Draft agreement on a Unified Patent Court and Draft Statute

Written evidence received from Prof. Dr Winfried Tilmann, Attorney-at-Law, Düsseldorf, Germany

The battle about Art. 6 – 8 of the Union-Patent-Regulation

One hotly debated issue for both, the draft-Unitary Patent Regulation and the draft-Agreement on a Unified Patent Court, was the rule on a cease-and-desist-claim in case of direct and indirect patent infringement with its limitations in the Regulation, a rule to be interpreted finally by the European Court of Justice. A growing number of user organizations had asked for a transfer of this rule into the draft-Agreement in order to avoid referrals to the ECJ on the requirements of the rule. The following article tries to explain why the EU legislator could not act accordingly.

I. The dust has settled

1. The dust of the "battle" about Art. 6 – 8 of the Union-Patent-Regulation has settled and the time has come to recount, for history's profit, like Tacitus, what the battle was all about and what will follow from the solution the Trilog of the Presidency, the Parliament and the Commission has found.

2. Art. 6 and 7 of the proposal of the Commission for a Union-Patent Regulation of April 2011 were following the CTM-Regulation and the Design-Regulation which had regulated the cease- and desist-claim (Unterlassungsanspruch) in the case of the infringement of a CTM or a Community Design as an autonomous Union-law claim in the Regulation (Art. 102 CTM-Regulation; Art. 89 Design-Regulation) and which had left the other sanctions against the infringement (other claims as for information, damages, publication) to national law to be applied by the "Community Trademark Courts" or "Community Design Courts" meaning the national courts acting as functional Union courts. [1]

3. The proposed Art. 6 regulates the conditions for a cease- and desist-claim in the case of a direct infringement (the accused form of the defendant fulfills all elements of the patent claim). The proposed Art. 7 regulates the conditions for a cease- and desist-claim in the case of an indirect infringement (the defendant supplies objects which may be used in an intended direct infringement). The proposed Art. 8 containes the usual patent-free areas and actions, Art. 9 the established Union-law exhaustion-rule developed by the Court of Justice, both also followed the example of the CTM- and Design-Regulations.

II. The Kraßer-Argument

4. What were the objections against this parallel to these two Regulations? The main objection was that there would be referral questions from the new Unified Patent Court to be constructed under the intended Agreement on such a court. That was indisputably true, because also the interpretation of Art. 102 CTM-Regulation had to follow the guidance of the ECJ. However, even under the very active referral-practice of the CTM Courts there had been few referrals regarding Art. 102 CTM-Regulation and the most important referral (DHL v, Chronopost [2] ) had been decided only in 2011, after 11 years of existence of that Regulation.

5. Certainly more referrals were to be expected regarding Art. 6 and 7, since, differently from Art. 102 CTM-Regulation, they are spelling out the details of the conditions for fulfilling the requirements of these rules. Prof. Rudolf Kraßer, the author of the leading book on patent law in Germany [3] , described, in an Opinion asked for by the European Patent Lawyers Association, all questions of interpretation and application which had arisen in Germany in the past, and they were quite a few.

6. On the other hand, many of these questions had already been solved by court decisions Germany in the past and ably commented in Prof. Kraßer's book. The same is true for other Member States regarding the same or very similar provisions which had been common property of the national law of EU Member States since the Luxembourg Agreement of 1985/1989, national law provisions anticipating the entry into force of that Agreement which, unfortunately, never happened (five states not ratifying it).

7. It will not be necessary to start all over again in submitting all these questions to the ECJ, because of the acte-claire-doctrine. In applying the most recent practice of the ECJ regarding that doctrine [4] , according to which the question must be claire not only to the court dealing with it but also to the courts of other Member States, the Unified Patent Court will be permitted and obliged to take account of the common practice of the patent courts of the EU Member States regarding these same or similar provisions in their national law which will correspond to Art. 6 and 7. And this practice has been following largely the same line. Therefore, many interpretation-questions regarding the details of Art. 6 and 7 will be regarded as claire by that new court. Even considering the psychological impact of the rules on cooperation of the Unified Patent Court with the ECJ in the Agreement, obediently reinforced after the Opinion of the ECJ 1/09 of March 2011 [5] , the Unified Patent Court will not have to ask the ECJ unnecessary questions, unnecessary because they have already be answered in the same way by the national courts.

