Full support for the Unified Patent Court Agreement, complete rejection, long lists with points of concern. The German government has published the reactions to its consultation on the new draft ratification bill for the UPCA.

A new ratification process was started last March, after the German Federal Constitutional Court (BVerfG) declared void the process of 2017, because parliament hadn’t approved the ratification bill with the required two-thirds majority. The government published a new draft ratification bill last month and opened it for consultation, with an updated memorandum, explaining among others why and how the UPCA can still enter into force now that the UK does no longer want to be part of it. One central issue: according to the memorandum, a decision about the London section of the central division can be made after the UPC comes into force; initially these cases can be heard in Paris and Munich.

It isn’t clear how many “an die am Patentrecht interessierten Verbände und Institutionen” were given the opportunity to comment by the Ministry of Justice and Consumer Protection (BMJV), but 14 responses were apparently filed, their length varying from a few lines to 25 pages (Monika Schmidt).

Support

Not surprisingly, the European Patent Office hopes the ratification procedure in Germany can be completed as soon as possible, despite the Brexit: “These economic benefits for European companies and especially SMEs will not be affected by the announcement of the United Kingdom, one of the signatory states to the UPCA, that it will withdraw from the European Union and no longer wants to participate in the Unitary Patent. Because even without the UK, the UP package will lead to significant simplification and cost reduction for the companies of the participating EU member states, which is also largely recognized by European companies.” (full reaction here)

There is unconditional support as well from the VDMA and ZVEI, representing mechanical and plant engineering as well as the electrical engineering and electronics industry; Der Verband der Forschenden Arzneimittelhersteller (the Association of Research-based Pharmaceutical Manufacturers); der Verband der chemischen Industrie e.V.; der Bundesverband der Deutschen Industrie.

The VPP – Vereinigung von Fachleuten des gewerblichen Rechtsschutzes simply writes: “We welcome the introduction of the Unified Patent Court very much and hope that the court can soon start its work.” The Vereinigung für gewerblichen Rechtsschutz und Urheberrecht e.V. (GRUR) would like to see the UPCA enters into force soon, and sees chances for strengthening the position of Munich as venue for international patent litigation. The Bundesverband IT-Mittelstand e.V. und patentverein.de e.V is a supporter of the UPCA as well, although they would like to see some changes unrelated to the Brexit.

Criticism

Other respondents are more critical, however. The Verband der Beschäftigten des Gewerblichen Rechtsschutzes (a union of IP law officials), rejects the UPCA, for reasons which are partly related to the Brexit. A quote:

“The present UPCA and the draft ratification bill are in conflict with many important basic principles of the German Basic law. Because of these shortcomings, we reject this agreement and expect the Federal Constitutional Court to reject it in a new round of review. We consider necessary a fundamental revision of the project.” (full reaction here, German language)

The Bundesrechtsanwaltskammer writes, among others: “The ratification by the legislator should only take place after a new jurisdiction regulation [concerning cases originally planned for the London section of the central division] has been established.”

The Deutscher Anwaltverein thinks the “BMJV’s plan to introduce this bill (…) raises a series of questions that warrant a critical opinion”.

“Another point to consider (…) is that the UPCA has clear features of the English (Anglo-American) legal procedure. As apart from Ireland, the only country with experience with this system is no longer part of the system because of the Brexit, some signatories may feel the desire or need to renegotiate the Agreement.”

“It is hard to imagine that the other contracting states would embrace the idea of shifting responsibilities from London to Paris and Munich, especially with a rather vague outlook that this will be reviewed after seven years at the earliest.”

“With regard to the specific German constitutional problems [concerning the supremacy of EU law, as laid down in the UPCA] certain groups have already publicly announced that they will have these checked by the BVerfG. It would be desirable, especially regarding the questions the BVerfG has already touched upon, to create more clarity. The draft bill gives some clues, but these are not entirely convincing (…) there is a not insignificant risk that the law falls through again and thus the entire project will be blocked or put at risk altogether. That should be avoided.”

The Foundation for a Free Information Infrastructure e.V. (FFII) filed a response as well, repeating its well-known arguments against the Unitary Patent project and adding its concerns regarding the way the Brexit is handled in the draft bill.

