For the time being, the Unified Patent Court (UPC)--a single patent judiciary for the contracting states of the European Patent Organization (which runs the European Patent Office)--is actually the Nullified Patent Court. And doubly so:
Three weeks ago, the European Patent Litigators Association (EPLIT) announced that it had "learned that the UK government intends to stop its cooperation towards the creation of the Unified Patent Court." The UPC Agreement involved ultimate jurisdiction of the Court of Justice of the EU (CJEU) over certain segments of patent law. The UK couldn't have submitted to CJEU without its government exposing itself to allegations of betraying the majority that voted in favor of Brexit four years ago.
What came as more of a surprise than British anti-CJEU consistency, the Federal Constitutional Court of Germany yesterday announced that a majority of its Second Senate had declared (as per an order dated February 13, 2020) the German legislature's Act of Approval to the Agreement on a Unified Patent Court (UPC Agreement) "void" as the Bundestag (Federal Parliament) had passed it with a simple majority as opposed to the two-thirds majority required by the Basic Law (Germany's de facto constitution) for acts that effectively amend the country's constitution. Here, the conferral of ultimate jurisdiction over a certain field of law to a new non-German court was held to be tantamount to an amendment to the Basic Law--and, therefore, a violation of constitutional rights asserted by complainants. A minority of three dissenting judges, however, considered this application of the two-thirds majority rule to be exceedingly strict and a potential impediment to further European integration (a very policy-driven position that is unfaithful to the law).
Simply put, the majority of judges viewed not the UPC Agreement but its ratification to be unconstitutional.
Apart from the need to modify the treaty in light of Brexit and the fact that the coronavirus crisis dictates other priorities, the government coalition parties couldn't re-ratify an updated UPC Agreement without support from the opposition as they hold only 398 (56%) of the Bundestag's 709 seats. Theoretically, the libertarian FDP (80 seats = 11%) could provide the missing votes.
The combination of the UK's withdrawal (as the UK was a "must have" contracting state under the original UPC Agreement and supposed to be the seat of one of three sectorial appeals courts) and the higher quorum for re-ratification in Germany suggests significant delays, but doesn't spell definitive doom for the UPC project in the opinion of practitioners:
Gerd Zimmermann, founder of patent firm Zimmermann & Partner, says "there still is a strong political will in continental Europe to put the UPC in place, as neither Brexit nor the Constitutional Court's ruling weakened the resolve to put a single European patent judiciary in place."
Bardehle Pagenberg, a leading IP prosecution and litigation firm that analyzed the fallout from brexit just one day before the Constitutional Court's ruling, said in a press release that "most of industry is rightly in favor of the system even without the UK."
Patentverein, a group of German medium-sized companies critical of the country's bifurced patent litigation system (which deprives defendants of a full invalidity defense to infringement claims), also issued a press release expressing hope that "a new European effort [would] be made without the UK on board."
So there is widespread consensus that re-ratification (subsequently to renegotiation) is a question of when, not if. interestingly, the two patent firms as well as Patentverein say or at least imply it's also a question of how (i.e., on what terms):
Bardehle Pagenberg provides a non-exhaustive laundry list of areas in need of improvement: "Since the UPCA has to be revised anyway, the opportunity could – and should – be seized to make the system more attractive. Issues to be considered are the criticized opt-out / opt-in regulations, sound grounds for the compulsory inclusion of European bundle patents, the good, but improvable rules of procedure, the (high) reimbursable attorney fees (which may be prohibitive for SMEs), the renewal fees for the Unitary Patent, as there is no valid reason for subsidizing national budgets via the renewal fee share in the Unitary Patent, just to name the most important ones."
Patentverein more subtly expresses the organization's "hopes that the good parts of the [EU-wide] Unitary Patent will be preserved," which I interpret as diplomatically suggesting that there is room for improvement.
Mr. Zimmermann says "it's rather likely that governmental and private-sector stakeholders will make a variety of political demands, though it's hard to imagine that any dealbreaker would surface." He considered it "essential to work toward a new multilateral agreement, but negotiation dynamics should not produce a result that would come at efficiency's expense." For an example, "most European patents are filed in the EPO's three official languages, irrespectively of the UK's participation, so for practical purposes the agreed-upon language regime should be maintained."
In addition to those reactions to yesterday's ruling, let's not forget that the UPC's Rules of Procedure have previously been--and without a doubt will again be--a subject of debate. Six years ago, a broad industry coalition warned against the risks of the UPC turning Europe into a trolls' paradise.
In that context, access to injunctive relief is the most important issue--as it is in the German patent reform debate. Earlier this week, the Federation of German Industries (BDI)--the largest industry association in Europe--was forced to retract a submission (particularly on injunctive relief) that the Federal Ministry of Justice and Consumer Protection had already published on its website, as the statement misleadingly suggested that large parts of the German economy backed a permissive approach to patent injunctions. This setback for patent enforcement extremists proved that the companies advocating--as did the aforementioned UPC Industry Coalition--a more balanced patent system are ever more influential. There's a strong connection between a future "UPC 2.0" effort and the ongoing process for a reform of Germany's Patent Act: whatever comes out of the national legislative process will inform--if not dictate--the position the German government will have to take when the UPC Agreement is renegotiated. The stakes could hardly be higher, and a growing number of stakeholders are perfectly aware of this while some others are still clueless as to what it takes to influence patent legislation.
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