Is the "inscrutable patent bar" unlikely to see a unitary patent agreement by June 2012?

The House of Lords

Wednesday afternoons and unitary patent reform are beginning to be an all too common event for the patent lawyers amongst us, and especially for Baroness Wilcox (Minister of State, Department of Business, Innovation & Skills).  Yesterday afternoon she was before the House of Lords EU Sub-Committee E on Justice and Institutions on the on-going saga of the proposed unitary patent reform. The latest of the hearings followed the earlier and somewhat fraught session before the House of Commons European Scrutiny Committee a couple of weeks ago (see previous reports here and here), which itself followed the expert witness session held in January (see reports here and here).

Listening to the initial stages of the proceedings, the AmeriKat felt slightly disheartened.  The members of the Sub-Committee admitted that they were quite confused by the effect and problems with the proposals, which was a stark difference to the House of Commons European Scrutiny Committee which appeared to be much more engaged and prepared to discuss the details of and concerns with the proposals (which may have much more to do with how many more times the issue has been debated by the Scrutiny Committee, than the House of Lords EU Sub-Committee).  However, by the end of the proceedings the AmeriKat’s faith was restored as some clarity was provided by Baroness Wilcox as to the current state of the negotiations.  The Minister stated that there is a deadlock of uncertain duration as to the location of the Central Division and that in her opinion the stated June 2012 deadline to finalize the proposals was slipping. 

Lord Bowness

However, before those comments came the Sub-Committee’s Chair, Lord Bowness opened the proceedings:   

"May I just say in opening…I hope that you and your colleagues understand that this committee has always been supportive of the proposal for a pan-European patent and a simplification of the language regime and all the benefits that flow from that. I hope you will accept that is a given. We understand the difficulties that have arisen over the Spanish and Italian decision to challenge the proposal.  But we do just want to concentrate on the structure of this proposed court. . . . We did find the Explanatory Memorandum and correspondence incredibly difficult to follow. It probably is an incredibly complicated proposal, so hopefully it will be much clearer hearing the answers to our questions from you…"

Baroness Wilcox

Baroness Wilcox, thanking the Chairman, and probably sensing an overall more relaxed tone in the session as opposed to the last hearing before the House of Commons Committee,  stated she felt that she and her team of officials, consisting of Liz Coleman and Neil Feinson from the Intellectual Property Office and Nicolas Fernandes from the Department of Business, Innovation and Skills (BIS) were

“amongst friends here and I hope we can bring some expertise to clarify a complicated legislative process”

Turning to the first question, the Chairman explained that at the very heart of the Sub-Committee’s confusion was why the unified system was being dealt without outside of the EU system.  Baroness Wilcox explained that they tried to create a specialist tribunal structure in 2003 but this proposal was unsuccessful.  The current proposed system was unified in that it would deal with the proposed unitary patents and the existing patents granted by the European Patent Office, and that the proposed Unified Patent Court (UPC) would, when faced with questions of substantive patent law, interpret law consistently across both of these patent rights.  Baroness Wilcox also explained to the Sub-Committee that the CJEU was not set up to deal with disputes between private parties, nor did they have the patent expertise and procedures to handle patent disputes.  However, the current proposals would permit referrals of questions of substantive patent law to the CJEU.  Users in the UK have highlighted these problems, she explained, and stated that jurisdiction of the court over such issues would result in further delays, uncertainty and costs and would defeat the whole idea of the proposed system.  This prompted Lord Blackwell to ask the witnesses to explain the difference between the unitary patent and an EPO patent.  Ms. Coleman explained that when the EPO grants a patent it does so on the basis of a single patent application but that that single patent application is then divided into national patents so a patent owner has to enforce their patent on a territory-by-territory basis.  The unitary patent, on the other hand, would automatically cover all 25 countries for a single patent and enforcement of that patent would cover all 25 countries who are part of the enhanced cooperation procedure. 

Lord Renton

Lord Renton explained that he sat on the Constitution Committee who had been, that morning, discussing judges.  It arose during the discussion that there was anxiety for the need to appoint a judge who is an expert on patents [The AmeriKat is unclear as to what exactly Lord Renton was referring to], and as such Lord Renton questioned what the judicial supervision arrangements were of the court system.  Ms. Coleman explained how the litigation arrangements and the court system was structured and Mr. Fernandes again reiterated the point that the over-arching principle of the UPC was to create a common court to the participating EU Member states to deal with patent issues, avoiding the need of state-by-state litigation.  The witnesses also explained the general court structure and structure of the Court of First Instance structure (comprising of the local, regional and Central divisions).

