France, Germany and Italy are holding trilateral talks on redistribution of the competencies that were originally allocated to the London seat of the UPC’s central division among Paris, Munich and Milan.
According to the German Ministry of Justice, a decision is expected shortly. A spokesperson told Kluwer IP Law: ‘Once an agreement has been reached, the intention is first to inform the other member states of the outcome of the deliberations and to start negotiations among all member states in the competent body.’ She added that the ‘establishment of another central division of the UPC in Milan requires an amendment to the UPCA. The contracting member states jointly decide on amendments to the Convention. Whether and when such a decision will be made is currently not certain.’
Earlier, the Italian newspaper Il Sole 24 Ore reported agreement had been reached between the three countries that the third seat of the UPC’s central division would go to Milan, but only on the condition that many of the competencies originally designated for London, would be allocated to Munich and Paris.
According to the Agreement on a Unified Patent Court (see annex II), Paris has jurisdiction over cases involving performing operations, transporting, textiles, paper, fixed constructions, physics and electricity. Munich is the competent section for mechanical engineering, lighting, heating, weapons, and blasting, and London for human necessities (pharmaceuticals), chemistry and metallurgy.
After the Brexit, the UK withdrew from the UP system and London had to be replaced as seat of the central division. For years, Italy has been claiming the seat for Milan, and after the Netherlands withdrew their candidacy last year, it was the only remaining candidate (as far as is publicly known).
However, Germany and France apparently requested an important share of the London competencies would be transferred to Munich and Paris and would not go to Milan. Munich claimed the chemistry and metallurgy cases and Paris wanted jurisdiction over pharmaceutical patents with SPCs – at least 90% of the drugs that have been successful on the market, according to Il Sole 24 Ore. It would leave Milan with economically much less attractive pharmaceutical patents without SPCs and non-pharmaceutical biotech.
As could be expected, this didn’t go down well in Italy. Questions were asked in Parliament, last week a seminar was organised on the issue. Apparently, a compromise is now being discussed in which Milan keeps chemistry and Paris will only be competent for pharmaceutical patents with SPC where the validity or infringement of the corresponding basic patent is not in question.
There has been a lot of debate whether the London seat of the UPC’s central division could be moved to another city without renegotiating the UPCA, as London is expressly mentioned in the agreement. The same discussion has now surfaced about the reshuffle of competencies among the three seats of the central division.
Luke McDonagh, assistant professor at the LSE Law School and specialist in IP and constitutional law, thinks Milan is a viable option for a division. ‘There is lots of IP expertise in Milan. However, it would be far from ideal for the court seat to be moved and competences potentially being rearranged without amending the UPC agreement. An amendment to the agreement would clarify matters.’
McDonagh told Kluwer IP Law: ‘From a constitutional perspective the main issue for national jurisdictions is the creation of the UPC structure itself – the recognition of supra-national judicial authority I.e. a shift from the national level to the UPC. One could argue that a redrafting of internal competence within the UPC structure does not change the core national recognition of the UPC’s supra-national authority. As such, the Milan amendments would not change that core issue, as the amendments would only change the internal UPC structure not its supra-national competence. Nonetheless for legal clarity there is reason for making the amendments.
The plan seems to be to get the UPC up and running and then to make the amendment(s). This would mean that any national ratifications of the amendments, to e.g. set up the Milan division, would come late this year at the earliest.’
Asked whether McDonagh thinks the creation of the UPC is a positive development, he said: ‘The usefulness of the UPC without the UK as a member is in some doubt. The most likely short-term scenario is a gradual shift of litigation from Germany to the UPC. I am concerned that the UPC will end up simply making the patent litigation system more fragmented. Given the initial aim of the UPC was to ‘unify’ this would be a frustrating outcome.’
Rumours that the new Milan seat will start functioning from the very start of the UPC’s functioning on 1 June 2023, were not confirmed by the German Ministry of Justice: ‘This depends on when an agreement is reached. In any case, the UPC will take up its work on June 1, 2023 with the entry into force of the agreement. The responsibilities of the central chamber department that was formerly supposed to be seated in London will be temporarily assumed by the central chambers in Paris and Munich until a final regulation is reached.’
