BREAKING: German constitutional court upholds complaint against UPC Agreement and implementing act

This morning, the German constitutional court issued a 86-page decision in which it upholds the constitutional complaint against the German ratification of the Agreement on a Unified Patent Court [decision here]. According to the Court, the German act by which it was to accede to the UPC Agreement, violates the German populace's democratic rights under Article 38 Basic Law, because it was not passed with the parliamentary majority required by Article 23 Basic Law.

Article 1 of the UPC Agreement provides that "A Unified Patent Court for the settlement of disputes relating to European patents and European patents with unitary effect is hereby established." According to the German constitutional court, this constitutes a transfer of adjudication authorities, which implicates the constitutional rights of the German populace.

Such a transfer of authority requires, by German law, a two-thirds majority in the Bundestag [the German federal parliament]. German constitutional law only recognises international obligations to the extent they are compatible with the national constitution [even in the context of the EU: see the infamous decisions Solange I and Solange II]. This means that the recognition of international adjudicatory authority requires strict constitutional safeguards, which were not met in this case. Thus, the complainant's rights under Article 23 Basic Law were not observed.

A more detailed analysis of the decision's contents will follow soon. [Update: see here for the follow-up post]

Background

As readers will know, the Unitary Patent (UP) and the Unified Patent Court (UPC) are an attempt to finally realize a dream long held by European patent lawyers: true harmonization of the European – not EU – patent system. To this end, the idea is the simultaneous introduction of a Unitary Patent and the establishment of the Unified Patent Court, often jointly referred to as the "Unitary Patent Package".

The UP is created by Regulation 1257/2012 and provides for a European patent, granted with the same set of claims in respect of all participating Member States [Art. 3]. It would provide uniform protection across all participating Member States, with validity also being determined for all of these Member States together. Thus, the Unitary Patent would function much like the European Union trade mark.

In parallel, the participating Member States envision the creation of a transnational court to hear patent disputes in the Agreement on a Unified Patent Court. The UPC would have the jurisdiction to invalidate or uphold patents across all participating Member States, and likewise to grant relief for infringement effective in all those states.

Needless to say, this has been an extraordinarily ambitious project on which much ink was spilled [to get an idea of the breadth of issues the UPC and UP give rise to, see Tilmann & Plassmann's commentary, Katreview here]. In particular, the compatibility of the UPC with EU law was challenged twice before the Court of Justice of the European Union (CJEU) [here and here], and two large Member States – Poland and Spain – have to this date refused to sign the Agreement [here].

It was ultimately decided that the UPC Agreement would enter into force, and so the UPC would open its doors, once thirteen Member States had ratified the Agreement, including the three Member States in which the highest number of European patents had effect in the year preceding signature [Art. 89 UPC Agreement]. Those states are Germany, the UK and France, and this caused some hurdles on the road to the UPC.

The long wait is over (Image credit: Giphy.com)

Challenges to UK and German participation

Brexit posed an obvious obstacle to the UK's continued participation in the UK. There has long been hopeful speculation that, despite leaving the EU, the UK might still join the UPC [here]. However, it recently became clear that the UK will not be joining the UPC as this would require it to respect the primacy of EU law and the overarching jurisdiction of the CJEU in relation to the UPC system [here]. The EU Justice subcommittee has since investigated the wisdom of that decision [here].

But challenges arose also in Germany. In June 2017, it became known that the German constitutional court had asked the German president not to sign off on the implementation of the Unitary Patent Package [here]. It turned out that a German attorney had lodged a complaint with the court alleging that the Unitary Patent Package violated the German constitution [Grundgesetz or "Basic Law" – English version here, Katpost here]. In June 2018, the Hungarian constitutional court, ruling on a similar complaint, held that the Unitary Patent Package in fact violated the Hungarian constitution and therefore could not be ratified [here].

In response to an inquiry, the German constitutional court indicated that the central issues in the complaint were the following [courtesy to Kluwer Patent Blog]:

In terms of substance, plaintiff is essentially asserting a breach of the limits to surrendering sovereignty that are derived from the right to democracy (Art. 38 (1), clause 1, Basic Law). Primarily the following violations are asserted:

• breach of the requirement for a qualified majority arising from Art. 23 (1), sentence 3, in conjunction with Art. 79 (2) Basic Law;
• democratic deficits and deficits in rule of law with regard to the regulatory powers of the organs of the UPC;
• the judges of the UPC are not independent nor do they have democratic legitimacy
• breach of the principle of openness towards European law owing to alleged irreconcilability of the UPC with Union law.

The German constitutional court is a special court within the German legal system that hears cases directly upon application. Its jurisdiction is mostly limited to reviewing the constitutionality of acts of parliament or public policies, though it fulfils a number of other important functions as well [here]. No appeals are possible from a decision by the German constitutional court.