Oktoberfest for the UPC?
On February 19, 2013, Germany, together with 24 EU member states, signed the Unified Patent Court (UPC) Agreement. A protocol on the provisional application of some parts of the UPC Agreement was signed by all participating member states on October 1, 2015. The entering into force of the UPC Agreement will complete the reform of the European patent system, which has long been pursued. This reform is expected to strengthen the regulatory framework for innovative industries in the European single market through better and more effective protection of inventions.
At present, patent protection in Europe can either be obtained through national patents, issued by the respective national offices, or European patents, granted by the European Patent Office. However, the granted European patent is only a ‘bundle’ of individual national patents. Under article 64(3) of the European Patent Convention, any infringement of a European patent shall be dealt with by national law. Thus, despite the name European patent, there is no unitary property right with effect for all member states and no unitary judicial protection. Judicial relief can only be obtained on a national level and only applies to the territory of each respective member state.
The reform of the European patent system includes two European regulations, (EU) No. 1257/2012 and (EU) No. 1260/2012. These regulations create a new property right in the form of a unitary patent with uniform protection within the territory of the participating member states. Both regulations were adopted in January 2013. However, they have not yet entered into force. According to paragraph 2, article 18 of the 1257/2012 regulation and paragraph 2, article 7 of the 1260/2012 regulation, their entry into force depends on the date of entry into force of the UPC Agreement. The UPC Agreement aims at setting up a unified EU-wide patent jurisdiction.
Towards the unitary patent and UPC
These regulations, upon their entry into force, will have general application and will be directly applicable in all participating member states, including Germany. They do not need to be mediated into national law by means of implementing measures. However, because not all the member states could agree on a common European institution to hear disputes about the new unitary patent, the UPC Agreement has been organised as an enhanced cooperation mechanism between 25 member states. Since the UPC will be created on the basis of an international treaty, national ratification by its signatories is required.
The UPC Agreement will enter into force three months after the 13th state, which must include Germany, France and the UK (being the three states with the most patents in 2012), has ratified the agreement. So far, nine countries (including France) have ratified it. In three further European countries (the UK, the Netherlands and Estonia) the necessary national legislative procedures are expected to be concluded by mid-2016, though the UK referendum on the EU could complicate matters. Thus, with Germany having also started the ratification process, the required minimum number of participants is expected to be reached soon.
On February 16, 2016, the German Federal Ministry of Justice and Consumer Protection published the first draft of legislation that will make it possible for Germany to ratify the UPC Agreement. The draft law granting consent for ratification was published together with accompanying draft legislation to implement the unitary patent system into German law. The accompanying law proposal in particular contains changes to German patent and civil procedure law to accommodate the unitary patent. It, among other things, also addresses the delegation of German judges to the UPC.
After a period of consultation, it is anticipated that final draft laws will be introduced into the German parliament before the summer of 2016. These will then pass through the legislative process in parliament for debate, any amendments, and then a final vote—probably in autumn.
The ratification process
Treaties through which Germany enters into a binding agreement with another state must be ratified by the head of the state, the federal president. Ratification, in principle, denotes the formal declaration of approval by the president. The UPC Agreement and the protocol on provisional application of the agreement, however, also require the approval of the competent legislative bodies through a federal statute, granting consent for ratification.
“The accompanying law proposal in particular contains changes to German patent and civil procedure law to accommodate the unitary patent.”
Treaties that relate to subjects of federal legislation require the consent or participation of the bodies responsible for the enactment of federal law. Under number 9, paragraph 1, article 73 of the German constitution, industrial property rights are, inter alia, under exclusive legislative power of the federal parliament, the Bundestag. Moreover, consent of the Bundestagis required because, with the establishment of the UPC, sovereign powers are transferred to an international organisation.
For some laws, the consent of the Bundesrat, a legislative body that represents the 16federal states of Germany, is a further compulsory requirement. In the case of the UPC Agreement, the consent of the Bundesrat is, inter alia, required because the agreement is in a close relationship with EU law.
Changes to national legislation
The UPC Agreement will confer jurisdiction over ‘conventional’ European patents and European patents with unitary effect (ie, unitary patents) mostly to the new UPC—an international organisation. So in the eyes of the Federal Ministry of Justice, there was no need for accompanying national legislation dealing specifically with the institutional or procedural framework of the UPC. However, the new intellectual property right needs to fit in with the existing laws.
Among other things, it was to be clarified that patents that have been granted covering Germany could be declared invalid by a national court only if the UPC is not competent to hear the matter. Furthermore, it was to be determined whether the protection of an invention through a national patent can be claimed alongside protection through a European patent or a unitary patent.
The law proposal does not include a prohibition to claim a national and a unitary patent for the same invention (no prohibition on double patenting). However, if an infringement action based on a German patent is brought before a German court and the invention upon which the German patent is based is also covered by a European patent or a unitary patent that is subject to proceedings pending before the UPC, the German court shall dismiss the action as long as it concerns the same cause of action and the same parties
One issue of particular importance was the inclusion of national legislation dealing with the enforcement of orders and judgments of the UPC, since according to article 82(3) of the UPC Agreement, enforcement procedures shall be governed by the law of the contracting member state where the enforcement takes place. In the Ministry’s proposal, the German Court Fee Recovery Statute is rendered applicable correspondingly for the recovery of certain claims of the UPC. Further, the tasks of the Federal Office of Justice are expanded.
The law proposal is, however, limited to only the necessary amendments. Unlike in other member states, a full harmonisation of German patent law was not intended. Interested parties have in particular expressed concerns about how the proposed law regulates double patenting and the enforcement of decisions of the UPC.
Article 87(1) of the UPC Agreement allows for a simplified amendment of the agreement by a decision of the administrative committee when considered necessary to improve the functioning of the court. These amendments will enter into force unless a contracting member state declares within 12 months that it does not wish to be bound by the decision.
To ensure that such an amendment of the UPC Agreement cannot enter into force in Germany without the parliament having been consulted, the federal government shall by law be obliged to raise an objection to all amendments formed on the basis of article 87(1).
Deliberate delays?
The German law proposals are expected to be brought before the Bundestag before the summer break begins. Interested parties can still comment on the draft legislation. If the required minimum number of contracting states who need to ratify the UPC Agreement is reached, an adoption of the law by the German legislative bodies will also render the protocol on provisional application of the UPC Agreement applicable, allowing some parts of the UPC Agreement to be applied early.
This would include final decisions on the practical setup of the court, for example, the recruitment of judges and testing of IT systems. When ratified by autumn this should ensure that the UPC is fully operational and ready to hear cases on the very day the UPC Agreement is expected to formally enter into force, January 1, 2017
The slow pace of the implementation process in Germany had lately provoked some general nervousness with the interested public. In some US media, there has even been speculation that Germany was deliberately delaying the proceedings, to cause the unitary patent system to fail. However, a British exit from the EU does now present the greatest danger to the implementation of the unitary patent system, in particular, because one of two sections of the central division of the UPC shall have its seat in London.The British EU referendum will take place on June 23, 2016.
Ulrich Worm is a partner at Mayer Brown. He can be contacted at:uworm@mayerbrown.com
Benjamin Beck is a research assistant at Mayer Brown. He can be contacted at: bbeck2@mayerbrown.com
