From October 2016 to March 2017 the team is joined by Guest Kats Rosie Burbidge and Eibhlin Vardy, and by InternKats Verónica Rodríguez Arguijo, Tian Lu and Hayleigh Bosher.

Tuesday, 5 May 2015

CJEU refuses to throw España in the works – part I

As reported by fellow Kat Darren this morning, the CJEU has rejected both of Spain’s challenges to the legality of the Unitary Patent Package. This post will summarise the first of these decisions, C-146/13, which requested the annulment of Regulation 1257/2012 based on seven pleas. A later post will discuss the second case, C-147/13, which challenged the translation regime.

For those readers who want to know if there were any surprises in C-146/13, no there weren’t. Advocate-General Bot had issued his opinion (reported here) urging a comprehensive rejection of the Spanish case, and the CJEU has followed the A-G’s advice.

The intervention by a group of academics headed by Alain Strowel (reported here) urging the Court to resist the “dangerous precedent” in which the EU would “abandon its powers in favour of the Member States” has fallen on deaf ears. So too has the criticism of the A-G’s opinion on the basis that it failed to take into account the context of the ongoing debate over the shortcomings in perceived independence of the EPO Boards of Appeal.

The 1st plea: Infringement of the values of the rule of law
For many readers of this blog, this ground was the one promising the most interest. Spain argued that the administrative pre-grant procedure under the European Patent Convention failed to provide a satisfactory system of judicial review, and that it was unacceptable that such a deficient system should be incorporated into the EU legal order.

Spain also argued that the EPO Boards of Appeal and Enlarged Board were not independent from the Office and were not subject to any form of judicial review, given the EPO’s immunity.

The CJEU dismissed the challenge without making any comment on the allegations of lack of judicial independence. The Court held that the administrative procedure for granting patents under the EPC was unchanged by the Regulation under challenge and the Regulation merely established that the granted Patent could have a unitary effect in the participating Member States.

The 2nd plea: Lack of legal basis
Spain’s case on this point was that the first paragraph of Article 118 of the TFEU (one of the fundamental treaties underlying the European Union) was not adequate as a legal basis for the unitary patent system. The relevant paragraph in Article 118 reads:

In the context of the establishment and functioning of the internal market, the European Parliament and the Council, acting in accordance with the ordinary legislative procedure, shall establish measures for the creation of European intellectual property rights to provide uniform protection of intellectual property rights throughout the Union and for the setting up of centralised Union-wide authorisation, coordination and supervision arrangements.

Spain’s argument in a nutshell was that the contested Regulation fails to properly establish a comprehensive patent system, being “devoid of content” on substantive patent law, and that it was improper for the Regulation to provide that the effects of the unitary patent (or “EPUE”, the European Patent with Unitary effect) should be defined with reference to the national law where the infringement occurs or where the defendant is domiciled since this was contrary to the uniformity of protection mentioned in Article 118. (The Regulation says that the EPUE has those effects throughout the unitary territory.)

The Court again agreed with the A-G. It was not necessary for the Regulation to harmonise all aspects of patent law as long as the measures went some way to harmonisation, and the protection was uniform since whatever national law was used to define the effects of the EPUE, that protection was the same in all Member States.

The 3rd plea: Misuse of powers
Spain had submitted that the Parliament and Council misused their powers by establishing an “empty shell” of a Regulation which in fact failed to establish a judicial system capable of ensuring uniform protection throughout the EU.

The Court gave this short shrift stating that for a plea of misuse of powers to succeed, Spain would have had to establish that the EU organs were trying to take measures for reasons other than those for which the power to take those measures was conferred. Spain, said the Court, had not established any factual basis for the plea.

The 4th & 5th pleas: Infringement of Article 291(2) TFEU and/or the principles laid down in the Meroni judgment
These grounds concerned the delegation of certain powers, such as setting renewal fees and other administrative tasks, to the EPO or to a select committee of the Administrative Council.

While the Court agreed that the setting of the level of renewal fees and the share of distribution of those fees constitutes the implementation of a legally binding Union act for the purposes of Article 291(1) TFEU, it held that Spain had failed to show that other criteria required under Article 291 applied, specifically, the requirement that uniform conditions for implementing legally binding Union acts are needed. It is only in those cases that the Commission or Council has powers conferred on it.

In the Meroni judgment the Court had held that the delegation by an EU institution to a private entity of certain discretionary powers was not compatible with the TFEU. However, Meroni did not apply here as it was not the EU institutions which were delegating powers to the EPO but rather the participating Member States to the unitary patent system.

The 6th and 7th pleas: Infringement of the principles of autonomy and uniformity of EU law
Spain contended that the essential character of the powers of the European Union and of its institutions should not be altered by any international treaty. Yet there was no difference in essence, Spain said, between the Agreement on a Unitary Patent Court and the earlier abandoned draft agreement on community patents which the Court had held to be incompatible with EU laws.

Spain also argued that in acceding to the UPC Agreement, the participating Member States were exercising a competence which was now a competence of the European Union, i.e. the exclusive competence to conclude international agreements.

