Tuesday 8 March 2011

UPLS dead and buried

In Avis 1/09 Creation of a Unified Patent Litigation System the Court of Justice of the European Union gave its negative ruling on the proposed system.

 The following comment was received from Paul England (Simmons & Simmons, London):
"In probably the most important decision the Court of Justice of the European Union has ever made for patent owners it has this morning dashed hopes of the proposed Unified Patent Litigation System in an Opinion that says this is not compatible with European Union law.

What this means in practice

For European patent holders this means there is currently no end in sight to the current unwieldy system which requires:
• a patent to be granted for every European state for which protection is sought;
• that infringement proceedings are fought in the courts of every state in which infringement occurs; and
• that invalidity proceedings are fought in each country for which revocation of the national patent is sought;
and therefore bringing high costs and inconsistency of decisions for those engaged in patent litigation at a European level.

The only way towards a single system may now be for the Court of Justice itself to decide on patent litigation cases – something which the profession does not want.

More detail on the background to this decision

The proposed Unified Patent Litigation System (UPLS)

In December 2009, the EU Council unanimously agreed on key elements of the proposed UPLS together with the proposal on translation arrangements for a Unitary Patent put forward in early July 2010. The UPLS is the latest initiative to establish a single system in Europe that combined a single, pan-European Unitary Patent with the existing European Patent Convention system that grants so-called European Patents. Despite their name, the latter patents are only effective nationally, and so any patent revocation or infringement related proceedings that occur in Europe must be fought in the courts of the national patent affected, whether they affect more than one European country or not.

The UPLS, as well as introducing a single Unitary Patent covering all EU states, also proposes a single system of European patent courts (the European and EU Patent Court (EEUPC)) in which all European patent disputes can be heard. In essence, the proposal provides that the EU accede to the European Patent Convention (EPC), allowing the European Patent Office to grant Unitary Patents and setting up an EU Patent Court to hear disputes relating both to Unitary Patents and existing European patents. However, before proceeding with this proposed system, the Agreement was referred to the Court of Justice to decide whether the proposed UPLS is compatible with the EU Treaties. This was done using the “Opinion” procedure, provided for by Article 300(6) of the EU Treaty. This special procedure exists to allow the EU’s institutions to seek advice from the Court of Justice about the compatibility of an international agreement with EU law before signing it. Most Member States, the Council, the Commission and the EU Parliament were represented at a hearing on 18 May 2010 before the Court of Justice.

The Opinion, which says that the UPLS is incompatible with the EU Treaty and the Treaty on the Functioning of the European Union means that this proposal is now consigned to history, the latest in a long line of setbacks to proposals for such a system that has been in the planning for nearly 40 years.

What now?

This decision is a tremendous blow for those who have worked on the UPLS proposals. These include members of the EU Commission, Senior Judges and leading patents practitioners, including our own Kevin Mooney. Many will view this decision as the Court of Justice seeking to be the judicial body overseeing any single patent litigation system that comes to fruition in Europe. This was the one single issue on which the Commission, industry and the lawyers agreed at an early stage in drafting the proposals to be undesirable. This is because, according to this view, the Court of Justice does not have the necessary expertise in this area of law. 
It might be thought that some attempt could be made to amend the proposed UPLS system or to go back to the drawing board completely. But, the essential reasoning for the decision is that the Member States cannot divest to an international body their powers as part of the European Union order over matters that will, inevitably, require the implementation of European Union law. So the reasons are fundamental and appear to rule out any revision of the UPLS or a return to the previously attempted European Patent Litigation Agreement (EPLA) proposal. It seems that alternatives to a system presided over by the Court of Justice have run out. The latter view is supported by a recent advance with the proposed single, pan-EU patent called the Unitary Patent in which, for only the second time in its history, the European Parliament voted for the “enhanced cooperation procedure” to be used to push this through, despite opposition from Italy and Spain on the language regime that is planned to be adopted. Decisions on such a patent would be made by the Court of Justice.

There is scant enthusiasm in industry and within the patent profession for a Court of Justice centred system and so support for this enterprise is likely to run out also".
Paul's disappointment will be shared by those who worked long and hard to achieve the UPLS, but not by those who have opposed it from the start for a variety of reasons. The constitutional roadblocks on which the proposal foundered were never going to be easy (some say, possible) to overcome, and it may be wondered how much appetite remains among the UPLS's supporters for seeking to navigate a path around them.

One point on which, it seems to this blogger, all are agreed -- whether pro- or anti-UPLS -- is that there is little or no enthusiasm for any system which places patent law in the hands of the Court of Justice.  But this is not the sort of consensus which can be easily converted into fresh proposals.

