The CJEU andthe Unitary Patent &Unified Patent Court

David Rose andAxel Walz

9September 2014

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Introduction

The Role of theCJEU

The SpanishChallenge

Uniform

Protection?

Concluding

Comments

1 2 3 4

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Introduction

Introduction

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• Preparations for Unitary Patent and UPCcontinuing

• However, a number of significant ‘unknowns’includes the likely role of the CJEU

• Forthcoming judgment in Spain v EuropeanParliament & Council C-146/13 & C-147/13

• What role should the CJEU have in patentmatters?

Introduction

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Professor Sir Robin Jacob:

“there is no time for anything other than plainspeaking … I know of no one in favour ofinvolvement of the CJEU in patent litigation.On the contrary all users, lawyers and judgesare unanimously against it.”

2 November 2011

Introduction

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Kitchin L.J.:

“… the CJEU has no real patent expertise and its trackrecord in IP cases does not inspire confidence…

… one need look no further than two of its most recentdecisions. Brüstle … an astonishing decision and onewhich is already affecting research in this country ….Medeva is not much better. It … has left the law so unclearthat references, costs and delays are inevitable.”

Presentation at CIPA Congress Dinner, October 2012

Introduction

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Dr. Jochen Pagenberg (former President of EPLAW):

“If one wants a really unattractive, inefficient, unpredictable and probablyextremely expensive patent court system, then we will get it; one must only givethe ECJ a chance to receive as many referrals in patent law as possible.

If one wants to see substantive patent law in Europe to be decided by judgeswithout any solid knowledge and experience in this field, then one must involvethe ECJ whenever possible.

And if somebody intended to lay a solid ground for failure of this – at some timevery promising – project, then he will probably succeed.”

EPLAW President’s Report, 2 Dec 2011

Introduction

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Professor Dr. WinfriedTilmann:

“One of the side-tones in the debate which appeared to me to be especiallyinappropriate were certain warnings against the quality of possible ECJ-decisions and answers of the ECJ to referrals onArticles 6-8. In the opinion ofa great majority of Union law scientists and observers the ECJ is the bestfunctioning institution of the Union. The ECJ has been very active in the field oftrademark law. One may not agree with all his decisions, but generallyspeaking his practice is impressively good … There is no reason to believe thathe will not answerArticle 6-8 referrals with the same competence.”

Written Evidence before the House of Commons

European Scrutiny Committee, 28 Jan 2012

Extent of the CJEU’s role

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• No right of appeal from UPC Court of Appeal -CJEU will not be a third tier of appeal in the UPCregime

• CJEU will have no jurisdiction over UPC (theUPCA is not Union Law)

• But – is there scope to engage CJEU via:

• Art. 3(2) or Art. 5(2) and (3) UP Regulation;and/or

• Arts. 25-27 UPCA?

Extent of the CJEU’s role

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• UPC may refer questions of Union law to CJEU e.g.

relating to:

• the Biotech Directive (Directive 98/44/EC)

• the SPC Regulation (Regulation 469/2009)

• the Unitary Patent Regulation (Regulation 1257/2012)

• the Translations Regulation (Regulation 1260/2012)

• competition law issues e.g. Art. 101 TFEU

• the Enforcement Directive (Directive 2004/48/EC)

The key question

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• What role will the CJEU have over issuesrelating to substantive patent law?

• And…what role will the Spanish challengehave in answering this question?

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The Spanish Challenge

The Spanish challenge

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A deal breaker?

• If the CJEU upholds challenge = potential to unravel 40+years of progress leading to Unitary Patent regime?

• If the CJEU rejects challenge =

• Will CJEU have jurisdiction over substantive patentlaw matters?

• What impact would this have on ratification of UPCA(and therefore on Unitary Patent coming into effect)?

The Spanish challenge and its antecedents

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• March 2011 – CJEU Opinion on compatibility ofunified patent litigation system

• April 2013 – CJEU decision in challenge bySpain and Italy in relation to use of enhancedco-operation procedure

• Late 2014(?) – CJEU decision on Spain’schallenge to Unitary Patent Regulation(1257/2012) and Translations Regulation(1260/12)

CJEU Opinion 01/09 (March 2011)

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• Proposed unified patent litigation system not compatiblewith TEU / TFEU:

• Deprived national courts of power/obligation to referquestions of EU law to CJEU under Art. 267 TFEU

• If decision of proposed court was in breach of EU law,it could not be subject to infringement proceedings bythe Commission / give rise to financial liability onbehalf of the MS

• Revised Unified Patent Court Agreement signed by mostMember States (19 February 2013)

Challenge by Spain & Italy (April 2013)

