Due to recent developments in Germany, Slovenia and Austria, where parliaments gave their support to the Protocol for Provisional Application of the Unified Patent Court Agreement, it is likely that after many years of delay the new Court will open its doors in 2022 and also the Unitary Patent will finally see the light of day. According to the architects of the Unitary Patent package, it will make the Europe-wide enforcement of patents easier, offer greater legal certainty and reduce litigation costs. But not everybody is convinced. Prof. Dr. Thomas Jaeger, European law expert of the University of Vienna, is an outspoken opponent of the Unitary Patent system, which he calls “a recipe for disaster”. Kluwer IP Law interviewed him.

Could you explain what your objections are to the UP system?

“I am not an opponent of an EU patent system per se, I am a critic of the dysfunctionalities of this system in particular. This applies to both the substantive patent and the litigation system.

1) The substantive Patent Regulation is just an empty shell that cross-references to other legal systems, international (EPC, UPCA) and national (civil law). This renders the handling and application of the Unitary Patent complex and deprives it of the uniform character that, for example, the Trademark Regulation affords.

2) The same is true for the UPCA: Because it is a legally complex and intransparent compromise, it fails to consolidate patent jurisprudence in Europe. Instead, it just adds one more layer of patent jurisprudence of last instance. This invites strategic patenting and torpedo litigation. I expect that in many cases, enforcement costs, but also costs for third-party users wishing to access knowledge, will go up instead of down.

First, let’s not forget that all non-EU states were involuntarily kicked out of the system and are forced to remain separate. This concerns important patent jurisdictions such as Switzerland or now also the UK. Their national courts remain competent as is.
Second, the UPC has a final say for non-EU patents of the EU MS.
Third, the CJEU has its final say in all cases involving interpretation of Unitary Patents and the UP Regulation as well as any other issues of EU law, e.g. fundamental rights, autonomy, effectiveness of procedural law and many, many more.
Fourth, the EPO Boards of Appeal remain competent as is.
Fifth, national patent courts of the EU-MS (e.g. the German BGH) remain competent for purely national patents.

3) The legality of the UPCA is questionable. By now, we have a considerable amount of recent CJEU case law that hints to the EU law incompatibility of the UPCA’s role and jurisdiction. This could lead to the toppling of that system once it becomes operative. Until the CJEU has had a chance to pronounce on the legality of the UPCA, it seems risky for patent holders to make widespread use of the system or to entrust it with valuable patents.

4) Furthermore, the idea behind this complex setup, which had been to keep the CJEU off limits in patent interpretation, could backfire: The Regulation is in fact a door-opener for the CJEU’s competence to speak out on issues of validity (and therefore: patentability) post-grant. The Regulation indirectly brings the core of the EPC within the scope of EU law and thus under the jurisdiction of the CJEU – similarly to what we have seen to be the (albeit there: limited) effect of the Biotech Directive. Personally, I believe CJEU involvement is a good thing, but it is certainly not what had been hoped for. My criticism here is the hierarchies between the various layers of law involved are yet intransparent to users of the system and will likely bear some surprises for them.

5) Another important point is that the Patent Regulation and the UPCA have missed a crucial chance to modernize and consolidate patent law exceptions and limitations. This concerns answers to the current challenges everyone is talking about, i.e. introducing modern and balanced exceptions or limitations for research, greening, an outspoken approach vis-à-vis AI and much more. That the Unitary Patent does not include a compulsory license (which therefore might or might not, we just don’t know, be available on the MS level), is just another illustration of its lack of modernity and balance, complexity and potential future surprises for users vested in the system.

6) The same is true, finally, for the qualms surrounding the role of the EPO and the sufficiency of legal protection afforded there (see the German constitutional complaints): They too are just another detail or footnote in a system that is inadequate on so many levels. The institutional and legal protection provisions of the EPC are in dire need for reform and modernization. The UP and UPC’s reliance on the EPC/EPO imports those problems into the EU’s legal system. More important in practice, because of that importation exercise into EU law, let’s not forget that the CJEU will enter the arena as an adjudicator for the overall legality or deficits of the EPO’s setup.

7) One final criticism amounts to a lack of democratic debate: We face legal issues (e.g. Brexit, EPO) and new challenges (pandemic, climate change) which might affect our perception of the package and its merits. The package today is something significantly different from what the EP (for the Regulation) and national parliaments (for the UPCA) consented to. They need to be given a fresh chance to assess these changes and to reconfirm that this is still what they want. Instead, governments simply keep meddling though behind closed doors.”