8. Still, the argument of possible referrals to the ECJ on the specific requirements of Art. 6 and 7, let me call it the "Kraßer-argument", was legitimate, i.e. correct from a legal point of law, even if one could debate about the number of these referrals. However, as the cases referred to in the Opinion of Prof. Kraßer show, the requirements of Art. 6 and 7 are not technical in the meaning that they require the knowledge of technical patent law to solve them. These provisions are defining the border-line of patent-law to public use i.e. patent-free use, free commercial competitive behavior. They belong to the sort of questions the ECJ has to answer for defining the border-line of CTMs and free use. They have neighboring questions in the fields of exhaustion-law and competition law and they describe the tort-law actions against infringing practices. Taken together, one can even say that the ECJ should have a say in defining these border-lines between the patent right and competition, since he is the ultimate controller of a functioning competition, of the free movement of goods and services and the functioning of the internal market.

9. This is true all the more for the Art. 8 and 9 defining the patent-free acts for the reasons of special protected interests (Art. 8) and for the free movement of goods (exhaustion-rule in Art. 9). Without one protective rule (sanction) in the Union-Patent-Regulation these restrictive rules would have no place in the Regulation (they would be "restricting a nullum"). Their place would, then, be in the Unified Court Agreement. As far as they reflect Union law rules they would, also in that position, be a matter for referral questions to the ECJ

10. This leads to another aspect of the question of the "opposition" how to avoid referrals to the ECJ. If Art. 6 to 9 would be referred to the Unified Court Agreement the Unified Court would not "escape" the ECJ: Not only the Union-law parts of Art. 8 and 9 would be a matter for referral questions. Also the cease-and-desist claim, then regulated in the Court Agreement also for the Union Patent (it exists there already for the classical European Patent), would be matter for referral questions, at least under the aspect of the Enforcement Directive. The general rules of Art. 3 (2) (effectiveness, appropriateness) would govern its applicability. Whereas, if they stay in die Regulation they would be subject only to their own autonomous regime. Surely, if transferred to the Agreement, the detailed requirements for a cease-and-desist-claim as regulated in Art. 6 and 7 of the Regulation would not be matter for referrals.

11. With these qualifications (number of cases, neighborhood to established ECJ-matter, subjected to referrals also in the Court Agreement) the Kraßer-argument is standing out as a legally correct argument of the "opposition's" wish to transfer these rules to the Unified Court Agreement.

III. The EPC-Argument

12. This cannot be said of the second argument of the opposition that the ECJ might use (misuse) referral questions on the specific requirements of Art. 6 and 7 for expanding his jurisdiction to the technical rules of the EPC on patentability. This fear is unfounded for a number of reasons: (1) the Unified Patent Court would not ask the ECJ on the interpretation of EPC-rules, since they are not part of Union-law. (2) The ECJ normally sticks to the questions asked and refrains from questions he is not asked. (3) The ECJ will reject questions concerning other than EU law and will not, himself, extend answers on Union law to answer also EPC-questions.

13. EPC-questions outside the jurisdiction of the ECJ are: revocation-rules (Art. 138 EPC), scope of protection rules (Art. 69 EPC and Protocol thereto), the block-grant-effect and the block-revocation-effect (Art. 142 EPC) and the block-transfer-effect (Art. 148 EPC) (the Art. 142 EPC-effect and the Art. 148 EPC-effect being triggered by Art. 3 (2) of the Regulation).

14. To summarize: The only valid legal point of the "opposition" were the expected referrals of the Unified Patent Court regarding the specific requirements of Art. 6 to 8 (and 9) of the Regulation, the Kraßer-Argument with its limits indicated in Nr. 4-11, above.

IV. The "Opposition" Movement

15. The "opposition" started in the Expert Committee of the Commission where the UK position, since a long time skeptically observing the growing influence of the ECJ practice on the national courts, met support from other members. It coincided with a certain frustration of the members when the political actors (Council, Parliament) took over the steering-wheel, reducing the influence of the Expert Committee. Both motives combined resulted in a furor which soon, like a bush-fire, jumped over to the European Patent Lawyers Association (EPLAW), the Venice Judges Meeting 2011, a UK Group submitting a Paper on Principle Objections, large enterprises, the ICC, the American Chamber of Commerce, the CBEE, FICPI and others and to a small group of Member States in the Council (UK, Sweden, Finland).