The EU flag has 12 stars which according to the EUROPA
site are meant to signify "perfection".  The circle represents
"unity".  Does this mean that we should absolutely strive
to create a near "perfect" unitary patent system?

The Sub-Committee then asked whether Baroness Wilcox was fairly confident the system was going to work.  The Minister replied that the UK was still in the middle of negotiations because there would be no point of having a system that did not work and continued to be “as expensive and complicated” as the current system.  She again pointed to the position in the US and China where one is able to obtain a patent for the whole of those jurisdictions, one set of rules applies and the process is fast, efficient and inexpensive.  The situation in Europe was the opposite to this position much to its detriment, explained the witnesses, and that was the purpose of the proposed system.  However, the Minister was keen to reiterate to the Committee that the UK was negotiating to ensure that before they signed up to a system they were confident that they were signing up to a system that made sense.  In particular, they were ensuring that the Rules of Procedure are "well advanced" before the UK signs up to the system.  The Rules of Procedure, explained Baroness Wilcox, were vital to the success of and the UK’s agreement to the proposals. 

Lord Temple-Morris

Then followed a lot of questions and discussion regarding how the current proposals were operating without the EU as a signatory, outside the usual EU structure, etc.  Again, as Lord Bowness stated, this was where much of the general confusion was stemming from in the Sub-Committee.  After this interlude, Lord Temple-Morris asked in short, why the proposals were even in existence and why there was demand for the proposals.  He said that the proposals had “a political sniff, if you like, of a mess” about them, but that the Minister 

“has every sympathy with me.  The patent bar is an inscrutable place where very few people tend to go and those that go tend to be very iconoclastic looking after their own particular affairs”

He continued saying that the Minister thus had a very uncomfortable position of having to justify the position in respect of the proposals.  Lord Temple-Morris questioned why the UK Government did not just leave the issue alone until there was a sufficient industry/business demand and/or until the system was fully within the EU remit and system.  Baroness Wilcox replied saying that everything was down to growth and the need to being able to trade, compete and to ensure the easier enforcement of patents across Europe with decreased expense, especially for SMEs.  The UPC would, she said, provide this costs-savings by virtue of its “single-enforcement for multiple-states” effect; much how it operates in the US.  She again referred to how frustrating it was to have a disunited state in respect of patent enforcement in Europe. 

The Sub-Committee then put forward the position that business and representative groups of SMEs had proposed over 100 different amendments to the proposals.  The witnesses explained that there was no way they could put forward all of those 100 amendments, so they had been focusing on a small number of key issues, such as the length and scope of the transition arrangements.  This and other issues were currently being negotiated.  Another key element that the UK is still negotiating, explained Baroness Wilcox, are amendments to allow for more opportunities for parties to go straight to the Central Division, instead of the local and regional courts.

The Earl of Sandwich

In case readers forgot we were talking about UK politics, a good reminder is that the next question came from the Earl of Sandwich.  He quoted Sir Robin Jacob’s statement on knowing no one who thinks the involvement of the CJEU, by way of Articles 6-8, is a good idea.  He asked whether Sir Robin’s fears were going to be realized:

BARONESS WILCOX:  I have had the privilege of discussing the issue with Sir Robin in person several times which was a very exciting occasion because he is a very exciting man to exchange with and very, very, very, very well versed in all of this.  Of course references to the Court of Justice are unavoidable  when questions of EU law are concerned, which leads to additional costs and delay, but the main issue here is the potential of  the new EU patent Regulation to apply in the case of infringement disputes and we would like to minimize the number of references to Court of Justice  particularly in areas of specialized patent law where the Court does not have the relevant expertise.  So we have continued to press for the deletion of Articles 6 to 8  from the Regulation . . .  We continue to talk with Sir Robin Jacob…[because] its important as to who is going to write the rules for new body and its very important and its very interesting for me to continue to have the conversations with him.  So the nice thing with Sir Robin is that he is madly enthusiastic on discussion and that is a wonderful thing  because he asks you the impossible questions and it gives you the chance to fight them out before you get there. 