“1. The software patents granted by the EPO will be made enforceable; 2. Litigation will be more expensive, especially for defending SMEs; 3. A captive Unitary Patent Court. We have independent national courts and Supreme Courts for civil patent cases, we will have a captive Unitary Patent Court, with no CJEU nor the European Parliament as correctives; 4. Lack of compliance with the European Convention on Human Rights (ECHR); 5. Germany is violating the Brexit Withdrawal Agreement and its spirit.”

“Presenting a Treaty for ratification to the German Parliament with an interpretation of how the UPCA will be interpreted if the UK is no longer participating, is clearly violating the spirit of the Vienna Convention on the Law of the Treaties. In such a situation where there is doubt on the content of a draft Treaty in view of the upcoming departure of one of its Contracting Parties, the ratification of the Treaty should be suspended, and the Treaty needs to be renegotiated. That is the correct procedure under the Vienna Convention on the law of the Treaties.”

“If Germany is misled by the patent industry and ratifies the UPCA, this would be a serious breach of procedure under EU law by the German government, and a new constitutional complaint will be launched [the FFII has already announced it could file a complaint itself]. Germany would also expose itself to litigation from the EU institutions and other Member States.”

UK may not cooperate

The contribution of IP law firm Bardehle Pagenberg focuses on various interesting issues. It points out, among others, that although the withdrawal of the UK from the Unitary Patent system can only succeed with the help of London, the UK may not be interested in cooperating. Also, it questions the renewal fees for the Unitary Patent post-Brexit, the issue of the London central division and the lesser appeal of a UPC without the UK. (English version of their reponse here)

“Germany must (…) ensure that a ratification triggering the UPCA to enter into force does not result in the United Kingdom remaining a Contracting Member State of the UPCA. It will hardly be possible for the United Kingdom to be excluded from the UPCA against its will and certainly not where unilaterally construed by a single Contracting Member State. (…)

Recently, the United Kingdom’s interest in the UPCA has fundamentally changed. As long as the United Kingdom was participating, the UK (or at least its public stakeholders) were strong supporters of the UPCA in the hope of strengthening London as a legal venue. In the future, the English courts will not only be in competition with other national patent courts, particularly those in Germany, France and the Netherlands, but also specifically in competition with the UPC, which ought to attract patent litigation of particular economic significance.

Thus, by all accounts, the London venue is already reflecting on how they can stand their ground amongst such competition. The United Kingdom has obviously understood that, by using clever tactics, it can delay a plan B for a system without the UK following Brexit. Now the United Kingdom no longer has any tangible interest in constructive cooperation to help overcome the consequences of Brexit for the UPCA. (…)”

About relocation of the London central division: “A solution that is to be found politically by the Contracting Member States and which is independent of the individual case and the opinion of single individuals (i.e. a universally applicable solution) is clearly preferable, not least in order to promote the users’ trust in a court system that is only just being created.”

“The renewal fees have not yet been recalculated on account of Brexit, which raises important questions. The “commercial basis” for the cost comparison between bundle patents and Unitary Patents has changed considerably as a result. In the future, applicants will additionally have to pay the renewal fees for the United Kingdom, which will increase from GBP 70 to GBP 610 by the end of the term. This does not make an enormous difference for applicants validating their patents throughout Europe. However, a considerable majority of applicants validate their patents, at most, in the four States forming the basis of the “True Top 4” calculation. It can be safely assumed that this will be reflected by the course of action taken by applicants. This in turn ought to have an effect on the volume of cases heard by the UPC.”

“There is an understandable major interest as it were in a swift entry into force after many years’ delay – but not at any price and not with such haste that would entail wholly unnecessary risks. After all, the quality and stability of the court system and the financial burden ultimately to be borne by European citizens are just as important values.”

Some of the points mentioned above can also be found in the response of Monika Schmidt, who criticizes both the UPCA in general and the way the Brexit is being dealt with.

Next steps

What will all this lead to? The next step is for the Justice Ministry to prepare the bill, with or without changes, for approval by the German government. Then the draft bill will be sent to the Bundestag and the Bundesrat, which will both have to decide by a two thirds majority whether they support it. If they do, the President will sign the bill plus the protocol for provisional application. Completion of the German ratification procedure will automatically trigger the start of the Unitary Patent system. According to Winfried Tilmann, consultant at Hogan Lovells and one of the founders of the court, this could happen before the end of this year.

