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Tuesday, 5 May 2015

CJEU refuses to throw España in the works – part II

As discussed in Part I of this two-part series, the Court of Justice of the European Union today dismissed two challenges filed by Spain against the legislative framework put in place to create the European Patent with Unitary Effect (“EPUE”), better known as the Unitary Patent.

This post deals with the second decision, C-147/13, which examined the legality of the translation arrangements of Council Regulation (EU) No 1260/2012 (the “contested regulation”).

Essential reading
for patent attorneys?
As background, the current pre-grant language regime of the EPO is unchanged by the contested regulation, i.e. a single language of proceedings which is English, French or German, with the claims being translated at grant into the other two languages. A further feature is that an application can be initially filed in another language such as Spanish or Hungarian before being translated into one of the three working languages of the EPO. For the benefit of readers unfamiliar with the current post-grant regime, certain countries have signed up to the London Agreement and either dispense entirely with any further translations, or only require their claims to be translated into the country's official language; other countries, such as Spain, have not signed up to that agreement and require a full translation of the specification into their official language or else the European patent lapses for that country.

The contested regulation is relatively short and sweet (or bitter, one supposes, depending on who’s doing the tasting). It sets out a language regime that has the following key features.
  • Where the specification of a European patent, which benefits from unitary effect has been published in accordance with Article 14(6) of the EPC, no further translations shall be required. (Art. 3)
  • In infringement proceedings the patent proprietor must provide at the request and the choice of an alleged infringer, a full translation of the specification into an official language of the country in which the alleged infringement took place or the alleged infringer’s domicile. At the request of a court hearing an infringement dispute, the patent proprietor shall provide a full translation of the patent into the language used by that court. (Art. 4)
  • Given that European patent applications may be filed in a non-working language of the EPO (i.e. not English, French or German), the Member States participating in the unitary patent regime entrust the EPO with administering a compensation scheme. The compensation scheme, funded by renewal fees, reimburses all translation costs up to a ceiling, for such individual/SME/non-profit/university applicants who file in one of the official languages of the Union that is not  working language of the EPO. (Art. 5)
  • During a transitional period lasting up from 6 to 12 years (depending on when an expert group deems the quality of machine translations to be satisfactory) the proprietor will be obliged to file a full translation of the specification for information purposes only into English (if the language of proceedings is French or German) or into any other official language of the Union (if the language of proceedings is English). (Art. 6)
  • Entry into force of these provisions was to occur on the later of 1 January 2014 or 20 days from the date of entry into force of the Agreement on a Unified Patent Court. (Art. 7)
Spain relied on five pleas, all of which had been dismissed in Advocate-General Bot’s Opinion and were similarly dismissed by the Court here. As with the decision in the parallel case, there were no real surprises relative to the A-G’s opinion.

The 1st plea: Infringement of the principle of non-discrimination on the ground of language
Spain claimed that the regulation disregards the principle of non-discrimination, stated in Article 2 of the Treaty on the European Union (TEU), since the language regime is prejudicial to individuals whose language is not English, French or German. While acknowledging that such unequal treatment might be permissible sometimes it had to be proportionate and justified on public interest grounds.

The Court noted that there is no general principle of EU law to the effect that anything that might affect the interests of a European Union citizen should be drawn up in his language in all circumstances. Acknowledging the lack of equality, the Court held this to be justified in terms of the objective of creating a uniform and simple translation regime especially compared to the current EPC regime post-grant.

Coverage wanted in every country?
For Risk, yes; for patents, only maybe
This Kat notes that the Court took it for granted (as indeed have the political forces behind the unitary patent project) that it is self-evident that patent proprietors want to obtain a patent in every EU member state, and it is this goal that is held to justify departing from equal treatment for all languages in order to keep the costs down. However, the evidence shows that most patentees are content with protection in a smaller number of countries. While it might be complex and costly to obtain protection EU-wide, the fact remains that in the post-London Agreement world many patentees never have to translate their patent at all. However, such considerations never appear in the Court’s decision.

The 2nd plea: Infringement of the principles stated in the Meroni judgment 
Meroni was also raised in C-146/13. It is an old decision that sets limits on how EU organs like the Council and Commission can delegate powers to outside agencies. Spain argued that the principles were breached by the Council having delegated certain powers to the EPO, namely the compensation scheme and the power to publish translations.

The Court dismissed this without too much soul-searching: it was not the Council that had delegated powers, but rather the Member States. As such, Meroni was not applicable.