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• Challenge to use of enhanced co-operation procedure in relationto UP Regulation (1257/2012) and Translations Regulation(1260/12) based on following arguments:

• Council lacked competence to establish enhanced co-operation

• Misuse of powers

• Breach of the condition that a decision authorising enhancedco-operation must be a last resort

• Infringements ofArts. 20(1) TEU and 118, 326 and 327 TFEU

• Disregard for the judicial system of the Union

• CJEU rejected challenge

Current challenge by Spain

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C-146/13 and C-147/13

• Spain seeks:

• Declaration Unitary Patent Regulation is legally non-existent or, alternatively, annulment of certain articles

• Annulment of Translations Regulation or, alternatively,annulment of certain articles

• Hearing date: 1 July 2014

• Opinion of Advocate General Bot: 21 October 2014

• CJEU decision: expected late 2014

Arguments against UP Regulation

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• Breach of the rule of law

• Non-existence of an act of the EU and, alternatively, lack of a legalbasis because the Regulation does not provide uniform protectionas required byArt. 118(1) TFEU

• Misuse of power through use of enhanced co-operation

• Infringement ofArt. 291(2) TFEU and, alternatively, misapplication ofMeroni principle in relation to renewal fees

• Misapplication of Meroni in relation to delegation of certainadministrative tasks to EPO

• Breach of principles of autonomy and uniformity re rules governingRegulation’s entry into force

Arguments againstTranslations Regulation

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• Infringement of non-discrimination principle

• Lack of legal basis for Art. 4

• Failure to have regard to Meroni case law

• Infringement of autonomy of EU law

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Does the Unitary PatentRegulation provide “uniformprotection”?

Legal basis: Art. 118(1) TFEU

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“In the context of the establishment and functioning of

the internal market, the European Parliament and the

Council, acting in accordance with the ordinary legislative

procedure, shall establish measures for the creation

of European intellectual property rights to provide

uniform protection of intellectual property rights

through the Union and for the setting up of centralised

Union-wide authorisation, coordination and supervision

arrangements.”

Art.3(2) of the UP Regulation

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(1) …(2) A European patent with unitary effect shall have a unitary

character. It shall provide uniform protection and shall haveequal effect in all participating Member States.It may only be limited, transferred or revoked, or lapse,in respect of all the participating Member States.It may be licensed in respect of the whole or part of theterritories of the participating Member States.

(3) …

Arts. 6-8 of the draft UP Regulation

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• Article 6: Right to prevent the direct use of theinvention

• Article 7: Right to prevent the indirect use of theinvention

• Article 8: Limitation of the effects of the unitarypatent

The problem with Arts. 6-8

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• Including infringement provisions in Regulationmeant CJEU would have jurisdiction oversubstantive patent law issues

• No jurisdictional requirement under Art. 118TFEU?

• Art. 3(2) provides for uniform protection

• The Central Division and Court of Appeal canensure uniform protection

The problem with Arts. 6-8

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• Would be significant number of referrals to CJEU underArts6-8 (see e.g. Professor Dr. Rudolf Krasser’s report)

• References would lead to extra delay and extra costs

• CJEU’s reputation for ‘opaque’ decisions – would causeconsiderable uncertainty

• CJEU judges’ lack of experience / expertise on substantivepatent law

• Would defeat purpose of specialist patents court (the UPC)

• Potential for separate, parallel body of case law

• Why include infringement provisions but not validity?

The defence of Arts. 6-8

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• Arts. 6-8 are necessary to comply with Art. 118TFEU

• Infringement is at the core of an IP right and soinfringement provisions should be included inthe UP Regulation

• BUT in any event the acte clair doctrine wouldmean minimal references to the CJEU onsubstantive patent law issues?

The defence of Arts. 6-8

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Thomas Jaeger (Max Planck Institute)

“… somewhat contradictory and almost schizophrenic attempt to,on the one hand, ground the unitary effect in EU law by virtue ofthe legal basis … of Art. 118 TFEU while, on the other hand,trying to dissociate the patent as far as possible from the natureand institutions of the EU legal order.”

“All Back to Square One:An Assessment of the Latest Proposals for a

Patent Court for the Internal Market and PossibleAlternatives”

(Max Planck Institute Research Paper No. 12-01), 15 Dec. 2011

The compromise solution

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• June 2012: European Council suggested thatArts. 6-8 be deleted

The compromise solution

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• Initial European Parliament response: deletion not compatiblewith Art. 118 TFEU

• The compromise:

• A newArt. 5 containing a reference to the UPCAgreementmaking the relevant provisions applicable to the unitarypatent

• Rapporteur Bernard Rapkay describedArt. 5 as a ‘sub-sub-suboptimal’ but acceptable solution

• December 2012: European Parliament proceeded to adoptUP Regulation (and Translations Regulation)

Art. 5 UP Regulation

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Uniform Protection

1) The [Unitary Patent] shall confer on its proprietor the right to preventany third party from committing acts against which that patent providesprotection throughout the territories of the participating Member Statesin which it has unitary effect, subject to applicable limitations.