Earlier this week, in answer to questions by MEP Patrick Breyer, the European Commission declared it is “of the view that the withdrawal of the United Kingdom from the European Union does not affect the ratification process of the Unified Patent Court Agreement in Germany. (…) The Commission would welcome a swift ratification of the Unified Patent Court Agreement by Germany.”

On behalf of the European business community, BusinessEurope, Eurochambres, Orgalim and SMEunited sent a joint statement to European Commissioner Thierry Breton for the Internal Market, calling “for the swift ratification of the Unified Patent Court Agreement and the entry into operation of the European Patent system as soon as possible”.

Will this happen? The Unitary Patent project has faced unexpected setbacks before. As was pointed out in a Bristows article, not only German associations which filed a consultation response, but also member states may have doubts about the German plans with the UPC. “Some indication of that (and other views on a unitary patent and UPC system without the UK) may be obtained in the consultation the European Commission is carrying out on an IP Action Plan.  The IP Action Plan is published here as a “roadmap”, open for consultation from 10 July to 14 August 2020.”

Objections can certainly be expected from Italy. Last month, the Italian AIPPI published a position paper, stating that the German proposal for the London section of the central division would be contrary to art 87 (revision of the Agreement) and the 1969 Vienna Convention on the Law of Treaties. The Italian AIPPI considers Milan is the ideal location for the London section.


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7 comments

  1. It was to be expected that the big industry, especially Business Europe, BDI VDMA and Co, is in favour of the UPC, but the number of critical voices, especially when it comes to the status of the London Section of the Central Division, is noticeable.

    Even a well-known patent attorney firm has expressed reservations about the way the draft bill deals with the London section. Another one did not write to the Ministry of Justice, but has also expressed similar reservations.

    That the two most important groups representing the German legal profession have made very clear that some of the problems, the London and the remaining constitutional problems, are of such nature that a new ratification without a proper clarification of those problems is not advisable. That has certainly come as a surprise to the Ministry of Justice.

    Whilst the „Verband der Beschäftigten des Gewerblichen Rechtsschutzes“ might err when it disputes the fact that a patent which is not in German can have an effect in Germany as Germany has signed and ratified the London Agreement on translations, it also brings forward problems linked with the presence of part-time judges. This seems not to be common in most of European jurisdictions, and certainly not in Germany.

    Mr Breton’s reply is a disgrace, but enough has been said in the preceding publication of Kluwer Patent Blog.

    That Business Europe and Co are fully for the UPC is not a surprise as any intervention of its chairman in the recent years was overly favourable to the UPC. They have pockets deep enough to afford litigation before the UPC.

    It is however interesting to note that at the bottom of the document stemming from the European business community to find the following proviso:

    “This paper and the positions reflected in it are not supported by the Spanish Confederation of Employers and Industries (CEOE), Confederação Empresarial de Portugal (CIP), the Confederation of Industry of the Czech Republic (SPCR) and MGYOSZ –BUSINESSHUNGARY”. Not really a surprise. If the UPC would be so marvellous as claimed, why are those associations reticent?

    That after all, should the UPC come into force, lawyers and patent attorneys will in spite of any present reservation be happy to earn money through the system, it is noteworthy that any of the very serious political/economic consequences the UPC will have for Europe have been barely drawn to the attention of the Ministry of Justice.

    What is at stake here is
    – on the one hand, the deleterious effect of the UPC for SMEs, which have only ever been a fig leaf for the big industry to hide behind, and
    – on the other hand the possibility to give to two thirds of proprietors of European patents to attack the reminder of proprietors of patents stemming from the UPCA member states by coming to one single place the UPC. US trolls are jumping at the bit.

    Now the SMEs have been dropped, the accent is made for the necessity of the UPC in helping Europe to recover from the COVID pandemic. With 2/3 of the patents not coming from UPCA member states how is this possible? What would the promoters of the UPC have been able to say without the pandemic? Please do not take people for a ride.

    The political/economic disastrous consequences for Europe in general and Germany in particular is something which will have to be explained to German MPs who will have to ratify the new ratification bill by a 2/3 majority.

  2. For the last nearly one thousand years the national security of England has been based on playing off one European mainland Power against another. In the few years of its EU membership, this was tempered by the need to engage, to get EU law-making rational and efficient. But now that the UK is out of the EU it can revert to its thousand year old task of messing up unity on The Continent. Keep that in mind when pondering UK conduct vis a vis the UPCA.