The 3rd plea: Lack of legal basis for Article 4
The legal basis for introducing the contested regulation was stated to be Article 118 of the Treaty of the Functioning of the European Union, in particular the second paragraph of that Article. Article 118 authorises the EU to establish Europe-wide IP rights, and the second paragraph allows the Council of the EU to “establish language arrangements” for European IP rights.

Spain’s argument was that Article 4 of the regulation, dealing with the provision by the patentee of translations in cases of dispute, was not a “language arrangement” but rather was about establishing procedural safeguards in the context of legal proceedings. As such there was no basis in Article 118 for this provision of the contested regulation.

The Court dismissed the argument, saying that Article 4 was directly part of the language arrangement for the EPUE and could not be separated from the arrangements as a whole in the contested regulation, defined in Articles 3, 4 and 6. Moreover it was not prohibited, when establishing the language arrangements for a European IP right, to rely on the existing language arrangements of e.g. the EPC, and nor was it obligatory for the regulation to define all aspects of the language arrangements of the EPUE.

The 4th plea: Infringement of the principle of legal certainty
This plea encompassed several disparate objections, all alleged to lack legal certainty:
The Kingdom of Spain claims that the Council infringed the principle of legal certainty. First, the contested regulation limits access to information for economic operators, since the specification of the EPUE is published only in the language of the proceedings, to the exclusion of other official languages of the EPO. Next, the contested regulation does not specify the arrangements, pertaining to language or otherwise, for the grant of the EPUE. Further, the contested regulation does not indicate, in the context of administration of the compensation scheme, either the costs ceiling or how compensation is to be determined. Moreover, the provisions of Article 4 of that regulation are not sufficient to offset the lack of information relating to the EPUE. A translation of the EPUE provided in the event of a dispute has no legal value and Article 4 does not set out the specific consequences of the possibility that an infringer of a patent has acted in good faith. Last, a machine translation system did not exist when the contested regulation was adopted and there is no guarantee that such a system can function in an area where accurate translation is of fundamental importance.
The Court dutifully makes its way down this catalogue of objections in paragraphs 79-88 of the judgment (to which readers are referred if they want to know why each objection is dismissed), explaining that it can at no point identify any breach of the principle of legal certainty.

The 5th plea: Infringement of the principle of the autonomy of EU law.
The objection here is about the entry into force of the contested regulation which was set at 1 January 2014 or with reference to the date of entry into force of the UPC Agreement, whichever is later. Spain argued that this infringed on the autonomy of EU law because “the contracting parties to the UPC Agreement were given the power to determine the date when provisions of EU law would become applicable, and consequently when the powers of the European Union are exercised.”

As in case C-146/13 where a similar objection was raised, the Court here considered that it was sometimes permissible for a regulation’s entry into force to be dependent on Member States making the necessary legislative arrangements, and that this was one of those cases.


So once again, a comprehensive rejection of the case made by Spain. Reading the two decisions together, this Kat’s reaction is one of wearied submission. One can’t help feeling that the Court views the unitary patent package as A Good Thing and equally views the attempts by the Kingdom of Spain to stymie its introduction as A Bad Thing (this may be influenced by the fact that some of Spain’s grounds were rehashing matters decided in the earlier challenge taken by Spain and Italy). One gets the impression that almost regardless of the arguments made, Spain was going to fail in its attempt to hold up this process any further.

While this Kat is not in a position to opine on whether the judgment is legally correct as a matter of EU administrative and procedural law (but hopes that readers will do so in the comments), it seems a pity that the Court did not appear to want to scratch beneath the surface of the regulations and think about what the unitary patent system will really look like when in operation.

The Court in both decisions appeared much more comfortable considering the contested regulations almost in the abstract, and in constructing a convoluted legal path between the requirements on the one hand for the Council to have acted within the limits and constraints set by the underlying EU treaties while on the other hand absolving the Council of any responsibility for those parts of the two regulations that handed any powers over to the EPO (in which case it was not the Council but rather the Member States that were said to be handing over the keys to the kingdom). The result seems a little too neat to be convincing, but at least we now have a final answer on the legal challenges.

All that's left now is for the major countries to ratify. Which presumably is just around the corner, right? 


ExaMinus said...

All that's left now is for the major countries to ratify. Which presumably is just around the corner, right?

Which brings us back to the question of the consequences of a "Brexit". Am I correct in assuming that this would require a further diplomatic conference? .

Anonymous said...

The UK will welcome this judgment -perhaps not some of the reasoning- as it sees enhanced cooperation as a way in which it can stay in EU -it can cherry pick the laws that will apply to it.

You should compare this public international law + EU law structure with the one the UK negotiators also managed to achieve in the banking resolution package. But these are issues for pure EU constititional lawyers of which IP law is now firmly part.

