2 Intellectual Property
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| Opinion 1/09 of the European Court of Justice on the Draft Agreement on the European and Community Patents Court and Draft Statute
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| Legal base | Article 218(11) TFEU
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| Document originated | —
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| Deposited in Parliament | —
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| Department | Business, Innovation and Skills
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| Basis of consideration | EM of 30 March 2011
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| Previous Committee Report | None; but see (32365) 18115/10: HC 428-xvi (2010-11), chapter 4 (9 February 2011)
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| To be discussed in Council | No date set
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| Committee's assessment | Legally important
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| Committee's decision | Not cleared; further information requested
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Background
COUNCIL DECISION AUTHORISING ENHANCED COOPERATION IN THE AREA
OF THE CREATION OF UNITARY PATENT PROTECTION
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.
THE EUROPEAN AND EU PATENTS COURT
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
EXPLANATORY MEMORANDUM OF 7 JANUARY
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.
MINISTER'S LETTERS OF 16 FEBRUARY AND 9 MARCH
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.
Conclusion
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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