The Proposed Unified Patent Court for Europe: conditio sine qua non for a Unitary Patent or unavailing venture into the unknown?

The following is an invited guest post by William Bull. Mr. Bull is a researcher at the Maastricht European Private Law Institute (M-EPLI) at Maastricht University in the Netherlands

European countries have now almost reached agreement on the creation of a European Union patent with unitary effect and a 'Unified Patent Court' (UPC) to be established (primarily) in Paris in 2014 or so. The plan is to introduce a patent right valid throughout the territory of 25 of the 27 EU Member States (Italy and Spain remaining outside the process due to objections to the proposed linguistic regime) and, in tandem, a single patent court at European level with exclusive jurisdiction in infringement and revocation proceedings covering the same territory, in lieu of domestic courts. The UPC is to consist of two divisions; a Court of First Instance and a Court of Appeal. The former is to be further sub-divided into a Central Division (located in Paris, albeit itself with 'thematic branches' in London and Munich!) and additional regional and local divisions situated in various Member States.

It is by now de rigueur for any commentary on the European patent project to begin with a reminder of its protracted history. The idea of creating some form of common European patent system can be traced all the way back to the 1960s, and has been plagued by drawbacks and delays ever since. The most recent attempt to revive the project came in 2000 with a proposal for a Regulation on a Community Patent (following on from the Regulation establishing a Community Trade Mark (CTM) adopted some years earlier), and continued with an accompanying proposal for a Community Patent Court of 2003. The former would introduce a unitary patent right covering the entire European Union, while the latter would lead to the creation of a unified patent court with exclusive jurisdiction over both the new patent right and existing 'European' patents (that is, bundles of national patents) obtained under the European Patent Convention (EPC) system. Together, these proposals were to be the 'building blocks' for a future EU system, designed to overcome the difficulties posed by the need to acquire and litigate patent rights in different Member States.

Of course the European legislator is faced with this core dilemma in virtually any of the areas of law in which it has some competence to act, and European intellectual property law is by no means the only field where there have been lengthy deliberations over the need, form and likely success of measures seeking to instigate some 'harmonisation' of the law (in one way or another). The debate on the harmonisation of European private law (and particularly contract law) immediately springs to mind as an example, for this also began some decades ago, leading to the drafting of various academic principles, from the Principles of European Contract Law (PECL) in the course of the 80s and 90s, through the Draft Common Frame of Reference in the 2000s, and culminating in a proposal for a Common European Sales Law only last year. What makes the European patent project unique is the fact that it has focused on the introduction of an apposite pan-European court system as well as on matters of substantive law. The creation of a unified patent court for the EU is considered by many – not least the European Commission – to be a conditio sine qua non for the proper functioning of the proposed unitary patent. This is the case even though such a court would be unprecedented, and was not seen as necessary for either the CTM or the Community design introduced in 2002 (both of which are adjudicated upon by designated national courts collaborating with the Court of Justice of the EU (CJEU) via the general EU preliminary reference procedure). So it is the importance attached to this aspect of the patent debate that will readily come as a surprise to those operating in other areas of European law, including the sphere of European private law (EPL).

In spite of the many parallels that can be drawn between the debate on harmonisation of European IP law and that of private law more generally (not to mention other areas of EU law), however, there is a distinct lack of interaction among actors in the various subfields. This means that often similar arguments are used, but without benefiting from insights in the other field. It is therefore against this backdrop of academic fragmentation that we would encourage further comparison between the European harmonisation debate in areas such as patent law and contract law, as this should lead to lessons on what to encourage or to avoid in developing the two fields. In particular, since in EPL there has been hardly any discussion about the introduction of a European court in order to ensure uniform interpretation, we cannot help but wonder whether the significance of this issue in patent law is not overestimated. This is a particularly worthwhile question bearing in mind that if an alternative to the unified patent court could be found, this would greatly help the present political process, which now appears to be stuck on the issue of involvement of the CJEU.

