'UPCA should be abandoned and substantive reform at EU level taken up'
June 2, 2020
The March ruling of the Federal Constitutional Court (FCC) in Germany that the German ratification of the Unified Patent Court Agreement (UPCA) was void because it didn’t get the required two-thirds majority, increased the uncertainty about the viability of the project. But the debate is far from over. Patrick Breyer, member of the European Parliament for the German Pirate Party, asked the European Commission earlier this month to confirm that, due to the Brexit, Germany no longer has the right to ratify the UPCA. In the meantime Thierry Breton, commissioner for the Internal Market, urged the EU last week to speed up plans for the single patent system. Kluwer IP Law spoke to Patrick Breyer.
On 5 May 2020 you sent three questions to the European Commission concerning the Unitary Patent project. You wrote: “According to EU case law (Court of Justice of the European Union Case 22/70), Member States must not enter into agreements with third countries that affect EU rules or alter their scope. The UK is now considered a ‘third country’ under Article 216 of the Treaty on the Functioning of the European Union. While the EU may jointly assume obligations with the UK with respect to patent litigation, Member States no longer have a right to do so.” In your questions, you’ve asked the Commission 1) to confirm that Germany no longer has the right to ratify; 2) to advise the German Government not to ratify the UPCA as it stands; 3) Whether it would launch an infringement procedure against Germany if it ratified the UPCA in its existing form. What do you hope to achieve with your questions?
“The Unitary Patent is another attempt to validate and expand software patents in Europe. Software development is a key sector on which whole industries and markets depend. The agreement would reserve to the EU Court of Justice only a say in a few limited technical matters. The UPCA is an attempted takeover of EU institutional powers by external international organizations. This can undermine democratic control and threatens economic development and sustainability in Europe.”
You’ve linked your questions to the Brexit. The UK, however, has announced its withdrawal from the Unitary Patent. Doesn’t this mean that the problem of a participating ‘third country’ has been solved?
“To my knowledge the UK has not formally withdrawn so far, which would mean that Germany must not ratify at present. I also do not think properly excluding the UK from the arrangement is possible without changing the treaty.”
Are you concerned German re-ratification will be pushed through parliament? Is there enough support for the UPC in Germany?
”This will likely depend on the German Greens. In the past they have agreed with the principle of a unitary patent system and voted in favour.”
Just a week after the FCC’s decision, the German minister of Justice and Consumer Protection, Christine Lambrecht, said she wanted to “continue to work to ensure that we can provide the European innovative industry with a Unitary Patent and a Unified Patent Court.” According to a report by law firm Simmons & Simmons a new Act of Approval to correct the deficiency in the German vote is currently being drafted. And last week Thierry Breton, member of the same Commission you sent you questions to, urged the EU to speed up plans for a single patent system. It doesn’t seem likely your questions will lead to the end of the Unitary Patent project, does it?
“Legal certainty is in the interest of all parties involved. The UPCA has successfully been challenged in court before. The actors should not risk this happening again. Union law gives the Commission all tools it needs.”
Who would benefit from and who would be harmed by the Unitary Patent system, in your view?
“Patent trolls that abuse the system to make money would benefit, whereas small and medium sized businesses, as well as innovation as a whole, would be harmed.
Patents often function as a deterrent to innovation rather than as an incentive. The patenting of knowledge in areas like genetics and biotechnology, as well as software, renders it a tangible threat to the future of our society.
Monopolies on plants and seeds and costly legal disputes about often trivial patents already demonstrate how it is both innovators and consumers who have to pay the price.”
Are you in favour of any patent system for Europe that is less complicated than the current system?
“This treaty should be abandoned and substantive reform at EU level taken up.
Patent law needs to be reformed or replaced with an approach that enables freer and fairer markets instead of continuing to further stifle innovation.
Patents should never be granted for ‘inventions’ that are trivial, non-substantial, computer programs, business models or works of nature. These types of patent impede the development of an information society and result in the privatisation of the commons. Small and medium IT companies throughout Europe prove that patents on software are no prerequisite to economic success. Innovation must be fairly rewarded, but this does not necessarily require the granting of monopolistic privileges that stifle innovation and negatively affect the access to
essential goods.
Pirates oppose the frequent abuses of patent privileges, such as introducing spurious changes to medicines with expiring patent protection. Uncompetitive practices such as paying competitors in order to delay the marketing of generics should be actively prevented. Universities and research institutes should be able to carry out scientific research for health and medicine without being encumbered by patents.”
How much time do questions like yours take to be answered? In other words, when do you expect a reaction from the European Commission?
“The Commission should answer my written questions within 6 weeks but often this time limit is not met.”
If the Commission’s answers are not satisfactory, in your view, what will you do?
“We may ask authoritative legal experts to look into the matter.”
