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Tuesday, 5 May 2015

BREAKING NEWS: CJEU rejects Spain's objections to the Unitary Patent Package

All Europe has been waiting with eager anticipation the handing down today of the decision of the CJEU in respect of the two challenges by Spain (C-146/13 and C-147/13) to the legality of the Unitary Patent Package.  Well, perhaps more accurately, all Europe is divided into three parts - those hoping that today the Unitary Patent Package will be consigned to the dustbin of history, those hoping that the challenges will be rejected in line with the Opinion of AG Bot, and those who could not care less.

Background

Initially, both Spain and Italy challenged before the CJEU the decision of Council to authorise the enhanced cooperation procedure with a view to create a single European patent, with the result that 25 of the then 27 Member States proceeded without Spain and Italy.  That challenge was duly rejected back in 2013.

Undeterred, once the Unitary Patent Regulation and associated Regulation on translations were enacted, and the Unified Patent Court Agreement signed back in December 2012, Spain (without Italy this time) proceeded to challenge its compliance with European Union law, and sought annulment of both the Regulations in two actions (one for each Regulation) before the CJEU (reported by IPKat here).  (The Agreement, being a treaty between Member States and not an EU legislative enactment, could not directly be challenged in the same way.)

In November 2014, AG Bot issued opinions in both cases arguing that the two challenges should be rejected, as reported by IPKat here.  The reasoning of these opinions has attracted some criticism.

The basis of the Challenges

In Case C-146/13 Spain sought an order to:

  • Declare legally non-existent Regulation (EU) No 1257/2012 of the European Parliament and of the Council of 17 December 2012 implementing enhanced cooperation in the area of the creation of unitary patent protection [the Unitary Patent Regulation] and, in the alternative, annul that regulation in its entirety;
  • In the alternative, annul:
(a)    Article 9(1) in its entirety, and Article 9(2) in the terms set out in the fifth plea in law in support of this action;
(b)    Article 18(2) in its entirety, and all references in Regulation No 1257/2012 to the Unified Patent Court as the judicial regime for the EPUE [European patent with unitary effect] and as the source of law for the EPUE
The arguments put forward were:
  • Breach of the values of the rule of law in so far as a regulation has been established on the basis of a right granted by the European Patent Office, whose acts are not subject to judicial review. [This ground is of course very relevant to the question of the judicial independence of the Boards of Appeal of the EPO and their possible reform - see here, here and here]
  • Non-existence of an act of the European Union and, in the alternative, lack of a legal basis for Regulation No 1257/2012 in that it does not introduce measures guaranteeing the uniform protection envisaged in Article 118 TFEU. [The argument here is that the Regulation has Art 118 as its legal basis, but that relates to "measures for the creation of European intellectual property rights to provide uniform protection of intellectual property rights throughout the Union"; since the Unitary Patent Regulation does not create a Eruopean property right and it is not uniform throughout the EU, the legal basis is invalid]
  • Misuse of power through the use of enhanced cooperation for purposes other than those provided for in the Treaties.
  • Infringement of Article 291(2) TFEU and, in the alternative, misapplication of the Meroni case-law in the regulation of the system for setting renewal fees and for determining the 'share of distribution' of those fees. [Art 9(2) of the Regulation leaves this to participating Member States]
  • Misapplication of the Meroni case-law in the delegation to the European Patent Office of certain administrative tasks relating to the European patent with unitary effect. [Here the involvement of the EPO, which is not an EU body, is criticised]
  • Breach of the principles of autonomy and uniformity in the application of European Union law, as regards the rules governing the entry into force of Regulation No 1257/2012. [Here the link between the Regulation and the Agreement, which is not an EU instrument but a treaty between Member States, is criticised]
In Case C-147/13 Spain sought an order to:
  • Annul Council Regulation No 1260/2012 of 17 December 2012 implementing enhanced cooperation in the area of the creation of unitary patent protection with regard to the applicable translation arrangements [the Regulation on translations]
  • Alternatively, annul Articles 4, 5, 6(2), and 7(2) of Council Regulation No 1260/2012 of 17 December 2012 implementing enhanced cooperation in the area of the creation of unitary patent protection with regard to the applicable translation arrangements 
The arguments put forward were:
  • Infringement of the principle of non-discrimination by introducing a scheme to the detriment of persons whose mother tongue is not English, French or German, the scheme being disproportionate to the objective pursued. [This was the whole basis of Spain's opposition to the Unitary Patent Package]
  • Lack of legal basis for Article 4 by regulating translation in the event of a dispute, which does not directly affect the language arrangements for the intellectual property right referred to in the second paragraph of Article 118 TFEU. [Art 118 states "The Council ... shall by means of regulations establish language arrangements for the European intellectual property rights"]
  • Infringement of the principle of legal certainty.
  • Failure to have regard to the case-law in Meroni by delegating the administration of the compensation scheme (Article 5) and the publication of the translations (Article 6(2)) to the European Patent Office.
  • Infringement of the principle of the autonomy of European Union law by making the application of the Regulation dependent on the entry into force of the Agreement on a Unified Patent Court. [These last two grounds mirror the last two grounds of C-147/13]
Outcome
The Decisions in both cases have been issued today, rejecting Spain's challenges.  Since this was the last serious obstacle to the Unitary Patent Package being implemented, the significance of these judgments is that the Unitary Patent and Unified Patent Court will proceed, provided the necessary number of ratifications of the Unified Patent Court Agreement occur (13 including UK, France and Germany). The full text of the Decisions [updated 11:20am] is available online at C-146/13 and C-147/13.  [Further update 2:00 - if you prefer to read on BAILII, they are C-146/13 and C-147/13]  Further analysis from one or more of the IPKat team will follow once we have had chance to digest them.  In the meantime, ever faithfully prompt and informative is the Press Release from the CJEU.

