Legal basis of the unitary patent: do not play with fire!
Under close scrutiny, it appears that the legal basis of the regulation on the unitary patent is at best questionable. At worst, such doubts could very well mean that the regulation is simply illegal. In a situation where the enhanced cooperation procedure is already undergoing two appeals before the Court of Justice of the European Union (CJEU), the future of the unitary patent cannot afford such a strong legal uncertainty. Hopefully, some amendments to the proposed regulation could help the unitary patent to partly overcome this hindrance.
The proposal for a regulation (COM(2011)0215 – 2011/0093(COD) of the European Parliament and of the Council implementing enhanced cooperation in the area of the creation of unitary patent protection has been authorised by the Council Decision 2011/167/EU of 10 March 2011 authorising enhanced cooperation in the area of the creation of unitary patent protection. But analysis of this legal basis and the substantive content of the proposal for a regulation shows that there are – at least – three legal reasons to question the legality of this proposal.
First reason: no creation of European patent rights
The legal basis of the regulation is Article 118, paragraph 1 of the Treaty on the Functioning of the European Union (TFEU). This was mentioned in a recital of the decision having authorised such a regulation:
(9) The area within which enhanced cooperation would take place, the establishment of measures for the creation of a unitary patent providing protection throughout the Union and the setting-up of centralised Union-wide authorisation, coordination and supervision arrangements, is identified by Article 118 TFEU as one of the areas covered by the Treaties.
And the Commission has explicitly stated such a legal basis in its explanatory memorandum to the proposal for this regulation:
Council Decision 2011/167/EU authorised the Member States listed in its Article 1 to establish enhanced cooperation in the area of the creation of unitary patent protection.
Article 118 (1) TFEU provides for the legal basis for creating European intellectual property rights providing uniform protection throughout the Union by means of a regulation adopted by the European Parliament and the Council, acting in accordance with the ordinary legislative procedure.
Article 118 (1) TFEU reads as follows:
In the context of the establishment and functioning of the internal market, the European Parliament and the Council, acting in accordance with the ordinary legislative procedure, shall establish measures for the creation of European intellectual property rights to provide uniform protection of intellectual property rights throughout the Union and for the setting up of centralised Union-wide authorisation, coordination and supervision arrangements.
There is no doubt about the fact that this article gives EU the power to create a new patent title. The wording clearly mandates EU for a creation, that is: something new. And the object of this creation is not an uniform protection of intellectual property rights, as the official title of the regulation – Proposal for a Regulation of the European Parliament and of the Council implementing enhanced cooperation in the area of the creation of unitary patent protection – could lead to mistakenly believe. The uniform protection is actually the goal to reach with such a creation. But the object of the creation is undoubtedly European intellectual property rights.
Such a new patent title should have been, and has actually been called a Community Patent or, since the entry into force of the Lisbon Treaty on 1 December 2009, an EU Patent. This was actually the case in the Council draft document that has been submitted to the Court of Justice of the European Union, when this latter was asked for an Opinion about the compliance with the EU Treaties of the draft agreement on a unified jurisdiction for this new EU patent – the proposed jurisdiction would also have had powers on usual European patents granted by the European Patent Office. This draft document foresaw that the EU would access to the European Patent Convention (EPC) — the legal international agreement that gave birth to the European Patent Office (EPO) and defined substantive patent law for European patents, i.e. requirements for European patents to be issued. As the CJEU has summed up in its Opinion:
51. Moreover, it must be observed that the request for an Opinion makes reference to the background to the draft agreement. The draft agreement is part of a range of measures currently being studied by various bodies of the European Union, such as the creation of a Community patent as a new intellectual property right and the accession of the European Union to the EPC.
But the regulation on the unitary patent, as proposed by the Commission, as well as accepted by the Council, is taking another direction and does not actually create any new patent title. Instead it is proposed to add the special characteristic of having a unitary effect to the classical European patent granted by the EPO and governed by the EPC. But these patent rights would remain European EPO patents, without any new patent title being created.
Therefore, unless the unitary patent is unambiguously defined as a new patent title for the EU, there is a very strong presumption that the regulation does not comply with Art. 118 TFEU, and thus lacks a correct legal basis in the Treaties.
Second reason: an EU regulation is not a special agreement
In order to confer a unitary effect to the classical EPO European patent, the first article of the proposal for a regulation on the unitary patent states:
This Regulation constitutes a special agreement within the meaning of Article 142 of the Convention on the Grant of European Patents (European Patent Convention), as amended (hereinafter "the EPC").