TreatyNotifier said...

I wonder whether the translation requirements runs contrary to the London Agreement. The UK is not allowed to request a translation, so why would it be allowed to request one in a unitary patent in which it participates (note: from an EPC point of view, it are the member states that make the unitary patent, not the EU).

However, IF this runs contrary to the London agreement, there seems to be no court with jurisdiction to say so:
-national (UK) courts have no jurisdiction over unitary patents
-CJEU may say that the the london agreement provisions are contrary to the unitary patent regulation and are thus "inapplicalbe national law", but it has not basis to say a member state is in conflict with a non-EU treaty/regulation
-UPC will only apply treaties applicable to all states (... as well as "national law", but that can not mean that all provisions of all parties can be regarded to apply without any delimitation)...

benQ said...

Where should the conflict with the London Agreement lie? It concerns "classical" EP patents and Article 65 EPC. Hence, whlie the situation may sound absurd, for an EP patent you would not need to file a translation, while for a EPUE patent you'll have to.

I also cannot see any real bad in the EPUE patent system: as long as applicants can decide which route to take, "classical" EP or EPUE, they can decide how to best implement protection for their invention in the European (contracting) states. If they only intend to go for DE, FR, EN, ES, IT, why should they opt to head for an EPUE? If they don't trust that a Unified patent court will be able to appropriately take care of their legal interests, why should they head for an EPUE?
Or am I ridden by a misconception here?

TreatyNotifier said...

@benQ , I agree with you it is somehow fair to impose this extra translation for an additional option in the EP-system. If someone doesn't like it, they can always go for EPs that remain "classical"

But I just wonder if it with ratifying the UPC agreement, the London agreement would be breached. My reasoning:
-translations are allowed to be requested for EPs
-translation requirements form an exception to the "no formalities" principle (an EP takes immediate effect everywhere, where designated)
-the EPC basis for this exception is 65(1)
-the london agreement limits the applicability of 65(1) for EPs valid in a certain state
-an EPUE has translation agreements, they -as an exception to the no formalities principle- need to have a legal basis in EPC
-that legal basis can only be 65(1)
-an EPUE is an EP
-, which "may only be granted jointly" (art 142) by UK, FR, DE and others; thus unitary effect constitutes granting for the UK (+FR, DE, ...)
-the London agreement holds for EPs of every member state (Any State party to this Agreement having an official language in common with one of the official languages of the European Patent Office shall dispense with the translation requirements provided for in Article 65, paragraph 1, of the European Patent Convention.), and thus for every EP, incl EPUE

But again, I could be wrong in this interpretation and welcome your assessment. And if I am right, I see no court where one could go to (except maybe challenging ratification with the const court of Germany, which may -I have no idea- evaluate whether an older treaty obligation can prevent ratificaton of conflicting treaties)

benQ said...

Sorry for the belated response. I don't think that the UPC agreement is breaching the LA for at least this reason: the LA ist not applicable to any state that did not ratify it. So either a state ratifies the UPC agreement and then it dispenses with the language requirements as defined therein, or the state ratifies the LA and defines the translation requirements within the frame of the LA, or both. Where a state has ratified both, it depends on the route the patent has taken, substantially they are all "EP"s, formally they will be either "EP" or "EPUE". Hence, the assumption "-an EPUE is an EP" maybe wrong.

TreatyNotifier said...

BenQ, thanks for the response. We are getting clearer and clearer where our opinions differ.
For individual states that have ratified the LA, they have the international obligation (towards other LA states) not to enter into obligations which run contrary to the LA; and they would have an international oblicatoin (towards UPC agreement states) to apply the UPC agreement. If there is will be different membership between both treaties (and there is), then a state entering into both treaties should make sure it can conform to both treaties. If it can't it shouldn't ratify...

So is there a conflict?
The question boils indeed down to: is a EPUE formally an EP in the sense of the EPC? To be frank, I don't see why it wouldn't. The EPC agreement (and the UPC agreement, and the unitary patent regulation) speak about "attribution of unitary effect" to an EP and I would assume that this attribution does not make it formally a non-EP. This view seems at least to be consistent with the link between that other unitary patent that exists already for years: between Switzerland and Liechtenstein. Both countries only have an (automatic) unitary effect, and no classical EP besides that; they are furthermore LA states. If the unitary patent for Switzerland-Liechtenstein would thus not constitute formally an EP in their territories, then their implementation of the LA would be without substance (because it would only apply to classical EP , which don't exist) [but then, one could indeed say that in the EUs EPUE, classical EP always remain, and thus in that case there is 1 way of implementing LA (classical EP); so implementation with non classical EP (EPUE) is not necessary; as said before: I don't think that there is legal basis for that interpretation in the EPC or the LA).

benQ said...

