The future of the UPC is uncertain. Last Friday, the German Constitutional Court gave the UPC project a huge setback. Now the JUVE Patent reporters offer their different views on what the court's decision means for both German ratification, and the UPC project in general. Read our analysis on arguably the decade's most important patent judgment.
26 March 2020 by Mathieu Klos
The Constitutional Court has ruled that a second attempt at German UPC legislation in the German Bundestag requires a clear majority. The parliament must approve the UPC laws with a two-thirds majority due to the impact on constitutional rights by an international court. The guidelines of the constitutional judges are clear. Now, however, the UPC’s chances are extremely poor.
“Scepticism about European institutions, including the UPC, is rising”
This is because the world has changed. The Europe of today is no longer the Europe of 2013, when 25 EU states signed the UPC Agreement. Europe is also no longer the Europe of March 2017, when the Bundestag adopted the draft law. The approval of Europe has fallen dramatically, but scepticism is rising around handing over national competences to European institutions such as the UPC. This is true not only among the general population, but also in political circles. Visible signs include Brexit, increasing nationalist tendencies and a rise in right-wing populist parties throughout Europe.
Less visible is a growing lack of interest in the European integration project among the population as a whole, which the new patent court would stand for.
Two years ago the UPC laws passed through German parliament without much opposition. But when the Bundestag was re-elected in 2018, right-wing populist party AfD (Alternative für Deutschland) moved in. The AfD railed against the UPC. Now the German government needs the broad support of the other political parties. It is questionable whether a two-thirds majority is really as secure as the supporters of the UPC believe. Other observers question whether the German government’s political support for the project is as strong as it was before the Constitutional Court’s ruling.
The patent community is clearly impacted by these factors. Even after the court’s decision, the individuals responsible for the UPC have not lost hope in the project. But now, their mantra that “it’s not dead yet” sounds increasingly desperate.
The Federal Ministry of Justice has now confirmed it is still in favour of the UPC. But before putting the UPC laws to a vote, the ministry must get a better sense of the prevailing mood among the members of the Bundestag. The government also needs to listen to the patent community.
Many once-ardent UPC supporters now resign themselves to years of uncertainty. The patent lawyers are preparing to continue working with the existing national patent court systems. Better the devil you know.
In June 2017, UPC officials made a big mistake. “The Federal Constitutional Court will quickly and smoothly settle the UPC complaint, no problem,” they said, shortly after the industry became aware of a constitutional complaint. Almost exactly three years later, the same court declared the German UPC legislation invalid.
Now the first joint civil court of EU states may fail due to a formal error. The German government and the Bundestag overlooked the fact that constitutional rights are affected when sovereign rights are transferred to a supranational court. Instead of a quick procedure with a simple majority, parliament should have ratified the UPC Agreement with an absolute two-thirds majority. But the government and its UPC advisors wanted to push through the German ratification as quickly as possible, in order for the patent court to begin. The UK’s imminent EU withdrawal in March 2019 and the prospect of the UK participating in the UPC beyond Brexit, remained a strong motivating factor.
“The UPC officials did not take Stjerna and his concerns seriously”
But the judges did not reckon with Düsseldorf IP lawyer Ingve Stjerna. The complainant made no secret of his concerns about the UPC Agreement. Ths included his concerns that the EU, and the governments involved, had disregarded principles of transparency and the rule of law. Now, the Constitutional Court has upheld his complaint in one of four points. The Bundestag must vote again on the UPC laws.
The whole project could now fail because of this arrogance. Without German ratification, the UPC cannot begin. Boris Johnson has already withdrawn the UK’s participation due to Brexit.
A continental European version of the patent court with 24 EU states is still possible. But the German Bundestag is unlikely to start as a fast-track procedure, as some officials believe. And a hasty reaction is also unlikely. Firstly, EU governments are more concerned about the coronavirus pandemic than helping an almost-failed court project back on its feet. Secondly, because of the UK’s withdrawal, the Federal Ministry of Justice and Consumer Protection officials responsible must look carefully at the UPC laws. The law must pass muster at the Constitutional Court. Nobody in the patent community wants to see another fiasco.
On the day the Constitutional Court published its decision, Ingve Stjerna told JUVE Patent that what conclusions the goverment draws from the decision remain to be seen. Stjerna pointed out that the Constitutional Court has not dealt with the content of his objections to the UPC Agreement. He warns, “If, despite these problems, the German government continues to adhere to the convention, a new constitutional review by the Constitutional Court will have to be considered, possibly of a complaint from a company.” Many times throughout his career Stjerna has proven that he is persistent and extremely meticulous. This time, the warning should be taken seriously.
It will be interesting to see whether Stjerna has prominent supporters from industry, and whether any will openly show their colours. In any case, in recent months the circle of UPC sceptics has grown considerably. Some patent lawyers remain sympathetic to the idea of a European patent court. But others simply no longer care about the UPC project in view of the constant setbacks. Therefore, its future depends to a large extent on whether the industry still wants the patent court. Only then does the German Bundestag deserve to give the current UPC a second chance.