16. The view of this opposition, for which the whole package of the two Regulations and the UPC Agreement soon seemed to become worthless, if their view was not followed, was eloquently and forcefully presented by Ms. Wigström (Deputy from Sweden) in the Legal Affairs Committee of the European Parliament during its session on November 21, 2011.

V. The Art. 118 TFEU-Argument

17. Only at a late stage of the discussion, the requirements of Art. 118 TFEU, the basis for the Union Patent Regulation, became part of the discussion and noticed by the "opposition". Actually, the risk and burden of referral-questions to the ECJ concerning the detailed requirements of Art. 6 -8 of the Regulation had to be weighed against the danger, that the Regulation would lose its legal base in Union law, if these Articles (and Art. 9) were transferred to the UPC Agreement.

18. Art. 118 TFEU defines the "European intellectual property right" and the "measures" creating such right by the effect of a "uniform protection". From this wording it seems to follow that the Regulation cannot be based on Art. 118 TFEU, if it does not contain at least one "measure" (claim, sanction) for "protecting" the Union Patent in a "uniform" way.. The uniformity of the EPC granting and revoking-rules has nothing to do with "protection rules". The scope-of-protection-rule of Art. 69 EPC (plus Protocol thereto) applies already to European Patents. Art. 3 (2) of the draft-Regulation apparently is intended to add protection for the European Patents with unitary effect.

19. This was the view of the Judicial Services of the Commission, of the Legal Committee of the Parliament and of the great majority in the Council.

20. Against this view, Prof. Kraßer had included in his Opinion the following remarks:

3. 3. Mindestvoraussetzung für die Anwendbarkeit der Ermächtigung ist nach Art. 118 Abs. 1 AEUV lediglich, dass ein Rechtstitel, ein intellectual property right, durch Unionsrecht geschaffen wird. Schon dies bewirkt das erforderliche Minimum an Vereinheitlichung jedenfalls dann, wenn im Recht der (teilnehmenden) Mitgliedstaaten Gegenstand und Kernwirkung des in Frage stehenden Rechts übereinstimmend verankert sind.

...Deshalb kann sich die in Aussicht genommene Verordnung darauf beschränken, die Grundlage dafür zu schaffen, dass für die teilnehmenden Mitgliedstaaten einheitliche Patente erteilt werden.

..Für den in Art. 118 Abs. 1 AEUV geforderten einheitlichen Schutz (uniform protection) und die „gleiche Wirkung", von der Art. 3 (2.) des Verordnungs-Vorschlags spricht, genügt die Einheitlichkeit der vorbezeichneten Kernwirkung....

21. In a free translation, this argument runs as follows: It is sufficient, under Art. 118 TFEU, to create, through Union law, an industrial property right. This already creates the necessary minimum of harmonization, at least if the object and basic effect (Kernwirkung) of the relevant protective sanction is enshrined in the national laws in the same way. Therefore, the argument continues, the Regulation can confine itself to create the basis on which unitary patents may be granted for the participating member states. For the uniform protection under Art. 118 TFEU and for the "unitary effect" Art. 3(2) of the Regulation, speaking of the unity of the basic effect (Kernwirkung), is sufficient.

22. Legally, this argument amounts to leaving the "uniformity" of the protection for the EU member states to regulate. According to Prof. Kraßer they have already basically achieved uniformity. If that were true (it is not), would that uniformity continue to exist? Would any deviation by some member states let the European IP-right-character fall away? Can Art. 118 TFEU be construed as permitting the EU legislator to let his intention to create a "uniform protection" being realized by the member states without guidance as to its contents and without obligation? Would the Regulation, after the deletion of Art. 6-8, be not "nothing more than an empty shell", as Deputy Rapkay put it in the Legal Committee's meeting of November 21, 2011?

23. The said argument would run against the apparent meaning of Art. 3 (2) of the draft-Regulation which is intending to add something regarding protection to that which is already existing for European Patents on the national level which would have to be applied according to Art. 64 EPC. If the argument were correct, the Regulation would add nothing on the side of protection.

24. This argument would run further against the wording of and the effet utile intended by Art. 118 TFEU. From the wording of that rule it follows clearly that the "measure" by which the European industrial property right" is "created" must in itself contain and through itself provide for a "uniform protection".