Five years ago, you already called the Unitary Patent system an ‘emergency patchwork’ in an interview on this blog. That was even before the UK’s decision, after the Brexit vote, not to join. That will not have made you more positive, I suppose?

“The departure of the UK is just another aspect of the overall ineptitude of the system. What good is the system without the UK on board? How will it be able to deliver on its promises of lower user and litigation costs without the UK, how will it be able to consolidate patent interpretation and enforcement and, not least, how will it be financially sustainable?”

Still, the start of the UPC seems to draw closer very quickly now. How do you explain this?

“The initial plans for an EU patent date back as long as the late 1950s. Already the conclusion of the EPC had been a response to failure among (then) EEC states to agree on patent legislation. Decade by decade, fresh plans had been tabled and marred for all sorts of reasons. The 2000s alone have seen four different proposals. It is the strong political will to finally get the deal done that has characterized the whole project ever since the office of Commissioner Barnier. Since then, a ‘whatever it takes’ mentality drives the project forward no matter what, i.e. even after the initially unthinkable worst case scenario of UK withdrawal.

It’s like someone desperate to find a partner: The more setbacks you encounter, the more both frustration and determination grow. Eventually you may settle for someone who is a far cry from your preferences. While such a relationship may sometimes turn out fine nonetheless, it typically is a recipe for disaster.”

Last month, the Preparatory Committee announced that UPCA member states will soon sign “a draft Declaration on the authentic interpretation of Art. 3 of the PAP-Protocol, following the United Kingdom’s withdrawal from the Unitary Patent System. In line with public international law, this Declaration will confirm the entry into force of the PAP-Protocol, once the required 13 Member States become bound by said Protocol, recognizing that Art. 3 of the PAP-Protocol is to be interpreted as mirroring Art. 89 of the UPCA.” Do you agree this solution is ‘in line with public international law’? Can ‘United Kingdom’, which is mentioned in Art. 3 as one of the obligatory signatory states of the protocol, interpreted as being ‘Italy’?

“Public international law is outside my core competence, I am an EU law expert. Having said that, I would expect public international law, and the VCLT in particular, to be rather flexible to accommodate more or less any understanding the parties desire.

My problem with the Declaration is a different one. As was said before, I think we need a fresh democratic debate over the package and parliamentary involvement. Clarifying the text of the UPCA directly in regard of the UK would not only be the more transparent and legally certain option, but it would offer the important chance for re-ratification and thus confirmation by parliaments. If the support for the UPCA is still there and everyone is on board, that exercise should be no problem and accomplished quickly.”

Are politicians in the Member States aware of the problems? I have to say I followed the ratification debate in the German Bundestag earlier this year and had the impression the representatives of the various political parties weren’t all that well informed.

“The UPC will now likely become operational in view of the fact that there is no renewed and broad democratic debate. If we had it, the picture might actually be different. The Bundestag’s disinterest in the issue is, in my view, largely owed to the perception that so far down the line there is no alternative left but to waive it through, so why bother. If that perception was changed, e.g. by subjecting the current shape of the package to re-ratification across the MS, parliamentary interest and the level of information of parliamentarians will certainly pick up.”

Who are the main beneficiaries of the UP package?

“First, I have the impression that many stakeholders welcome the system as being better than nothing. They acknowledge that the system is flawed, but still hope for some benefits in terms of fees and facilitated cross-border patent enforcement. I am not sure whether those hopes are justified, e.g. in view of the cost effects of Brexit, the generally limited territorial scope of the system, the remaining bifurcation compromise or the absence of jurisdiction for compulsory licenses. But also on a general note: a single system that is flawed may turn out to be worse than the current mix of some good and some bad systems.

Second, more specifically, it seems there is also a number of stakeholders who may be interested in the new system as an additional tool of prolonging and complicating litigation for both invalidity and infringements (mind the lack of consolidation of jurisdiction and of civil law claims), thereby better shielding questionable patents from invalidation as well as raising the stakes for access to key knowledge.”

In a recent GRUR article about the UP system you also pointed at the COVID-19 pandemic. Why?

“Because the Unitary Patent and UPCA are unmodern. The package insufficiently supports and stimulates research (for lack of suitable exceptions and limitations) and it stifles third party access to knowledge (e.g. lack of a compulsory license). COVID-19 is just a current example for why we need a modern approach to patent law instead of more of the same, which is what the package stands for.”

