The German Constitutional Court issued its long-awaiting decision regarding the compatibility of the German law passed to allow Germany to participate in the Unified Patent Court (UPC) and the associated unitary patent, holding that the German law had not been passed with the necessary majority and was therefore void. New German legislation will need to be passed in order for the UPC project to proceed. This, coupled with the changes that will be needed to deal with Brexit, is likely to take years. It is therefore a major set-back for those businesses and IP professionals who were hoping that the UPC and unitary patent would usher in a new era of IP harmonisation across Europe.
The Unified Patent Court Agreement was concluded in February 2013, after years of negotiations. The basic idea was that holders of European Patents would, once the relevant patent application proceeded to grant, be able to elect for the granted patent to have unitary effect in the territories of all the participating countries. The validity and infringement of these unitary patents would be decided in a single court proceeding in the new Unified Patent Court, which would have “local divisions” in any country that wanted one and a “Central Division”, which would hear revocation actions and certain other proceedings. The UPC would also have jurisdiction to hear infringement and validity proceedings regarding non-unitary European patents (that is, European patents that on grant are validated in individual countries in the usual way), save to the extent that patent owners opted out these patents during an initial transitional period.
There was much wrangling over the location of the important Central Division of the new court. The compromise solution was to split the work of the Central Division between branches located in Paris, London and Munich. In order for the UPC Agreement to enter into force, it would need to be ratified by 13 participating countries, including France, the UK and Germany. In the end, 25 countries participated – all the EU countries, save for Spain, Poland and Croatia. Of those, 15 have to date ratified, including both France and UK. German ratification was all that was needed to bring the new court into being.
Two subsequent issues have delayed the UPC project. First, the UK voted to leave the EU in 2016 and finally did so on 31 January 2020. There is currently a transition or implementation period, during which the future relationship between the UK and the EU is being negotiated. This is due to expire on 31 December 2020 but it could be extended for up to two years. There was much debate in IP circles over the consequences of “Brexit” for the UK’s participation in the UPC. However, the current UK government has indicated that it no longer wishes to participate, due to the recognition the UPC will give to European law and to the oversight (on matters of EU law) that will be given to the Court of Justice of the European Union. The remaining countries participating in the UPC project therefore have to decide what will replace the London branch of the Central Division and whether the proposed fees for the unitary patent will need to be revised to acknowledge that unitary patents will no longer cover the UK.
Second, a constitutional complaint was filed with the German Constitutional Court, arguing that German participation in the UPC and unitary patent regime was unlawful. The complaint raised numerous grounds. Only one of these has been upheld by the German Constitutional Court’s decision: the complaint that the relevant German law was not passed with the requisite voting majority. (The German legislation was passed unanimously but only 35 members of the Bundestag were present.) This decision immediately points to the solution for German participation, namely re-passing the legislation with the voting majority required by German law. However, given the emergency situation in Germany and many other countries due to the coronavirus outbreak, and the need to renegotiate the UPC Agreement in the light of the UK’s departure from the EU, it appears inevitable that further progress will be delayed significantly, quite possibly by years.
A huge amount of work was undertaken to negotiate the UPC Agreement, to prepare the facilities for the new court, recruit judges and other personnel required for its operation, and to draft the lengthy rules of procedure that would have governed proceedings. This all now risks being wasted. Proponents of the UPC and unitary patent, including many in industry, will no doubt lobby the governments of participating countries to try to move the project forward. In the meantime, European patents will continue to be granted and enforced exactly as they are now, with national proceedings in individual jurisdictions.
Author: Graham Burnett-Hall