REPORT: House of Commons Committee hears unified evidence on unitary patent proposals (Part I)

The Houses of Parliament ready for some evidence
on the unified patent proposals

Last Wednesday the IPKat informed readers that the AmeriKat would be forgoing any prospect of birthday joy in favor of attending the House of Commons European Scrutiny Committee’s oral evidence hearing on the unitary patent and unified patent court proposals (see previous posts on Committee here). However, the afternoon did provide at least some celebratory delight in the battle of the unitary patent debacle (listen to the hearing here). The AmeriKat was unsure at what level the Committee would be engaged and/or interested in the issue.  However the initial tone set by the Chairman, Mr. William Cash MP, and by virtue of the Committee's following 18 questions posed to the witnesses, the Commons Scrutiny Committee demonstrated that it is thankfully engaged with and taking the industry's concerns on board:

“This is a very important and very technical question which is before the Committee and I ought to add that we’ve received evidence from the following organizations – EPLAW, Henry Carr QC, Federation of British Industry, Charted Institute of Patent Attorneys, IP Federation (here), two letters with attachments from the Minister Baroness Wilcox and also finally from the Intellectual Property Lawyers Association.  We also had it from the AIPPI... I would also mention that the evidence so far appears to be broadly consistent and very much in line with that which has been given by Henry Carr QC and the Chartered Institute of Patent Attorneys. This is a hugely important question, I repeat, and is something that we want to get right. I have to add that the Committee has not received any expert evidence whatsoever which supports the agreement on the UPC as drafted.  We have also asked the Minister to refer it to any such evidence but the Minister has not responded."

The hearing, which took place in Committee Room 19 at the Palace of Westminster on Wednesday afternoon, first heard evidence from Mr. Henry Carr QC (IP Bar Association/11 South Square), Vicki Salmon (CIPA/IP Asset) and Tim Roberts (CIPA's President) who gave evidence together. The proceedings closed with evidence from Dr. Christian Gassauer-Fleissner, Chairman of European Patents Lawyers Association (EPLAW). Both sets of witnesses were posed the same 18 questions, with some variations. The members of the Committee in attendance and posing the questions were Nia Griffith (Labour), Kelvin Hopkins (Labour), Penny Mordaunt (Conservative), Stephen Phillips (Conservative) and Henry Smith (Conservative).

Chairman of the
Scrutiny Committee,
Mr. William Cash MP

The first question, posed by Mr. William Cash MP, was whether to date the witnesses had had opportunities to contribute to formulation of policy on the EU unitary patent and the unified patent court ("the UPC").  Mr. Carr replied that they had been given none, a statement echoed by Ms. Salmon and Mr. Roberts.  Mr Carr stated

“There have been contributions from Sir Robin Jacob who has offered a few opinions but on the issues which he has offered opinions it is pretty clear that no one wants to listen very much.”

Mr. Cash MP  went on to mention the oft-quoted statement of Professor Sir Robin Jacob, who was described by Mr. Cash as being regarded as “generally being regarding as having unrivaled expertise in the field of intellectual property” [“What is it about Sir Robin which makes politicians swoon?”, asks Merpel, remembering Baroness Wilcox's comments] from his 2 September 2011 opinion

“This is no time for anything other than plain speaking. I am fortunate enough to have had wide experience, as barrister, judge and now academic, with the patent system from all angles. I have many contacts amongst users and lawyers. I know of no one in favour of involvement of the CJEU in patent litigation.  On the contrary all users, lawyers and judges are unanimously against it."

Mr. Henry Carr QC

Henry Carr QC agreed that this view was still correct in relation to the proposals as currently drafted, in particular because, as Professor Sir Robin was referring to, the current Draft Regulation included Articles 6 to 8 which means that questions of substantive law on patent infringement would be subject to interpretation by the CJEU.  This, explained Mr. Carr, would cause a great deal of delay, at least 2 years, and be subject to decisions by a panel of judges who do not have any expertise in patent law.  In replying to a second follow-up question on whether any comments the profession had made to various institutions had filtered through to drafts, Mr. Carr said that he could not find that "any of the fundamental objections to the current proposal made any difference."  Tim Roberts said that the only movement that was observed was the increased enthusiasm by the UK Government in having the Central Division in the UK which had been taken on board after UK industry raised the issue.  Ms. Salmon said

"We have put comments in but sometimes it’s hard to know how many of them get through and how strong a negotiating position there is– because we represent to the UK government– and then it all goes quiet.  I think we find the whole European legislative process quite opaque.  It’s very difficult at times to find even what draft legislation is under discussion and therefore its quite difficult to see what's going on to it."  