TreatyNotifier, from what I can see, an EPUE is examined applying the EPC, but it is not entirely governed by the EPC (as otherwise there wouldn't be any further Regulations that in fact govern the EPUE). Article 65 EPC applies for EP Contracting States and EP-patents. It does not apply for EPUE-patents. So, an EPUE is not an EP. Applicants may choose to make an EP an EPUE (for some EPC member states and/or some EPUE"-member" states). If an EPUE is a way to "avoid" the LA requirements, it does not breach the LA, as Article 65 EPC does not apply to the EPUE?

TreatyNotifier said...

BenQ, I think an EPUE is an EP. An EPUE is not entirely governed by the EPC, just as the classical Dutch EP is not governed entirely by the EPC, but also by the Dutch patent act. The fact that there is implementing legislation does not mean that the EPC does not fully apply to a specific version of an EP (classical or unitary).

Article 65 EPC applies to EP contracting states. Article 148 provides that (those) contracting states may provide for unitary EP and the unitary effect regulation (see article 1) is a special agreement in the sense of Article 142 EPC. The unitary patent regulation is -as well as being EU law- thus also an agreement in the context of the EPC, and thus EPC regulations must apply, unless specifically abrogated in the EPC.... Where a member state a contracting state has limited the applicabilility of article 65, through the LA, it should also be held to apply that limitation when it enters into agreements in the sense of Article 148...

Anonymous said...

The Brexit should not influence the unitary patent. No states have been named in Art 89. Just those three with the most designations. Should GB fall out, it could be NL to take the place.
The translation problem at the beginning of the life of the unitary patent might be easy to solve. What is more worrying is that after a action has been started before the UPC, then it might become much more complicated, as it can be the language of the country of the defendant or the language in which the patent has been granted.
One important thing, interpretation costs for hearings before the UPC will not be free as before the EPO, but can be given to loosing party.
When one sees that at most 30% of the EP applications stem from EU member states, one wonders why politicians claim that the UP will be easier and cheaper to enforce for SMEs and Universities. It is just not credible.

David Brophy said...

@Anonymous 21:25:-

I disagree that it is so simple (though I'm not sure what the effect of a Brexit actually is).

Article 89 de facto identifies the UK. It was one of the three Member States with the highest number of designations in the year preceding the signature of the agreement. The Netherlands was not one of those three:

Art 89(1). This Agreement shall enter into force on 1 January 2014 or on the first day of the fourth month after the deposit of the thirteenth instrument of ratification or accession in accordance with Article 84, including the three Member States in which the highest number of European patents had effect in the year preceding the year in which the signature of the Agreement takes place or on the first day of the fourth month after the date of entry into force of the amendments to Regulation (EU) No 1215/2012 concerning its relationship with this Agreement, whichever is the latest.

Interestingly the "Member States" are defined as the members of the EU, in contrast to the "Contracting Member States" who are party to the UPC Agreement.

Anonymous said...

When one sees that at most 30% of the EP applications stem from EU member states, one wonders why politicians claim that the UP will be easier and cheaper to enforce for SMEs and Universities. It is just not credible.

Please explain how 70% of EP applications stemming from non-EU member states affects the claim that the UP will be easier and cheaper to enforce for SMEs and universities. That is just not logical.

The claim might well be bogus, but that percentage has nothing to do with it. An SME with an UP really does not care whether 30% or 40% or 80% of all EP applications were filed by EU applicants.

Did politicians ever claim that the UP will be bad for non-EU entities? Then you have a point. But I don't recall that they did.

Anonymous said...


After a Brexit, the UK is no longer a Member State, so is no longer one of the three Member States in which the highest number of European patents had effect at the relevant date. That "Member States" are defined as the members of the EU seems to be of help here, if anything.

I realise it is possible to interpret "Member States" in Art. 89(1) as "those states that were then members of the EU", but that does not seem to be the most straightforward reading AND it would lead to the paradoxical result that the Agreement, without amendment, could never enter into force after a Brexit. Interpretations that render an international treaty completely ineffective should normally be ruled out (Art. 31(1) Vienna Convention).

Of course Art. 7(2) of the UPC agreement will look a bit funny after a Brexit.

(Btw, why was Art. 89(1) drafted so sloppily? "the thirteenth instrument of ratification or accession ..., including the three Member States ..." Member States are not instruments. And if "the latest" of "the year" and "the first day" is "the year", which day of that year is to be taken?)

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