2 Enforcement of patent rights
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(31127)
7928/09
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(b)
(32604)
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(c)
(33058)
11533/11
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Draft Agreement on the European and Community Patents Court and draft Statute
Opinion 1/09 of the European Court of Justice on the Draft Agreement on the European and Community Patents Court and draft Statute
Draft Agreement on a Unified Patent Court and draft Statute
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| Legal base | (a)Article 81 and 218(8) TFEU; co-decision; QMV
(b) Article 218(11) TFEU
(c) —
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| Document originated | (c) —
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| Deposited in Parliament | (c) 8 September 2011
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| Department | Business, Innovation and Skills
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| Basis of consideration | (c) EM of 21 September 2011
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| Previous Committee Report | (a) HC 5-iv (2009-10), chapter 4 (15 December 2009); HC 5-xi (2009-10), chapter 3 (24 February 2010)
(b) HC 428-xxiii (2010-11), chapter 2 (5 April 2011)
(c) None
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| Discussion in Council | (a) and (b) Not applicable
(c) No date set
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| Committee's assessment | (a) and (c) Legally and politically important
(b) Legally important
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| Committee's decision | (a) and (b) Cleared
(c) Not cleared; further information requested
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Background
2.1 In parallel with discussions to establish a single EU-wide
patent, there have been separate discussions aimed at creating
a single European patent court. In 2009 these discussions led
to proposals for a European and Community Patent Court (ECPC).
The proposed ECPC agreement, document (a), was considered by the
Committee in December 2009 and February 2010, and held under scrutiny.[13]
2.2 Following concerns raised by some Member States,
the Council requested the opinion of the Court of Justice, under
Article 300(6) EC (now Article 218(11) TFEU), on the compatibility
of the envisaged ECPC Agreement with the provisions of the EC
Treaty. That Opinion (1/09), document (b), was issued on 8 March
2011. We reported on it in April 2011, and held it under scrutiny.[14]
2.3 The Court found that the draft agreement establishing
the ECPC was incompatible with the EU Treaties 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 Court for a preliminary
ruling under Article 267 TFEU — such preliminary rulings
were "indispensable to the preservation of the very nature
of [EU] law".[15]
And secondly, if a decision of the unified patent court 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 according to the Court.
Previous scrutiny
2.4 The Committee last wrote to the Parliamentary
Under Secretary of State and Minister for Intellectual Property
at the Department for Business, Innovation and Skills (Baroness
Wilcox) on 22 June, when it noted that the Commission's non-paper
on the unified patent court suggested that, in order to meet the
requirements of the Court's Opinion of 8 March, the ECPC should
have jurisdiction for EU Member States only, so excluding non-EU
Member States which are party to the 1973 European Patent Convention,
and which number 38 (including 27 EU Member States). Pending the
deposit of the revised agreement, the Committee asked the Minister
for a more in-depth analysis of how a unified patent court would
affect the European patent, and how likely it was to meet the
requirements of the Court of Justice's Opinion.
2.5 The Minister replied on 7 July in the following
terms:
"The Commission recommends that the unified
patent court have exclusive jurisdiction over infringement and
validity for both the unitary European Union patent and for (bundle)
European patents granted under the EPC. Participation in the proposed
agreement would only be open to Member States of the European
Union.
"EU Member States not taking part in the
unitary patent would be free to participate in the court agreement
but the court would only have jurisdiction over (bundle) European
Patents in respect of those countries.
"The operation of European bundle patents
in respect of non-EU EPC Contracting States would be unaffected.
Disputes relating to (bundle) European patents in such States
would still be heard by the relevant national court as is current
practice.
"This system will still provide significant
savings to UK businesses because they would not need to litigate
their patents in as many different national courts as they do
now.
"You also asked how likely it is that the
Commission's recommended approach will meet the concerns of the
Court of Justice of the European Union (ECJ). In its opinion of
8 March the ECJ (the 'Court') objected to conferring jurisdiction
on a court created by international agreement which would deprive
Member States' courts of their task of implementing Union law
or referring questions to the Court of Justice for a preliminary
ruling. The Court distinguished this from the Benelux Court of
Justice as "a court common to a number of Member States,
situated, consequently, within the judicial system of the European
Union, its decisions are subject to mechanisms capable of ensuring
the full effectiveness of the rules of the European Union.
"The Commission recommends addressing this
point by limiting participation in the new patent court agreement
to EU Member States. As you note in your letter, the Commission
goes on to state that as consequence it would seem possible for
infringement proceedings then to be initiated against all Member
States jointly were the unified patent court to violate Union
law and for any financial liability arising to be applicable to
all Member States jointly.
"By limiting participation in the proposed
agreement to EU Member States we are satisfied that the Commission's
recommended approach addresses the issues raised by ECJ Opinion
1/09. This approach received support from the vast majority of
Member States when it was discussed at the Competitiveness Council
on 30 May 2011, so I am confident it will be adopted.