The Court dismisses both of Spain’s actions against the regulations implementing enhanced cooperation in the area of the creation of unitary patent protection

The current European patent protection system is governed by the European Patent Convention (EPC),(1) an international agreement which is not subject to EU law. That convention provides that, in each of the Contracting States for which it is granted, the European patent is to have the effect of and be subject to the same conditions as a national patent granted by that State.

Through the ‘unitary patent package’ (2) the EU legislature sought to confer unitary protection on the European patent and establish a unified court in this area. Under the EPC system, European patents provide, in each of the States which are party to that convention, protection the extent of which is defined by the national law of each State. By contrast, under the European patent with unitary effect (EPUE) system, the national law designated on the basis of Regulation No 1257/2012 will be applied in the territory of all the participating Member States in which that patent has unitary effect, which will guarantee the uniformity of the protection conferred by the patent. The translation arrangements for the EPUE, which are based on the current procedure in the European Patent Office, are designed to achieve the necessary balance between the interests of economic operators and the public interest in terms of the cost of proceedings and the availability of technical information. The official languages of the Office are English, French and German. The EU legislature also considered that it was essential to establish a court having jurisdiction to hear cases concerning the EPUE in order to ensure the proper functioning of that patent, consistency of case-law and hence legal certainty, and cost-effectiveness for patent proprietors.

Spain seeks the annulment of the two regulations forming part of that package, namely the regulation on the creation of unitary patent protection (Case C-146/13) and the regulation governing the applicable translation arrangements (Case C-147/13).

By its judgments delivered today, the Court of Justice dismisses both of Spain’s actions.

Case C-146/13, Regulation (EU) No 1257/2012
Spain contests (inter alia) the legality, in the light of EU law, of the administrative procedure preceding the grant of a European patent. It argues that that procedure is not subject to judicial
review to ensure the correct and uniform application of EU law and the protection of fundamental rights, which undermines the principle of effective judicial protection.

The Court rejects Spain’s argument by pointing out that the regulation is in no way intended to delimit, even partially, the conditions for granting European patents – which are exclusively governed by the EPC – and that it does not incorporate the procedure for granting European patents laid down by the EPC into EU law. Instead, that regulation merely (i) establishes the conditions under which a European patent previously granted by the European Patent Office pursuant to the provisions of the EPC may, at the request of the patent proprietor, benefit from unitary effect and (ii) provides a definition of that unitary effect.

Spain also submits that the first paragraph of Article 118 TFEU (Treaty on the Functioning of the European Union) concerning the uniform protection of intellectual property rights throughout the European Union is not an adequate legal basis for the regulation.

In that regard, the Court points out that unitary patent protection is apt to prevent divergences in terms of patent protection in the participating Member States and, accordingly, provides uniform protection of intellectual property rights in the territory of those States.

Spain also contests the assignment to the participating Member States acting in a select committee of the Administrative Council of the European Patent Organisation of the power to set the level of renewal fees and to determine the share of distribution of those fees.

The Court observes in that regard that, according to the TFEU, it is for the Member States to adopt all measures of national law necessary to implement legally binding Union acts. Moreover, it inevitably falls to the participating Member States, and not to the Commission or the Council, to adopt all the measures necessary for the purposes of carrying out those tasks, given that the EU – unlike its Member States – is not a party to the EPC. The Court adds that the EU legislature did not delegate any implementing powers which are exclusively its own under EU law to the participating Member States or the European Patent Office.

Case C-147/13, Regulation (EU) No 1260/2012
Concerning the applicable translation arrangements, Spain alleges (inter alia) infringement of the principle of non-discrimination on the ground of language since – in its opinion – the regulation establishes, with respect to the EPUE, a language arrangement which is prejudicial to individuals whose language is not one of the official languages of the European Patent Office. Spain submits that any exception to the principle that the official languages of the European Union have equal status ought to be justified by criteria which are other than purely economic.

