Forty-eighth Report of Session 2010-12 - European Scrutiny Committee Contents

5 Enforcement of patent rights



Draft Agreement on a Unified Patent Court and draft Statute

Legal base
DepartmentBusiness, Innovation and Skills
Basis of considerationMinister's letter of 2 December 2011
Previous Committee ReportHC 428-xli (2009-10), chapter 2 (9 November 2009)
To be discussed in Council5 December
Committee's assessmentLegally and politically important
Committee's decisionNot cleared; further information requested

Background and previous scrutiny

5.1 The background to this proposal is set out in our earlier Report.[44] In the conclusion, we said as follows:

"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".[45]

The views of the Chartered Institute of Patent Attorneys

5.2 The Chairman of the Committee received a letter from the Chartered Institute of Patent Attorneys, dated 30 November 2011, saying:

"The Chartered Institute of Patent Attorneys has written to the Prime Minister and Baroness Wilcox, Minister for Intellectual Property, urging the government not to sign the draft agreement on a unitary European patent, to be discussed at the Competitiveness Council meeting in Brussels on Monday (5 December). CIPA's position on this is shared by most of British industry.

"The attached position paper explains why the draft agreement, in its current form, would be bad for the UK and both British and other European businesses. I also attach a letter from CIPA's President, Tim Roberts, published in today's Times.

"It appears that there is inappropriate pressure being exerted on government representatives to sign this agreement next week, so that it will happen during the Polish presidency. There is no other reason at all why signature should not be delayed by a few weeks, until all parties agree that the current remaining problems have been satisfactorily solved."

5.3 The attachment reads as follows:

"We support the idea of a Unitary European Patent. But only if it is an improvement on the present system. What is currently being discussed is not. It would be worse, not better. It can and must be improved.

"The amendments we must have are:

a)   Deletion of Clauses 6-8 of the Regulation. The CJEU must not decide European patent infringement law. They are not suited to it.

b)   Non-exclusive jurisdiction. There must be a right to litigate EPO-issued national patents in existing national courts. This is vital for SMEs.

c)   German property law not to apply automatically to Unified Patents of extra-EU applicants.

d)   Transitional provisions. Five years is quite inadequate. There must be a continuing right for patentees to opt out. Also, because the system may not work as planned, and will be difficult to amend, there must be a clear right and mechanism for countries to leave it.

e)   Sensible provision for SPCs.

"Also, there are two features currently included which must be retained and clarified:

f)   Clear rights for EPAs to represent in the Court, possibly with extra qualification.

g)   Proper privilege for advisors. Legal professional privilege and litigation privilege needs to be recognised for all patent attorneys on patent prosecution files.

"These are the key issues, but there are other amendments needed. The Government should not sign up until all the documents are ready, including the rules of court procedure."

The Minister's letter of 2 December 2011

5.4 The Parliamentary Secretary for Business, Innovation and Skills (Baroness Wilcox) writes as follows:

"Thank you for your consideration of the Explanatory Memorandum submitted on 21 September. I am writing in response to the conclusions of the Committee's meeting on 9 November, to give an update on negotiations and a summary of stakeholder positions as expressed to my Department.

"As the draft Agreement is not an EU legislative proposal, nor is the EU as such able to become party, the Presidency has been conducting discussions in a specially convened group, the Friends of the Presidency. This group is supported by the Council secretariat, and the Commission attends in an observer capacity, assisted by a representative of the European Patent Office. More recently negotiations have moved into COREPER.

"The Presidency has been focussing on ensuring that the draft Agreement is legally sound in relation to Opinion 1/09 of the Court of Justice of the EU, and the existing EU acquis. They have been less inclined to take on board amendments of a technical nature, given that the substance of the Agreement was discussed in Council working groups before the Council conclusions of December 2009. The previous version of the Agreement was the subject of EM 7928/09 which has cleared scrutiny.

"The Presidency is now hoping for consensus to be reached on some political aspects before an initialling ceremony in Warsaw on 22 December. We expect that any initialling will be provisional, and on the basis that outstanding issues will be addressed satisfactorily before a Diplomatic Conference in June 2012 at which the Agreement will be adopted and signed. It will then be subject to ratification by national governments according to their usual procedures.

"We have been consulting stakeholders primarily through the Intellectual Property Office's European patent reform consultation group, which last met on 29 November. This includes representatives of industry, the legal and patent attorney professions and the judiciary, as well as Government officials. In relation to the text in document 11355/11 a small group of representatives has suggested over 100 amendments, while recognising that issues would need to be focussed for discussions with the Presidency.

