For decades European countries have discussed the creation of a European Unified Patent Court (“UPC”) which would consist of a single court with branches across Europe. The UPC system would also allow innovators to opt for a new European patent with unitary effect across the Member States of the EU, instead of the existing European patent which consists of a bundle of national patent rights, enforceable locally.
It is a project that has received strong support from sectors of industry and legal practitioners alike. However, it is not a stranger to challenges. The UPC’s progress has suffered repeated delays as previously reported by us here. Now, a decision of the German Federal Constitutional Court has dealt the UPC a further blow.
The German Decision
In order to bring the UPC into operation, the three largest contracting states (by number of patents) are required to ratify the Unified Patent Court Agreement (the “UPCA”). In its long-awaited decision, the German Federal Constitutional Court has found that the way in which the Bundestag (the German parliament) approved the UPCA was incompatible with the German Constitution. An approval of this nature should have been passed by two thirds of all members of the Bundestag (a qualified majority). In reality, only 35 members were present to vote on ratification, a quorum was not determined, and the president of the Bundestag did not declare that the approval was adopted by a qualified majority.
The German Court decision puts the German approval process back to square one, bringing the setup of the UPC to a halt once more. Some speculate that this recent blow may in fact mark the end for the UPC. The German Federal Government, for its part, has announced its steadfast commitment to the UPC. It intends for the Bundestag to vote again during this legislative period in order to remedy the errors identified by the German Federal Constitutional Court.
Further resolute allegiance to the project was echoed in a statement on the UPC website which maintains that despite the delay this judgment will cause, the preparatory committee of the UPC are dedicated to continuing the preparatory work and moving the project forward in so far as they can, given the restrictions arising from the COVID-19 pandemic.
Despite these optimistic assertions, it is undeniable that the future of the UPC is uncertain. Separate to this constitutional challenge came the surprise announcement that the United Kingdom no longer intends to participate in the UPC system. The UK had previously committed to establishing the UPC and ratified the UPCA on 26 April 2018. The UK Government now views the application of EU law and being bound by the Court of Justice of the European as inconsistent with its aim of becoming an independent, self-governing nation following Brexit.
If the UK formally disengages from the project, at a minimum, renegotiations on certain operational aspects of the UPC system will be necessary. For instance, the UK had been designated to host the UPC’s chemistry (including pharmaceuticals) division in London. This role would need to be filled by another contracting state if the UK formally withdraws.
It remains to be seen how, or if, Ireland will react to these latest developments. For Ireland to ratify the UPCA, a referendum is required to amend the Irish Constitution. The topic was last discussed in Dáil Eireann (the Irish parliament) in December 2018 when it was stated that a decision on holding a referendum could not be made until there was greater clarity from Germany and the UK. Although a referendum was included in the Government Legislative Programme for Autumn 2019, it seems unlikely to get any immediate attention given the German Court’s decision and the further delay that has created.
A Future for the Unified Patent Court?
The German decision coupled with the UK’s intention to withdraw from the UPC system, is certain to delay the introduction of the UPC and may put its future in doubt. If the German Bundestag promptly ratifies the agreement, this might generate new momentum for the existing project. However, should the ratification process drag on indefinitely, political will and support for the establishment of the court in its currently proposed form may peter out, signalling the need to go back to the drawing board. Many continue to champion the UPC project in its current form, so attention will now turn to the progress the German legislature can make in this current legislative period. Any progress there will have a formative impact on the prospects for court’s establishment.
If you have any queries in relation to the Unified Patent Court or would like to know more about our patent litigation services, please contact Laura Scott, Carol Plunkett or your usual contact at William Fry.
Contributed by Laura Casey and John Sugrue