The Court acknowledges that the regulation differentiates between the official languages of the EU. However, it emphasises that the regulation has a legitimate objective, namely the creation of a uniform and simple translation regime for the EPUE so as to facilitate access to patent protection, particularly for small and medium-sized enterprises. The complexity and particularly high costs of the current European patent protection system constitute an obstacle to patent protection within the EU and affect adversely the capacity to innovate and compete of European businesses, particularly small and medium-sized enterprises. The Court emphasises that the language arrangements established by the regulation make access to the EPUE and the patent system as a whole easier, less costly and legally more secure. The regulation is also proportionate, as it maintains the necessary balance between the interests of applicants for EPUEs and the interests of other economic operators in regard to access to translations of texts which confer rights, or proceedings involving more than one economic operator, by introducing a number of mechanisms (including a compensation scheme for the reimbursement of translation costs, a transitional period until a high quality machine translation system is available for all the official languages of the EU, and a full translation of the EPUE for operators suspected of infringement in the event of a dispute).

The Court also holds that the second paragraph of Article 118 TFEU constitutes the correct legal basis for the regulation, as that regulation establishes the language arrangements for a European intellectual property right (namely, the EPUE), defined by reference to the EPC.

Footnotes
(1) Convention on the Grant of European Patents, which was signed at Munich (Germany) on 5 October 1973 and entered into force on 7 October 1977. The European Patent Organisation is an intergovernmental organisation that was set up on the basis of that convention. The Organisation has two bodies; the European Patent Office, and the Administrative Council, which supervises the Office’s activities. The European Patent Office is the executive body of the European Patent Organisation and its main task is to examine patent applications and grant European patents.

(2) That ‘package’ comprises Regulation (EU) No 1257/2012 of the European Parliament and of the Council of 17 December 2012 implementing enhanced cooperation in the area of the creation of unitary patent protection (OJ 2012 L 361, p. 1), Council Regulation (EU) No 1260/2012 of 17 December 2012 implementing enhanced cooperation in the area of the creation of unitary patent protection with regard to the applicable translation arrangements (OJ 2012 L 361, p. 89) and the Agreement on a Unified Patent Court, signed on 19 February 2013 (OJ 2013 C 175, p. 1).

7 comments:

Anonymous said...

For richer or poorer,
For better or for worse...

Ozymandias said...

Note that the CJEU appears to be pushing the same nonsense we've seen elsewhere about "complexity and particularly high costs of the current European patent protection system" and how the Unitary Patent will be "easier, less costly and legally more secure".

If this is genuinely the rationale for their decision I fear they have been misled by their political masters. We will see when the full text becomes available...

Anonymous said...

Clever CJEU -reasoning rests on a point Spain failed to spot.So they save the (institutional) day.

Confused said...

Is it me, or is the CJEU's statement in para 107 of C-146/13 more than a little bit disingenuous?

Sure, Article 18(2) of Reg 1257/2012 only provides for a derogation from Articles 3(1), 3(2) and 4(1) of that Regulation. However, if a "participating Member State" does not ratify the UPC Agreement, then the provisions of Article 3(1) mean that no EPUEs can exist in that territory. Given that the rest of the Regulation relates exclusively to EPUEs, then not ratifying the UPC Agreement is absolutely equivalent in effect to applying a derogation to ALL substantive provisions of the Regulation.

I thought that the CJEU was supposed to interpret legislation in a teleological manner - and not engage in the kind of form over function reasoning illustrated by para 107 of C-146/13.

Very disappointing.

Anonymous said...

I don't mind if there's a unitary patent regime in Europe - but NOT YET. I think it's too soon. I think they're going to massively bonk it up and issue patents that should not exist, particularly software patents, so I would like another 10 years or so of prior art under the old system to exist first.

Anonymous said...

I think they're going to massively bonk it up and issue patents that should not exist

Why do you think so? The patent granting procedure is not changing.

Anonymous said...

@Ozymandias:
If this is genuinely the rationale for their decision I fear they have been misled by their political masters. We will see when the full text becomes available...

I didn't read the judgments yet, but I expect to find in them legal reasoning rather than cost calculations.

Anyway, is it really so hard to believe that the unitary patent will make it cheaper to have patent protection in all of the participating EU member states? (Ideally that would have been all EU member states, but that will still take some time. That's unfortunate, but political reality.)

The argument that applicants nowadays are perfectly happy with just 3 member states is not a very good one. They are not perfectly happy with just 3 member states, but many more is simply too costly in terms of renewal fees and overhead costs (try to deal with 28 national patent offices at a time), not to mention potential litigation costs. And that translation costs were brought down already by the London agreement is not a development completely independent from the long quest for a community/unitary patent.

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