In our view, there is nothing against splitting the two building blocks: in a paper that I wrote together with Jan Smits (available on SSRN) I argue that it may indeed be useful to introduce the unitary European patent, but I do not see the advantage of creating the proposed European patent court system, given a) the disadvantages of such a system and b) the possible alternative. First: the disadvantages of the proposed patent court system. From the perspective of end users, a rational patent litigation system depends on three main factors; expertise of the judges, the ability to make a speedy decision, and low costs. We doubt whether the new system would be able to provide these, certainly (but not only) in the short- to medium-term. Given that the regional and local divisions of the Unified Patent Court will be spread across Europe and necessarily composed of multi-national panels with the discretion to decide whether or not to bifurcate proceedings, it is difficult to see why the UPC as it is envisaged would fare much better against the obstacles to efficient litigation and uniform interpretation of differing levels of judicial expertise, patent cultures and language barriers. Second, a possible alternative to the now proposed unified patent court could consist of a competitive model of convergence of patent law. This model is based on the present European practice in which 50 to 70% of all patent cases in Europe end up before the courts of a very limited number of countries (and in particular before the German courts, of which the Düsseldorf district court is seen as market leading, dealing with more than 600 new infringement cases every year from all over Europe). The popularity of the German court system among European litigants apparently stems from its speed, high quality, commercial sense and the fact that the staying of an infringement procedure due to revocation is only rarely allowed.

In short, our point is that successful harmonisation of IP law may indeed be dependent on uniform interpretation of European rules, but this uniformity need not come from a common European court. It can also be provided by a national court, as long as individual claimants are allowed to choose the court of their liking. In fact, in the absence of any meaningful political compromise on a European court system in the last 40 years, such a market for patent litigation has already partly come to exist. Of course that is not to say that such an alternative is not without its own problems, but we believe that a competitive model of convergence has a lot of merit over the proposed European court system, which could easily prove to be an unavailing venture into the unknown.

* * * * *

These questions are discussed in detail in the working paper by Jan M. Smits and William Bull entitled 'European Harmonisation of Intellectual Property Law: Towards a Competitive Model and a Critique of the Proposed Unified Patent Court', available at: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2117835.

21 thoughts on “The Proposed Unified Patent Court for Europe: conditio sine qua non for a Unitary Patent or unavailing venture into the unknown?

  1. Important? Ned the UK agrees with you but UK doesn’t make the EU Rules. The responsible committee of the European Parliament has a chairperson and an executive member, elected by the members of that Parliament, and they are BOTH individuals from Germany, one of them a member of a big litigation law firm to boot. Conflict? You might well suppose so. I could not possibly comment.

    Germany has more patent cases going through its courts than all the other 26 EU Member States put together. One reason is that patent owners like Germany. Another is that, in Germany, litigation is a first resort rather than a last resort. Think: At the first sniff of a problem, go and see Uncle Judge, to get ADR + injunctive relief.

    So, you see, bringing the EU round to doing pan-European patent litigation free of the mischief of bifurcation of the trials of infringement and validity is more or less a pipe dream.

  2. Germany’s system creates a stronger patent because it increases the clout the patent holder can wield.

    Of course, this means that it must be broken and needs “fixing” by that self-proclaimed pro-patent hawk Ned Heller.

    [Eyeroll]

  3. Max, "retract."  Perhaps the EU could set up criteria for FF&C.  Important among them is that all issues related to validity and infringement might be heard in one court.  That would force Germany to "fix" its system to stay in the game.

  4. Recall? With that word, what did you mean Ned? Remember? Retract?

    I thought the former. Now I think you must have meant the latter. Never mind.

  5. Correction: NOT the presiding judge of the Federal Patents Court. Rather, Richter Guntz, the presiding judge of Munich’s patent infringement court.

  6. That’s why I included “Two years later” for validity in Munich.

    German litigators will tell you that the English make everything unnecessarily complicated, by conflating infringement and validity. See how much simpler iot is in Germany, they say. The judging panel in Duesseldorf is freed of any necessity to wrestle with thorny issues of validity. The Federal Patents Court (promoted Patent Office Examiners) in Munich is freed of any burden of struggling to understand the accused embodiment.

    Incidentaly Meldrew, a little bird just told me that the Chairman Judge of the Federal Patents Court of Germany has just now walked away……to join the EPO. Of course, the EPO doesn’t touch infringement issues either but I suppose the judge wants to be closer to where the law is actually made.

  7. Not to mention that in Germany validity is decided by a Federal Court (slowly) and infringement by a State Court (relatively quickly, as if you don’t have to think about validity, and don’t have to think about juries, you should be able to decide quickly on infringement).

    Could you imagine a similar situation in the USA? Would a Federal Patent Court ever consider that it had to respect the claim construction offered by a State Court and was not free to adopt a narrower construction?

    Bifurcation sucks – it is institutionalised injustice.

  8. Patent law should not operate in a vaccuum, like it is foreseen with this international patent court.

    Patent law cannot be isolated from other parts of civil law.

