On 23 June 2011 the Council reached an agreement on a substantive patent right for the internal market and the establishment of a European and Community Patent Court, and adopted a Proposal for a Regulation implementing enhanced cooperation. With the Lisbon Treaty the Union introduced a new legal framework which created a new legal basis for the creation of a unified patent system. The new project has been problematic and not all the member states have been able to agree. There are mainly two concerns: a substantial one, concerning the substantive patent right, and an institutional one, concerning the creation of a court. Spain and Italy did not agree to the proposal because of the “language dispute” regarding translation arrangements.
There is a discussion about whether the other states can use the procedure of enhanced cooperation. Enhanced cooperation, introduced by the Treaty of Amsterdam, is a procedure that allows member states to move on with further cooperation if no uniformed agreement can be reached (Art. 20 TEU). Other member states which do not agree are free to join later (Art. 328 TFEU). Enhanced cooperation may not constitute discrimination between those who want to agree and those who do not. Also, it must be objective and protect the interest and reinforce the integration process of the Union. The legality of enhanced cooperation in the field of patent law is one of the problems that Thomas Jaeger discusses in his research paper available at SSRN published in January, entitled All back to square one? – An assessment of the latest proposals for a patent and court for the internal market and possible alternatives. The question of legality emerges because if the language regime is implemented without the consent of Spain and Italy, they will be excluded from participation in practice even in the future, since their objection refers to the language dispute.The Spanish and Italian government lodged actions for annulment of that Council authorisation (Cases C-274/11 and C-295/11), which are currently pending before the ECJ.
The previous draft agreement of 2009 on the European and Community Patent Courts was sent to the European Court of Justice (ECJ) for its opinion (Opinion 1/09 of 8 March 2011). The ECJ found in particular two concerns about the setting up of a patent court which have to be reformed in order to comply with Union law. One of the concerns is that if the patent court applies EU secondary law this might risk the autonomy of Union law. Normally, international courts that are linked to the ECJ are obliged to send preliminary references to the ECJ and have jurisdiction limited to the application of international agreements. The other concern that the ECJ had with the proposed court system was that it might jeopardize the principle of completeness of the system of remedies, since the system of cooperation between the ECJ and the national courts is laid down in primary law. There were no remedies available for individuals against breaches of EU law by the Patent Court. The risk of setting up a court that applies Union law is that it would deprive the national courts’ right to interpret and apply Union law. If the Patent Court had exclusive jurisdiction to hear disputes brought by individuals in the field of patents, the consequence would be that national courts would be deprived of their jurisdiction in cases concerning patent issues. However the ECJ did not stated that it was impossible to establish a patent court that is in accordance with Union law. The proposed Patent Court would have been outside the institutional and judicial framework of the Union, and accordingly it has, under international law, a distinct legal personality. It would have had to interpret not only international law but also Union law. The ECJ also emphasised in its Opinion 1/09 that if the Patent Court were to be in breach of Union law it could not be subject of infringement proceedings, concluding that the draft agreement was not compatible with Union law.
There is a clear need for development in the field of European patent law. Jaeger’s critique of the legality of the enhanced cooperation is understandable since it would discriminate Spain and Italy which could not join even later unless they subject to the terms and conditions of the system which already gave rise to their non-participation at the outset. A condition of the enhanced cooperation procedure is that it has to be objective and protect the interest and integration of the Union. It is clear that this condition is very important when it comes to patent law since it is strictly connected to trade and the internal market. It might be more efficient not to use the enhanced cooperation and to move on to further discussion to resolve the legislative problems, waiting for all the member states to agree on a proposal.