"The Presidency has produced a revised draft
agreement for the Court system based on the Commission's recommendations.
This draft has now been published and I will deposit the new draft
agreement and submit an Explanatory Memorandum accordingly.
"UK industry has not yet had an opportunity
to comment on the detail of the new draft agreement. The Government
regularly consults UK stakeholders on developments with both the
unitary patent and unified patent court negotiations and we will
continue to engage positively with industry."
The Unified Patent Court Agreement
2.6 This new draft international agreement on what
is now called the Unified Patent Court (UPC), document (c), has
been revised to take account of the opinion of the Court of Justice.
It nonetheless preserves much of what was in the previous agreement
establishing the ECPC. Similarities include the fact that the
Unified Patent Court (UPC) would comprise a Court of First Instance
and a Court of Appeal; the Court of First Instance would be composed
of local, regional and central divisions; the local divisions
would be hosted by the Contracting States; a regional division
may be set up by two or more Contracting States (the seat of the
central division has yet to be decided). The UPC would have exclusive
jurisdiction concerning the infringement and validity of both
European bundle patents (granted by the European Patent Office
according to the European Patent Convention) and European patents
with unitary effect, established under two Regulations implementing
enhanced cooperation in the creation of unitary patent protection.[16]
2.7 There are two major differences between the UPC
and the ECPC agreements, however. The UPC agreement is restricted
to EU Member States only — non-EU Contracting States of
the European Patent Convention are no longer parties to the agreement.
And the EU, as a legal entity separate to its Member States, is
no longer a party to the agreement. The new UPC agreement also
introduces provisions on joint Member State liability for any
failure of the proposed patent court to apply EU law, including
that set out in the patent Regulations.
BASIC PROVISIONS OF THE AGREEMENT AND STATUTE TEXT
2.8 Article 1 establishes the creation of
the UPC as a court common to the Contracting Member States with
exclusive jurisdiction for European patents and European patents
with unitary effect. Article 2 provides definitions for
certain terms used in the agreement. Article 3 describes the scope
of the UPC's jurisdiction. Articles 3a and 3b deal with
legal status and liability of the UPC. Article 4 specifies
that the UPC will be made up of a Court of First Instance, a Court
of Appeal and a Registry. Articles 5-9 outline the functions
of these parts of the Court.
2.9 Articles 10-14 outline the requirements
for the judges of the UPC, including the eligibility criteria,
how judges are appointed, and how they are trained.
2.10 Article 14a specifies that the UPC shall
respect the primacy of EU law and apply the entire body of EU
law. Article 14b makes provisions to ensure the proper
application and uniform interpretation of EU law. Specifically,
provisions are made to ensure the UPC refers questions on the
interpretation of EU law to the Court of Justice of the European
Union. Article 14c sets out joint liability of the Contracting
Member States should the UPC fail to apply EU law. Article
14d requires that the Contracting Member States ensure the
UPC complies with their obligations under EU law. Decisions of
the UPC will be directly attributable to the Contracting Member
States.
2.11 Articles 14e-14i set out the applicable
law for the UPC, including listing allowable defences within the
Court. Articles 15-16 describe the jurisdiction of the
UPC. Article 17 allows for the creation of mediation and
arbitration centres.
2.12 Articles 18-21 set out the financing
requirements of the UPC. The court shall be self-financing with
fees set and reviewed periodically by an Administrative Committee.
Any shortfall in the budget of the court would be provided by
the Contracting Member States.
2.13 Articles 21a-28 set out the organisational
and procedural provisions relating to the UPC; this includes outlining
who is responsible for representing parties in the UPC.
2.14 Articles 29-31 describe the language
arrangements of the Court. Articles 32-34 set out the procedures
before the UPC and the rules for evidence.
2.15 Articles 34a-44a deal with the powers
of the UPC, including the provision of temporary and permanent
injunctions. Articles 45-47 set out how appeals will be
dealt with in the system.
2.16 Articles 49-56 describe the method that
the UPC will use to reach decisions and to then to ensure that
the decisions are enforced.
2.17 Articles 57-57b present the details
of how the UPC will be implemented and operated following agreement.
2.18 Article 58 outlines the transitional
arrangements for pre-existing European patents. In particular,
it allows holders of European patents applied for or granted before
the UPC is created to opt-out of the jurisdiction of the UPC.
2.19 Articles 58a-60 set out the requirements
for the entry into force of the agreement.
