After the Federal Constitutional Court overturned the UPC legislation in March this year, the prospect of UPC ratification seemed slim. Observers expected the UPC project to be stalled for years to come. But now there is a real prospect that the Bundestag will pass the legislation this year.
10 June 2020 by Christina Schulze
In March, the German courts broke the latest news on the UPC ratification saga. But the German Federal Ministry of Justice had learned a harsh lesson. The Ministry of Justice interpreted the Federal Constitutional Court’s ruling to mean the Bundestag should have passed the UPC legislation, or UPC Accompanying Act (Begleitgesetz), with a two-thirds majority.
Now, the Federal Ministry of Justice has submitted a new draft bill on the UPC legislation. The ministry has sent the bill to associations and institutions, asking for opinions. The deadline is in three weeks. Then, one way or another, things could move quickly for the UPC project.
The interpretation by the Federal Ministry of Justice is that the Federal Constitutional Court overturned the law “because the law was not passed with a two-thirds majority.” The ministry makes this clear in its draft. At the same time, the ministry doesn’t see any further problems with the law.
Essentially, the German government simply wants to vote on the law once again. According to the Federal Ministry of Justice, “The wording of the law is unchanged, but the explanatory memorandum contains necessary updates.”
Winfried Tilmann, consultant at Hogan Lovells and one of the court’s founders, says, “The draft bill on the UPC Agreement meets my expectations.”
“Since the Federal Constitutional Court has not demanded any changes to the content of the law, the law can be introduced into the Bundestag unchanged. This time, it only needs to be passed with two-thirds of the votes,” says Tilmann.
Now, the question is whether this is merely a formality. Undoubtedly, the Bundestag could have achieved the two-thirds majority required for UPC ratification in its first vote. The Bundestag did not achieve a majority, but only because the law was discussed so late. In the German parliament, typically only a small number of members of parliament are present and vote for or against a law according to the previous decisions of their parliamentary groups.
In the case of the UPC Accompanying Act, the vote was unanimous. Here, the court has political support beyond the government majority.
But since the last vote, the world has continued to turn. Brexit is a political reality. Beforehand, in the agreement, UK, French and German UPC ratification was a mandatory precondition for the start of the court.
However, the Federal Ministry of Justice does not see this as an obstacle, “Irrespective of the fact that British approval is currently available, the UK’s withdrawal has no influence on the applicability of the regulations on entry into force, because they are to be interpreted in such a way that a withdrawal of one of these three states, which could not be foreseen by anyone, does not prevent the entire entry into force for the remaining parties.”
However, UK withdrawal from the UPC also means losing the London division. For the time being, the Ministry of Justice has postponed this problem. Only when the UPC comes into force can representatives of the member states decide on the UPC’s third location. Initially, courts in Paris and Munich will hear any UPC cases.
Tilmann says, “To have a discussion now about where the London division should eventually move to would be far too much of a hassle. For this, all states would have to amend Art. 7 of the agreement and then ratify it again in its amended form.”
“It would be better, once the provisional application phase is under way in accordance with the protocol, to determine in the competent administrative committee the inevitable legal consequence of the loss of London, namely that the tasks of London will be provisionally performed by the remaining central divisions.”
France and the Netherlands have expressed intest in hosting the spare UPC division. The German Ministry of Justice confirmed to JUVE Patent that this issue will be tackled later.
However, some observers in the patent community have expressed concern as to whether handing over control to an administrative committee is legally and politically possible.
Tilman Müller-Stoy, partner at Bardehle Pagenberg, says, “If there isn’t already an existing political backroom deal behind this, it might be tough to get the necessary unanimous agreement in place.”
“Secondly,” says Müller-Stoy, “legally, I am wondering who is competent to decide which case goes where in the initial period. I am not sure, for example, that the UPC president or the Administrative Committee have the necessary powers in place.”
In addition, in its judgment the Federal Constitutional Court hints at further substantive points not addressed in the draft bill. Müller-Stoy says, “The draft does not tackle the open issues which were not substantively decided by the German Constitutional Court. Establishing a court system which will be under foreseeable, avoidable legal attacks before national courts and the CJEU while already running is of some cause for concern.”
On the day of the judgment, Ingve Stjerna, plaintiff in the UPC ratification case, told JUVE Patent that the Federal Constitutional Court’s judgment suggests towards further constitutional deficits in the UPC Agreement.
Whether companies are currently positioning themselves for a new constitutional complaint against UPC ratification remains speculative. However, any concerns can be raised in the period for submitting opinions to the Federal Ministry of Justice.