Article 142 EPC reads as follows:
(1) Any group of Contracting States, which has provided by a special agreement that a European patent granted for those States has a unitary character throughout their territories, may provide that a European patent may only be granted jointly in respect of all those States.
(2) Where any group of Contracting States has availed itself of the authorisation given in paragraph 1, the provisions of this Part shall apply.
The EPC is an international agreement, which can also be called treaty, protocol, covenant, convention or exchange of letters, among other terms. As such, it is binding for its Contracting States and should be interpreted as specified by the Vienna Convention on the Law of Treaties, which Article 31 (1) states:
1. A treaty shall be interpreted in good faith in accordance with the ordinary meaning to be given to the terms of the treaty in their context and in the light of its object and purpose.
The only way to interpret with good faith the expression “special agreement” of Art. 142 EPC is that this should be also an international agreement. Therefore, the first article of the proposal for a regulation on the unitary patent suggests that this regulation should be contemplated as an international agreement.
This is confirmed and actually reinforced by Recital 6 of the regulation on the unitary patent, which states:
(6) It is foreseen in Part IX of the EPC that a group of Member States of the European Patent Organisation may provide that European patents granted for those States have a unitary character. This Regulation constitutes a special agreement within the meaning of Article 142 of the EPC, a regional patent treaty within the meaning of Article 45(1) of the Patent Cooperation Treaty of 19 June 1970 and a special agreement within the meaning of Article 19 of the Convention for the Protection of Industrial Property, signed in Paris on 20 March 1883 and last revised on 14 July 1967.
Article 45(1) of the Patent Cooperation Treaty of 19 June 1970 reads as follows:
(1) Any treaty providing for the grant of regional patents (“regional patent treaty”), and giving to all persons who, according to Article 9, are entitled to file international applications the right to file applications for such patents, may provide that international applications designating or electing a State party to both the regional patent treaty and the present Treaty may be filed as applications for such patents.
Article 19 of the Convention for the Protection of Industrial Property, signed in Paris on 20 March 1883 and last revised on 14 July 1967 reads as follows:
It is understood that the countries of the Union reserve the right to make separately between themselves special agreements for the protection of industrial property, in so far as these agreements do not contravene the provisions of this Convention.
International agreements, as defined in Article 2 of the Vienna Convention on the Law of Treaties are: “concluded between States in written form and governed by international law”. International law is said to be horizontal in nature, meaning that all states are sovereign and theoretically equal. The parties to an international agreement accept to be bound by this agreement and this consent, according to Article 11 of the Vienna Convention on the Law of Treaties, should be “expressed by signature, exchange of instruments constituting a treaty, ratification, acceptance, approval or accession, or by any other means if so agreed”.
Whereas EU regulations are passed by legislative enactments. According to Art. 288 TFEU, EU regulations are one means – along with directives, decisions, recommendations and opinions — of the EU institutions to “exercise the Union's competences”. Thus, they are legislative acts of the EU law, which should be regarded as municipal law, binding vertically on the EU citizens. An EU regulation “shall be binding in its entirety and directly applicable in all Member States”. In the case of the unitary patent, the regulation is voted by the European Parliament and participating Member States of the Council.
Given their substantive difference in nature — international law vs. municipal law – and in the processes used to make them entered into force – various instruments to expressed consent to be bound by an international agreement vs. legislation enacted by a legislature – it is indisputable that an EU regulation cannot be an international agreement.
Moreover, a regulation is an normative act of the European Union as such. And the EU cannot be considered as a group of Contracting States to the EPC.
Therefore the regulation on the unitary patent cannot constitute a special agreement within the meaning of Art. 142 EPC. Such an agreement should be concluded separately, subject to international law procedures for its entry into force – signature, exchange of instruments, ratification, acceptance, approval or accession.
Third reason: Member States have no power to use Art. 142 EPC
The legal basis of the regulation on the unitary patent, i.e. Art. 118 TFEU, falls within the area of shared competences1 between the EU and the Member States. The Council decision having authorised such a regulation, made it very clear:
(12) The creation of unitary patent protection is not included in the list of areas of exclusive competence of the Union set out in Article 3(1) TFEU. The legal basis for the creation of European intellectual property rights is Article 118 TFEU, which falls within Chapter 3 (Approximation of Laws) of Title VII (Common Rules on Competition, Taxation and Approximation of Laws), and makes a specific reference to the establishment and functioning of the internal market, which is one of the shared competences of the Union according to Article 4 TFEU. The creation of unitary patent protection, including applicable translation arrangements, therefore falls within the framework of the Union's non-exclusive competence.