The Court rejected these two arguments as inadmissible, holding that it did not have jurisdiction to rule on the lawfulness of an international agreement concluded by Member States or a measure
adopted by a national authority.

Spain further argued that the timeline for implementing the contested Regulation was defective as it depended on the will of the countries involved. Also, if a Member State were to decide not to ratify the UPC Agreement, the contested regulation would not be applicable to that Member State and the Unified Patent Court would not acquire exclusive jurisdiction over its territory to decide on EPUE cases, with the result that EPUEs would not have unitary effect as regards that Member State.

The Court held that it was permissible for the entry into force of a regulation to be dependent on countries making the necessary legislative and administrative arrangements. As regards countries deciding not to ratify the UPC Agreement, the Court said this was, in effect, a red herring. There were certain limited derogations open to countries, but countries were not able to simply decide arbitrarily that they would not ratify.

On this last point the IPKat notes that the Court took a more measured approach than the A-G. The A-G had argued that based on the principle of “sincere cooperation” Member States were under an obligation to ratify swiftly and without delay, and that they would be in breach of their obligations if they did not push through ratification. Perhaps conscious of the speculation over when and indeed whether some of the bigger Member States might ratify the UPC Agreement  the Court has demurred from repeating this finding in its judgment.

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So there you have it. This Kat suspects that the judgment will have convinced few people to change their minds on whether the Unitary Patent project as currently envisaged is a good thing or whether the manner of its implementation was legal.

The Court has laid down a legal narrative, which this Kat finds somewhat unconvincing (but is the first to admit he is not an expert on the EU treaties), between on the one hand finding that the mechanisms were all good and proper under EU laws and on the other hand, allowing the EU itself to disclaim any responsibility for derogating its powers. In other words when it seems to be necessary for an act to be that of the EU, the Court finds this to have been the case, but when it is imperative that acts and measures are those of the Member States, hey presto, those acts are nothing to do with the EU institutions. Of course that may very well be down to the careful drafting of the instruments in question, but few practitioners seem to have concluded that the unitary patent system was a project characterised by careful consideration and drafting.

13 comments:

Anonymous said...

Under UK law there is supposed to be a referendum before new powers are ceded to the EU. The fact that there is no UK referendum in this case is another classic fudge - ignoring the reality and concentrating on legal form.

Anonymous said...

The main concern of Spian was that Spanish be an accepted language for the Unitary Patent. Although the observations on the institutional independence of the BoAs may be correct, this did not prevent Spain from accepting European Patents for many many years and to continue doing so.

Anonymous said...

Absolutely brilliant title! Thanks for the laugh.

Anonymous said...

Can you point to the legal basis for "Under UK law there is supposed to be a referendum before new powers are ceded to the EU"?

Anonymous said...

Actually, although Spain pressed for Spanish being an accepted language, it also proposed together with Italy a second language regime. Namely English only. In that way, everyone would be on the same page. And that option was swiftly dismissed by the German and French speaking countries. Speaking about language selfishness...

Anonymous said...

Fine, cost saving and simplification is sufficient reasoning for transferring (outsourcing?) legal powers of the EU to other international treaties. Should we, the European citizens, henceforth not think about transfers of other costly and complex administration of union legal acts to existing international treaties all or a majority of EU member states are participating parties? Could not the undisputable complex and very costly judicial system of the CJEU, based on equivalent regulations as Nos. 1257/2012 and 1260/2012, transferred to the Administrative Tribunal of the ILO or the UN, which has a clear slender and cheaper structure. At least the ATILO delivers its judgements in two languages, English and French, which seems sufficient to me.
Another option could be the transfer of the EU judicial system to one of the EU member states with binding effect on the territory of all other EU member states, i.e. Hungary!
I'm sure we would not see any drop in quality of the legal process and judgements.

THE EPO jester

Anonymous said...

"Can you point to the legal basis for "Under UK law there is supposed to be a referendum before new powers are ceded to the EU"?"

I would assume the poster was thinking of the EU Act 2011(commonly referred to a the "referendum lock") but that only requires a referendum if there are amendments to TEU or TFEU. Its not relevant to the UPP.

Anonymous said...

Anonymous of 0947 said "English only. In that way, everyone would be on the same page. "

Everyone on the same page, except .... (I let you guess)

Anonymous said...

Regarding the alleged "English-only" proposal, a couple of things need to be clarified:

Firstly, the Spanish delegation's negotiating position was never clear. This was partly, I suspect, because the Spanish delegation was less than familiar with the intricacies of the European patent system. I've heard quite credible rumours of late-night scrambles for copies of the EPC in Spain's permanent representation before the EU, and in their official declarations, there was always significant confusion between language of filing, language of proceedings and language of the patent post-grant. So, one day they offered support for the Italian "English-only" proposal, and literally the next day they told the domestic press that they would never allow that a patent valid in Spain wasn't in Spanish.