LORD BOWNESS:  You have obviously have reassured him since he wrote that…. 

LORD TEMPLE-MORRIS: . . . What does Sir Robin really want at the end of the day? 

BARONESS WILCOX:  Who would like to answer what Sir Robin would like? 

Coming to the rescue, Mr. Feinson said that he understood that Sir Robin would like the Unified Patent Court to decide all issues of patent law and very little opportunity for issues of substantive patent law, issues arising from infringement, being referred to the CJEU.  Something, the AmeriKat notes for the Sub-Committee, is definitely not a view of only Sir Robin and the judges, but a view shared by much of the European patent profession (although not all). 

Lord Boyd of Duncansby

Repeating a question raised by Stephen Phillips two weeks ago in the House of Commons Scrutiny Committee hearing, Lord Boyd of Duncansby asked what the Commission communiqué was referring to when it stated there was only one “outstanding issue” to resolve.  Baroness Wilcox stated that

“The summit communiqué was a high level statement -- if you know what is meant by that in the European Union -- reflecting what is perhaps the most difficult outstanding issue in the negotiations. I would interpret as meaning that if agreement could be reached on the seat of the Central Division, the other more technical issues would fall into place, but the package as a whole has not yet been agreed and outstanding technical issues which are still important, both for us in the UK and the other Member States.  We continue to meet with Danish Government and impress on them the need to ensure negotiations are taken forward.  But what is most important is getting the right package, not when it is signed.  So we are not interested in when its being signed.  We are interested in what we are signing being right. So, if it means we are making life difficult, not just for ourselves but others, in saying that  "we are not happy yet, we are not happy yet", we will  continue to do so.  It has taken 41 years just to get this far so I don’t see there is any hurry…these are very important things.”

Is the June 2012 deadline
for agreement on the unitary patent
slipping away?

The Sub-Committee explained that in December, when the Polish Presidency had set a timetable for initialing the patent package in December, the Sub-Committee had been asked to clear the proposals really quickly [“By whom?”, the IPKat wonders] but that the Sub-Committee had declined to do so.  The Sub-Committee understood that June 2012 was the deadline to finalize the proposals.  Baroness Wilcox stated that it was her opinion that the June 2012 deadline was slipping but that she was not worried about it because she thought it was important, not just for the UK but for other countries, to be very clear as to what the parties are actually agreeing.  Mr. Feinson stated further that there was deadlock as to the seat of the Central Division, but in the meantime the UK was doing a lot of preparatory work to ensure that once deadlock is resolved the negotiations and agreement can proceed quickly.  Baroness Wilcox stated that there had been no decision on the location of the Central Division and that 4-5 names had been put forward.  

The Sub-Committee also stated that they believed that there was a “deep general committed enthusiasm” for the proposals form a commercial angle despite there being professional difficulties and professional objections.  It was their understanding that the “commercial enthusiasm” will make the proposals go through quickly.  Baroness Wilcox said that was correct.  However, the AmeriKat wonders if there was some lack of clarity regarding what the enthusiasm is for.  There is undoubtedly enthusiasm from commerce (and indeed the patent profession) for a proposed unitary patent and unified court system, but the current “execution” of the system in the current proposals is what is lacking enthusiasm from business, industry and the patent profession.

When will the deadlock
on the location of the Central
Division be unlocked?

After an hour of questioning the hearing ended. The purpose of the EU Sub-Committee of the House of Lords is to scrutinize EU law and to propose improvements.  Given the content of yesterday afternoon's hearing it is plain that the Sub-Committee will not be proposing many, if any, improvements or undertaking any proactive steps until Baroness Wilcox and her team reports on the latest developments. 


So what's next?  As long as there is a deadlock of uncertain length on the location of the Central Division, probably very little, except whatever on-going discussions the Minister and her team will be having with other Member States on the negotiations.  In the meantime, readers should not forget that as far as the AmeriKat is aware the Minister has to still to finish out her appearance before the House of Commons Scrutiny Committee.  


For idle paws the AmeriKat suggests clicking here to read an interesting set of documents from October and November of last year regarding the discussion by the House of Commons Scrutiny Committee regarding the withdraw from the enhanced cooperation procedure that were published on the Committee's website two days ago.