In such area of shared competences, the European Union and the Member States can both adopt some legislation, and should cooperate as stated by Article 4 of the Treaty of the European Union (TEU):
The Member States shall facilitate the achievement of the Union's tasks and refrain from any measure which could jeopardise the attainment of the Union's objectives.
Moreover, when the EU has exercised its competence, Member States are not allowed any more to do so. Article 2 (2) TFEU clarifies this restriction:
The Member States shall exercise their competence to the extent that the Union has not exercised its competence.
In the context of the unitary patent, this could mean that once the EU has adopted a regulation, based on Art. 118 TFEU, the Member States would not be allowed any more to conclude on their own a special agreement within the meaning of Art. 142 EPC – which should be, as we've just seen, an international agreement.
In a landmark decision, Case 22/70 Commission v Council  ECR 263 (the AETR judgement), the Court of Justice of the European Union has confirmed that, when the EU has passed some legislation in an area of shared competences, the Member States cannot act outside the EU framework:
22. […] it follows that to the extent to which Community rules are promulgated for the attainment of the objectives of the Treaty, the Member States cannot, outside the framework of the Community institutions, assume obligations which might affect those rules or alter their scope.
The AETR case has been constantly endorsed in subsequent case law of the CJEU. And in Opinion 2/91 of 19 March 1993, the Court of Justice of the European Union has further clarified that, in areas of shared competences, the Member States are authorised to conclude an international agreement, only jointly with the EU:
9. The exclusive or non-exclusive nature of the Community's competence does not flow solely from the provisions of the Treaty but may also depend on the scope of the measures which have been adopted by the Community institutions for the application of those provisions and which are of such a kind as to deprive the Member States of an area of competence which they were able to exercise previously on a transitional basis. As the Court stated at paragraph 22 in its judgement in Case 22/70 Commission v Council  ECR 263 (the AETR judgement), where Community rules have been promulgated for the attainment of the objectives of the Treaty, the Member States cannot, outside the framework of the Community institutions, assume obligations which might affect those rules or alter their scope.
11. The Community's tasks and the objectives of the Treaty would also be compromised if Member States were able to enter into international commitments containing rules capable of affecting rules already adopted in areas falling outside common policies or of altering their scope.
12. Finally, an agreement may be concluded in an area where competence is shared between the Community and the Member States. In such a case, negotiation and implementation of the agreement require joint action by the Community and the Member States (judgement in Kramer, cited above, paragraphs 39 to 45, and Opinion 1/78, cited above, paragraph 60).
Therefore it can be questioned whether Member States are free to conclude a special agreement, within the meaning of Art. 142 EPC, without the EU being also a party to this international agreement.
How and why did we end up here?
The idea of having a unitary patent covering the whole European Union is as old as the idea of the European Patent Office. One can already find some insights in a recommandation of the Council of Europe in 1949, proposed by the French Senator Mr Longchambon. The idea has come more real ten years later, with a speech by Mr. Von Der Groeben – considered as one of the founding fathers of the European Union, and at the time, Member of Commission of the European Economic Community — on the occasion of the meeting on the 19th of November 1959 regarding the formation of industrial property laws:
Two solutions are possible: the harmonization of national legislation, which could be accompanied by an international uniform procedure for filing industrial property rights, and the creation of a uniform European right. It seems that the first solution, with the two possibilities it includes, would not allow us to fulfil perfectly our tasks in the common market, but could be considered, with certain reservations, as a step towards the latter.2
The first solution shows the way to the EPC, along with the EPO, and the second solution to what is now referred to as the unitary patent. And this early speech shows already that the EPC was already considered only as a first step towards a complete solution which would be achieved by the creation of a unitary patent.