As ever, readers' opinions are welcomed.


MaxDrei said...

No wonder industry does not want the European Court of Justice to have the last word. Look what the ECJ has done to trademark law in Europe. Look what a mess the Supreme Court of the USA is doing to patent law in the USA.

Conversely, look how refreshing is the patent jurisprudence of the UK Supreme Court.

But then, its line is to tell the lower courts to follow settled EPO jurisprudence.

That jurisprudence is settled because the 24 Technical Boards of Appeal at the EPO in Munich vie with each other to lay down the best path for legal development.

And is it not exactly that competitive process which we now enjoy, in the efforts of the national patents courts of Germany, The Netherlands and the UK, to lay down the best path of post-issue patent law in Europe?

I'm only asking, Mr Mooney.

Jason Burwell said...

While the patent court ('PC') itself, as proposed, appears to be killed by the ECoJ opinion, I don't think this is the ECoJ saying anything like 'we want to be in charge of this'. I think the ECoJ has burnt its fingers with TM's and, in effect, doesn't want to see the details of patent cases AT ALL... so, my hope is that there may be other routes open to try...

Here follows two thoughts, does anyone have any others? :

Noting §59. of the opinion, which states: "It should be made clear...concerns not the powers of the PC in the field of the European patent, but its powers relating to the future Community patent"

and noting that what the ECoJ seems to want to reserve is that requests for ECoJ preliminary rulings must still go via national courts (§80 of ECoJ opinion)

Wouldn't there be scope for doing something EPLA-like & based squarely on European (i.e. not 'Community') patents, but with a right of appeal, for EU-nationals only(?) to their national courts on EU-treaty-interpretation-related issues?

In the alternative, the profession or the EPO (maybe collaborating with patent judges around Europe - e.g. those from EPO judges symposia) might look to form an extra-judicial resource/institution/venture for providing professional mediation services for multi-jurisdictional cases - to offer litigants a cheaper/quicker (trusted) way forward towards commercial resolution - noting the well-proven & -researched track record of mediation 'working' in 75%+ of disputes that use it.

Jason Burwell
European Patent Attorney

Anonymous said...

Jason Burwell's "First Thought" has some appeal to it.

The CJEU objects to the idea of allowing the European and EU Patent Court ("E&EUPC") to rule on the interpretation of community patent regulation. The appeal chamber of the E&EUPC must be required to request preliminary rulings on the interpretation of the community patent regulation. There must also be a means to compel the E&EUPC to comply with EU law in the event it fails to do so.

Although it might well be possible to amend the draft E&EUPC treaty to address these concerns, it would be unwise to do so. The whole point of the E&EUPC is that it acts as a specialist court to develop substantive patent law in a consistent and rational manner. The draft treaty was framed precisely to avoid allowing the non-specialist CJEU to issue preliminary rulings on substantive issues of patent law. The CJEU lacks the resources and technical expertise to do this effectively and quickly.

The solution must be to drop the "Community" / "EU" element of the proposed unitary patent and unitary patent court. Rather than using an EU regulation as a basis for the unitary patent the member states could establish a (non-EU) unitary European patent under Arts 142-149a EPC. Provided the unitary patent court were obliged to seek preliminary references on areas of EU law and provided an adequate enforcement regime were set up, the concerns of the CJEU would be addressed without allowing the CJEU the possibility to opine on matters of substantive patent law.

Steve Peers said...

I have already responded to Jason Burwell's first suggestion on the IPKat blog. On the specific idea of dropping the 'EU' element of the proposed patent court, does this make sense given that the EU patents would be granted through the European patent system anyway? And if it could be done, wouldn't this kill the EU patent idea, since holders of EU patents would be exposed to multiple litigation and holders of other European patents would not?

In my reading the EU court objects in principle to any international court ruling on EU law issues. It confined itself to ruling on the EU patent but why would the reasoning be different for any other international court dealing with any other issue where EU law is involved? The EU court expressly said that providing for a preliminary ruling procedure for the international court was not good enough.

On the other hand the Court expressly approves of Member States (but not involving non-Member States) agreeing to set up a common court among themselves. So that is the way forward, it seems to me. I see no reason that common court could not have jurisdiction over EU and European patents alike.

Also the idea of a Regulation for the patent has already been approved by the EU this week. But it seems implicitly that the route of a 'unitary' patent pursuant to Art. 142 EPC will now be followed, according to the Commission proposal for enhanced cooperation. There is no reason why using the form of a regulation would rule out that approach. Preumably the idea of the EU joining the EPC is now off the table since Spain and Italy would not approve it.