No. 16
January 2011
International Association for the Protection of Intellectual Property
AIPPI General Secretariat |Toedistrasse 16 | CH-8027 Zurich
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EU Patent and the EEUPC Agreement: What can still happen?
Jochen Pagenberg[1], Attorney at Law, Bardehle Pagenberg GbR

The last three months were characterized by ever-changing news about the progress, or better non-progress, of the future legal order in patent law in Europe. It is, therefore, not easy to give a consistent report of the developments, and it is even less easy to predict any result, since so far nothing is definite and more time will be needed before even one of the two pillars, the EU patent or the EEUPC, is embedded in solid ground. The EU patent has again a new name, since it will not cover the whole EU anymore, and the litigation system remains uncertain until the ECJ issues its opinion. And, since both the patent and litigations systems are bundled together, both will share a common fate at the end. The following is, therefore, only an attempt to describe the status quo after the partly contradictory news from Brussels.

1. The Patent Court System

Uncertainty with the Patent Court System arose after the unofficial publication of the Recommendations of the Advocates General in the Opinion Procedure pending before the European Court of Justice. Reference is made here to the report of the hearing before the ECJ. [2] One could have anticipated a difficult discussion among the 27 judges on the various problems, but certainly would not have expected a verdict of incompatibility with the Treaty based on several grounds.

Two points stand out among the multitude of legal questions discussed by the Advocates General.

(a) Lack of guarantee against infringements of the EU legal order.

The first point is the statement of incompatibility for which a lack of ECJ competence and control in the future patent court system has been given as a main argument. The AGs found that the present draft proposal for the EEUPC in Article 14 bis, par. 1 b) is lacking sufficient remedies for a possible infringement of Union law by the Patent Court and adequate protection of the autonomy of the Union's legal system. The opinion reads as follows on this point:
    82. In its current wording, article 14 bis, paragraph 1 b) of the draft agreement therefore risks creating the impression that the future P(atent) C(ourt) will not be required to take into account, in its judgments, either the treaties or the fundamental rights and general principles of Union law, or even the relevant directives on the matter...

One could not rule out the possibility according to the Advocates General (AGs) that
    86...the future Patent Court will ignore some of the principles and provisions of Union law mentioned above or that it will not take them into account sufficiently when resolving disputes between individuals concerning patents...

This is a remark that patent judges with decades of experience in European law - some of them sitting in the highest courts in their respective countries - will not have read with much enthusiasm[3].

And the AGs added:
    87...[The Agreement] should include the obligation to comply with all case law of the European Court of Justice, and not just the obligation to follow the preliminary judgments pronounced under article 48 of the agreement contemplated, following reference of a preliminary question from the PC itself for a ruling.
    93. Given that Union law and the case law of the Union courts will only be compulsory for the future PC through the agreement contemplated, the provisions thereof must be totally lacking in any ambiguity with regard to the scope of the PC's obligation to observe Union law. That is not the case with the current state of the draft agreement.

The proposal then discussed by the AGs would create even more disharmony if adopted by the ECJ, not only among future patent judges, but also among most member states, industry and practitioners. The options of the AGs are farreaching:
    113. As pointed out by France in particular, a choice of different options would be available in order to guarantee the correct and uniform application of Union law in disputes falling under the competence of the future PC. Consequently, one could consider submitting judgments of the PC Court of Appeal to the control of the European Court of Justice, pursuant to article 262 TFEU. This control could be exercised in different ways: by an appeal on points of law (open to parties to the dispute before the PC Court of Appeal), by an appeal in the interests of the law (open to the Commission and/or to the Member States and/or to the EPO, along the lines of the former article 68, paragraph 3, EC) or even by a re-examination mechanism (along the lines of the provisions of article 256, paragraphs 2 and 3, TFEU)

What results from these remarks, if adopted by the Court, would be an involvement beyond a preliminary reference procedure, which most member states, the Commission's Expert Group of judges and litigators, and the Commission itself had proclaimed as “the maximum” that could be tolerated if one does not want to endanger the efficiency, practicability and above all predictability of the EEUPC's procedure.

(b) The way-out in case of dead-lock: EPLA

Of notable interest are recitals 58, 60 and 63 of the Opinion, of which excerpts are reproduced here as well.
    58...Union law is not in principle opposed to an international agreement providing for its own judicial system [4]...
    60. We should first point out that it is not the competences of the future PC concerning the European patent that pose a problem here: ...the Member States are therefore free to assign them to an international body, created by mutual consent and having the vocation of being “their” common court.... The future Community patent is more delicate.
    63...Disputes between individuals do not fall within the competence of the European Court of Justice...any competence not assigned to the Union in the treaties belongs to the Member States.

Scholars and practitioners have interpreted these remarks as an official rehabilitation of the EPLA Working Party which, during the discussions on EPLA between 2000 and 2006, had been accused by the EU Commission at that time of having no right and competence to negotiate the EPLA Agreement without the authorization of the ECJ[5]. Now the AGs take exactly the opposite view, It will be interesting to see whether the Court will share the opinion of the Advocates General on this point.

