Reactions to ruling FCC in case Unified Patent Court: 'positive' and 'great disappointment'
March 20, 2020
“Despite the fact that the judgement will result in further delay the preparatory work will continue, while the judgement and the way forward is further analysed.” Within hours the Preparatory Committee of the Unified Patent Court had published its reaction to the ruling of the German Federal Constitutional Court in the complaint against the ratification of the UPC Agreement.
In the English language press release, explaining the decision, the FCC announced: “The Act of Approval to the Agreement on a Unified Patent Court (“the Act of Approval”) to confer sovereign powers on the Unified Patent Court is void. In its outcome, it amends the Constitution in substantive terms, though it has not been approved by the Bundestag with the required two-thirds majority.”
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The clarity the FCC has given today in its judgement led to optimism in some circles, and to great disappointment in others, as is shown by the reactions Kluwer IP Law gathered.
Europarechtsfreundlichtkeit
Wouter Pors, partner of Bird & Bird a long-time supporter of the Unitary Patent project, wrote: “Today the German Constitutional Court (Bundesverfassungsgericht) ruled that the German ratification act for the Unified Patent Court Agreement (UPCA) is void, because only 35 out of 709 members were present for the vote, which required a majority of two thirds of the members of parliament because the UPCA forms a material change to the German Constitution as it transfers jurisdiction.
The Court also ruled – apparently unanimously – that the other complaints are inadmissible. These relate to the fact that judges are not appointed for life but only for 6 year terms and the procedure for their appointment, the more substantive complaint that there would be an insufficient justification for interference with the German Constitution and the complaint that the UPCA would be in violation of EU law. Obviously, those complaints could have constituted a much larger problem for the UPC, as the first two would require a revision of the UPCA and the last one, if awarded, could not have been overcome without additional EU legislation.
According to the Court a violation of EU law is not automatically a violation of the German Constitution, even not under the principle of “European law friendliness” (Europarechtsfreundlichtkeit). The Court also states that the UPC can be regarded as part of the program for the integration of the EU and can be seen as a substitute for EU law. The German Constitution doesn’t require that sovereignty can only be transferred to EU institutions.
Although it is unfortunate that the ratification act has been declared void, it is good news for the UPC that the other complaints have been declared inadmissible, which means that we now do have certainty on all issues raised before the German Constitutional Court.”
A more extensive reaction can be found on the website of Bird & Bird.
Stolmár & Partner IP from Munich wrote: “Interestingly, the Court dismissed the complaint insofar as it claimed that the UPCA violates fundamental democratic rights and the principle of separation of powers. While the respective part of the complaint was deemed to be inadmissible and thus not discussed as to its merits, the court nonetheless hints that the appointment of judges by an administrative council appears legitimate. Likewise, the court does not seem to be concerned with the fact that the administrative council will be responsible for defining the rules of procedure before the UPC.
So, where does this leave the UPC? Actually, not in a bad position. (…) Of course, with the current corona crisis ongoing, the UPCA won't be the top priority for some months to come. In addition, one question remains: will the other member states still go forward with the UPC, despite UK having withdrawn from the project? But overall, we take this decision rather positively.”
EPLIT
President Koen Bijvank of the European Patent Litigators Association (EPLIT) doesn’t feel the same way:
“Today's decision of the German Constitutional Court is a great disappointment. After the recent announcement of the UK that it no longer intends to participate in the UPC, the project now suffers another severe setback.
What makes the decision particularly disappointing is that it is on a formal issue, and not a substantive one. Although it may theoretically be possible that the Bundestag quickly votes on the legislation again, the political balance in Germany has shifted and it is not guaranteed that there will be a 2/3 majority in favour of the UPC. Even more importantly, the world has changed and all governments have much more important and urgent topics to deal with. Without the UK, the UPC Agreement will have to be renegotiated and therefore I do not consider it likely that we will see any progress on the project in the next few years.
All this means that it is business as usual for patent litigators across Europe. Since the Brexit referendum the field has adjusted to a world in which a UPC became increasingly unlikely. The Dutch jurisdiction has shown healthy activity over the past few years and I expect the coming years to be no different.”
