Can a CJEU ruling on the European system of central banks pave the way towards an even greater impact of CJEU IP rulings?

The IPKat's Central Bank

What has the Statute of the European System of Central Banks have to do with IP law?

Directly, perhaps not much.

However, a case recently decided in this area and concerning the provisional suspension of the Governor of the Central Bank of Latvia pending criminal investigations might have potentially important implications also in the field of IP.

In particular, it might be relevant in the case in which an EU Member State has incorrectly transposed an EU directive into its own national law.

Rimsevics

Last month the Court of Justice of the European Union (CJEU) issued a decision, Rimsevics, C‑202/18 and C‑238/18, which for the first time saw the highest EU court directly annulling an act rendered by an authority of a Member State (Latvia) and extricated it from that domestic legal order.

In her Opinion in that case, Advocate General (AG) Kokott had simply suggested that the CJEU should declare that Latvia had failed to fulfil its obligations under EU law (this was also the request of the applicants). However, the Court went beyond that and did the 'job' directly.

As explained in this very interesting post by Prof Daniel Sarmiento,

The Court did not declare that a Member State had failed to fulfill its obligations under EU Law. What the Court did was much more ambitious, for it annulled an act rendered by an authority of a Member State and extricated it from the domestic legal order. For the very first time, EU Law entered fully into the legal order of a Member State, declared a breach within the domestic legal order and eradicated the national legal act ipso iure. There was no need for the Member State to take any appropriate measures. No need for national courts to ensure the fulfilment of the duties enshrined in EU Law. The EU legal order did the job for them.

Sarmiento adds:

[B]y stepping into national law and purging its legal order in a way that is unparalleled in international law, the Court of Justice has finally and fully stepped into the shoes of a national court. In fact, if this judgment is seen together with the Court’s efforts to protect the independence and integrity of national judiciaries, the overall effect is one in which a new Court has emerged. A Court sitting at a constitutional apex, assisting national courts when their integrity is undermined, confronting Member States that drift away from the rule of law, and annulling national acts when necessary, particularly in areas in which a less marked distinction between the EU legal order and national legal orders prevail.

If the implications of this (technical) decision are really those described above, then they might be significant also in the field of IP.

By taking the specific case of copyright, readers of this blog will be aware that - especially in more recent years - the CJEU has found a few national transpositions of key directives like the InfoSoc Directive incorrect. Member States had simply thought they enjoyed greater freedom in the transposition of EU provisions than what they actually had.

Incorrect transposition of EU directives

As I discuss at greater length in this book, there are arguably provisions in EU copyright directives that are drafted in such a way that EU Member States enjoy limited freedom when transposing them into national legal systems.

The CJEU has clarified that this may be the case when a provision in a EU directive imposes on EU Member States, in unequivocal terms, well-defined obligations as to the result to be achieved that is not coupled with any condition regarding application of the rule laid down in them.

The very issue of direct effect of EU directives has been tackled in a copyright context in OSA, C-351/12 [here].

That reference for a preliminary ruling from the Czech Republic asked the CJEU, among other things, whether Articles 3(1) of the InfoSoc Directive is unconditional enough and sufficiently precise for a certain individual or organization (a copyright collecting society in that case) to rely on in a dispute between individuals before a national court in case of incorrect transposition of that directive by a certain EU Member State.

The CJEU answered in the negative. It is settled case law that even a clear, precise and unconditional provision of a directive seeking to confer rights or impose obligations on individuals cannot of itself apply in proceedings exclusively between private parties (lack of direct horizontal effect).

Sunday musings made to entertain
friends and family:
Does a ruling on central banks
mean anything for IP?

It is true that a national court, when hearing a case between individuals, is required, when applying the provisions of domestic law, to consider the whole body of rules of national law and to interpret them, so far as possible, in the light of the wording and purpose of the directive in order to achieve an outcome consistent with the objective pursued by the directive. However, this cannot serve as the basis for an interpretation of national law contra legem.

The conclusion of the CJEU in OSA, C-351/12 differs from the view that AG Sharpston had taken in her Opinion in that same case. The AG observed that, first, when national courts apply domestic law, they are bound to interpret it, so far as possible, in the light of the wording and purpose of any relevant directive, in order to achieve the result sought by the directive (Marleasing principle).

That obligation is inherent to the Treaty system and enables national courts to ensure the full effectiveness of EU law when they determine disputes within their jurisdiction.

Only if such an approach is not possible, eg because it would lead to an interpretation contra legem, is it necessary to consider whether a relevant provision of a directive has direct effect and, if so, whether that direct effect may be relied on against a party to the national dispute.

The AG also stressed that it is for national courts to do whatever lies within their jurisdiction, for example taking the whole body of domestic law into consideration and applying the interpretative methods recognized by it, to ensure that the InfoSoc Directive is fully effective, and thus achieve outcomes consistent with the objectives pursued by it.

She concluded that an interpretation of national law that would be inconsistent with the Directive is not permissible.

The AG did not state expressly what the legal consequences of incorrect implementations of the InfoSoc Directive would be. However, she appeared to agree with OSA’s suggestion that this would be disapplication of incorrect national provisions.

What might happen now?

After the decision in Rimsevics, the conclusion of AG Sharpson in OSA might be indeed the correct one. This might mean that the CJEU could be in a position to directly disapply or even invalidate national provisions that have resulted from an incorrect transposition of relevant EU directives.

If that was the case, then:

• EU Member States should be way more careful when transposing EU directives into their own law (this is likely to be true also if and when the transposition of the draft EU directive on copyright in the Digital Single Market [here] takes place);
• It is likely that, in line with a trend already embraced by the CJEU towards greater harmonization of national copyright laws, there will be less room for diverging national solutions in areas harmonized at the EU level;
• The consequences of a CJEU referral might be way more 'intrusive' than what has been the case so far, and this might be an incentive for litigants in national proceedings to push for a referral be made by the relevant national court to the CJEU.