Vicki Salmon

Turning to the draft Rules of Procedure, the Committee asked if the panel had been able to put through their views on the Rules of Procedure and whether any of those comments had filtered through to the draft.  Prior to turning to the issue of the Rules, Mr. Carr stated that he wished to amplify one thing regarding the location of the Central Division.  He stated that it was correct that initially the UK government did not seem interested in bidding for the Central Division, but upon receipt of various e-mails and letters from those in the profession and industry, the Government put in a bid for the Central Division to be in London.  Mr. Carr stated that it was really important that this was done and that the location for London be pushed - for reasons he would turn to later during the hearing.  In relation to the Rules, he stated that there was a committee who would be working on the Rules - who will meet this week on 3 February 2011 - but that no one had done anything about the Rules for years.  The Rules contained some

"405 paragraphs of immense complexity which curiously do not deal with some of the fundamental questions that one would expect the rules to deal with"  

but that the profession would have an opportunity to discuss the Rules and their comments, including some particular suggestions from Daniel Alexander QC - Vice Chairman of the IP Bar Association.

When questioned about their opinions on the impact assessments conducted by the Commission and others, the panel unanimously stated that they felt the assessments to be, as Mr. Carr stated, "very poor and quite alarming from the perspective of SMEs".  Further, the panel of witnesses agreed the assessments were based on a whole slew of assumptions which were outdated and not based on solid foundations upon which to justify the current system.  It was suggested that it would be better that a brand new assessment be undertaken, especially in light of the departure of the EU who, up until the introduction of the enhanced cooperation procedure and the CJEU's Opinion, had been a signatory and a source of funding for the system.

The AmeriKat so thrilled to be
 spending the afternoon in Parliament
she even brought a hat...

The issue of the controversial introduction of the enhanced cooperation procedure produced a question from Mr. Cash MP, who stated:

"In relation to enhanced cooperation, as you raise that question, of course  there are limitations on the use of that procedure.  Really, I think I am right in saying, it should be used mainly as a matter of last resort.  But, are there any political reasons that you can consider, which would tend towards the promotion of this proposal which have not yet been disclosed as to who and which countries might benefit from it as compared, for example, [to] the assertions that Europe as a whole might benefit from it?  Could you just elaborate a little bit on some of the underlying political questions, because I know the Poles were particularly interested to get this through during their Presidency and I just sort of felt that this was being pushed rather, and that there was accelerated enthusiasm to get it through to benefit individual countries.  Could you perhaps just give us a little elaboration on your views of that?"

Mr. Carr was the first to bravely address that question.  The exchange that followed the question was as follows and ended with Mr. Cash MP requesting a further paper from the panel on the potentially hidden issues of why the proposals were being pushed forward with such great force:  

MR. CARR:  I think the country that stands, potentially, to benefit most form this is Germany.  And the reason for that is that Germany, as you know, already has the European Patent Office which is a very big employer in Germany and very, very successful organization….and I think is the second biggest after the Commission – the second biggest European institution.  If Germany, as it wishes to, gets the Central Division, in effect, for reasons I can explain if you wish, most cases will go to the Central Division.  And therefore the other centers of expertise in patent litigation, which are primarily the UK and the Netherlands will lose out very, very considerably.  Germany will then gain another big, big institution which will be very, very important and will very much expand the amount of patent litigation, its importance to patents, than it already has.  So they are the big gainers.  Why that caused the Poles to accelerate, I am not sure. I think many of these Presidencies wants to say they have  done something.  Certainly the big gainers will be Germany if they get that Central Division. 

Ms. Penny Mordaunt MP

WILLIAM CASH MP:  In relation to the German question, would you say that it will enhance their economic prosperity  for them to have the advantages of this court in the way you described?

MR. CARR:  Well, I would do, I would certainly say it will.  If we look at the situation in the UK at the moment, and perhaps compare it with Germany.  I have seen various figures,  the reliability I would not vouch for.  In broad terms currently patent litigation and patent advisory services in the UK generates hundreds of millions of pounds for the economy - that's as it stands at present.  Germany is even more so: there are more patent cases in Germany than here, but we are still a big player.  If we were to get the Central Division, estimates that I have seen are that we would get as much as five times as much patent related work than we do at the moment – so we would be into billions. Whoever gets the Central Division, that's going to be a major employer - a major employer of skilled people, so many cases, so much staff - so I think whoever gets that will benefit their economy greatly if it goes ahead. 

