In Defense of Articles 6 to 9 of the Unitary Patent Regulation

Will we ever find cases related to substantive patent law in here?

Articles 6 to 9 of the Unitary Patent Regulation relate to substantive patent  law. They regulate the right to prevent direct and indirect use of the invention (Art. 6 and 7, respectively), the limitation of the effects of the ‘Unitary Patent‘ (Art. 8) and exhaustion of the rights conferred by the ‘Unitary Patent‘ (Art. 9).

As the question of which EU member state will receive the Central Division of the EU Unified Patent Court (see here, here, and here) is officially seen as the only remaining obstacle to the Unified Patent Court Agreement, the Unitary Patent Regulation already received green light from the EU Parliament’s legal committee (JURI) in late December (see press release) so that the EU Council already began to linguistically finalise the Regulation text in early January.

THE DISPUTE ON ARTICLES 6 TO 9

Even so, a strong and illustrious ‘opposition movement’ of legal professionals and their associations (e.g. EPLAW and Jochen Pagenberg, European Patent Judges and Sir Robin Jacob, Professor Krasser, CIPA), industry representatives (e.g. ICC, IP Federation), and a few politicians (e.g. JURI member Cecilia Wikström (SE, ALDE) [1, 2, 3] and UK IP Minister Baroness Wilcox) demanded Articles 6 to 8/9 to be removed from the Regulation to prevent substantive patent law from becoming subject to review by the European Court of Justice via referral questions according to Article 267 TFEU.

Jochen Pagenberg

Theses concerns received considerable attention and support in the blogoshere, e.g. on the IAM, ipeg, and IPKat blogs, the latter by Annsley Merelle Ward (aka @AmeriKat), an IP litigator at magic circle law firm Allen & Overy LLP being among the 10 largest law firms worldwide.

Despite the strong interests apparently at play, it has always been the opinion of the ksnh::law bloggers that, when having a look at the underlying structures and systematics of patent law, it appears to be fully coherent to include these provisions just into the Regulation, which replaces national patent law comprising similar statutory clauses.

Central to the opposition movement and clearly the most pointed (and partly trenchant) voice was that of the European Patent Lawyers Association (see e.g here), which considered the whole approach an unwanted present for industry and expressed in a resolution that

If one wants a really unattractive, inefficient, unpredictable and probably extremely expensive patent court system, then we will get it; one must only give the 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 judges without any solid knowledge and experience in this field, then one must involve the ECJ whenever possible.

Another source of criticism was the European Scrutiny Committee of the UK House of Commons under Chairman Bill Cash – a convinced eurosceptics Tory MP considering the EU a failing project) – offering serious concerns regarding possible disadvantage for British businesses (see report of 20 Dec 2011 hearing and transcript of 25 Jan 2012 hearing) and concluding that

[p]rincipal among those concerns are the effect of the non-exclusive jurisdiction of the unified patent court on small businesses seeking to enforce EPO patents through national courts and the jurisdiction of the Court of Justice being extended to cover the infringement of patents. From the submissions we have received, there appears to be a substantial body of expert opinion which thinks the Court of Justice would be wholly unsuited to this task, with profoundly negative consequences for the enforcement of intellectual property rights across the EU.

And further, based on EPLAW’s resolution,

the presence of these Articles gives jurisdiction to the Court of Justice to decide the law of infringement under the unitary patent. This is bad for three reasons:

• the Court of Justice lacks experience and expertise in patent law;
• the likelihood that EU and national law would diverge, as the Court of Justice does not have the same oversight over the law of infringement of national patents and may therefore set a different standard for infringement of the Unitary Patent;
• the delay in proceedings caused by references of points of infringement law to the Court of Justice.

Prof. Winfried Tilmann

At this point, the legal community received the observations of Professor Winfried Tilmann of Hogal Lovells LLP - being an EPLAW member himself – in form of his written evidence to the European Scrutiny Committee. Therein, Professor Tilman (wt), who already had a disagreement with Jochen Pagenberg (jp) concerning the proper interpretation of ECJ Opinion 01/09 and the attractiveness of a Unitary Patent Court being in line with that opinion [wt1, jp1, wt2, jp2], gave his personal view on the ’opposition movement’ and its dynamics in rather open words:

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. Wikström (Deputy from Sweden) in the Legal Affairs Committee of the European Parliament during its session on November 21, 2011.

In the end, however, despite attempts to persuade JURI otherwise (cf. EPLAW’s briefing and Wikström’s e-mail), the EU Parliament’s legal affairs committee accepted Amendments 12 to 18 of the Proposal (COM(2011)0215; JURI draft report PE472.059), which only required minor amendments but no cancellation of Articles 6 to 9 (see PE478.655v01-00, page 5, item 16).