2) The scope of that right and its limitations shall be uniform in allparticipating Member States in which the patent has unitary effect.

3) The acts against which the patent provides protection referred to inparagraph 1 and the applicable limitations shall be those defined bythe law applied to [Unitary Patents] in the participating Member Statewhose national law is applicable to the [Unitary Patent] as an object ofproperty in accordance with Article 7.

Art. 21 UPC Agreement

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Primacy of and respect for Union law

20. The [UPC] shall apply Union law in its entirety and shallrespect its primacy.

Requests for preliminary rulings

21. As a court common to the Contracting Member States and aspart of their judicial system, the [UPC] shall cooperate with the[CJEU] to ensure the correct application and uniforminterpretation of the Union law, as any national court, inaccordance with Article 267 TFEU in particular. Decisions ofthe [CJEU] shall be binding on the [UPC].

Arts. 25-27 UPC Agreement

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• Article 25: Right to prevent the direct use of theinvention

• Article 26: Right to prevent the indirect use ofthe invention

• Article 27: Limitation of the effects of a patent

UK ratification of theUPC Agreement

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• UK Government Technical Review and Call forEvidence (closed 2 Sept 2014)

• Infringement provisions in UPCA and provisions ofUK patents law:

“although there are some differences in the exactwording … these are merely differences in draftingwhich do not alter the range of acts which are to beconsidered to be infringing, i.e., they are notmaterial differences”. (para 88)

UK ratification of theUPC Agreement

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• Proposals to amend s.60 PatentsAct 1977 only to the ‘extentnecessary’ including:

• two new exceptions to infringement (in relation to plant breedingand computer programs)

• revisions to contributory infringement and vehicle exemptionsprovisions to reflect larger territory of Unitary Patent

• provisions relating to groundless threats and the Unitary Patent

• bring UK patents law into line with the UPC infringementprovisions for all patents valid in the UK (including UnitaryPatents, EP(UK)s and GB patents) [even though UPCAgreement does not require this]

The effect of Arts. 3(2) and 5

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• Do they satisfyArt. 118 TFEU?

• If they do, does Art. 5(3) bring substance ofArts.6-8 effectivelyback in to the Regulation meaning CJEU still has referring role?

• UK Government:Article 5 “compared to no Article at all,increases the risk of references to the [CJEU] on matters ofsubstantive law of patent infringement by no more than anegligible amount (one so low that it can in practice be ignored).”

Letter fromParliamentaryunderSecretaryofState

atDepartmentofBusiness, InnovationandSkills

29Nov2012

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Concluding Comments

Concluding comments

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• Spanish Challenge

• Potentially impactful even if challengerejected: CJEU may hold that there is asufficient legal basis for the UP Regulationbecause CJEU does have a role in relation tointerpretation of substantive patent lawissues

Concluding comments

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• Arts. 5(1)-(3) UP Regulation

• Likely gateways to CJEU references

• If it can be shown that rules applied by agiven UP Court are inconsistent – forexample:

• test for infringement

• scope of limitations

• approach to assessing inventive step

Concluding comments

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• Inconsistency would suggest lack of uniformity

• Kaesling (2013):• “As the unitary patent’s unitary effect cannot be

reached without unitary rules on infringement, theCJEU may derive its competence to review fromthe unitary character itself.”

• In relation to putting infringement rules in theUPCA: “It is questionable whether a transfer ofprovisions relevant to the Unitary Patent to [theUPCA] can affect their character as EU law.”

Concluding comments

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• Ultimate tension:

• Does the CJEU decide that it has no role in relationto interpretation of substantive patent law, therebydeclaring that the conditions laid down in Art. 118(1)TFEU are not met?

Concluding comments

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• TRIPs

• Art. 207 TFEU requires CJEU to interpret Art.28 of TRIPs (Daiichi Sankyo C-414/11)

• Art. 5 UP Regulation and Art. 25-27 UPCAimplement the obligations in Art. 28 TRIPS

• UPC can (and should) refer questions to theCJEU relating to consistency with Art.28TRIPs?

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Questions?David Rose: david.rose@eu.kwm.com

Axel Walz: axel.walz@eu.kwm.com