    And without the UK as the “third member of the committee” of the Big Boys Club of the EU, with London no longer deciding pharma/biotech cases for the UPC, in patent matters ongoing, Germany and France are free once more to bicker over issues such as “Shall Paris or Munich call the shots”. What we are seeing now is a struggle for supremacy between the governments of France and Germany. As Attentive points out, fine for big industry, but not so helpful for the SME sector. Isn’t there some saying or other about elephants fighting and mice getting ground into the dust?

    1. As to the present situation in the UK and who calls the shots as to international trade issues, an interesting analysis can be found at :
      https://www.politico.eu/article/power-list-who-matters-in-uk-trade/
      Given the division within the UK government, it is not clear that they are in a position to sow division within the EU anyway.
      The shift towards centralisation at the top of the UK government as signalled in this article implies that any deference to CJUE is anathema.

  3. Max Drei is right when it says that UK is reverting to his age-old tactics of playing up mainland powers against each other.

    I am however not sure whether France and Germany will bicker about where the work foreseen for the London Section will go. Mr Tilmann is of the clear opinion that it should go to Paris and some French lawyers were very happy by this gift from Brexit.

    That in the explanatory note the lawyers in the Germany Ministry of Justice they also referred to Munich, appears no more than a reminder it could also be Munich. In view of the difficulties France and Germany have at the moment in the EU, it is doubtful that on such a rather minor issue they would show a dissent.

    It rather seems that UK has only ever been participating in international treaties to be sure that it would not go again their interests. Lord Palmerton said once: The UK does not have friends or foes, it just has interests. How true!

    Its attitude in the EU is a good example. I am not thinking of the famous stance I want my money back, but rather to all exceptions UK wanted and got granted in the EU. No application of the EU Social Charta is a prime example. Before Brexit the then PM David Cameron wanted even more exceptions for UK.

    Even in the field of IP, it should be remembered that UK became a member state of the predecessor of the early DG1 of the EPO. UK joined the IIB in the mid-sixties and got full voting rights, but managed to get a ceiling to its contribution. In other words it had its fingers in the pie, but did not have to endorse all the accompanying requirements.

    This situation repeats itself with the UPC. By signing and ratifying the UPCA but at the same time declaring not wanting to participate but not declaring its withdrawal according to the VCLT, UK is in the comfortable position to blow up the whole UPC system.

    History is meant to repeat itself, but in the case of the UK and it applies to a large extent.

  4. Thanks Attentive Observer and Max Drei for these insightful comments.
    The approach of the UK IP profession in respect of the EU is exemplified by the request by CITMA, the Chartered Institute of Trade Mark Attorneys, that UK professionals be authorised to represent clients before the EUIPO for a period of three years after Brexit.
    Another line of thought is aimed at relaxing UK requirements vs. European rules so as to make the UK attractive as a filing country and boost UK national filings. An example could be the recent CIPA Discussion Paper on « Patenting inventions created using an AI system » suggesting that inventorship rules should be made more flexible to avoid the need for the designation of human inventors when an AI system is used for obtaining an invention.

    1. Why would the EU allow UK Trade Mark Attorneys to continue acting before the EUIPO? What’s in it for the EU? How many cherries can you pick?

      Allowing AI inventors to be named on an application requires more than an adaptation of the formal requirements. The AI must be able to assign his (or her?) rights too. And for being able to do that, it first needs the possibility to actually own any rights.

  5. Interesting comment by UK Watcher about an AI inventorship entity needing capacity to assign its rights.

    I don’t see that as a problem. Consider:

    The owner of the AI machine is already the owner ab initio, of any patentable invention that arises from the employment of the AI machine to make inventions. Just like Section 39 of the UK Patents Act from 1977. Being already the owner/employer, there is no need to get out of the AI machine any freshly signed instrument of assignment specific to the invention. That would be superfluous.

    The employer files at the EPO and puts on the Form of Declaration of Inventorship “AI, by virtue of being its employer”. Prima facie, Applicant is entitled to the patent. Who has locus to dispute that entitlement? Only AI. Will AI dispute entitlement? Not in the foreseeable future.

    Or am I overlooking something?

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