    It is strange that Maastricht researchers have not digged into that direction.

  9. Which earlier court? Are you thinking of that which is “established” by a court in an EU State with no tradition of litigating patent disputes? I’m not convinced that would be a good idea. The 27 Member State EU has tried for 40 years, and thus far failed, to agree on a unitary patent system. One reason just might be that 2 Member States (GB, IE) have stare decisis and the other 25 don’t.

  10. So when David Mitchell told me I could not have the Application i then entered on Aug 23, 1997 there abouts, that they claimed was lost it was because the first check was torn and you can’t have a CIP on a loss of entitlement, AND as I told MOATZ A MILLION TIMES MY CHECK WAS TORN UP, he just pretty much told me to F”OFF. And that is why David Mitchell beat it!

  11. Wouldn’t you think that stare decisis would come in handy to bind the later court to what the earlier court established?

  12. Ned do not discount the expert patents court in Holland. Think stent litigation. Actually, as I said above, judges in different EPO States do give their brothers and sisters FF&C on the substantive law.

    True, Europe has one patent law on patent validity. Where judges differ, in parallel patent actions, they do it graciously, on the facts found. On the substantive law, they don’t differ any more, except for the (see below) still not yet disciplined judges in Germany.

    England finds facts out of witness X-exam. Mainland has no sense of the power of x-exam to root out the facts, supposing instead that all witnesses in patent trials are no better than paid shills. So, while English Decisions include verbatim key statements from the expert witnesses, and use them to justify their findings, mainland courts have no truck with this approach. What they do instead, to find out the facts, is unconvincing to the English.

    Why do I assert that German judges are “undisciplined”? Because they still don’t bow to the beautiful symmetry that what comes after and infringes must, if coming before, destroy novelty.

    This in turn is because of “bifurcation”.

    What is “bifurcation”? One set of judges does infringement and construes the claim accordingly. Another set of judges, sitting at the other end of Germany, does validity, and construes the claim as it sees fit. So, the wily rights owner asserts in Duesseldorf, pleads for a wide construction and gets immediate injunctive relief. Two years later, defending in Munich, he argues for a narrow construction. Prof. Mario Franzozi has likened the claim to an Angora cat, angry in Duesseldorf, with long hair upstanding, but soaking wet and tiny, in Munich. In rare cases, ten years later, if the parties are still at it, the Supreme Court looks at both infringement and validity. Watch how Apple litigates, in Germany, these next ten years.

  13. This would be a major step to reducing cost of obtaining worldwide patent protection.

    And the curtain is drawn back…

  14. Max, I think Europe operates or intends to operate under one patent law.  Thus all you really need is that the courts give effect to each others rulings.  But, because the only really competent patent courts that exist are those in Germany and England, take those two for a start.  One might also consider France or any other country that shows  special competence in patent law.  Which countries's courts should be given FF&C should be a political decision at the EU level.

    Regarding examples, when and if we have the same LAW, we should give FF&C to EPO, USPTO and JIPO examinations.  This would be a major step to reducing cost of obtaining worldwide patent protection.

  15. Ned, can you cite a successful example of your full faith and credit example? Does the USPTO give such to EPO obviousness determinations?

  16. Why not try full faith and credit to cases tried in Germany or in England? If there are cases in both England and Germany, give deference to the first to decide.

  17. Well said Tim. Look to London to see where parties attack the validity of duly examined rights. Why there? Because they get a fully reasoned final Decision, unlikely to be appealable, a roadmap for the courts of mainland Europe, arrived at with the benefit of discovery and cross-examination, within 12 to 15 months of commencing their action.

    There is a gulf of misunderstanding, between the common law jurisdictions of The British Isles and the civil law jurisdictions of mainland Europe. The Dutch, sitting exactly between England and Germany, best understand the benefits, going forward, of preserving both litigation cultures. Patents judges in England and Germany, jealous of their professional integrity and reputation, are bent on minimising any reidual differences between them, on matters of substantive patent law.

    So William Bull is right!

  18. A new viewpoint – which is interesting in itself. I would challenge one point.

    “The popularity of the German court system among European litigants apparently stems from its speed, high quality, commercial sense and the fact that the staying of an infringement procedure due to revocation is only rarely allowed.”

    These are reasons for the popularity of the system among plaintiffs – who choose where to litigate. Is there any evidence that the system is popular among defendants – particularly those who aren’t allowed to challenge validity?

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