These solutions have finally been implemented by two international agreements: the EPC, which has entered into force on 1973, and the Convention for the European Patent for the Common Market, also called Community Patent Convention, or CPC. The latter was signed in 1975 but has never entered into forced, because it was not ratified by enough countries. The CPC was ultimately completed in 1989 by the Agreement relating to Community patents, or APC, which has also failed to enter into force. Despite these failures of the CPC and the APC, their relevant characteristic is that they are international agreements, like the EPC and the “special agreement” referred to by Art. 142 EPC. Therefore both CPC and APC stated in their preamble:
Considering that it is necessary for these purposes for the High Contracting Parties to conclude an Agreement which constitutes a special agreement within the meaning of Article 142 of the Convention on the Grant of European Patents, a regional patent treaty within the meaning of Article 45 (1) of the Patent Cooperation Treaty of 19 June 1970, and a special agreement within the meaning of Article 19 of the Convention for the Protection of Industrial Property, signed in Paris on 20 March 1883 and last revised on 14 July 1967
As we have developed above, such statement is perfectly correct for international agreements, but would be problematic – to say the least – for an EU regulation.
More importantly, the fact that EPC and CPC were designed in parallel and with the objective that EPC would be a first step towards a final goal that would be achieved by CPC, explains the rationale behind Art. 142 EPC: it has been originally drafted in order to provide an interface between EPC and CPC. This is clarified in the reports on the First Preliminary Draft Convention for a European System for the Grant of Patents:
Article 8 permits the ECC countries to ensure that the European patent is unitary as far as the Common Market is concerned and must cover all or none of the ECC countries.
This preliminary draft has been published by the Inter-governmental Conference for the setting up of a European system at its second meeting held at Luxembourg from 13 to 16 January 1970. Works of this Conference have lead to the EPC. And at that time, the special agreement provision of Art. 142 EPC was located in Article 8. The above comment by the British Delegation shows clearly that the purpose of this article was to allow the Community Patent to take advantage of the granting procedure provided by the EPC.
In 1997, the European Commission explained in its Green Paper on the Community patent and the patent system in Europe, why the patent system in Europe was originally designed on the basis of two international agreements, and why such a basis can be changed in favour of an EU regulation:
The patent system was set up in Europe by means of international agreements. This is because, at the time, the Community' competence in this field was not clearly established. Times have changed, however, and the Court of Justice of the European Communities has repeatedly recognized that the Community is competent to take action in the field of patents if this contributes to the attainment of one of the objectives of the Treaty (in this case, either the free movement of goods or a system ensuring that competition is not distorted) – paragraph 27 of the Court's judgement of 13 July 1995 in Case C-350/92 Spain v Council  ECR I-1985 and paragraph 59 of its Opinion 1/94 of 15 November 1994  ECR I-5267 (request submitted by the Commission for an opinion on whether or not the Community had exclusive competence to conclude the GATT Agreements). It should, however, be stressed that, in accordance with Article 235 of the EC Treaty, the creation of a new Community system of protection by means of a regulation would require unanimity, in turn necessitating a consensus between Member States on all the technical issues involved.
Adoption of a Community regulation would offer the following advantages: the date of entry into force of the provisions would be known for certain, since it would be fixed irrevocably by the text itself (whereas the entry into force of a convention is uncertain, depending as it does on the speed with which the signatory countries ratify it), and matters would be greatly simplified when it came to future enlargements of the Community since the regulation would automatically form part of the acquis communautaire and would not have to be amended or renegotiated. Whether or not the Luxembourg Convention should be turned into a legal instrument covered by the Treaty and adopted under Article 235 is therefore a fundamental question to be addressed.
The CJEU's decisions referred to by the Commission are paragraph 27 of the Court's judgement of 13 July 1995 in Case C-350/92 Spain v Council  ECR I-1985:
22 It follows that neither Article 222 nor Article 36 of the Treaty reserves a power to regulate substantive patent law to the national legislature, to the exclusion of any Community action in the matter.
and paragraph 59 of its Opinion 1/94 of 15 November 1994  ECR I-5267 (request submitted by the Commission for an opinion on whether or not the Community had exclusive competence to conclude the GATT Agreements):
59) It should be noted here that, at the level of internal legislation, the Community is competent, in the field of intellectual property, to harmonize national laws pursuant to Articles 100 and 100a and may use Article 235 as the basis for creating new rights superimposed on national rights, as it did in Council Regulation (EC) No 40/94 of 20 December 1993 on the Community trade mark (OJ 1994 L 11, p. 1). Those measures are subject to voting rules (unanimity in the case of Articles 100 and 235) or rules of procedure (consultation of the Parliament in the case of Articles 100 and 235, the joint decision-making procedure in the case of Article 100a) which are different from those applicable under Article 113.
