Friday 4 April 2014

UPCA draft Rules of Procedure: issues that are still open

Professor Doctor Winfried Tilmann (Heidelberg University; Counsel to HoganLovells Düsseldorf) has been giving his close attention to some of the issues that still remain open for resolution following the publication of the 16th draft of the Rules of Procedure (RoP) --  a set of rules on which successful implementation and operation the Unified Patent Court Agreement (UPCA) will depend.  Readers are invited to share their comments with Winfried, and with one another, by posting them below.

Here Winfried writes as follows:
Legal aspects of open issues in the UPCA-RoP-draft 16

The 16th draft of the UPCS-RoP of January 31 left a few issues open on which the drafting committee could not agree or where a political decision seemed to be needed. The present article tries to summarize the arguments considered and to evaluate them from a legal point of view. 
I.          Rule 5: Sunrise period, details on the opt-out 
1.         The sunrise provision in Rule 5.13 provides that opt out applications may be lodged with the EPO before the entry into force of the UPCA. The EPO will subject the application to the same check on formalities, including a fee to be paid, as the UPC Registrar would do under Rule 5.1 to .6. On the day of entry into force the EPO will transfer the details of the application and the fee paid together with the result of its check on formalities to the UPC Registrar. 
The argument for this proposal is based on Art. 83(3) UPCA which provides that for an European Patent (EP) or an SPC an opt out is possible "unless an action has been brought before the Court", meaning any action concerning the patent or SPC to be opted out. Patent proprietors had voiced their fear that such an action could be brought against them immediately after the entry into force of the UPCA preventing their intended opt out. 
The EPO, initially, did not seem happy with this proposal, but now seems to be considering it in more detail. What would be the legal basis for implementing that proposal? 
In two respects the UPCA is an affiliated agreement to the EPC:
(1) The UPCA Contracting Member States have made use of an authorisation, contained in Art. 142(1) EPC, to partly substitute in the way of a "special agreement", the referral of Art. 64(1) EPC (incorporating material national law into the international grant effect) by unitary rules on EP, especially regarding the substantive and procedural consequences of patent infringement (the EP becoming a small unitary patent). 
(2) The UPCA Contracting Member States have made use of an authorisation, contained in Art. 149a(1) lit. a EPC, to establish, in the way of a "special agreement", a "European patent court common to the Contracting States party to it".
For both aspects of the UPCA (as a "special agreement") the provisions of Art. 143 to 146 EPC are applicable. This is not expressly said in Art. 149a EPC, regarding an agreement on a "European patent court", but it follows from the same kind of authorisation in Art. 142 and 149a EPC. Therefore, the EPC Contracting States may, under Art. 143(1) EPC, "give additional tasks to the European Patent Office", supervising the relevant activities of the EPO through the Select Committee (Art. 145 EPC), but they have to pay for the costs (Art. 146 EPC). 
2.         Based on the authorisation, contained in Art. 41(1) UPCA, to "lay down the details of the proceedings before the Court" the RoP define the requirement for an opt out of an EP in Rule 5.1 lit. b (all proprietors), lit. c (all designations), 5.4 (representation not necessary) and 5.5 (opt out fee). For SPC the RoP contain specific rules (Rule 5.2). These requirements are covered by the authorisation of Art. 41(1) UPC and are, legally, correct. The Note to Rule 5 does not go beyond the contents of Rule 5. 
3.         In January, 2014, the Preparatory Committee published on its website an Interpretive Note on Art. 83(1) and (3) UPCA according to which the national courts being competent to handle EP-cases in the Transitional Period would have to apply national law and not the law as harmonised by the UPCA. For a number of reasons I do not share this view. Since I will publish an article on that matter shortly, I shall not enlarge on it here.

