Good-Bye Unitary Patent?
On 20th March 2020 the German Constitutional Court issued a non-appealable decision upholding the complaint against the German ratification of the Agreement on a Unified Patent Court. The main reason for the decision was that, since the UPC Agreement amends the German Constitution in substantive terms, it would have been necessary that the act of approval of the Agreement had been passed by at least a two-thirds majority in the German Parliament. However, the act of approval was passed unanimously by the Parliament in a session where only about 35 members were present.
We explain next how the Unitary Patent System was developed, how it arrived to this apparently dead-end and whether a way out for the Unitary Patent System is possible.
Since the 1970’s the EU member states have aimed towards the creation of a single patent that covers all the member states.
Why is a unitary European patent desirable?
Unitary patent would make it possible for applicants to protect their invention in all participating countries by submitting a single patent application and without the need to validate the patent in each country once it is granted.
Thus, unitary patent protection would make the existing European system simpler and more affordable for inventors by eliminating complex validation requirements and by drastically limit expensive translation requirements in participating countries. This could stimulate research, development, and investment in innovation.
Finally, the unitary patent system would allow more effective litigation of patents across Europe through an Agreement creating a Unified Patent Court.
When did the project start?
The original proposals in the 1970’s for the European Patent Convention (EPC), which came into effect in 1978 and has been an undeniable success, were intended to proceed in parallel with those for a Community Patent Convention, i.e. a Convention directed to a unified enforcement process in all EU states, to replace the nationally litigated rights of each member state.
In 2004 the Council finally failed to agree on the details of a Regulation on the Community patent, inter alia due to difficulties relating to the languages into which the whole or parts of Community Patents would have to be translated.
The Unitary Patent Package
In 2010 the European Commission revived the idea of a single patent for the European Union and proposed an alternative approach to adopt a regulation to create a community-wide patent and a system for litigating such patents.
During 2012 the heads of government of the European Union reached agreement on the last remaining issue delaying adoption of the so-called “European Patent Package”, allowing the approval on December of that same year of a regulation for creating a Unitary European Patent to cover all EU member countries (except Spain and Italy who have opted out of the system) as well as a separate regulation relating to the languages to be used.
On February 2013, most member states of the EU (the exceptions were Spain and Poland) signed an agreement to create a European patent court system that would have jurisdiction over all patents issued by the European Patent Office (EPO) having effect within the participating countries irrespective of whether such patents are new unitary patents or part of the traditional bundle arising from a European patent application.
Both the regulations and the treaty were to come into effect when the latest had been ratified by thirteen of the signatory states, as long as Germany, France and the United Kingdom were part of those thirteen.
What has happened after the legislation was approved in 2013?
The approval was a great achievement but soon problems started to appear…
Already in March 2013 the Regulations were challenged by Spain. It took a couple of years until the European Court of Justice decided to reject Spain’s complaints on May 2015.
Soon after this decision, Italy announced that it had changed its mind and intended to become a participant of the unitary patent system. At that time, 8 countries, including France had ratified the UPC agreement. Therefore, it seemed that everything was again on the good track.
Moving forward 3 countries ratified during 2016, another 3 did it on 2017 and 2 more, the UK being one of those, did it before April 2018 (even though the Brexit referendum in the UK had been favourable to those advocating for leaving the EU). The momentum seemed to be there….
However, this started to change again in July 2017.the date when the Hungarian government filed a complaint asking the country’s Constitutional Court to evaluate whether the UPC Agreement was compatible with the Fundamental Law. Not very good news! However, also not too worrying for the fate of the Package as it could still enter into force without the participation of Hungary should the Constitutional Court rule against it.
A more severe obstacle arose in March 2017 when an individual filed a complaint with Germany’s Constitutional Court asking the Court to review whether the UPC is compatible with the country’s Constitution. The Constitutional Court then asked Germany’s President to withhold the signature of the implementing legislation for the Unitary Patent Package while the Court evaluated the complaint.
Meanwhile, in June 2018 Hungary’s Constitutional Court decided that the Agreement was not constitutional because it would deprive the Hungarian courts from having competence for judicial review on domestic legal disputes of individuals. So Hungary was gone!
In February 2020 another severe drawback took place when a UK Government spoke person declared
“The UK will not be seeking involvement in the unitary patent/UPC system. Participating in a court that applies EU law and bound by the Court of Justice of the European Union (CJEU) is inconsistent with our aims of becoming an independent self-governing nation”
So, the UK was also gone!
The most recent difficulty just appeared on 20th March 2020 when the German Constitutional Court issued a non-appealable decision upholding the complaint against the German ratification of the Agreement on a Unified Patent Court. The main reason for the decision was that, since the UPC amends the German Constitution in substantive terms, it would have been necessary that the act of approval of the Regulations had been passed by at least a two-thirds majority in the German Parliament. However, the act of approval was passed unanimously by the Parliament in a session where only about 35 members were present.
So, what is now going to happen?
As previously explained it is compulsory that Germany ratifies the Regulations and the Agreement for them to come into effect. Without Germany, the system is dead.
Is Germany’s ratification still possible?
The German Parliament can still try to pass the Act again with the required two-thirds majority.
However, even if the German government would be willing to bring forward another Act, and the Parliament would approve it, it might still be possible that another complaint is brought with the Constitutional Court, in particular since the Court has failed to express his views in relation of many of the grounds contained in the complaint he has decided upon.
In addition, it is also quite clear that the system is much less attractive without the UK involved, as not only implies the absence of the EU’s second economy but also the loss of the very high experienced UK Judges that were a great asset for the future Unified Patent Court. A huge opportunity missed due to the UK’s decision not to participate in the system.
Considering the above, it cannot be excluded that this may represent the end of the UPC project, or at least a lengthy delay.