In welcome news for supporters of the Unitary Patent, Advocate General Bot has proposed that the Court of Justice should dismiss both of Spain's applications for the annulment of EU Regulations relating to the Unitary Patent package.
Introduction
Given the progress which has been made in establishing the court and the rules of procedure (as we reported last week) this outcome was not unexpected and if the Advocate General's (AG's) reasoning is followed by the Court of Justice, as seems likely, one of the final barriers to the Unitary Patent coming into effect will have been removed.
Background
In December 2012, the European Parliament and Council used the "enhanced cooperation" procedure to pass two EU Regulations with the aim of establishing a single patent with unitary effect across 25 of the European Union's (then) 27 member states. The Regulations were in relation to:
- the creation of unitary patent protection (Council Regulation (EU) No 1257/2012); and
- the applicable translation arrangements (Council Regulation (EU) No 1260/2012).
Enhanced cooperation permits a group of participating states (in this case 25) to work towards a goal which may not be shared by other states. The two non-participating member states were Italy and Spain, which challenged the use of the enhanced cooperation procedure. Those challenges (C-274/11 and C-295/11) were dismissed by the Court of Justice on 16 April 2013.
In February 2013, the agreement on a Unified Patent Court was signed by 25 states (including Italy). It is a separate international treaty between the participating states to establish a pan-European judicial mechanism for existing European Patents and for the new Unitary Patent. It also defines the rights attaching to those patents. Once again, Spain (and this time also Poland) was not a signatory.
Following signature of the agreement, and while awaiting the outcome to its first challenge, Spain commenced two further actions in March 2013 (C-146/13, C-147/13) seeking to annul the Regulations passed in December 2012.
The AG's opinions in these actions have just been published.
Analysis
Spain's arguments are this time based on the legality of the Regulations themselves under principles of Union law, focusing in particular on the role of the European Patent Office (EPO) in the proposed new system.
The role of the EPO
The Regulations envisage the EPO fulfilling two key roles. First, unitary effect can only be conferred upon European Patents (EPs) which are granted by the EPO in the normal way, under the existing provisions of the European Patent Convention agreed in 1973. Second, some important administrative tasks are entrusted to the EPO under the supervision of a select committee of the participating member states. These include the setting of renewal fees, setting the distribution of fees between national patent offices, granting unitary effect to European Patents where requested, maintaining the register of Unitary Patents, and operating a compensation scheme for translation costs.
Spain argues that the Regulations should be annulled for broadly three reasons:
- the lack of any scope for judicial review of the EPO's procedures infringes the principle of the rule of law in Article 2 of the Treaty on European Union (TEU);
- delegation of measures such as the setting of renewal fees is contrary to Article 291(2) of the Treaty on the Functioning of the European Union (TFEU) requiring implementing measures requiring uniformity to be taken by the Commission; and
- such general and unsupervised delegation of power also infringes the Meroni principle in Union case law.
The AG concludes that these arguments should be dismissed for several reasons.
Perhaps most strikingly, Spain's argument that the lack of any scope to review the EPO's process for granting patents is contrary to the rule of law is dismissed as "irrelevant".
The AG explains this is because the Regulation purposely does not stipulate conditions for the grant and validity of patents. In other words, even if the EPO's procedures for granting patents are contrary to the rule of law, that does not affect the lawfulness of the Regulation because the Regulation does not address that activity.
In passing, the AG also records that all EU member states, including Spain, are signatories to the EPC and had not yet seen any violation of constitutional principles in the EPO's decisions on the granting of patents. Indeed, the AG noted that the EPO has proven effective in all respects and has a high level of technical specialisation.
Spain's second argument is that setting the level of renewal fees and determining their distribution are tasks which should properly have been conferred on the Commission under Article 291(2) TFEU to ensure uniformity of implementation, and not to the member states themselves.
The AG dismisses this argument. He says that the Regulation establishes a clear policy framework and gives clear guidance on the principles to be applied. The Regulation is binding on the participating member states. Therefore, because they have no discretion when exercising these powers, there is no need for the Commission to be involved.
Spain's third argument is based on the Meroni principle, which requires the delegation of implementing powers to an external body to be clearly defined and entirely supervised by the delegating institution on the basis of specific and objective criteria. Spain argued this was not the case.
However, this is also dismissed by the AG because the Regulation does not directly delegate any powers to the EPO. Instead, it empowers the participating member states to establish a select committee of the EPO. It is the member states which, in their capacity as contracting states to the EPC, delegate the additional tasks to the EPO. As such, the Meroni principle does not apply.
