Special Report: Update On Implementation Of The EU Patent Package

Significant progress has been made in the implementation of the European regulation to establish a European unitary patent and an international treaty which sets up a unified patent court. Given the loaded agenda for the coming year, it seems that a lot of work remains to be done. Meanwhile, an ongoing proceeding before the Court of Justice of the European Union (CJEU) initiated by Spain could bring down the whole system, according to sources.

In 2012, the European Parliament and the EU member states agreed on a “European patent package,” consisting of two regulations and an international agreement.

Regulation (EU) No 1257/2012 of the European Parliament and of the Council of 17 December 2012 implementing enhanced cooperation in the area of the creation of unitary patent protection sets measures to create a patent with unitary effect. ”The new regime will provide automatic unitary patent protection in all 25 participating member states,” according to a 2012 Parliament press release. The unitary patent regime will not include Spain, Italy and Croatia.

The Council Regulation (EU) No 1260/2012 of 17 December 2012 provides for some patent translation arrangements. The Council Agreement on a Unified Patent Court (UPC) sets the rule for the establishment of a specialised court which in the long term will have exclusive competence for unitary patent litigation.

An official EU website showing the status of member state ratifications is available here.

In the current system, a European patent granted by the European Patent Office has to be validated in all EPO member states in which the applicant looks for protection. With the patent with unitary effect, often called unitary patent, “by the means of one single request, the proprietor of a European patent will be able to get patent protection in 25 Member States of the European Union,” according to the brochure “An Enhanced European Patent System” [pdf].

The implementation of these regulations and agreement requires putting in place several financial, regulatory and procedural rules. This work is shared between two committees.

The Select Committee, under Article 9.2 of the EU regulation n°2157/2012, has the task “to supervise the EPO’s activities related to the tasks entrusted to it in the context of unitary patent protection,” including “the setting of fees” for patent renewal, according to the Select Committee website.

The Preparatory Committee includes the 25 EU member states that signed the UPC agreement. Spain, Poland and Croatia did not sign. The Preparatory Committee is tasked with establishing functional rules of the UPC but also court fees, with the aim to make the UPC effective as soon as it becomes operational.

A report from the two committees sent to the European Council in June entitled “Implementing the Patent Package – Second progress report” provides information on progress made and next steps to be taken by both committees, whose work was expected to be completed at the beginning of 2015.

However, the Preparatory Committee announced that its work will not meet that deadline.

“This is a huge undertaking for the signatory states but motivation remains high and commitment to achieving a quality court remains paramount for all members,” the Preparatory Committee’s secretariat told Intellectual Property Watch.

Ratification of the UPC Agreement

In June, Belgium, Denmark and Sweden ratified the UPC Agreement, so that now five countries, with Austria and France, have ratified it (see status of ratifications here).

According to the UPC website, the agreement will enter into force four months after thirteen ratifications, which must include France, Germany and the United Kingdom, and after “the date of entry into force of the amendments to Regulation (EU) No 1215/2012 (Brussels I Regulation) concerning its relationship with the Agreement.”

According to the second progress report, ratification in Malta has been approved by the national parliament, and the national process is underway in the UK and Slovenia.

Sources assert that some states are pondering their ratification. A summary by Mark Richardson of the Unitary Patent & Unified Patent Court 2014 Conference, held in Paris on 4 July and organised by Premier Cercle, provides such opinion. According to Richardson, Mihály Ficsor, vice-president for legal affairs at the Hungarian IP Office said in the summary that ratification in Hungary probably would be achieved only once there is more clarity on the renewal and court fees.

And according to Richardson, Svetlana Kopecká, director of the International Department at the Czech Republic IP Office, said that “in the Czech Republic, a vote in both chambers of parliament will be needed to ratify, and additionally an economic impact analysis will be required as part of their ratification process. This study will only be commissioned after the court/renewal figures are known.”

Spain’s Action before the European Court of Justice

Meanwhile, Spain’s continuing opposition seems to casting a shadow over the future of the system. In 2011, Italy and Spain filed an action for annulment of the patent package over language concerns before the Court of Justice of the European Union (CJEU). The CJEU dismissed those actions on 16 April 2013 (See CJEU press release).