Prof. Rudolf Krasser

THE KRASSER ARGUMENTS (CONTRA ART. 6 TO 9)

The arguments of the ‘opposition movement’ were summarised by Professor Rudolf Krasser (the author of the leading book on patent law in Germany) of the Munich Max Planck Institute for Intellectual Property in his September 2011 Opinion on “effects of an inclusion of regulations concerning the content and limits of the patent holder’s rights to prohibit in an EU regulation for the creation of unitary European patent protection” asked for by EPLAW:

1. Articles 6 to 8 open up a broad field of opportunities to submit questions on the interpretation of these provisions to the EU Court of Justice. The court would be overstretched by the expected quantity of questions submitted. The cost objective of the Unitary Patent would be defeated because of the large additional time involved, especially if the consultation of technical experts is necessary.
2. The need to develop principles that would apply equally in all participating Member States  is primarily a matter of harmonising corresponding national provisions. This development should not continued by means of EU legislation but by means of a separate agreement.
3. Articles 6 to 8 would subject an important element of substantive patent law to the EU Court of Justice, which in many cases would lead to delays in the proceedings as well as additional cost and effort for the parties involved, thereby seriously counteracting the objectives of the enhanced cooperation.
4. Art. 118 § 1, TFEU authorises the EU Parliament and the Council to harmonise national regulations concerning IP rights to an expedient extent. The minimum requirement for the application of the authorisation is, according to Art. 118 § 1 TFEU, merely that an intellectual property right is created by Union law. This itself achieves the necessary minimum harmonisation at least if the subject matter and core effect of the right in question is established  identically in the law of the (participating) Member States. For this reason, the proposed Regulation can be restricted to creating the basis for the grant of unitary patents for the participating Member States. It is sufficient for the uniform protection required by Art. 118 § 1 TFEU and the “same effect” of Art. 3 (2) of the proposed Regulation that the aforesaid core effect is unitary.

THE TILMANN ARGUMENTS (PRO ART. 6 TO 9)

In reply to these positions, Professor Winfried Tilmann of Hogal Lovells LLP, one of seven members of the Rules of Procedure Committee according to Article 22 of the UPC Agreement, explains “why the EU legislator could not act accordingly” in his written evidence of January 2012 for the UK European Scrutiny Committee and openly concluded:

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 [i.e. the argument of possible referrals to the ECJ on the specific requirements of Art. 6 and 7] 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.

In more detail, Prof. Tilmann observed the following:

II. The Kraßer-Argument

4.  [...] 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 [...]. However, even under the very active referral-practice of the CTM Courts there had been few referrals regarding Art. 102 CTM-Regulation [...].

5.  Certainly more referrals were to be expected regarding Art. 6 and 7, since [...] they are spelling out the details of the conditions for fulfilling the requirements of these rules. Prof. Rudolf Kraßer [...] described in [his] Opinion [...] 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 in 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 [...].

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 [according to which] 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. [...] Therefore, many interpretation-questions regarding the details of Art. 6 and 7 will be regarded as claire by that new court. [...]

8.  Art. 6 and 7 [...] 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 [patents] 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 [...]. 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.   [...] If Art. 6 to 9 would be referred to the Unified Court Agreement the Unified Court would [still] 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 [...], would be matter for referral questions, at least under the aspect of the Enforcement Directive. [...]

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.

[...]

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.

[...]

A larger part of Prof. Tilmann’s written evidence relates to the Art. 118 TFEU argument as sketched above under item 4 of the Krasser opinion:

IV. Supplementary comments on Art. 118 Para. 1, TFEU

17.  [...] Art. 118 TFEU [is] the basis for the Union Patent Regulation [...]. Actually, the risk and burden of referral-questions to the ECJ [...] 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./19.  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. [...]. 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./21.  Against this view, Prof. Kraßer had included in his Opinion the [...] remarks [as sketched above under item 4]. 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 [core 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 [core 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”.

[...]

26.  Therefore, [...] the most likely interpretation of “uniform protection” under Art. 118 TFEU [will be]: 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 [...] recognized the inherent weakness of Prof. Kraßers argument [...]. [...] 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 would have been a high risk that the Regulation would be declared null and void because wrongly based on Art. 118 TFEU.

[...]

Given the profoundness and singularity of Prof. Tilmann’s arguments pro Art. 6 to 8 of the Regulation and given especially the relevance of this question for the EU patent project as a whole, it is surprising that the IP blogoshere did not yet attentively consider these arguments. They represent, however, a serious contribution to the discussion and put the accusation into perspective that the politicians in charge simply brush off legitimate and reasoned concerns of professionals and industry – at least with respect to Article 6 to 9.

(Photos 2009 by ex libris gul via Flickr under a CC license)