Luke McDonagh: “The project was already reeling from the blow of the the U.K. decision to not participate. With the BVertG ruling the UPC project has taken another hit - and it may be a fatal one. In the midst of the Covid-19 crisis it is unlikely German legislators will prioritise the question of whether German ratification can now be salvaged after the BVertG ruling. A rethink of the entire UPC May be inevitable.”
JUVE Patent wrote: “It is now unclear if the decision will be the end of the patent court. The Bundestag can now save the situation by voting on the Act again with a two-thirds majority. This could again significantly delay the UPC process. Organising a quorum and a two-third majority in the context of Coronavirus will be a major challenge. A failure of the project is thus also possible.”
IP Watchdog: “The likelihood therefore is that this represents the end of the UPC project, or at least a lengthy delay. The existing system whereby European patents are enforced separately in each member state will continue for the foreseeable future.”
WIPR investigated whether the decision could be ‘a boon for UK patent litigation’. It wrote: “The Law Society of England and Wales has claimed that the potential delay to the implementation of the UPC (or its ultimate death) could give the UK time to mitigate the risks of not participating in the system.”
Only a formal issue?
In the meantime, there have been several reactions, among other from MN below a post on this blog earlier today, in which it is pointed out that the constitutional complaint is upheld by the FCC not only because of the formal issue of the parliamentary vote, which has drawn most of the attention, but that there may be substantive issues as well:
MN: “Last paragraph [paragraph 166, ed]: “Soweit Anhaltspunkte dafür vorliegen, dass die Festschreibung eines unbedingten Vorrangs des Unionsrechts in Art. 20 EPGÜ gegen Art. 20 Abs. 1 und Abs. 2 in Verbindung mit Art. 79 Abs. 3 GG verstößt … abschließenden Entscheidung kann vorliegend jedoch abgesehen werden, weil sich die Nichtigkeit des EPGÜ-ZustG bereits aus anderen Gründen ergibt.” I read this to state that the unrestricted primacy of Union law under to Art.20 UPCA would most likely NOT pass constitutional muster. Hence, even if UPCA’s implementation legislation would be submitted again and pass this time with the required majority, viability would still be doubtful.”
The ruling of the FCC will undoubtedly lead to more discussion and analysis in the upcoming period and it will be interesting to see what the next steps of the UPC Preparatory Committee will be.
Today’s reaction from the man who filed the complaint against the UPCA, Düsseldorf patent lawyer Ingve Stjerna, was very short and neutral. On his website he wrote: “With decision of 13/02/2020 (German language), the BVerfG allowed the constitutional complaint, declaring invalid the Act on the Agreement of 19/02/2013 on a Unified Patent Court (also cf. the court’s press statement of 20/03/2020).”
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Fragender
"Although it is unfortunate that the ratification act has been declared void, it is good news for the UPC that the other complaints have been declared inadmissible, which means that we now do have certainty on all issues raised before the German Constitutional Court." The statement by Mr. Pors seems to me overly optimistic. The BVerfG has not ruled, that the issues raised are inadmissible per se. Rather it held them inadmissible because of insufficient substantiation. To me this leaves (most of) the questions open - unless constitutional experts find definitive hints in the wording of the ruling (which I would expect needs more than just a few hours...). And how could the Agreement be ratified by Germany now, after the UK is no longer a member of the EU and London and the UK are hard-wired in it? Would anyone risk a bet, that the necessary re-negotiations would be limited purely to the replacement of London and the UK in the text?