Therefore, it becomes clear that the EU has competence to create a unitary Patent by means of a regulation. Article 235 of the Rome Treaty, referred to by the CJEU, allows actually the EU to propose regulations, even if the Treaty has not provided the necessary powers, if such action is proven necessary to attain, in the course of the operation of the common market, one of the objectives of the EU. Such regulation should be adopted by the Council, acting unanimously. This article has been renumbered to 308 with the entry into force of the Maastricht Treaty, and was ultimately the basis of Art. 352 TFEU in the Lisbon Treaty. But, moreover, the Lisbon Treaty has brought a much clearer competence for the EU to create a unitary patent with Art. 118. And, apart from measures about language arrangements dealt with paragraph 2, regulations based upon Art. 118, paragraph 1, require only qualified majority in the Council and the approval of the European Parliament.
From this moment, it becomes clear that the interface between the EPC and the unitary patent – which can be created through an EU regulation instead of an international agreement – lies no more in Art. 142 EPC, but can be achieved through the accession of EU to EPC.
It should be noted that Commissioner Barnier, who is responsible of the unitary patent issue for the European Commission, knew for a long time — even before the drafting of the Lisbon Treaty – that Art. 118 TFEU is the proper legal basis to create a unitary patent. The idea of such an explicit article was indeed put forward in a letter sent by the Staff Union of the European Patent Office (SUEPO), on July 21st 2000. At this time, Michel Barnier was the European Commissioner in charge of Regional Policy and responsible, ad personam, for institutional reform, and was the Commission's negotiator at the inter-governmental conference that has led to the Nice Treaty. The SUEPO's letter, addressed to the French Minister, responsible of patent policy, and copied to Commissioner Barnier, asked:
We therefore suggest that the French presidency takes the opportunity of the Intergovernmental Conference for the revision of the Treaties to propose that the rules of the Treaty establishing the European Community relative to the qualified majority would also apply to European patent rights.3
It can be inferred from this letter that Commissioner Barnier knows perfectly that the purpose of Art. 118 TFEU is to create a new patent title, without the burden of unanimity of Council's members to vote for such a creation. Then, why has the Commission proposed a regulation that doesn't create any new patent rights at all, although based on Art. 118 TFEU?
To answer this question, one should contemplate in the Treaties the actual legal basis for proposing a regulation which doesn't create a new patent title, but uses Art. 142 EPC in order to confer a unitary effect to classical EPO European patents. The answer has been provided by some members of the “patent microcosm”. For example, in this comment from Leo Steenbeek, patent attorney for Philips, or – more interestingly – in a letter from the Intellectual Property Owners Association (IPO). In this letter, this lobby for patent owners argues that:
no amendments to the European Patent Convention (EPC) are needed or desired, and that consequently, a different legal basis in the Treaty on the Functioning of the European Union (TFEU) should be used.
The rationale is that for EU to access EPC, some amendments to EPC are needed in order to allow not only States, but also organisations like EU, to become party to the EPC. Since such modifications of EPC are subject to approval of all its contracting States, this is not a very fast track. Therefore IPO and Steenbeek advise to use Art. 142 EPC. But with Art. 142 EPC, they also discard Art. 118 TFEU for being the appropriate legal basis in the Treaties and rightly point at Art. 114 TFEU, which allows for harmonisation measures to be taken by the European Parliament and a qualified majority of the Council – avoiding by the way the unanimity requirement of Art. 118.2 TFEU for language arrangements.
Once again, it should be noted that Commissioner Barnier is perfectly aware about this. He was one of the recipients of the IPO's letter. Together with Vincent Van Quickenborne – the Belgian Minister who was chairing the Council when the enhanced cooperation was decided and has since been one of the most active supporter of the Commission proposal – and Klaus-Heiner Lehne – the chairman of the Committee for Legal Affairs (JURI) who has rushed the approval of the enhanced cooperation by the European Parliament.
Had Commissioner Barnier followed the recommendation of the patent microcosm to use Art. 142 EPC together with a regulation based on Art. 114 TFEU, it would have been a disastrous political move. Because it would have resulted with EU totally giving away to EPO its power to define its patent and innovation policy. But at least, it would have been correct on a legal point of view. But since the authorisation to proceed within the framework of an enhanced cooperation has been given for a regulation specifically based on Art. 118 TFEU, the Commission was not allowed to use a different legal basis from the Treaties.