Since, as we will see hereafter, unanimity among the 27 member states was wrongly proclaimed a year ago after the Council Conclusions of 4 December 2009, the EPLA would be an option which does not depend on the compliance with the EU legal order and, thus, also would not need unanimity in the Council. Indeed, the EPLA is consistent with the new approach of the Commission. Rather than striving for the maximum in numbers of member states with less attention on quality of the outcome, it searches in the future for the maximum of quality with a smaller number of member states which can be combined into a “coalition of the willing,” within which agreement will probably be less difficult to achieve than among 27 countries, of which only a few have an interest in a patent system.

2. Failure of the language proposal of the EU Patent

A second negative surprise, in particular for the Belgium Presidency as well as the Commission, was the failure to reach unanimity among the 27 countries on the language proposal for the EU Patent. Indeed, the Commissioner responsible for the Internal Market, Michel Barnier, had still stated in March 2010 that he hoped to be “ the last Commissioner who tries to finalise a deal on the European patent.” Also, in the first week of November 2010, which started with a conference organized by the Belgium Presidency devoted to discussions on a number of topics of patent law, the Presidency had still hoped that its proposal for solving the deadlock over the language question would be a reasonable solution. The compromise proposal of the Belgian Presidency was based on the three language practice of the EPO as the final language regime for the EU patent, coupled with a 15 year transitional period with a more liberal standard.

However, the Spanish representative already announced at the November conference that Spain would not agree and requested adding Spanish as an additional official language, or as an alternative, a one-language regime with English as the only language. Italy also requested Italian to become a permanent official language. Both alternatives were rejected by the other member states with the main argument that the EPO would be unable to take any additional working language on board. Faced with these difficulties, the Belgium Presidency had to conclude on November 11, 2010 that “there will never be unanimity on the EU Patent.”

Disappointment that a positive outcome was only short by two votes was expressed by a number of voices within and outside the Competitive Council. However, some questioned whether, if Spain and Italy had not taken the initiative, others would have stood up to oppose the proposal that was on the table. Commissioner Barnier summarized his feelings with the following remarks:
    The absence of a European patent hinders our competitiveness, hinders European innovation, research and development. In the midst of the economic crisis, it is not the right signal...The current system for obtaining patents throughout the EU was too expensive, costing ten times more than in the United States.
The last remark may be questioned, since the figures compared are only the bare filing fees and, therefore, do not reflect the real burden on patentees for an average case when examining the filing practice of industry with regard to EP patents. They clearly ignore the costs of further prosecution, not to speak of the expense of later enforcement for which a comparison between the US and continental Europe would give a different picture. Successful inventions need effective and affordable enforcement systems. Thus, combining a system having more affordable filing fees with an unaffordable enforcement system is wasted money and overlooks the real needs of users, in particular, small and medium businesses

The reaction of the Commission and a number of member states was to abandon the perhaps overly ambitious approach for a 27 country granting system and to pursue another avenue. That approach was one which had already been proposed by practitioners a few years earlier, also in the context of the work for EPLA. It was to start with a smaller “coalition of the willing” and to use the possibility of enhanced cooperation for which only nine member states are necessary to join at the beginning and for which it may be easier to agree on a common concept. Upon invitation by the Commission, at first 10 countries had signed a letter to Commissioner Barnier[6] , requesting the start of the procedure of enhanced cooperation. Other countries announced that they may join later, some of them however under certain conditions, e.g. after the opinion of the ECJ for the court system will have become known[7]. Together with the request for enhanced cooperation, the Commission changed the name of the “smaller” patent from EU Patent to Unitary Patent.

At the Competitive Council meeting on December 10, 2010, the official press release[8] of the Commission proclaimed that
    A large majority of delegations considered that an enhanced cooperation...is the only option for moving ahead on the creation of a unified EU patent system.

These member states asked the Commission to present a formal proposal for initiating an enhanced cooperation. During the same session, the Italian and Spanish delegations strongly opposed – also - the idea of initiating an enhanced cooperation . The two countries expressed the opinion that “the requirements for engaging in that process are not currently met.”

The conditions for enhanced cooperation can be summarized as follows:
  1. It should be used only as a last resort if unanimity cannot be reached.

  2. There must be at least 9 countries wishing to participate.

  3. The Commission must accept the request and then send it to the Council with a proposal for authorisation.

  4. The Council must give authorisation by a qualified majority after obtaining the consent of the European Parliament.

  5. After authorisation of the cooperation, all members of the Council may participate in its deliberations, but only participating countries are allowed to vote.

  6. Enhanced cooperation is open at any time to member states wishing to join in.
In its submission of the “Proposal for a council decision authorising enhanced cooperation... [9]” the Commission mentioned that the group in support now counts 12 member states that have submitted their request for enhanced cooperation [10] and that 13 further states are contemplating to join. Italy and Spain in the meantime had sent a formal letter under a common letterhead of both Berlusconi and Zapatero to Commission President Barroso alleging that enhanced cooperation by the member states is incompatible with the principles and functioning of the internal market[11].

