Documents considered by the Committee on 5 April 2011 - European Scrutiny Committee Contents

2   Intellectual Property


Opinion 1/09 of the European Court of Justice on the Draft Agreement on the European and Community Patents Court and Draft Statute

Legal baseArticle 218(11) TFEU
Document originated
Deposited in Parliament
DepartmentBusiness, Innovation and Skills
Basis of considerationEM of 30 March 2011
Previous Committee ReportNone; but see (32365) 18115/10: HC 428-xvi (2010-11), chapter 4 (9 February 2011)
To be discussed in CouncilNo date set
Committee's assessmentLegally important
Committee's decisionNot cleared; further information requested



2.1  In December 2009 political agreement was reached in the European Council on an EU patent Regulation. The Regulation establishes an EU-wide unitary system for patent protection, similar to the existing Community trade mark text. It does not, however, provide for a language regime for the EU patent, leaving what is a divisive issue to subsequent legislation.

2.2  Translations represent a significant proportion of the cost of patenting across Europe, and therefore agreeing a business-friendly language regime is important. Accordingly, on 30 June 2010 the Commission adopted a proposal for a Council Regulation on the translation arrangements for the EU patent. This proposal echoed a 2009 proposal for a three-language arrangement (which had failed to get consensus), but with additional elements relating to the availability of quality machine translations and the reimbursement of translation costs for applicants from EU states that have an official language which is not English, French or German. Despite compromises being offered, the required unanimity was not achieved at either the 11 October or 10 November Competitiveness Council. Ultimately, at the 10 November Council, Spain, Italy and Poland could not agree to the proposal. The Belgian Presidency concluded that the required unanimity could not be achieved within a reasonable timescale.

2.3  In advance of the 10 December Competitiveness Council, 11 Member States, including the UK, wrote to the Commission to request that they make a proposal to use enhanced cooperation in an attempt to agree a language regime for the translation of EU patents. The Commission obliged and the authorising Decision was adopted by the Council on 10 March 2011.


2.4  The European Patent Convention ('the EPC'), signed at Munich on 5 October 1973, is a Treaty to which 38 States, including all the Member States of the European Union, are now parties. The European Union is not a party to the EPC. That convention provides for a unitary procedure for granting European patents by the European Patent Office ('the EPO'). While the procedure for granting that right is unitary, the European patent breaks down into a bundle of national patents, each governed by the domestic law of the States which the holder of the right has designated.

2.5  Work by the Council also led to the drawing up of a draft international agreement to be concluded between the Member States, the European Union and third countries which are parties to the EPC creating a court with jurisdiction to hear actions related to European and Community patents. The agreement would establish a European and Community Patents Court (now a European and European Union Patents Court — EEUPC) composed of a court of first instance, comprising a central division and local and regional divisions, and a court of appeal, that court having jurisdiction to hear appeals brought against decisions delivered by the court of first instance. The third body would be a joint registry.

2.6  The EEUPC would ensure consistent interpretation of the law relating to both types of patents. The EEUPC will be set up by an international agreement between the participating States. A draft of the agreement exists, but negotiations have been suspended pending an Opinion of the Court of Justice of the EU (ECJ), on the compatibility of the draft agreement with the EU Treaties.

2.7  The EEUPC will be a specialised court whose jurisdiction is confined to adjudicating on the validity of European and EU patents, namely:

  • actions for actual or threatened infringements of patents and supplementary protection certificates and related defences, including counterclaims concerning licences;
  • declarations of non-infringement; and
  • actions or counterclaims for revocation of patents.

The national courts of the participating States would continue to have jurisdiction in actions related to EU patents and European patents which do not fall within the exclusive jurisdiction of the EEUPC, such as actions concerning patent ownership.

2.8  As a general rule, unless the Parties agree to bring an action before the central division, an action for patent infringement should be brought before the local division hosted by the participating State where the infringement occurred or where the defendant is domiciled or, if that State has no local division, the regional division in which that State participates.

Previous scrutiny


2.9  In an Explanatory Memorandum of 7 January from the Parliamentary Secretary for Business, Innovation and Skills at the Department for Business, Innovation and Skills (Baroness Wilcox) we were told that when the UK wrote to the Commission to request enhanced cooperation on the three-language regime for the EU patent, it included in its letter a specific reference to the ECJ Opinion on the EEUPC, as that Opinion may have a material effect on the UK's participation. This caveat was included in order to ensure that if the ECJ concluded that it did not have sufficient jurisdiction and required wider powers under Article 262 TFEU, the UK could withdraw from the request for enhanced cooperation before it was presented to the Council for a vote. That Opinion, the document which is the subject of this Report, was to be issued on 8 March 2011.