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The “establishment of another central division of the UPC in Milan requires an amendment to the UPCA”.
Good but also splitting temporarily the London section to Paris and Munich also requires an amendment to the UPCA, doesn’t it?
As far as I read in Annex II, Paris and Munich are NOT competent for classes A and C.
Small detail: how would they amend the UPCA?
“One could argue that a redrafting of internal competence within the UPC structure does not change the core national recognition of the UPC’s supra-national authority”.
So long as they do not transfer additional competences away from national courts, the same argument could be made for other, substantive changes to the laws under which the UPC operates. An example might be changes to the applicable exemptions from patent or SPC infringement. But are we really saying that such substantive changes would not need to be approved by at least some form of elected legislature?
The counter-argument is, of course, that substantive changes to a previously agreed modus operandi for a supranational authority require renegotiation of the governing treaty.
I certainly know which argument I prefer, namely the one that preserves at least a tiny shred of democratic legitimacy for a court that will have (exclusive) say over patent and SPC rights in EU Member States … and supposedly also beyond.
“the UPC will take up its work on June 1, 2023 with the entry into force of the agreement.”
It’s not into force in the first place.
First case at 9am on the 1st of June will challenge the validity of a pharma patent that should have been litigated in London.
And an administrative committee does not have the power to amend the treaty, because there is no EU Law that contains ‘Milan’. Those legal hackers know it.
Actually, everything has been done until now is legally invalid, since the PPA has not entered into force, the necessary UK ratification being missing.
Should Italy ever have thought that it would inherit as such what was foreseen for London, it was hoping for a kind of miracle.
It does not come as a surprise that France and Germany want to share the remains of what was originally foreseen for London.
The distribution of IPC classes at the time was the result of hard negotiations between three countries. IPC classes A and C deal with technical areas which will see a continuous development, especially in the health business, hence the great interest for them.
On the other hand, it was already problematic to establish a Central Division with three sections.
It is now further getting problematic as it now emerges that the UPCA should, after all, be properly amended. Why has it needed the sunrise period to come to that obvious conclusion? That the parliaments have to be involved in the amendment was, from the occurrence of Brexit, obvious for a first year law student.
It seems thus that the solution proposed by some that the UPCA will be amended at 8.00 on the day the UPC starts at 9.00 is not any longer pursued.
Coming up and saying now that it is only the internal competence within the UPCA which has to be changed is not really convincing. See above.
What is more convincing is that the UPC will end up simply making the patent litigation system more fragmented.
Whatever is envisaged, the fact that the UPCA does not contain an exit clause does not seem to have been tackled.
It still remains to be seen whether an amendment based on Art 87(2) UPCA after the opening of the UPC is at all legally safe. It is difficult to see that an amendment introducing Milan instead of London can have, for constitutional reasons, a retroactive effect.
It should also be kept in mind that the PPA, irrespective of whether it can be considered into force, is silent on Art 87(2) UPCA. A pre-emptive amendment seems thus excluded for this reason alone.
Whether the Italian Parliament will accept what is left from London remains to be seen. And then we end up with Art 87(3) UPCA. The consequnces of a non-approval under Art 87(3) UPCA are totally unclear.
Last but not least, the constitutionality of part-time technical judges still active in private practice or in industry, will also have to be ascertained.
According to an article published on 07.03.2023 in KluwerIPLaw News alerts the Strict code of conduct may lead to problems at UPC.
One or two lawyers and designated UPC judges are said to have threatened to resign because of the court’s strict code of conduct.
This has been reported by JUVE Patent. According to the website, the Code of Conduct practically thwarts any legal work. “In its current version, the Code of Conduct is likely to be a particular problem for patent attorneys from larger law firms.”
There is thus still a host of legal problems which will have to be solved by respecting the rule of law.
At a conference on the UPC to be held in Paris at the end of the month, one of the topics will be: is the UPC a colossus with feet of clay?
It will be interesting to hear what will be said there.