The Commission has also announced that the practicalities of the proposed granting procedure for the Unitary Patent and the EP Patents would be modified. It was foreseen that applicants can apply for EP patents as today, and their applications will be examined by the EPO. Only shortly before grant, the applicants would have to make a choice as to whether they wish to obtain (1) a bundle of patents for all designated states or (2) a unitary patent for the countries which have joined “the club” and a smaller bundle of patents for the rest[12]. Applicants in the EU whose language is not English, French or German would have the option to file applications in any other official language of the European Union. The costs for translation into one of the three official languages of the EPO would be eligible for compensation.

To summarize the present situation:

1) European and EU Patent Court:

A decision by the Court on the patent litigation system, which is expected around February 2011, will determine the compatibility of the present EEUPC proposal with the EU Treaty. The decisive point will be the role of the ECJ within the patent litigation system. If more involvement of the Court will be requested than is foreseen in the present proposal for the EEUPC, this will most likely be the end of the entire project. If the Court, on the other hand, approves the view of the AGs on the independence of an international court system like EPLA, this could proceed on the basis of a second “coalition of the willing” for the litigation system, so that the work on EPLA could continue. If the best and most flexible solution is adopted, one can expect that soon a greater number of countries will join. Countries which have so far opposed EPLA will have to reconsider whether they prefer to stay outside a common litigation system.

2) Enhanced cooperation for a Unitary Patent

The Council needs a qualified majority to approve the project of enhanced cooperation, and it needs the consent of the European Parliament. Although the possible negative votes of Spain and Italy may not hinder the adoption of the enhanced cooperation approach, it is possible that the two countries will challenge the further proceeding before the Court with the allegation that the conditions of Article 326 et seq. TFEU are not met. Even without such an additional court proceeding the negotiations on the proposed text of the enhancement proceeding of 14 December 2010 will take time.

Since extended discussions on new problems will certainly not promote the enthusiasm of users, one should not try the most complicated route, but should choose a realistic solution with those countries that are willing to cooperate. It appears that the majority of the members of the group that have opted for enhanced cooperation are the same countries who had worked together in the Subgroup of the EPLA Working Party. It may not be wise now to put too much pressure on the remaining countries to join the group, since it might render the discussions unnecessarily complicated and reduce the chances for an optimal solution. The goal of the group should be to frame a solution that is attractive enough so that a large number of the remaining countries will later want to join..

  • Dr. iur , Attorney-at-Law, Munich/Paris; President, European Patent Lawyers Association

  • Pagenberg , The ECJ on the Draft Agreement for a European Community Patent Court – Hearing of May 18, 2010, 41 IIC 695 (2010)

  • Cf in contrast Ullrich, The Development of a System of Industrial Property Protection in the European Union: The Role of the Court of Justice, in: Eger, Ö konomische Analyse des Europarechts (Abstract in English), who, on p. 33 et seq., 35 et seq., takes a more balanced view, cf. http://ssrn.com/abstract=1688319. He emphasizes the leading role of the EEUPC due to its high qualification and the particular – also technical – experience of the judges which justify its comprehensive and, in the end, exclusive competence for infringement and revocation cases also for EU patents, so that one should not compare the patent court system with EU jurisdiction in other fields of IP law.

  • The Opinion refers to the ECJ decision 1/91 of 14 December 1991 (ECR. p. I-6079) point 40.

  • This view is apparently still shared by France which also supports officially the idea to implement the ECJ as a third instance within the European patent litigation system. The overwhelming majority of member states as well as the Commission regard this as an unacceptable condition.

  • France, Germany, Estonia, Denmark, Finland, Lithuania, Luxembourg, the Netherlands, Slovenia and Sweden

  • In a letter of 8 December the Parliamentary Secretary of the UK Department of Business Innovation and Skills, Baroness Wilcox, in a letter to Commissioner Barnier announced her sympathy for the project of enhanced cooperation, but under the condition that the project would comply with the Conclusion reached on 4 December 2009 and the translation arrangements proposed by the Belgian Presidency. She also expressed reservations in case the ECJ “requires additional jurisdiction not presently available under the Treaty” .

  • Council Press Release No. 17668/10.

  • Proposal for a COUNCIL DECISION authorising enhanced cooperation in the area of the creation of unitary patent protection COM (2010) 790 final of 14 December 2010.

  • Denmark, Estonia, Finland, France, Germany, Lithuania, Luxembourg, the Netherlands, Poland, Slovenia, Sweden and United Kingdom

  • This common letter destroyed the rumours circulating due to a press announcement on 9 December in Brussels that Spain will give up its opposition against enhanced cooperation and Italy would be “isolated” among the member states. No information of the result of the Council Meeting has been published during the last two weeks of 2010.

  • The understanding so far was, as discussed also during the hearing before the ECJ that a special section within the EPO would be in charge of EU patents

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