DRAFT STATUTE
2.20 The draft statute is incomplete but currently
outlines the institutional and financial arrangements for the
UPC. Articles 2-9a set out the requirements for judges,
including the eligibility criteria, their appointment and how
they should serve in office. Articles 10-12a outline the
arrangements for governing the new court system. Articles 13-15
set out how the Court of First Instance should function including
the composition of panels. Article 16 sets out the requirements
for the composition of panels of the Court of Appeal. Articles
17-20 define the functions of the Registrar. Articles 22-32
present the financial arrangements for the UPC. This includes
the framework for adopting the budget each year. Articles 33-37
deal with the process of reaching decisions within the UPC and
how dissenting opinions with be dealt with. Annex II to
the Statute lists the topics to be included within the Rules of
Procedure.
The Government's view
2.21 The Parliamentary Under-Secretary of State and
Minister for Intellectual Property at the Department for Business,
Innovation and Skills (Baroness Wilcox) deposited an Explanatory
Memorandum on the draft agreement on 21 September.
2.22 In its introduction she says the UK sees an
effective patent litigation system as a crucial part of the overall
package to deliver a business-friendly unitary patent in Europe.
She then sets out some of the Government's concerns.
2.23 On funding, the Minister explains that the fact
that the EU is no longer a party to the agreement means that there
will not be an EU contribution to the setting up costs of the
UPC. The UK favours a system whereby the UPC will be self-funded
primarily through court fees. Contracting Member States will be
expected to subsidise the operating costs initially but the level
of contributions may be expected to fall as the UPC begins to
recoup costs through court fees.
2.24 On jurisdiction, she says that in the UK and
most EU Member States related validity and infringement actions
on a patent case are generally dealt with together. Current proposals
allow for these actions to be dealt with separately, however.
She explains that UK industry generally opposes hearing these
actions being heard separately as it could mean that cases are
more expensive and/or could reach inconsistent decisions.
2.25 Current proposals state that the new Court will
have exclusive jurisdiction over actions involving European and
unitary patents. There is a transitional period of five years
during which time litigants will have the option of using national
patent jurisdictions instead. The Minister reports that some industry
stakeholders have commented that the transitional period is not
long enough because it can take five years or longer to take an
application from filing to grant at the European Patent Office
(EPO).
2.26 There are a number of related issues which impact
on the affordability of the UPC for users, the Minister says.
These include the costs of accessing the UPC, who is allowed to
represent parties in court and whether parties will be able to
get legal aid. UK stakeholders have raised concerns that the costs
of the UPC might be prohibitively high now that there will not
be a contribution from the EU budget to the setting up costs of
the court.
2.27 The first instance of the UPC will be regional,
to allow local access, but European in character. Achieving this
means local/regional court divisions (not national courts) at
first instance which follow the same procedures and meet uniform
standards of quality, consistency, efficiency. Large regional
divisions and mixed judicial panels would encourage this. Local
(national) divisions in each State could mean national practices
would continue, which is likely to be inefficient.
2.28 There are a number of language issues to be
resolved. These include the operational language of the division,
the language of proceedings, the language of court documents and
the language of judgments. Related is the issue of translation
and interpretation. Different solutions could apply to each. Some
Member States have concerns that their nationals may not be able
to use their own language in the UPC, and judgments may not be
available in their language. However, UK industry is concerned
that complex language requirements will create cost and uncertainty.
2.29 Patents are highly technical documents and this
can present difficulties for judges if they do not have the technical
know-how to understand the invention. Some European States use
technically-qualified (non legally-qualified) judges and others,
such as the UK, use technical experts to provide the necessary
technical knowledge. UK industry is concerned that there are currently
not enough suitably qualified judges to populate all of the panels
of the Court of First Instance and Court of Appeals in their local,
regional and central divisions.
2.30 Current proposals for the Court do not state
the location of the central division of the Court of First Instance,
the Court of Appeal and the Mediation Centre.
Conclusion
2.31 We report earlier in this chapter previous
and helpful correspondence with the Minister on how a unified
patent court could be established whilst respecting the primacy
of EU law, as set out in the Opinion of the Court of Justice,
and on how it would have jurisdiction over European patents granted
under the 1973 European Patent Convention as well as unitary EU
patents. We note that negotiations on the draft agreement are
at an early stage. So rather than asking further questions now,
we would be grateful for an update on the negotiations when the
details of how the UPC will operate in practice for EU and European
patents become clearer, such update to cover whether the concerns
raised by the Minister above have been allayed. We would also
be grateful for a summary of the views of UK industry on the UPC.
In the meantime, the draft agreement on the UPC, document (c),
remains under scrutiny.
2.32 We now clear the previous agreement on the
ECPC, document (a), and the Opinion (1/09) of the Court of Justice,
document (b), from scrutiny.
13 See headnote. Back
14
See headnote. Back
15
Para 85. Back
16
The Committee maintained a scrutiny reserve on both of these proposals
in its Report on 18 May 2011. See (32700) 9224/11 and (32701)
9226/11: chapters 2 and 3, (18 May 2011) HC 428-xxvii (2010-12). Back
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