Attentive Observer
The reactions following the decision of the FCC can be summarised with for some the glass being half full, and for other being half empty. One thing is nevertheless very clear. The UPCA is only opened to EU member states. That has a direct effect on Art 7(2) UPCA. I fail to see that the FCC has decided for good that there is “certainty on all issues raised before the German Constitutional Court.” They were dismissed for formal reasons, but certainly not for substantial reasons. In my opinion, the court did not say “that the appointment of judges by an administrative council appears legitimate”. It simply said that the German representative has a veto right. That does not imply that it is as such legitimate. The other express their disappointment that it will take a long time to reschedule a vote in the German Parliament. I cannot see the German Parliament recasting a vote for a treaty without any changes in Art 7(2) UPCA, and this point is a problem which is not easy to decide. Too many national interests are at stake. Furthermore there are more urgent problems to be dealt with that the interest of a bunch of big industries and lawyer firms. Sorry for the Chairman of EPLIT, but the issue decided is not a formal one. It is a fundamental issue, and the haste by which the UPCA was driven through the institutions has now backfired. It is good so, since it will give the possibility to rethink the whole process. For a start, now the UK has left, do we need so much resemblance of the UPC with the UK litigation system? Could we not go along a bit more slowly and carefully? That the UPC will be delayed is certain. That this delay may not be favourable to it is also certain. I will not claim that the UPC is dead, but severely injured and the injury inflicted by the Brexit and the decision of the FCC might prove to be fatal to it. By the time the problem of Art 7(2) is settled, there will have been the election of another German Parliament and the issue of ratification might take a totally different turn. Enhanced cooperation might be an aim worth pursuing, but subsidiarity is also an aspect which should play a role. In view of the few really supranational litigations do we really need such a treaty which only serves some interests and is certainly detrimental to a lot of others, starting with SMEs and European industry at large? Enhanced cooperation excluding those not willing to be bulldozed down, I think here of smaller countries and their fragile industry, as well as the SMEs, is something the EU cannot afford. Either there is a EU patent valid for all EU member states, but simply adding a layer of case law for some of them, with all uncertainties going with it, is not an aim worth pursuing. To hear in another blog that it might be worth trying to “draft a text that would make it possible for European Economic Area countries and perhaps even other countries to join” is simply showing that this person, another lawyer, who is also fiercely again technical judges (UPC conference in Munich in 2017), has not bothered reading the decision of the FCC. C 1/09 was already clear in this respect and now it is even clearer: it is only open to EU member states. To sum it up: if it is absolutely necessary to have a supra-national jurisdiction for patent matters, which I doubt, it could be envisaged, but then its reach should be over the whole of the EU, and not only in part of it. We should not forget that this selectiveness was the birth defect of the UPC. It goes without saying that any attempt to create a supranational jurisdiction in patent matters in the EU should be submitted to the CJEU for opinion. It should be avoided to create something which might be killed by the CJEU at the first opportunity. Techrights and zoobab: FINGERS OFF!! Even by excerpts on Twitter!
Peter Parker
The judges at the BVerfG often give some hints in an orbiter dictum to the lower courts if they feel that it helps a case to move more swiftly in the judicial system - maybe to avoid to have to deal with the same matter on a different issue a few months later.Just read two dozen or so of their decisions dealing with day-to-day matters and you will see this. As this was a high profile case due to the involvement of the Federal President, the Government, the Bundestag and the Bundesrat, I think that they would have given also in this case some stronger hints if they believed that the other issues have merit but are simply not substantiated enough - in particular as all the arguments in the case are public facts and the judges could connect the dots themselves, even if the complaint did not specify them detailed enough.
MaxDrei
Given that there is an EU-wide system of Registered trademarks and for Design Patents, ought there not to be one too for utility patents? Or are utility patents categorically so different that the pursuit of an EU-wide system of litigating utility patents should now be abandoned. I mean, now that the UK has gone, and at the EPO there has been a change in the nationality of the President, why not step back from silliness and build on the good bits of the present system. Validity (obviousness) is the hard problem. Let unchecked, the expense of litigating it gets out of hand (hence the drive in some quarters to push the UPCA through) Given those considerations, the EU should make the EPO the ultimate decider on substantive validity. National courts should offload the issue to the EPO. Compared with that, deciding what is an infringement is more straightforward. For those unusual cases that require it, let it be judiciable all the way up to the CJEU.
Anonymous
MaxDrei, in view of the quality of the EPO decisions with respect to inventive step being so low and formalistic, the BoA not willing to reverse G1/93 in spite of better arguments from national courts, the independence of the members of the BoA obviously not being guaranteed, and the new RoPBoA, I think letting the EPO be the ultimate decider is the worse what could happen.