Autonomy of EU Law
Spain also attacks the Regulations on the basis that they infringe the principle of the autonomy of Union law.
Firstly, Spain argues that the participating member states cannot agree the jurisdictional regime in the agreement on a Unified Patent Court between themselves, because the EU has exclusive competence in this area under the Brussels I Regulation.
The AG does not agree. He thinks that Spain is in effect attempting to challenge the legality of the agreement as a whole. This is not a matter for the Court of Justice to decide. He points out that this is not a case where an EU Regulation approves or enforces an international agreement (in which case the Court of Justice could have reviewed the Regulation), but it simply establishes enhanced cooperation between the participating states. Therefore, because the agreement is a treaty under international law it is not subject to the TFEU, and so the Court of Justice has no legal standing to review it.
Spain also argues that because the Regulations are conditional upon the agreement coming into force, and because ratification of the agreement is optional, member states therefore have an option whether to be bound by the Regulations or not, which infringes the principle of the autonomy of Union law.
Once again, the AG is not convinced. He finds that the participating member states have a duty to ratify the agreement under the principle of sincere cooperation enshrined in Article 4 TEU. Further, the conditionality of the Regulations is necessary for the sake of legal certainty.
Legal Basis under Article 118 TFEU
Spain's final broad attack on the Regulation creating unitary effect argues that it lacks legal basis under Article 118 because it is an 'empty shell' without any substantive content, particularly as it fails to specify the acts against which the Unitary Patent provides protection. Further, Spain submits that the Regulation fails to guarantee uniform protection of IP rights.
The AG dismisses this reasoning on the basis that the Regulation contains substantive provisions, including those defining the requirements for the award of unitary effect, the scope and limitations of unitary effect, and the rights of patent proprietors.
Further, the AG finds that despite the application of national law to Unitary Patents as an object of property, the Regulation still provides for uniform protection across the participating member states because the national law applicable to a particular unitary patent will be the same across all of the participating member states.
Translation Requirements
Many of Spain's arguments against the Regulation establishing the translation regime reflect those above. However, it also alleges that the choice of languages set out in the Regulation infringes the principle of non-discrimination.
The AG acknowledges that there will be discrimination against people who do not know one of the official languages of the EPO (German, French or English). Nevertheless, he does not believe this should lead to the Regulation being annulled because the EU legislature is pursuing the legitimate objective of significantly reducing translation costs.
The AG also holds that the choice of languages is appropriate because (i) most patent applications to the EPO originate from EU member states which speak those languages (indeed, 90% of applications are in one of these three languages); (ii) most scientific papers are published in those languages; and (iii) patentees and their advisors are already familiar with working in those languages at the EPO.
What Next?
The Court of Justice will hand down its judgment next year. The court is not bound by AG Bot's opinion, but it is fairly unusual for it to reach a different conclusion.
It remains to be seen whether the court will agree with the AG's reasoning and effectively wash its hands of any responsibility for the content of the agreement on a Unified Patent Court and acts carried out by the EPO. If it does so, patent proprietors will have little recourse against administrative decisions of the EPO.
We have already seen the problems which may arise from the lack of any review of the EPO's administrative decisions, and it would be unfortunate if these issues risked being compounded by the Regulation creating unitary effect.
Of more immediate interest is the impact of the AG's approach on the operations of the Unified Patent Court. If the Agreement is outside the competence of the Court of Justice, one assumes that references by the Unified Patent Court to the Court of Justice can only relate to the substantive content of the Regulations, rather than any matters relating to the Rules of Procedure of the court, or the agreement itself.
For example, adopting the AG's approach, it may be that questions regarding the interpretation of Article 83 of the agreement would fall outside the Court of Justice's jurisdiction. If so, there are likely to be fewer references to the Court of Justice than expected and the Court of Appeal of the Unified Patent Court will have greater powers.
However, it is worth noting that the AG's Opinion is limited to the context of Spain's applications, and the Unified Patent Court could perhaps choose to make its own reference to the Court of Justice on some future occasion.
In the meantime, participating states will continue to ratify the agreement on the Unified Patent Court over the next 12 months, no doubt spurred on by the AG's suggestion that they have little choice in the matter and may be in breach of Union law if they fail to do so. The various committees will also continue their work in preparation for the package entering into force, probably in 2016.
It remains to be seen whether Spain will, before then, choose to join the party.