Will the UPC’s legality be tested immediately after its launch, you think?

“I have heard from a number of sides that such interest is there, especially since the hurdles for a challenge are low: Any national court whose jurisdiction is removed because of the UPC could put the question of EU law compatibility of that removal of jurisdiction (i.e. of legality of the UPCA) before the CJEU by way of a preliminary ruling. All it takes is a litigant who approaches that court, which would in turn need to ascertain the preliminary question of its continued jurisdiction.”

You’ve proposed several alternatives for the Unitary Patent system. What do you hope will happen?

“I am not a stakeholder, so my view is purely academic. I hope for a functional, consolidated and factually uniform patent system for the whole of the internal market, e.g. (but not exclusively) EU trademark-style. So it could be a fully-fledged EU system, but doesn’t necessarily have to be. A reformed and functional patent system could just as well be established outside of EU law as a reformed EPC/EPO/EPLA-type system. Whatever the way forward, the system should not be a complex, arbitrary and ailing hybrid monster mix. I have previously called the Unitary Patent a Hieronymus Bosch-type creature consisting of odd body parts and features. Instead of becoming less of that, the creature has metamorphed even more since.”


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15 comments

  1. His paper was mentioned in Techrights some days ago:

    http://techrights.org/2021/12/01/thomas-jaeger-in-grur/
    http://techrights.org/wp-content/uploads/2021/12/the-benelux-alternative-to-the-upc.pdf

    If you read it all, it is clear that the UPC court system is outside of the design of the European Union, and cannot interpret EU law, as the CJEU only talks to the courts of the Member States:

    “the narrative was invented that the UPC is a court common to the Member States. It is not, of course, because the functioning and jurisdiction of the court remained the same as envisaged for the EEUPC.”

    He then cites the CJEU’s Miles judgement, which explains why the Benelux court is acceptable, and other models like the UPCA are not (lack of functional links with the national Courts of the Member States):

    “‘It is true that the Court of Justice has held, in … Dior, that … a court common to a number of Member States, such as the Benelux Court of Justice, [is] able to submit questions to the Court of Justice, in the same way as courts or tribunals of any of those Member States. … However, the Complaints Board [at hand] is not such a court common to … Member States[.] Whereas the Benelux Court … procedure … is a step in the proceedings before the national courts leading to definitive interpretations of common Benelux legal rules …, the Complaints Board does not have any such links with the judicial systems of the Member States. … Moreover, although the Complaints Board was created by all the Member States and by the Union, the fact remains that it is a body of an international organisation which, despite the functional links which it has with the Union, remains formally distinct from it and from those Member
    States.”

    The UPCA should have been sent to the CJEU for an opinion, but the article TFEU 218(11) which was used in 2009 to obtain the 1/09 opinion could not be used anymore to obtain another opinion, since this article of the treaty is for treaties with non-EU nations (EU and other countries, like for ex Canada).

  2. The German Governement never provided an analysis of the compatibility of the UPCA with EU law:

    https://www.bristowsupc.com/latest-news/german-government-responds-to-fdp-s-questions-on-upc/

    “Has the government examined the compatibility of the UPCA with the Basic Law, in particular the fundamental rights, and with Union law, and if so, with regard to what aspects were these checked? The government replied that these were examined comprehensively.”

    This CJEU jurisprudence on “common courts” should have appeared in such report, this might be a gross maladministration from the German Ministry of Justice Lamberts.

    1. André, you assume that mere logic and legal precedent will prevent the CJEU from ruling that, despite all appearances to the contrary, the UPC is a “court common to the Member States”. As we have witnessed over the years, a sensible and rational approach to interpreting the (case) law is the last thing that we can expect to see when it comes to the UPC.

      1. “As we have witnessed over the years, a sensible and rational approach to interpreting the (case) law is the last thing that we can expect to see when it comes to the UPC.”

        That should be clarified BEFORE the UPC enters into force. As mentioned above, the CJEU is not competent to review deals between Member States, the 1/09 was done under Art218 TFUE for deals with non-EU states. But I guess any Member State could bring the question to the CJUE using other articles of the EU treaties.

        1. André, what should happen and what will actually happen are two entirely separate matters.

          Please remember, the strategy that the UPC’s supporters are using here is to bring the UPC to life and then to make the courts nervous about bringing down an entire system upon which so much time, effort and energy has already been expended. Essentially, it is the legal equivalent of boots-on-the ground diplomacy.