Spain then filed a second legal action on March 2013 which is considered by some legal experts as more likely to be successful. This legal action is divided in two, challenging Regulation (EU) No 1257/2012 (Case C-146/13) (link to the action record and link to main arguments), and the Council Regulation (EU) No 1260/2012 (Case C-147/13) (link to the action record [scroll down page]). But both are being analysed jointly. These actions ask the CJEU to annul these regulations, or alternatively to annul some articles.

A main concern of Spain is the delegation of powers to the EPO, a non-EU entity, according to sources.

According to a paper by the Allen & Overy law firm, Spain “argues that the creation of the Unitary Patent in fact does not harmonise the Member States’ laws, as Unitary Patents will be granted (or refused) by the European Patent Office (EPO), which does not apply EU law, and their scope of protection will not be harmonised by EU law either.”

Acts of the EPO are not subject to an EU judicial review, which is in “breach of the values of the rule of law,” Spain’s action claims.

Furthermore, Spain considers this delegation of power as a “misapplication of the Meroni case.” The Meroni doctrine says that a “European authority cannot delegate powers with a wide margin of discretion, and that any delegated powers should be accompanied by guarantees of judicial review,” the Allen & Overy paper states.

Spain also considers that the EU Regulation No 1260/2012 on patent translation arrangement constitutes an “infringement of the principle of non-discrimination by introducing a scheme to the detriment of persons whose mother tongue is not English, French or German,” according to Spain’s legal action.

A first hearing in the Spanish case was held on 1 July. The paper notes that the European Commission did not participate in the written proceedings in the case, which might be considered unusual since the EU “usually intervenes to support the legality of EU law provisions challenged before the Court.”

“This could be seen as a confirmation of the Commission’s reservations on the system,” it says.

The Advocate-General still has to give its legal opinion, which might be published in October 2014, according to the Allen & Overy paper.

Committees Ploughing Away

Select Committee

According to the Select Committee’s timeline, the tasks of the Select Committee are “to ensure the governance and supervision of the activities to the tasks […] that member States participating to the enhanced cooperation shall give to the EPO.”

Those tasks are listed in Article 9(1) of Regulation 1257/2012 and include to: administer requests for unitary effect by proprietors of European patents, administer the Register for unitary patent protection; publish translations, and collect and administer renewal fees for European patents with unitary effect.

The Select Committee also will have to set the level of renewal fees in accordance with articles 12 and 13 of the Regulation 1257/2012, which provide guidance on renewal fees and their distribution between EPO and member states.

In March, at its seventh meeting, the committee adopted the rules relating to the compensation scheme for costs of translations of applications filed in a language other than the three official languages of the EPO, which are French, German and English.

The level of renewal fees was discussed during the eighth meeting of the committee, while during the ninth meeting in June, the Draft Rules relating to Unitary Patent Protection were adopted in principle, with the exception of some technical aspects requiring further discussions. Further discussions on the level of renewal fees were also carried out in June.

According to the committee’s timeline, the committee is scheduled meet again in October to discuss some more about level of fees, and in December to pursue discussions on fees and estimated costs and on the draft budgetary rules. It is not clear to what the estimated costs relate.

“The density of meetings and the volume of work already achieved clearly demonstrate the continued commitment of the participating Member States,” the Select Committee’s chair and secretariat told Intellectual Property Watch. “Hard work is being done, with the strong support of the European Patent Office.”

Preparatory Committee

The Preparatory Committee, at its fifth session in May, decided to conduct a revision of its roadmap to reflect the fact that the early 2015 target date will not be met according to the secretariat press release. The committee also discussed the rules on court fees and recoverable costs.

In its July meeting, the Preparatory Committee approved a list of candidate judges, and adopted financial regulations. The training of the judges is expected to start in autumn.

According to the second progress report of the two committees, “a public hearing on the Rules of Procedure will be arranged in the autumn of 2014. The Rules of Procedure are currently with the working group for review and a revised 17th draft will be published ahead of the public hearing.”

Consultations on a proposal for the court fees are expected to be launched by the first half of 2015, according to the Preparatory Committee secretariat.

Brief Timeline and Expected Actions:

• October 2014: Select Committee discussions about level of fees
• Autumn 2014: 17^th draft UPC Rules of Procedure followed by a public hearing
• Autumn 2014: start of the training of future UPC judges
• December 2014: Select Committee discussions about level of fees, estimated costs and draft budgetary rules.
• First half of 2015: proposal for the UPC fees.

Catherine Saez contributed to this report.