Uncertainties for the realisation of Unified Patent Court

In a decision published 20 March, the German Constitutional Court declared the vote on the ratification act of the Unified Patent Court (UPC) Agreement void because the German Parliament did not pass the act with the required majority. The decision is published less than one month after the UK said it would not be seeking involvement in the system, and further support the growing speculations that the UPC will never get off the ground.

The Unified Patent Court (UPC)

As those with an interest in patents will be aware, the Unified Patent Court (UPC) is still not a reality. The UPC is a proposed common patent court open for EU member states hearing cases regarding infringement and revocation of European patents (including the new Unitary Patent). If carried through, the Unitary Patent and the UPC represents significant changes to European patent law. In essence, it will create a single approach to patent protection and litigation across the participating EU member states.

Up to date, all EU member states except Spain, Poland and Croatia have signed the UPC Agreement. The participating member states have set down a Preparatory Committee which will exist until the UPC is established.

As a non-member state, the UPC Agreement will not apply to Norway. However, the potential new uniform patent system could still be of importance for the considerable number of Norwegian businesses seeking patent protection in EU member states.

Background – Challenges to British and German participation

Ultimately it was decided that the UPC Agreement would enter into force once thirteen Member States had ratified the Agreement, of which France, UK and Germany were mandatory (as the three Member States with the highest number of European patents in the year preceding signature). This last condition has caused hurdles for the establishment of the UPC.

In the UK, the Brexit-process has caused uncertainty regarding UK's participating in the UPC. 27 February this year, the UK government confirmed it would not be seeking involvement in the UPC, despite the country's ratification of the underlying Agreement in April 2018.

After the British withdrawal, it has been made clear that Italy will replace the UK as one of the three mandatory states to ratify the UPC Agreement. At the moment, 15 member states, including France and Italy, have already ratified the UPC Agreement. The only country missing for the UPC Agreement to enter into force in Germany.

In Germany, a constitutional complaint against the country's legislation to ratify the UPC Agreement (the Act of Approval to the Agreement on a Unified Patent Court) has set the national process on a halt. The complaint was filed shortly after the draft legislation had been passed by the German Parliament (Bundestag) in March 2017.

German Constitutional Court's decision 20 March

20 March this year the German Federal Constitutional Court (Bundesverfassungsgericht) published a decision where the Court upholds the constitutional complaint against the country's legislation to implement the UPC. The Court concludes that the German national legislation to confer sovereign powers on the Unified Patent Court is void on the ground that the German Parliament did not vote with the required majority.

The UPC Agreement to some extent transfers jurisdiction from the German national courts to the UPC, which is why it was deemed to affect the German Constitution. Article 1 of the UPC Agreement provides that "A Unified Patent Court for the settlement of disputes relating to European patents and European patents with unitary effect is hereby established". If the appropriate procedure is not followed for such transfer, the ratification act has no effect according to the majority of the judges.

The decision is final as there can be no appeal of a decision of the German Federal Constitutional Court.

The immediate consequence of the decision is that the German government can no longer complete the ratification process. It must bring the laws through the German parliament again, causing a further delay to the ratification process. 

For the UPC and the Preparatory Committee, this means, in the best case, the start of the UPC will be further delayed. Following the published decision, the Preparatory Committee issued a press release on Friday 20 March regarding the German decision stating that

"… despite the fact that the judgement will result in further delay the preparatory work will continue, while the judgement and the way forward is further analysed".

It remains to be seen whether the German court decision, which at first glance appears to entail a technical difficulty, may be overcome by a second future vote in the German Parliament by the necessary qualified majority. What is clear, is that the decision leads to further uncertainty as to if and when the UPC will come into effect. The UK government’s decision to withdraw from the UPC puts more pressure on the remaining member states, causing a fear that the UPC will never get off the ground; without the UK as a member of the system, it is thought to be significantly less attractive for major businesses. As the UPC project has once again suffered a huge setback, this fear is not weakened. One could not exclude the possibility that the German Constitutional Court, by its ruling, may have dealt the final blow to the UPC.