25. This follows also from the legal history: The Lisbon fathers of that Article had the examples of the CTM-Regulation (Art. 102) and the Design-Regulation (Art. 89) before them which had provided for an at least partially uniform protection (cease and desist claim or order). The new rule, apparently, tried to generalize these examples for these and other European IP-rights.

26. Therefore, the interpretation Attorney General Villalón [6] as well as the ECJ [7] have given to the concept of EU-wide "protection" under Art. 102 CTM-Reg. in the case 235/09 (DHL v. Chronopost) will be the most likely interpretation of "uniform protection" under Art. 118 TFEU: safeguarding the unitary right by a court order and the enforcement of that order. This means for an EP with unitary effect: substituting the national protection, to which Art. 64 EPC is referring, by a protection rule on the Union law level.

27. Prof. Sir Robin Jacob, member of the Group of Experts of the Commission and President of the Patent Judges Association recognized the inherent weakness of Prof. Kraßers argument (according to which "uniformity" may depend from the willingness of the member states to regulate the protection in a similar way, at least "basically", see Nr. 23 and 24). Jacob had first argued in two Opinions (like Prof. Kraßer) that it was sufficient, regarding the requirements of Art. 118 (1) TFEU, to have Art. 3 (2) of the Regulation state that the Union Patent will have a unitary character and enjoy "uniform protection". The participating Member States would, then, be free to collectively spell out what the "uniform protection" would be. In a third paper he proposed adding a sentence that the participating member states must collectively provide for a uniform protection. Legally, that would amount to a sort of delegation: delegating the determination of the contents of the "uniform protection" to the participating Member States. It would be a kind of "Directive within a Regulation" without at least indicating the necessary contents of its realization, certainly a bold construction.

28. In my opinion, also this compromise would not be in line with the wording and meaning of Art. 3 (2) of the draft-Regulation and of Art. 118 TFEU. There was, at least, a serious risk, that the view of the Judicial Service of the Commission, the Legal Committee and the majority in the Council was correct and would be shared also by the ECJ. Any defendant in a Union Patent case before the Unified Patent Court would have argued in this direction, and the UPC would have had to refer this question to the ECJ. There would have been a high risk that the Regulation would be declared null and void because wrongly based on Art. 118 TFEU.

29. The ECJ, already alarmed about the danger of not being included in the process of interpreting Union law (Opinion 1/09) in cases before the Patent Court as designed before March 2011, certainly would have noticed the fervent attempts of the "opposition" to leave him out of the patent-cases before the newly constructed UPC. Therefore, a referral to him on Art. 118 TFEU would have to be argued before him in a very difficult atmosphere. And it would be known to the ECJ that the EU legislator saw this risk and, then, acted "with eyes shut". Surely, the Union legislator should not have run that risk.

VI. The decision in the Legal Affairs Committee

30. Weighing the expected burden of referrals described in the Kraßer-Opinion (with its limited weight, see nr. 3-10, above) against the serious risk of invalidity of the Regulation the Legal Committee of the European Parliament rightly decided that the latter risk had more weight: There must be a clear and safe legal support basis for the Regulation in the Union Law. This was explained convincingly by the Chairman of the Legal Committee, Mr. Heiner Lehne in the session of the Legal Committee of November 21, 2011 after the intervention of Ms. Wigström.

31. This opinion prevailed in the Legal Affairs Committee on December 19, 2011.

VII. Final appraisal

32. The campaign conducted by the "opposition" was ill conceived from the beginning. The requirements of Art. 118 TFEU were overlooked or disregarded, at least played down, almost until the very end. The limited practical impact of the Kraßer-argument was not realized; the dimension of the debated problem grew out of proportions. During the campaign the debate on this specific problem got mixed up with the fears of certain quarters of practitioners (lawyers and judges) as well as enterprises (large pharmaceutical and IT firms) who felt they could lose in the new system. Thereby, it damaged the credit of the whole project.

33. One of the side-tones in the debate which appeared to me as being especially inappropriate were certain warnings against the quality of possible ECJ-decisions and answers of the ECJ to referrals on Art. 6-8. In the opinion of a great majority of the Union law scientists and observers the ECJ is the best functioning institution of the Union. The ECJ has been very active in the field of trademark law. One may not agree with all his decisions, but generally speaking his practice is impressively good. The requirements of Art. 6-8 are not of a quality unknown to the ECJ (see nr.8 and 9, above). There is no reason to believe that he will not answer Art. 6-8-referrals with the same competence.

28 January 2012