II.         Rule 14: Language of the Statement of Claim (protection of the defendant) 
Rule 14.2 contains two alternative texts which are supposed to implement Art. 49(2) UPCA, according to which the Contracting Member States may designate one or more of the official languages of the EPO as the language of proceedings of their local or regional division instead of the language of the division's state or region (Art. 49(1) UPCA,here: "home language") 
1.         The first alternative text proposes that any Contracting Member State (1) may designate an EPO-language which the division "must or may use", "may" indicating a choice for the division, and (2) may subject its designation to conditions. Both parts of the proposal want to safeguard a "fair trial" as required by Art. 6 of the European Convention of Human rights. 
The defendant, who is already protected by Rule 271.1 and .7 (refusal of service) against a Statement of claim the language of which he cannot understand and by Rule 109 (regarding interpretation during oral hearings), might argue that the "trial" (procedure) is not fair, because he must have translated, at his own costs, all pleadings and documents into the language he understands. The proposal would allow a "condition of designation" according to which the division may order the use of its home language hoping, by doing so, to solve the language-problem of the defendant. The proposal would also allow a "condition" that the division may use its home language if the division itself has problems understanding the case in the designated language. In short, the proposal allows for an "exit out of the designated language and back into the home language in a given case". 
The human rights problem the proposal is trying to solve is evident.[1] The proposed solution will help the defendant. Even if he cannot understand the home language of the division either it is at least the language of his domicile state or region or the language of the market where he is active (use of the patent alleged). The disadvantage for the claimant is that he may have started in the designated language and, now, must translate his Statement of Claim into the Court's language. But such a kind of problem (not necessarily the same) the claimant will already have encountered under Rule 271.1 and .7 (refusal of service). 
2.         The second alternative text ("Belgian clause") wants to solve the language problem for a special (Belgian) type of defendant who has used the patent (allegedly) only in one state (local division) or one region (of a regional division) where he has his domicile (here "domicile use"). It proposes that in such a case, if an EPO language is designated, the Statement of Claim shall be drawn up in the language of his domicile state or (if an official regional language exists in that state) in the language of the region where he has his domicile (here "domicile region"). In a caveat-clause the proposal allows the "language of choice of the claimant" (1) in the case of several official languages in the domicile state or domicile region and (2) in the case of multiple defendants with seats in different states or regions of a state having different languages. 
The second alternative text, legally, is a rule to be applied, if, for instance, Belgium designates English as an EPO-language to be used (Art. 49(2) UPCA). Belgium would be able to achieve the same result by defining the second alternative text as a "condition for its designation" under the first alternative text. Therefore, both solution can easily be merged on the basis of the first alternative text. In any case, the second alternative text (whether as a rule or a condition) should be redrafted to make it easier to read, to understand and to apply. 
III.        Rule 97: Action against the EPO (time constraint) 
1.         Pursuant to Art. 32(1)(i) UPCA the UPC has jurisdiction for actions against the EPO regarding tasks conferred upon the EPO under the Unitary Patent Regulation (Art. 9(3) UPatReg), for instance if the EPO has refused to register an application for unitary effect (Art. 4, 9(1) lit. c UPatReg). A problem of time arises, because that action before the UPC might take some time. If the claimant is unsuccessful, time limits for paying renewal fees to the designated states might have run out. All the RoP can do to solve this problem is to cut short on any time limit in the procedure before the UPC (Rule 97) and even posing the question whether there must be an appeal (Note to Rule 97). 
From the viewpoint of "fair trial" (Art. 6 of the European Convention of Human rights[2]) the rushing procedure of Rule 97 does not seem acceptable. And the exclusion of appeal is not compatible with Art. 73 UPCA which prevails over the RoP (Art. 41.(1) UPCA, Rule 1.1). 