          1. “courts nervous about bringing down an entire system upon which so much time, effort and energy has already been expended.”

            Exactly. And industry has its entries at the CJEU via ex-members of political parties, as that was revealed recently by Liberation journalists with members of the EPP club.

            The same collusion with lobbyists happened with AG Melchior Wathelet with his opinion in “Achmea”, where he proposed to let those controversial intra-EU ISDS tribunals being recognised as “common courts of the Member States”. Hopefully the full court did not follow him, maybe they were aware of his conflict of interest.

  3. A number of perceptive and well-reasoned comments from Dr Jaeger. Also, it is hard to figure out how, in the light of the CJEU’s Miles judgement, the UPC could possibly survive even if it were brought into force.

    However, having closely observed the passage of events over the past 5 years or so, it seems to me that even such clear signs of impending doom are meaningless in the face of the strong political support that the UPC enjoys.

    Adding another, highly complex layer to the litigation system in Europe without first taking steps to TRULY harmonise the laws governing infringement was always a bonkers idea that would benefit no one other than (litigation) lawyers, litigants with deep pockets and patents of questionable validity, and, due to the additional fee income that they will reap, the EPO.

    Simply having a “unitary” patent (litigation) system does not automatically reduce barriers to obtaining and enforcing (or revoking) patent rights. One need only look over the pond to see that, despite having such a system, patent litigation is most definitely not for the fainthearted (or those without very substantial financial backing). This is because, in essence, US patent laws are written by lawyers for the benefit of layers. In this sense, the UPC very literally apes the US system. It even goes beyond that by placing responsibility for creation of the rules under the control of an (unaccountable) Preparative Committee whose members include lawyers from the very firms that are set to benefit from the UPC.

    Letting the fox loose in the hen house is never the best approach to crafting legislation. Doing this for the purpose of crafting international treaties that create bodies that have significant powers but that are essentially unaccountable is certainly a recipe for disaster.

  4. I feel obliged to post my support for what Concerned Observer writes. I’m retired so no longer have any skin in the game. But having spent most of my 40 years of practice in the sort of private practice law firms likely to benefit from the UPCA, I concur wholeheartedly with the notion that if you want efficient production in the hen house, to the benefit of society and the promotion of the useful art of golden nest egg-laying, to deliver future prosperity for all, the last thing one does is to give the fox the job of running the hen house.

    Foxes are well-known to be cunning. Less well-known are their consumate skills as lobbyists, if not yet in academic circles in Vienna then certainly on the EU campus in Brussels.

  5. I live in Brussels with a friend working in EU commission, present when UPC was a hot topic (much less now) and referring to the discussions held by “foxes” as being often driven by lowering annuity cost, a problem that would have been solved by correcting some national practices ( such those in Austria indeed) or introducing other mechanism for a more coherent allocation of fees and revenues among patent offices. I do agree that EU should have been more innovative to support IP tools more adapted to present challenges and available tools (a digital EU utility model?). The consolidation of jurisdiction and of civil law claims seems to me alike the harmonisation of fiscal and social policies among EU members, something too difficult to even mention but needing a generation change (or a lot of people clustering at place Schuman menacing to enter in EU commission) before something happens

    1. “a lot of people clustering at place Schuman menacing to enter in EU commission”

      European Commission and Mr Breton are responsible when it comes to infringements of EU law (including such CJEU jurisprudence), but they are driven by friends of “industry” (BusinessEurope, MEDEF, etc…). Like the story with Poland where the Commission was aware of the problems, they did not had the guts to take them to court, the CJEU had to do it on its own.

  6. How interesting, from LF. One can imagine how horror stories of outrageous aggregated annuity costs, peddled by the lobbyists, would play well with politicians whose outlook is skewed by the skilful attentions of well-financed but seriously biassed lobbyists. I can well imagine how those same politicians found it too burdensome to seek out unbiassed expert voices from within the patent profession for a disinterested view how much of a “problem” was the ascending scale of annuities, through the 20 year life of a patent.

    Eminent patents judge Robin Jacob explained how unused trademarks lingering for too long on the Trademarks Register should be understood as a menace, as “abandoned vessels clogging up the shipping lanes of trade”. With patents, it is right and good that every extra year of monopoly rights should incur cost on an ascending scale. Patent rights are inherently restraints on free trade. They should remain on the Register only as long as their owner finds it worthwhile to pay an ever-rising price for those exclusive rights.