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Jan Van Hoey
“We may ask authoritative legal experts to look into the matter.” Back in 2007, the legal affairs committee of the European Parliament (JURI) requested an opinion of the Legal Service of the Parliament about the ratification of the EPLA, which would have made an international agreement with Switzerland or Turkey. The EPLA was rules contrary to AETR (22/70), we are in the same situation with UK as a third country here.
Attentive Observer
Although I cannot agree with the position of Mr Patrick Breyer in respect of computer programs, there is a lot to be agreed with. Let’s just say that when the European Parliament took its decision about software which should not be patentable, it did so under the intense lobbying of the proponents of free software. Now we have an intense lobbying in favour of the UPC. Tables seem turning! The former lobbyist are now fighting new lobbyists. I consider however that the case law of the BA of the EPO has found a proper balance between the non-patentability of software as such and its patentability when it has a function which goes beyond the normal working of a computer. For instance, it does not matter whether a rolling mill is controlled by means of a computer connected to sensors and actuators or by a series of classical electronic circuits. The situation is slightly different when everything is happening in the computer itself, but as said, there are also situations there when a patent could be granted. I would therefore not consider that the UPC is a threat as such and would open the floods as only patents granted by the EPO can be reviewed by it. If the EPO has refused an application this decision cannot be reviewed by the UPC. Only post-grant infringement and validity can be decided (after the opposition period) by the UPC. The situation is thus by no means as bad as Mr Breyer makes out. That the UPC is a threat for European Industry is however a matter of fact. EP applications from EU member states represent according to the latest figures published by the EP 35,1% of all applications filed. When we take all EPO member states it comes to 45%. 72% of the applications stemming from Europe are filed by large enterprises and the rest by SMEs (18%) and the like (10%). In the end only 10% of the applications are filed by SMEs and the like having their seat or place of business in Europe. This figures valid in 2019 are not really different in the previous years. It means thus that 65% of all applications stem from non-EU member states. I fail to understand how this proportion can be favourable to European industry in general and European SMEs in particular, having their seat in the EU! It is thus not a surprise that countries like Poland and the Czech Republic are not in favour of the EPC. A recent research paper from Dimitris Xenos, “The Impact of the European Patent system on SMEs and National States and the Advent of Unitary Patent”, published in Prometheus, Vol. 36, No. 1 (March 2020), pp. 51-68, comes to the conclusion that “objective evidence shows that the new legal/institutional developments amplify existing imbalances in technological and economic capacities that are already observed between and within member states, and between them and non-EU states in the current global conditions of technological competition”. The figures used in the study, albeit older, are comparable to the actual figures, so that the conclusions in the paper are also valid today and confirm what I have stated above. One of the conclusions of the paper is that “the democratic control of industrial property in national markets is an essential responsibility of the state. Yet, the state is being stripped of democratic control by the EU’s new, pseudo-federal patent system”. A further one is “Objective evidence has emerged, albeit ex post, showing that the position of SMEs is very weak under the EPO system as their share of annual European patents granted is less than 10% and 17% in patent applications. These statistical results contradict the official justifications of the UPP, which focus on benefits for SMEs”. The UPC opens a boulevard for litigation from non-EU member states and is primarily for the benefit of large industry, for instance represented by Business Europe. Has this ever been explained to all the Parliaments having ratified or intending to ratify the UPC? That Mr Breton wants to push the UPC is not a surprise. It is a good friend and a political buddy of the former president of the EPO. To be very blunt, the UPC is pushed by the “Big” industry and lawyers who hope to fill their pockets when litigating before the UPC. Both represent a very active lobby which is more interested in its own profits as in the well-being of European industry in general and European SMES in particular. The lawyer’s fees are not on the low side when it comes to litigate before a national court, but imagine what it could be, when litigation is before a supra-national jurisdiction! In a second comment I will approach the problem caused by the non-participation of the UK in the UPC and the legal consequences it might have. Techrights and zoobab: FINGERS OFF!!!
MaxDrei
A word here, in support of the notion that the EPO is competent to set the limits of patentability, particularly in the field of "software inventions". GATT-TRIPS sets the limits of patentability as "all fields of technology". The EPO interprets this as inventions manifested as a combination of technical features that solves a problem in the technological arts, in a way that isn't obvious. The only inventive activity that "counts" for patentability is inventiveness in technology. This approach from the EPO squeezes out cleverness in fields other than technology far more efficiently than any other jurisdiction can do. What does anybody in their right mind find problematic with any of that? It hardly need be aid that there are fine judgements to be made, at the limit of patentability. What is "technical" and what is not? But with the EPO approach (unlike in other jurisdictions) ad with every further hundred hard-fought and marginal inter Partes disputes over validity at the EPO, that boundary gets ever sharper, with every succeeding year of EPO Boards of Appeal case law. Anybody who values legal certainty and a correctly functioning patent system should cherish the EPO case law on the substantive law of patentability, and not let any new patent court interfere with it or over-rule it or replace it with something having a lower degree of hard-won, consistent, rigorous and steadily increasing legal certainty