WILLIAM CASH MP:  ...Perhaps you could do a paper on that question.  There seems to be such unanimity in the profession that  I suspect that there are things not yet known to Parliament which are not being disclosed to us at the moment, which we would be able to benefit from, so if you could do that that would be helpful.

The CJEU is alleged to be slow and causes delays.
 The clock says 8:45 - but is that AM or PM?  

The Committee then posed several questions regarding the profession's concern on the inclusion of Articles 6 to 8 in the Proposed Regulation.  Mr. Hopkins MP questioned what was the cause for the "uniform and profound concern over the involvement" of the Court of Justice of the European Union ("CJEU", also referred to as the "ECJ" during the hearing) on substantive patent law.  Mr. Carr explained the concern from the perspective of the trade mark law experience:

"I have appeared in several cases in the European Court of Justice largely because the trade mark system is already subject to the ECJ, because we have a Trade Mark Regulation and a Trade Mark Directive, so questions of interpretation are referred to the ECJ. The practical effect that this has is that, let’s say you are involved in a trade mark case [and] a question of interpretation arises, unless the UK court is absolutely certain what the answer is not just here but in all Member States, it has to refer it.  So your case then stops and it takes about 2 years to get an answer from the ECJ.  And of course during that time, there are additional costs because the parties have to prepare written observations, governments intervene and you go to a hearing in the ECJ and you eventually get an answer.  It then comes back to the UK court who tries to interpret the answer, and one of the problems – there has not just been extra delay and extra costs – but in trade mark [law] its been really difficult to interpret the answer.  So then there is a great debate about who has won! And then you have to continue with the case.  So it’s not proved [to be] a system which intellectual property lawyers throughout  Europe wish to expand, and the problem with the existing proposal is that it expands it into patents, as well."

Mr. Kelvin Hopkins MP

The Committee itself pointed out that this stated delay could be compounded given the substantial backlog of cases at the CJEU.  Mr. Carr agreed and said that what people may find is that the UPC will not work very well and is worse than the current system.  Indeed, he said, the lawyers he had spoken to all said that the current proposals appeared to be worse than the current system of patent protection and enforcement in Europe.  Mr. Carr was asked whether those were just UK lawyers to whom he had spoken.  He stated that he had spoken to 

"[Patent lawyers] in other European countries.  I referred in my evidence to the opinion of the Council of Bars and Law Societies of Europe which apparently represents about 1 million lawyers – the fact there are 1 million lawyers in Europe is worrying, but nonetheless  - and their view was that partly because of this Article 6 to 8, the proposed system will increase legal uncertainty, increase costs and be bad for users, so I think it is a very widespread view.”

Ms. Nia Griffths MP

Ms. Salmon agreed, mentioning that other papers compiled on the subject, including letters and position papers from multinational industry bodies, for example from Sweden and EPLAW, also confirmed this view.  This concern was not just the UK profession arguing about Articles 6 to 8, but it was a view shared throughout Europe.  Again, Mr. Cash MP asked why, if given the unanimity regarding Articles 6 to 8, those provisions had not been removed?  Ms. Salmon stated that they had been "struggling to find out" and referred to the opinion from the Commission which has been very difficult to get a hold of, although she understood Professor Sir Robin Jacob was trying to get his hands on it.  Mr. Carr reinforced this position by identifying the opinions of  Professor Sir Robin Jacob and Professor Krasser who said that Articles 6 to 8 were unnecessary to include but some unnamed Commission lawyer had said their opinions were incorrect. [Readers will remember Cecilia Wikstrom had asked to see this opinion during a JURI session, but as far as the AmeriKat understands she was never provided with the Commission's legal opinion on Articles 6 to 8]. However, Mr. Carr stated, "if you look at the reasoning, there is very little to support the proposition."  

Mr. Cash MP asked that the panel in their supplemental paper to examine the reasons why Spain and Italy did not want to take part in the unitary patent system and/or Unified Patent Court.  He stated that:

Evelyn Waugh's Scoop

WILLIAM CASH MP:  I am getting increasingly puzzled about the question of why it is there is this headlong determination, rather obstinate determination, to go ahead with the proposal  which the entire industry , the lawyers, the judges, Sir Robin Jacob, everybody is against but there is some dynamic operating at the centre of gravity that is driving it forward despite the expert evidence of pretty well everybody.

MR. ROBERTS:  The only theory I can suggest to you is that the EU needs a victory and this can be presented as a victory.  This is something they have been trying to do for 40 years.  They’ve almost got agreement on something.  It is a very desirable objective and it is being presented outside the UK as a victory, as something the EU can do…  As the Daily Beast requested “please cable victories” and that is the motivation behind this.