    Sad, isn’t it. Politicians are under the sway of the lobbyists, who even draft the legislation for them. Meanwhile, in the media, “reputable” newspapers find it cheaper to publish corporate press releases rather than carry the costs of publishing decent quality independent investigative journalism.

    1. Max, there is an old adage that each generation gets the politicians that it deserves.

      I have no doubt that efficient lobbying and the gradual infiltration (and corruption) of various levels of governance has played a strong part in getting the UPC to where it currently stands. However, how many members of the patent profession have effectively been asleep at the wheel whilst all of this has been going on? There is perhaps an element of wishful thinking, ie an assumption that an unrealistic number of firms (and/or clients of those firms) will benefit from the new system. There has probably also been a large serving of believing the hype. But none of this provides an excuse for the fact that only a vanishingly small proportion of attorneys have recognised and called out the hideous flaws in the proposed system. (Sadly, much the same could be said about the profession’s general lack of reaction to the numerous and egregious breaches of the rule of law at the EPO.)

      I shudder to think how things might look in 10 years from now.

  7. I can only support what has been said by other commenter.

    The whole UPC is a disgrace and the lobby from the big industry and of the internationally active lawyer firms helped with some judges wanting to earn more than in their country of origin, have succeeded to throw sand in the eyes of the politicians. This group of which all members were co-opted have prepared a set of rules of procedure which did not have any control by any parliament. Here is also a big scandal.

    The SME have been nothing else than a fig leaf to make the whole thing more gullible. When one sees how the second German ratification has been obtained, it is a scandal.

    When one sees how the quality of the patents granted by the EPO has deteriorated over the years, one wonders how patents allegedly infringed will survive.

    One just has to see that in opposition, only one 1/3 of the patents survive without amendment, that is in 2/3 of the cases the patent is revoked or limited, and taking into account that only about 5% are opposed, a simple extrapolation shows that there must be quite a number of patents granted by the EPO which are not worth the paper they are (virtually) printed on. One just has a look at the decisions of the BA published regularly to come to this conclusion.

    Those patents belong to 2/3 to non-EU/UPC patent holders! The amount of money which be wasted over the years, but to the benefit of the lawyers who push for the UPC is astronomical. That all this should be to the benefit of European industry in general and to SMEs in particular is simply farcical.

    From the beginning the strategy of the UPC’s supporters was to bring the UPC to life and then to make the courts nervous about bringing down an entire system upon which so much time, effort and energy has already been expended. Brexit was a first blow, and the persistence with which those people want to fill their pockets is amazing, as the direct consequences of Brexit are simply ignored.

    The UPC is as useful as a plaster on a wooden leg! That it is cheaper than a EP is not correct. That the translation problem is solved is a lie. That the costs can only be footed by firms with big financial surface is another scandal, the more so since the fees are clearly in favour of proprietors.

    But the complacency of politicians is flabbergasting.

  8. One answer to DXThomas is that the world has changed and “moved on” from the days when the EPO started to do business. Currently, patents are a bulk commodity. The “quality” of each one no longer matters. Instead, what matters is to amass a larger portfolio of patents than each of your competitors controls.

    So, for the bulk owners, ability to withstand validity attacks is not the highest priority. But something that reduces the budget for annuity payments is.

    Litigation is a last resort. What these bulk owners need is outside counsel that can negotiate relations between eye-level competitors, world-wide. Outside counsel needs armies of lawyers, good contacts with government, and expertise in anti-trust law. The irony is that the UPC delivers all that the big portfolio holders wanted, everything on their shopping list, but has been sold to the politicians and the public as a benefit to SME’s in Europe. It’s a classic case of pulling the wool over the eyes of lobby-seduced politicians ready and willing to do the bidding of those paying the lobbyists in the naive and mistaken idea that this is, for us here in Europe, progress.

  9. Slovenian parliament did not even discussed it, not even the Brexit implications, it was the government that was bought by the German government.

    Surprisingly, the only party who could be aware of the decision of the German Constitutional Court before it was published was the german ministry of Justice, who then probably planned how to get the PPA into force, and pushed Slovenia and Austria. Strangely enough, it was put on the agenda of the Austrian Parliament 2 days before the decision of the GFCC was published.

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