Secondly, the "English-only" proposal, as was floated by Italy and (equivocally) backed by Spain, would have required either amending Art. 14 EPC (and therefore a full-blown Diplomatic Conference and new round of ratifications) or setting up a new "English-only" EU patent system entirely separate of the EPC. IMHO, either option would have been completely impractical regardless of French and German opposition.

My conclusion thus, from the beginning, is that the "English-only" proposal was never seriously meant, not by the Italians, and definitely not by the Spanish. It was just a blatant exercise in bad faith, launched when it was clear that all the other member states were about to launch the reinforced cooperation procedure.

Anonymous said...

@ Anonymous Wednesday, 6 May 2015 at 16:07:00 BST

I agree with you that Spain's position was less than clear from the beginning. However, to infer from this that the Spanish delegation was confused about the European patent system sounds cliché. There are enough European patent law specialists at the Spanish patent office and at the Spanish EU delegation.

As you mentioned such regime would go against the EPC. However, nobody said that the Unitary Patent had to comply with the EPC. It could have been established on its own as was the Community Trade Mark or Designs.

The German and French opposition clearly outlines how the language regime was not only a thorn in the eye to the Italians and Spaniards but also to the German and French speaking countries. These countries would never allow the conditions they require from others being applied to themselves.

Maybe the English-only was not a "blatant exercise in bad faith" but a desperate attempt in reaching an accord which was also acceptable for these two countries.

Anonymous said...

Secondly, the "English-only" proposal, as was floated by Italy and (equivocally) backed by Spain, would have required either amending Art. 14 EPC

Why? Just require that a granted European patent in German or French is translated into English for it to have unitary effect?

Obviously the "we won't give up Spanish"-proposal was also not going to require an amendment to the EPC introducing Spanish as one of the official languages of the EPO. (Or did Spain see this differently? That would not have been realistic, to put it nicely.)

But maybe I am missing something.

Anonymous said...

@Anonymous 16:49

However, to infer from this that the Spanish delegation was confused about the European patent system sounds cliché. There are enough European patent law specialists at the Spanish patent office and at the Spanish EU delegation.

I don't think there are many European patent law specialists in any national EU delegation. They are not that well staffed...

There are certainly good European patent law specialists in Spain: I've personally met a number of them. But I'm afraid they were mostly sidelined in this matter.

However, nobody said that the Unitary Patent had to comply with the EPC. It could have been established on its own as was the Community Trade Mark or Designs.

I mentioned this possibility, when I wrote about "a new "English-only" EU patent system entirely separate of the EPC". But consider this: not relying on the EPC, this separate EU patent would have required its own procedural law and substantive law on validity. When you see the contortions undertaken to take the substantive law on infringement out of the scope of the unitary patent regulations and the remit of the CJEU, I can only imagine the vapours if the EU had had to juggle with validity as well. Not to mention the fact that this would have prompted yet more political fights on software and biotech patents. It would have been an absolute nightmare.

Then, the EU would have had to wrestle also with the question of who would have been in charge of granting these patents. Hand them over to the EPO? There would have been some predictable haggling with non-EU EPO member states about the level of the official fees for this service. But above all, this could have opened the way to a more successful challenge to the unitary patent before the CJEU on the basis of Maroni. Let the NPOs grant EU-wide patents? Most of them have neither the will nor the resources to carry out full examination. Create a "EU Patent Office", duplicating the EPO? Not a chance.

In short: this solution would have been legally, politically and practically even more complicated than amending the EPC. It was never a serious prospect.

Anonymous @ 00:59:

Just require that a granted European patent in German or French is translated into English for it to have unitary effect?

This was not the "English-only" proposal floated by Italy, and actually corresponds to the "English-always" requirement that has been adopted for the unitary patent for at least the initial 7-year transitional period!

The "English-only" proposal meant English as only language of proceedings during examination. This would have required amending or circumventing the EPC altogether.

Obviously the "we won't give up Spanish"-proposal was also not going to require an amendment to the EPC introducing Spanish as one of the official languages of the EPO.

The Spanish position was so confusing, I wouldn't even rule that out: sometimes the Spanish delegation did indeed seem to be asking that Spanish be introduced as language of proceedings, just as for EU trademarks and designs. Mostly, however, it stuck to insisting that the current translation requirement for validation be maintained. That is not incompatible with the EPC, of course, but would have made the cost of the unitary patent prohibitive, as a unitary patent covering all EU member states would have needed translation to about a dozen languages at least...

Anonymous said...

@ Anonymoous Thursday, 7 May 2015 at 10:10:00 BST

Very interesting remarks, thanks for your contribution.

I personally think however that an English-only regime would have been palatable for Italy and Spain.

Such a regime would have been possible with the wording of the actual regulations just by changing Article 5 of EU Regulation 1260/2012 so that it would state "The text of such translations shall have legal effect" and by forfeiting the machine translation transitional period into English altogether.

In such a way you would have a de-facto English-only system with the possibility of having French and German procedural language up to grant for the applicants that would want so.

It is too late anyway now. Let's see how Italy's, Spain's and Poland's position evolves with time and how the ratification process continues.

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