelled. This means that the Central Division in Paris would take over the duties foreseen for the London Section. He considers that it would be possible to wait until a further amendment of the UPCA and the corresponding ratification to decide where the former London Section would be transferred to, for example to Italy. The problem is that Mr Tilmann does not give any legal basis to this daring conclusion.

    Needless to say that the French legal profession highly appreciates what it calls a gift from Brexit. It wanted to keep the matter silent, but this is not any longer the case now.

    I have rarely seen such a negation of the political situation. When one remembers the negotiations which ended up in splitting the Central Division in three part, it looks pretty naïve to claim, that all the member states will accept that Paris takes over two thirds of the Central Division, at least for a certain length of time.

    There is still a further Damocles sword over the ratification of the UPCA by Germany: the absolute supremacy of Union Law, cf. Art 20 UPCA, which has been queried by the German Federal Constitutional Court in § 166 of its decision nullifying the first ratification by the German Parliament. To the displeasure of Mr Tilmann, the FGCC did not take any decision on this point as it had already found other reasons why the ratification was null and void.

    For Mr Tilmann, should a conflict arise between primary Union law and national constitutional law, it could be resolved by the rules of the UPCA. According to Art. 82 (3) UPCA, the enforcement procedure is governed by the law of the Member State in which enforcement is to take place, unless the Treaty or the Statute provides otherwise.

    Even if as claimed by Mr Tilmann this point is supported by the minority view in the GFCC, the fact that this point has been entered in the decision of the FGCC, although this point was not raised by the complainant, is certainly not innocent.

    In general, I would take any conclusion of Mr Tilmann with a very large pinch of salt. When opinion C 1/09 was issued by the CJEU, he was of the opinion that the successor of the defunct EPLA, i.e. the UPCA, would only be opened to member states of the EU. Later, after Brexit, he was of the very opinion that the UK could stay in the UPCA after having left the EU. A late French politician said once: I am not a whether cock, it the wind which is turning….

    Anything, even the slightest straw is good to push the UPCA forward so that it can enter into force as quickly as possible. The problem is that the more the whole UPCA is stalled, the more the problems it creates become apparent. The fait accompli wanted by the proponents of the UPC is not any longer possible, and it is good so.

    Techrights and zoobab: FINGERS OFF!!!

  6. I just found in Lexology the translation of an article originally published on the home page of Kather Augenstein Rechtsanwälte about the judgement of the GFCC about the actions of the ECB and the possible consequences for the UPC.

    Translation
    https://www.lexology.com/library/detail.aspx?g=12b9b426-d627-4af7-9c07-efdbeecf01b3&utm_source=lexology+daily+newsfeed&utm_medium=html+email+-+body+-+general+section&utm_campaign=lexology+subscriber+daily+feed&utm_content=lexology+daily+newsfeed+2020-06-05&utm_term=

    Original
    https://www.katheraugenstein.com/die-neue-skepsis-des-bundesverfassungsgerichts-zu-europa-warum-es-zu-unrecht-dem-europaeischen-gerichtshof-widerspricht-und-was-das-fuer-das-einheitliche-patentgericht-bedeutet/

    Paragraph 6 of the of Dr Augenstein’s article makes very clear that the primacy of European law enshrined in Opinion 1/09 the CJEU would be an obstacle to the German participation to the UPC should the GFCC not allow this primacy.

    It appears quite clear that the question of the supremacy of EU law over the German Constitution as stated in § 166 of the decision on the UPC is far from innocent, and represents a constitutional threat to the UPC.

    Whether one agrees or not with this point, it cannot simply alleged that a complaint before the GFCC may be considered as not admissible from the outset, as the possibility of conflict is unlikely, see Tilmann: Zur Nichtigerklärung des EPGÜ-Ratifizierungsgesetzes, GRUR 2020, 441, Point 3, b).

    Techrights and zoobab: FINGERS OFF!!!

  7. For those of you with eyes to see and ears to hear:

    What does para. 166 of the BVerfG decision tell you?
    Why was this issue brought up by the court despite not being raised by the complainant?
    Would the court have brought it up if it had not been able (and willing) to address it in these same proceedings (had that been necessary)?

    Beyond that: Did the court reject the additional arguments raised on their merits? If not, what does that mean from a procedural point of view?

    Any efforts put into the idea of making the UPCA come into force in unamended form will ultimately prove to have been a complete waste of time.

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