International Investment Arbitration, the European Patent Office, and the Future Unified Patent Court

Whilst I am not sure of the point of this article (providing another "escape route" for the UPC post-Brexit, perhaps?), I do have two comments upon the theory that an IIA could help to ensure that proceedings at the EPO and the UPC are kept in line with all relevant (inter)national and EU laws. Firstly, I would agree with the view that "it is arguable that the EPC Member State cannot evade its obligations ... by having delegated the grant of patents to the EPO". However, this ought to apply in respect of EU and human rights laws - where there are actual courts (the CJEU and the ECtHR) that can enforce those laws against "errant" EPC Member States. The trouble is, we now have ample proof (eg via the views expressed by the head of the ECtHR on human rights cases relating to the EPO) that this mechanism does not work in practice. I cannot see why an arbitral tribunal would be any more effective in delivering justice. Secondly, the principle of autonomy of EU law prevented the EU from acceding to the ECHR, for reasons including those spelled out in paragraph 201 of CJEU Opinion 2/13: "The Court has consistently held that an international agreement cannot affect the allocation of powers fixed by the Treaties or, consequently, the autonomy of the EU legal system, observance of which is ensured by the Court". EU law affects both pre-grant patent law (eg by way of the biotech directive) AND post-grant patent law (by way of numerous provisions, including the Unitary Patent Regulations, the Bolar exemption, etc.). In the light of Opinion 2/13, I cannot see how the CJEU could accept a situation where an arbitral tribunal was fee interpret, and reach binding decisions based upon, those EU laws. I also cannot see how an arbitral tribunal could operate effectively without doing so. If the suggestion of creating an IIA is serious, then perhaps some attention should be given to working out how to ensure that it is consistent with EU law. Whilst I am open to ideas, I frankly don't see how it can be done.

Since the stakes of EU-wide patent infringement litigation are higher compared to national patent infringement litigation, the interest in having an extraordinary remedy against UPC decisions could be significant. It remains to be seen what happens to the EU Member State Initiative to replace Intra EU BITs with an EU ISDS mechinsm. That could also be of relevance to the UPC.

What a nice bomb put in the ring by Mr Klopschinski! My reply will be as provocative! Mr Klopschinski article will reinforce the fears uttered when dealing with TTIP, CETA and the same kind of trade agreements. Private arbitration might be a way of dealing with problems when faced with regimes being anything but democratic in order to safeguard investments. I however fail to see the necessity of this type of agreements for dealings between states which have long standing democratic regimes. As has been stated by a former President of the EPO, a patent is an insurance in case of success. When a patent is granted, it does not mean that the corresponding product/method will be a hit on the market. A lot of factors play a role in this. How many granted patents are simply gathering dust as the market has not found them interesting? Even if an application is refused, there are no means to decide whether this application could have been a hit on the market. When a patent is revoked, it is in general due to the fact that it infringes some legal requirements. Trying to institutionalize such arbitration mechanisms in IP matters shows to me a profound disdain for any legal or judicial system in our modern states. If such decisions are arrived at by a national court or a regional institution like the EPO, it has become a matter of fact, and I cannot see what role an arbitration chamber has to play then. This is the more so, that in such an arbitration, the panel will be composed of anybody but patent specialists. Balancing patenting requirements against economic values is something which should not occur. If, for instance, a democratic government decides to limit the price for medicines or to grant a compulsory licence, this is in the interest of public health. That the interest of public health should prevail over the interests of a private company which only has to take care of its shareholders goes without saying. If find it a fallacy to call such an “arbitration chamber” an “arbitration tribunal”. It has nothing of a tribunal in the common meaning of the words, as it composed in an entirely obscure manner. As far as the UPC is concerned, it might well be that “the stakes of EU-wide patent infringement litigation are higher compared to national patent infringement litigation”, but I still fail to see what good an arbitration chamber will bring in such matters. For this, the UPC has to start, which is anything but certain. The UPC itself foresees arbitration, and what should then be the role of a further arbitration forum? TRIPS has defined some minimum protection of IP matters, and if a national or regional decision has been taken by the competent legal authorities, the requirements have been fulfilled, and do not need an extra review level. Fair and equitable treatment for a foreign applicant/proprietor in IP matters is nothing new. This notion has been enshrined in the Paris Convention of 1883. This aspect is often forgotten, but it was next to the creation of the Unionist Priority, the second leg of the PUC. Being an entrepreneur entails certain risks, and an arbitration court cannot be taken as a kind of insurance against all odds, especially the loss of an application or a patent. That big lawyers firms would profit from this new way of challenging national or regional decisions goes without saying. But what is good for lawyer firms is not necessarily, and by far, good for our modern societies. I am also not sure that politicians in Europe would go as far as accepting such challenges, the more so since the EU treaties do not provide for such possibilities as has been shown by Concerned Observer. Techrights: FINGERS OFF!!!

Dear Attentive Observer, Thank you for your reply. Your initial remark that international investment arbitration is something only for "regimes being anything but democratic" underestimates that one task of agreements like TTIP or CETA is to serve as a template for agreements between industrialized nations and developing countries, where investment arbitration can be a necessary complement to local judiciary. Why should developing countries accept standards of treatments, when industrialized economies are not able to agree on these standards among themselves? This is even more true against developing countries' history of colonialism and capitualtions granting privileges to European traders in the 19th century. Therefore, one indirect effect of opposing agreements like TTIP and CETA is to deny investors investment protection in countries where it is actually needed. Another point is that international investment law does not ask if states are allowed to grant compulsory licenses or whether they can cut prices. In fact international investment law only asks if a state should pay compensation in case it interferes with private investments, i.e. to what extent can the state shift the costs of its public policies to private entities. Finally, I would like to remind you of G 1/97 where - before the introduction of Article 112a EPC - the Enlarged Board of Appeal characterized the EPO system at the time as follows: "Although the Enlarged Board of Appeal has concluded that, within the context of the EPC, requests based on the alleged violation of a fundamental procedural principle cannot be validly filed, and in particular that a special remedy cannot be created by judicial means on the basis of Article 125 EPC, it nevertheless wishes to emphasise that while, on the one hand, legal certainty and the principle that all litigation must end within a reasonable interval are essential elements in any jurisdictional system, a flagrant violation of a fundamental procedural principle is inimical, on the other hand, to the very idea of justice and does serious harm to the image of the judicial bodies concerned. This would be the case, for example, if it transpired that a decision had been crucially influenced by an illicit or even criminal act such as forging documents or giving false oral evidence." Therefore, I would not exclude at the outset that in the future there can be - enven though only in exceptional cases - a need for investment arbitration concerning EPO or UPC decisions. Kind regards, Simon Klopschinski