2.10  As with our predecessors, we saw the merit of the EU Patent, and of easing the translation burdens associated with it. So we supported the Commission's proposal for a three-language regime for EU patents. But we had reservations about the Government's approach to enhanced cooperation. We therefore asked it to explain the basis on which it contended that it was consistent with the strict rules on enhanced cooperation for a requesting State to withdraw its request, no provision for this being made in the Treaties. We thought that if the UK was not sure that it wanted to proceed on the basis of enhanced cooperation, rather than be counted among the requesting Member States it should consider whether to join at a later date, for which provision is made in Article 331 TFEU.[1]

2.11  We questioned, secondly, why it was necessary for the Council Decision to be taken on 10 March, two days after the Opinion of the ECJ was published. The Opinion was plainly relevant to the proposal for enhanced cooperation, as the Government's conditional approach to it demonstrated. We also said that we would like sufficient time to scrutinise the Opinion before clearing the Council's Decision to approve enhanced cooperation from scrutiny, and that we would expect an Explanatory Memorandum on the Opinion when the Minister deposited it. So we asked the Government to consider postponing the Council Decision.


2.12  Since that Report we have received (and responded to) two letters from the Minister, dated 16 February and 9 March. In the first, the Minister said that a declaration would be made by the Commission on the adoption of the Council Decision to the effect that Member States could withdraw from the enhanced cooperation even after the adoption of the Council Decision, so long as the Commission's implementing regulations had been adopted. In our reply of 3 March we said that this declaration did not overcome the problem that the Treaty does not provide for Member States to withdraw from a decision to enter into enhanced cooperation. As such, the proposed course of conduct appeared to us to be unlawful, and would set a negative precedent for the binding force of future decisions to enter into enhanced cooperation. So we asked again that the Minister insist that the Council Decision be postponed. This would give proper time for the Government's consideration and our scrutiny of the ECJ Opinion without a Council procedure not provided for in the Treaty having to be concocted.

2.13  In her reply of 9 March, the Minister said that the Government may need to override parliamentary scrutiny on the Council Decision. It saw enhanced cooperation as the only viable way forward and it would be extremely regrettable if it were unable to support the authorising Decision at the Competitiveness Council on 10 March.

2.14  She continued that in her previous letter she had explained that the Government had sought and obtained assurances that the UK could withdraw from the request for enhanced cooperation and it was confident of its ability to withdraw. The option of postponing the Council Decision was not available although the Government did discuss this possibility with the Commission, other Member States and the Presidency. Reopening the text of the Decision itself was also not a viable option given the risk of further amendment and debate which may have held up progress.

2.15  Although the Treaty was not explicit about Member States' right to withdraw from enhanced cooperation, the Council Legal Service had also advised in writing that any Member State participating in enhanced cooperation would be entitled to withdraw so long as no substantive act to the enhanced cooperation had been adopted. The Government considered that the combination of the Council Legal Service's view and the Commission's declaration to gave it sufficient assurance to be able to withdraw after the authorising decision so long as the two implementing regulations had not been agreed. At the Government's request, the Presidency had agreed that the final decisions on the two implementing regulations, one of which requires unanimity in the Council, would be taken together. If the regulations were taken for decision at the 30 May Competitiveness Council (as planned) then they would need to be presented by the Commission by the end of March.

2.16  The Government would take a final view on UK participation when it had fully considered the implications of the ECJ Opinion and the Minister would ensure that the Opinion was deposited and an Explanatory Memorandum submitted in sufficient time for the Committee to scrutinise before any final decisions on implementing regulations were taken.

2.17  The Committee responded by letter dated 17 March, asking the Minister to come into give evidence to it to explain why it breached the scrutiny reserve in voting for adoption on 10 March.

The document

2.18  On 8 March the Court published its Opinion. It found that the draft agreement establishing the EEUPC was incompatible with the TEU and TFEU for two reasons. Firstly, it would deprive national courts of the power or, as the case may be, obligation, to refer a question of EU law (including under the EU Patent Regulation) to the ECJ for a preliminary ruling under Article 267 TFEU — such preliminary rulings were "indispensable to the preservation of the very nature of [EU] law".[2] And secondly, if a decision of the EEUPC were to be in breach of EU law, it could not be subject to infringement proceedings by the Commission nor could it give rise to financial liability on behalf the EU Member States — two essential characteristics of EU law.[3]

The Government's view

2.19  In an Explanatory Memorandum of 30 March (accompanying the deposit of the ECJ's Opinion) the Minister says that the UK sees an effective patent litigation system as a crucial part of the overall package to deliver a business-friendly unitary patent. Should the Commission's efforts to amend the proposed international agreement prove unsuccessful the Council may need to consider other ways to achieve this objective.

2.20  No impact assessment has been carried out as it is not yet clear how the proposed international agreement will be amended to take account of the ECJ Opinion.

2.21  The current proposals allow for some subsidy of the EEUPC to be funded by the EU budget and by contributions from participating States that are not members of the EU. However, it is not clear how this will operate in practice.

2.22  A first exchange of views on the implications of the Opinion is expected in the Council working group on 14-15 April 2011. The Commission has indicated that it will come forward with amendments as soon as possible to render the proposed international agreement compatible with the EU Treaties.


2.23  The Explanatory Memorandum contains no detail of the Government's thinking on the ECJ Opinion, in other words whether the UK will withdraw from the enhanced cooperation, and on whether the timetable for the adoption of the implementing regulations stands. We would be grateful if the Minister could provide us with a full update after the Council working group meeting on 14-15 April and before any decision is taken on the implementing regulations, and before the Minister gives evidence to us on 4 May. In the meantime, the Opinion remains under scrutiny.

1   See headnote. Back

2   Para 85. Back

3   Ibid paras 86-88. Back

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