"The main points identified by this stakeholder group were set out in a 'Concerns of Principles' document and subsequently prioritised as follows:

  • Appropriate transitional provisions, with a wide-ranging review before the transitional arrangements end, and including the possibility for patentees not only to opt back into the jurisdiction for existing patents but also to opt out for patent applications made during the transition period
  • The possibility to initiate actions for infringement and interlocutory relief before the central division
  • Simplified language arrangements
  • Clarity and finalisation of the Rules of Procedure to ensure uniform quality of judgments
  • Inclusion of provisions on infringement of the unitary patent in the Court Agreement rather than in the unitary patent regulation
  • Technical issues including future provision for supplementary protection certificates with unitary effect.

"Additionally others have commented on the quality of the Patents County Court under recent reforms, particularly for small businesses, and consider it important that this avenue continues to be available; there is already provision for disputes to be taken to national courts rather than the UPC during the transitional period.

"In recent weeks, following a bid by Germany for the seat of the central division of the court, industry has mounted an extensive lobbying campaign for the UK Government to also bid for the seat of the central division of the Court. The French Government has bid for Paris to be the seat.

"For the Competitiveness Council on 5 December the Presidency have signalled their intention to have a political debate on specific aspects of the Agreement with a view to reaching a consensus, in particular:

  • The location of the seats of various bodies
  • The financial contributions from states in relation to bodies they host
  • Possible methods for calculating contributions from states to costs of the court in the setting-up phase
  • Requests to change the language of proceedings on the grounds of convenience and fairness to the parties
  • Additional opportunities to bring actions before the central division
  • Number of ratifications for the Agreement to enter into force
  • Extending the transitional period from that previously agreed in December 2009
  • Ensuring that a broader range of provisions can be reviewed by the Administrative Committee in order to improve the functioning, efficiency and cost effectiveness of the UPC and the quality of its judgments.

"In negotiating with European partners on these issues we will be seeking the most effective solutions for users of the patent system, bearing in mind that litigants will have different requirements depending on whether they are seeking to defend or challenge patents, and according to their business models.

"How the Presidency concludes the Council of 5 December will depend on the progress of discussions. There will be no vote as this is not an EU agreement. If a consensus emerges on the main outstanding points we would expect the Presidency to conclude that they will invite the 25 participating states to Warsaw to initial the agreement on 22 December. If the Court Agreement is finalised in due course, it will of course be subject to ratification by Parliament.

"If it would be helpful, my officials would be very pleased to discuss the substance of the draft Agreement, and the way forward, with the Committee Clerks."


5.5 We note that the Minister's letter was dated 2 December and so could only be considered by the Committee on 7 December, two days after agreement was expected in the Competitiveness Council. The Minister does not explain her own time constraints in producing the letter, and so her approach to Parliamentary scrutiny continues to leave us very concerned. Additionally, having submitted the draft agreement as a European document for scrutiny, together with an Explanatory Memorandum, the Minister is silent on whether she wants us to release it from scrutiny, which displays a further lack of understanding of the scrutiny procedures.

5.6 We also note that the Minister has not answered a key question we raised in our previous Report, namely whether the concerns raised in the Explanatory Memorandum had been allayed. These concerns included:

  • Separate jurisdictions for related validity and infringements actions on a patent case: the Minister explained that UK industry generally opposes these actions being heard separately as it could mean that cases are more expensive and/or could reach inconsistent decisions.
  • UK stakeholders had 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.
  • There were 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 had 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 was concerned that complex language requirements will create cost and uncertainty.
  • 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 was concerned that there were 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.

5.7 The Minister's letter fails to address whether these concerns have been met. They appear to us to relate to central issues in the agreement which we would have expected the UK to wish to resolve in its favour before giving political agreement. We would be grateful if the Minister could address these at the earliest opportunity.

5.8 Additionally, the Chartered Institute of Patent Attorneys letter to us demonstrates real concern that draft agreement will be disastrous for UK companies. It comments that "inappropriate pressure" is being placed on governments to sign the agreement. The attached "CIPA view" begins as follows:

"We support the idea of a Unitary European Patent. But only if it is an improvement on the present system. What is currently being discussed is not. It would be worse, not better."

This is followed by seven proposed amendments it thinks necessary before the agreement will be beneficial for UK companies.

5.9 Again, we would be surprised if the UK were willing to give its agreement to an agreement in the face of such opposition from a key stakeholder organisation, so we ask the Minister to address each of the points raised by the Chartered Institute of Patent Attorneys and say why the agreement as it stands will benefit UK industry.

5.10 Finally, we note the Minister says that the Presidency has been "less inclined to take on board amendments of a technical nature, given that the substance of the Agreement was discussed in Council working groups before the Council conclusions of December 2009". We ask the Minister to explain in more detail what this means; it sounds to us as if the Presidency has not permitted any substantive negotiations on the detailed provisions of the text.

5.11 Pending the Minister's replies to the above, the draft international agreement remains under scrutiny.

44   See headnote. Back

45   pp. 17-18. Back

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Prepared 15 December 2011