In its ruling, the Constitutional Court has shown the German government a clear way to make its accession to the UPC compatible with the constitution. However, the majority of the patent community now doubts whether the UPC project still enjoys the same strong political support as it did in 2016 and 2017. Back then, despite Brexit, the important patent states UK and Germany initiated their ratification process.
But the influence of industry and the legal profession on the Federal Ministry of Justice and politics is great. The patent scene has gained a lot of experience in political lobbying, especially in the last two years. Many lawyers campaigned for a quick pro-UPC decision from the Constitutional Court. Furthermore, the automotive industry and its advisors persuaded the Federal Ministry of Justice, in the wake of the connected cars lawsuits, to adapt regulations on automatic injunctions in German patent law.
If industry and the legal profession really want the UPC, they can still make a big difference. Currently, the main barrier is the coronavirus crisis. For the time being, the pandemic has shifted political priorities. This is to the UPC’s disadvantage.
The Constitutional Court’s ruling is also significant beyond the narrow confines of patent law. The court has created a new instrument whereby every citizen can have formal aspects examined by the Constitutional Court. For example, when a law accompanying European integration steps is passed.
This new instrument is not without controversy. Three of the eight constitutional judges involved in the decision have publicly displayed their dissent. The judges fear that the goal of European integration, as the German constitution defines it, will become unnecessarily complicated.
“The ruling is not only another setback for the UPC”
Therefore, the ruling is not only another setback for the UPC project. It also compromises a new legal framework for Germany in European integration. Thus, last Friday, the Constitutional Court made history in two respects.
The judges have set out a clear path for the German government to achieve UPC ratification. However, the court has not yet dealt with some of the substantive criticism of the UPC, such as the judges’ democratic legitimacy. This leaves room for renewed constitutional complaints – for the German government, no easy task. Nor for the patent community, because the judgment calls for further patience. Regardless – the UPC is not dead.
After years of turmoil over the UPC, then Brexit, then the UPC again, the prevailing view from London seems to be, “we can manage”. A long delay in implementing Brexit, the reversal of the government’s position on UPC participation, and the Constitutional Court’s near-rejection of the court system. UK patent lawyers now must ensure its patent courts offer can match a UPC system. A generation of patent lawyers with new ideas on how to move forward could provide the necessary breath of fresh air.
For the UK government, the intrinsic connection between the UPC and the European Union is pervasive. Following mixed messages from successive governments, Boris Johnson decided he could not ignore the issue. Although the UPC is not technically an EU body, and its tangential connection has long been emphasised by its supporters, the court nevertheless remains answerable to the supranational Court of Justice of the European Union. Now the UK government has resoundly rejected the UPC. An entity which has made its distaste of the EU so clear surely cannot continue to partake in a court bound – even if by the thinnest thread – to its laws.
“The UK’s patent lawyers are on the road to accepting no UPC”
In Germany, the majority opinion of the court was that the Federal Republic is ceding sovereign rights to a supranational court. Despite the different political structures of the UK and Germany, arguments have been made against perceived interference with established constitutional law. In the UK, the patent lawyers regard the German Constitutional Court’s judgment as yet another decision against their hopes for a Europe-wide project – but a perhaps inevitable outcome of a politically volatile situation. Germany must also reckon with this. However the UK’s patent lawyers, despite their broadly pro-remain stance, seem to be on the road to accepting the decision.
This is especially true in its new generation of recruits, who enter the profession with less preconceptions about what has been lost in a lack of UPC. The UK’s patent lawyers are determined to consolidate their reputation for excellence in patent litigation in Europe, and globally. This could mean the introduction of new visions for UK patent law. For example, the imminent announcement of two new judges for its patent benches would be a start.
It’s not that lawyers in London dislike the UPC project. Far from it, in fact. Many leading London-based firms are actively pro-UPC, with whole teams dedicated to producing information on the court. Some firms, such as Simmons & Simmons, have employees like the indomitable Kevin Mooney. He made the UPC his almost full-time focus over the past five years. But now, in the face of crises both political and medical, the UK patent scene is focusing on remaining balanced on its own two feet. It’s a blow to Mooney and the like; perhaps some behind-the-scenes intervention is already going on. Meanwhile, the UK looks forward.
However, a particular blow for the UK’s pro-UPC patent community is the cessation of the pharmaceutical division in London. For pharma-focused litigators, a court would provide the perfect opportunity for big-ticket, cross-border cases. The previous UK government under Theresa May earmarked Aldgate Tower, located in walking distance to the main hub of the City, as the UPC’s London division. Now the doors will remain closed. The European patent community must find a new location. While Milan has put in some strong opinions on its hosting of the court division, it remains to be seen whether this will be necessary at all. Perhaps the project will crumble into a pile of blueprints and judicial applications.
The UK’s patent scene now needs London’s budding generation of patent litigators to steer it through further unchartered waters. And Kevin Mooney? He won’t give up without a fight.