In his analysis Jaeger focuses on the most recent proposal issued after the ECJ’s opinion and still under discussion. Court systems similar to the one proposed by the Council already exist. An example is the Benelux Court. A difference between the Benelux Court and the suggested Patent Court is that the Benelux Court is common to a number of member states and it is situated within the judicial system of the EU. Consequently, its decisions are capable of ensuring the full effectiveness of the rules of the Union. The new proposal, by Jaeger referred to as “the follow-up model”, limits the number of parties to the draft agreement, excluding the EU and third state countries, introduces an obligation for the Patent Court to comply with EU law and to request preliminary rulings when necessary and also to introduce sanctions. The removal of the EU and the non-EU countries changed the nature of the Draft Agreement. The aim is to establish a court common to the member states. According to Jaeger this gives rise to a new concern. He explains the differences between the Benelux Court model and the proposed model for a Patent Court. The Benelux Court is based on a specific primary law authorisation (art. 350 TFEU) in contrast to the Patent Court. Furthermore, the Benelux Court’s jurisdiction is limited to preliminary rulings and it interacts with national court systems, while the Patent Court has full case jurisdiction and there is no interaction with the national courts. The Benelux Court deals only with application of the Benelux agreement where the Patent Court applies international law, the European Patent Convention (EPC) and Union law. If the system of preliminary references was incorporated in order to make the Patent Court more similar to the Benelux Court, it would not only be a parallel system to the national courts.
It seems that the follow-up model does not resolve the concerns raised by the ECJ. In order to ensure the autonomy and supremacy of Union law there must be a remedy system available within the Court system, liability for breaches of Union law and an open language regime. Even if modifications will be made to the proposal, the creation of a new Patent Court might not come into force since Spain and Italy have brought actions for annulment against the authorisation of the enhanced cooperation, and if those actions are successful the proposal will not go any further.
According to Articles 258-260 TFEU the Commission and the member states can bring another member state before the ECJ in case of a breach of Union law. However, this might not be possible in relation to the Patent Court if the country is not a member of the European Union. In order to solve the problems emerging in relation to the establishment of the Patent Court the parties must be restricted to only EU member states, those who want to cooperate in the enhanced cooperation. A system of remedies needs to be incorporated. The Patent Court shall have the exclusive competence in the patent area. The President of the European Patent Lawyers Association, Jochen Pagenberg suggests letting the ECJ be involved as a third instance above the Boards of Appeal of the EPO (his opinion is available here). The Patent Court could be under control of the ECJ and the national courts would remain intact. However, Pagenberg argues that not even this proposal would be possible in practice because there are virtual technical problems. He asserts that the main reason for the conclusion made by the ECJ is that if the ECJ was separated from the system of the Patent Court it would jeopardise the uniformity of the internal market. Many patent owners fear that the EU system, which did not use to include patent law, would not have the same quality in patent litigations as the national courts. As Jaeger alleges, “the ECJ is mistrusted in terms of its patent law competence in the patent community” (see at 7).
On the basis of the observations mentioned above it becomes clear that there is a serious problem with the creation of a Patent Court because the interpretation of Union law might differ in the different courts. Since the Patent Court is not the only court applying and interpreting Union law it is important that the national courts in the member states have the possibility to refer questions of Union law to the ECJ and then apply Union law in order to achieve a uniform application of Union law. Consequently, the Patent Court should interpret and apply the area of patent law exclusively. In other words, it should be the only court that has the competence to interpret European patent law. A suggestion is that in those cases in which patent law intervenes with other areas of EU law, some kind of interaction between the Patent Court and the ECJ is needed. Both courts must protect the interest of the Union and work for the same aim.
Another possible modification to the proposal could be that the Patent Court, just like the Benelux Court, would have shared competence with national courts in the field of patent law and the national courts would be able to refer questions of law to the Patent Court. The national courts have an important role to interpret and apply Union law at local level within the Union. However, even though there is a huge interest in finding a solution to these problems, there is more than one conceivable model for the establishment of a Patent Court, and some essential features still remain unsettled. These must be resolved before the project can become reality. Besides the legislative and constitutional problems there are also economic aspects and political interests at stake. Our suggestion is to continue the negotiation and the discussion and to listen to researchers in different areas. As Jaeger states, a bad court would be worse than no court at all.
by Amelie Edgren, Stina Haglund, Lina Olsson