An alternative option to Rule 97 would be an agreement concluded by the Contracting Member States, based on Art. 142(1) EPC, according to which the time limits regarding translation and renewal fees, under national law, shall expire only 1 month from the final rejection of the application for unitary effect in court proceedings under Rules 85 to 95. Such an agreement harmonizing national process law could, under Art. 31(3)(a) of the Vienna Convention, be concluded by an unanimous decision of the Select Committee without ratification and change of national law being necessary. This option should be discussed between the Preparatory Committee and the Select Committee. It would allow to return to the normal procedure under Rules 85 to 95 and to delete Rule 97. 
IV.        Rule 220.2: Appeal against unprivileged orders (procedural orders) 
1          Under Art. 73 UPCA there are six privileged types of procedural orders, privileged in the sense that both parties have the right to appeal against them without a leave of the Court being necessary (prominent examples: saisie-orders, preliminary injunctions). And there are un-privileged procedural orders (all other procedural orders, a great number). For them Art. 73(2)(b) offers two alternatives: (1) they are appealable together with an appeal against the final decision, or (2) where "the Court" grants leave to appeal they are appealable within 15 days "from the Courts decision to that effect", meaning 15 days from the decision to grant leave. 
Controversy has arisen regarding the question what "Court" means in Art. 73(2)(b)(ii) UPCA. The draft leaves this question for the Court of Appeals (CoA) to decide (Note to Rule 220.2). It has, provisionally, included a text in Rules 221.1 and .3 and 224.1(b) and .2(b) which may be used, if the CoA decides he may grant leave and not only the Court of First Instance (CFI). The procedure is the following. Rule 220.2: A party (applicant) may apply within 15 days from the order (to be appealed) to the CFI to give leave to appeal. Rules 220.2 and 221.1 and .3: If the CFI refuses to grant leave to appeal the applicant can lodge an Application for leave to appeal at the CoA. The standing judge of the CoA decides on that application. Rule 224.1(b) and 224.1(b): Within 15 days from the positive leave-decision of the CFI or the CoA the applicant must hand in his appeal. Within the same time limit he must hand in the grounds for appeal. 
The provisional procedure described is practicable, but its application will depend on the interpretation of Art. 73 UPCA by the CoA (Note to Rule 220.2). Traditionally, three leave-to-appeal-constructions are known: (1) leave only by the deciding court, (2) leave only by the appeal court (example: US Supreme Court), (3) leave by the deciding court and appeal against a no-leave-decision (Germany: second instance refuses leave; appeal against that no-leave-decision to the Federal Court of Justice which may revoke the no-leave decision and grant leave). 
The procedure proposed is adding a fourth variant: After a no-leave-decision ("refusal") of the CFI a leave may be granted by the CoA without the CoA revoking the CFI's decision. If leave is granted by the CoA, two un-altered decisions of the "Court" will stand: a no-leave decision by the CFI and a leave decision by the CoA. This is difficult to reconcile with Art. 73(2)(b(ii) UPCA which speaks of one leave decision of the "Court" only. It would not be possible to change the proposed procedure to an appeal against the no-leave decision of the CFI (German model), because the Agreement knows only one appeal procedure, not a special "appeal for leave-procedure". 
It is no secret that the strong support of users for the CoA-leave to appeal against unprivileged procedural orders, politically, is a kind of last-ditch fight against bifurcation orders (Rule 37.4). But there will be many other un-privileged procedural orders. The two-stage procedure to gain leave with the prospect of a full appeal procedure (if leave is granted), although with reduced time limits, may look pleasant to the defendant and to lawyers. It does not look pleasant to the CFI where the procedure goes on meanwhile (no suspensive effect, Rule 223.5) but under the Damocles-sword of a later revocation of the procedural order by the CoA with unpleasant consequences. The CoA's decision might even come after the decision on the merits of the CFI if the CFI does not stay the proceedings to await the outcome of the appeal proceedings on the un-privileged procedural order. The applicant may, then, include his argument into the grounds of appeal against the decision on the merits (Art. 73(2)(b)(i) UPCA).

[1]               See CJEU 27.3.2024, C-322/13.
[2]               See CJEU, above.

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