Despite the statement made by the Italian minister in the Council that they will use the Administrative Council of the UPCA to relocate the court from London to Milan using UPCA art87(2), despite the fact that there is no EU law containing ‘Milan’. Using the Administrative Council to make such decision is an abuse of law. It should be done properly via an amendment to the UPCA, which has to be re-ratified by National Parliaments.
But a second violation of the law after ignoring Brexit, I would not be surprised if they keep going with using the Administrative Council road.
You are stating the obvious.
But is seems that the obvious is not obvious for those who want to get the UPC to open its doors at any rate.
It is a catch 22 situation: On the one hand, Art 87(2) UPCA is not mentioned in the PPA and on the other hand, the replacement of London by Milan cannot have a retroactive effect.
Furthermore, whether the PPA has validly entered into force is anything but certain. Even a declaration under Art 31 VCLT, which was at a time foreseen to be signed at the COREPER, would not help, as there is nothing to interpret in Art 3(1) PPA. London is mentioned in a crystal clear manner. All the rest is legal gobbledygook.
What is much more worrying is that learned legal specialists, not to say legally qualified judges, already named as members of the UPC, seem to approve the disregard of law which ensues from what is presently discussed and foreseen. One really wonders why!
Let us just, for a moment, assume that, without any re-drafting / renegotiation / re-ratification of the UPC Agreement, that Agreement can be amended (presumably by the AC) in order to replace “London” with “Milan” AND to change the allocation of case categories between the three seats of the UPC’s Central Division.
As others have (repeatedly) pointed out, there is no “international treaty relating to patents or Union law” upon which the AC could base such amendments to the UPCA. Indeed, it would be very strange indeed if the EU were to pass laws that required a change in the cases allocated to different divisions of a court established under international law.
Thus, in order to make the two amendments to the UPCA mentioned above, the powers of the AC would have to be FAR more extensive than would appear from a plain reading of Article 87 UPCA. If this is indeed the case, then it poses some urgent questions:
What, if any, are the limits of the (revision) powers of the AC?
In theory, could the AC amend the UPC Agreement to take it out of (complete) alignment with EU law?
If not, what prevents the AC from doing this? Also, why is the AC not also prevented from making other amendments that do not find basis in “an international treaty relating to patents or Union law”?
As others have (repeatedly) pointed out, the Brexit treaty could be considered an international treaty relating to Union law in as much as it was an agreement specifying that Union law no longer extended to the United Kingdom of Great Britain and Northern Ireland except with regard to Northern Ireland as set out in the protocol.
@ Concerned observer
Amendments can be decided by the AC under Art 87(2) UPCA.
There is a kind of safeguard in Art 87(3) UPCA:
“A decision of the Administrative Committee taken on the basis of paragraphs 1 and 2 shall not take effect if a Contracting Member State declares within twelve months of the date of the decision, on the basis of its relevant internal decision-making procedures, that it does not wish to be bound by the decision. In this case, a Review Conference of the Contracting Member States shall be convened.”
There is however a problem with this solution. It has to be the government of a contracting member which will have to disagree. If the government does not disagree, the parliament can be short-circuited as the sentence “on the basis of its relevant internal decision-making procedures” is no guarantee that the parliament will be involved.
There is a further problem. What happens if after a Review Conference one member state will not ratify the amendment?
At least there is a clause in the EPC which provides that, after revision, a non-ratifying member state will then stop being part of the EPC, cf. Art 172(4) EPC. The EPC also contains a denunciation clause, cf. Art 174 EPC.
Why were such legal provisions not introduced in the UPCA?
The absence of a denunciation clause is bringing on lots of legal problems with the withdrawal of the UK as no denunciation is foreseen.
Just have a look at Art 65-68 VCLT.
Germany and France are blackmailing Italy by saying that if Italy does not the agree with their (indecent) proposal then Munich and Paris will temporarily assume all London competences.
According to which provision could the London competence be temporarily assumed by Munich/Paris?
If such a provision existed, why the London competence could not be temporarily assumed by another town (e.g. Milan)?
By the way, nobody explained why the London competence could not remain there. There are plenty of EU offices outside the EU.
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