One can only speculate on the reasons why the Commission has abandoned the plan for an EU accession to EPC, or why the decision to authorise the enhanced cooperation has not been proposed in the first place with the provision that its implementation would be based on Art. 114 TFEU. Accession of EU to EPC was included in draft proposal until it was decided to go for an enhanced cooperation. So there's a chance that the shift to an enhanced cooperation framework has been predominant. Maybe some doubt have been raised on the ability to conclude an international agreement – the accession to the EPC – for a EU restricted to only some Member States. There is no indication in the Treaties that when working through an enhanced cooperation, the EU has still a legal personality. Another factor has certainly been the opinion of the CJEU which has smashed the related project of a unified jurisdiction for the unitary patent. Two days after this rejection for incompatibility with the EU legal order, the Commission and the Council was still rushing to officially give its green light to the enhanced cooperation, as if it were more important to “maintain the momentum” – as the Commission has declared just a couple of hours after the CJEU has issued its opinion – than to take a break to analyse carefully the impacts.
What is sure is that, despite warnings, the enhanced cooperation was launched with precipitation. And this precipitation could very well explain why we are now ending up finding major deficiencies in the legal basis of the regulation on the unitary patent.
A possible way forward
As we have shown above, there are serious grounds to think that the legal basis of the proposal for a regulation (COM(2011)0215 – 2011/0093(COD) of the European Parliament and of the Council implementing enhanced cooperation in the area of the creation of unitary patent protection is wrong, and therefore that this regulation could be illegal with regard to EU Treaties. As in any legal matter, nobody can answer to the substantial issues we've raised with 100% of certainty… until the ultimate ruling of the competent jurisdiction – in our case: the Court of Justice of the European Union.
Then what should be the way forward? The following options may therefore be considered:
- Stick to the current proposal despite its questionable legal basis, with the hope that it won't ever be asserted by the CJEU.
- Put the current proposal at stand and rewrite a brand new project safe from any legal questioning, for example by conferring the granting of the unitary patent to an EU agency – the best candidate would be the Office for Harmonization in the Internal Market (OHIM), based in Alicante, which is already responsible for the European Trademark.
- Amend the current proposal in order to fix questionable issues.
But the regulation on the unitary patent won't escape a review by the CJEU. During a Council meeting, Spain and Italy have already announced that they will fill an action before the CJEU, as they have already done with regard to the Council's decision authorising the enhanced cooperation. The risk is too high that the proposal as it is questionably designed now would be wholly declared void. So the first option is not really conceivable.
As for the second option, it would certainly be very wise to rebuild up a patent system along the line of the European trademarks system. Unfortunately, the Commission has never been enthusiastic about building up an EU Patent Agency along the lines of the Trademarks Office in Alicante. And the “patent microcosm” seems to be very opposed to such a solution. It should be noted that the patent microcosm could very well try to kill the current regulation because it is not entirely satisfied that, as a result from the CJEU Opinion, litigations concerning unitary patents cannot escape from a review by the CJEU. It has already strongly advised “the Commission and Member States not to rush to a political decision”. Thus it can be anticipated that this option would be quite difficult to be accepted.
But the last option provides some middle-way solution between the radical first two alternatives. And some amendments in order to fix the current proposal are quite straightforward. First, with regard to the issue that the regulation could be not compliant with Art. 118 TFEU if no new patent is created, it seems sufficient to say that a European patent with unitary effect should be a patent title of the European Union. Second, about the impracticability of Art. 142 EPC, the obvious fix is to delete the reference to Art. 142 EPC in the regulation on the unitary patent.
Then, the remaining issue to be solved with the above first two amendments is the interface between the unitary patent and the EPC. Some hints about this can be found in the opinion of the Advocates General of the CJEU:
69. We should recall that Community patents will be granted by the EPO according to the applicable rules under the EPC for the granting of European patents. The hearing before the Court showed how this administrative technique may be classified in two different ways:
⋅ The theory of delegation: according to the Parliament and the Council, administrative powers will be delegated to the EPO by the European Union; the EPO will grant Community patents instead of and in the place of a European Union agency.
⋅ The theory of transformation: according to the Commission, the EPO will not act on behalf of the European Union and will actually only grant a European patent pursuant to the EPC; this European patent will only be transformed in the Union's legal system, to become a Community patent, automatically, solely through the effect of the Community patent regulation.
The theory of transformation is only admissible in the case of the EU's accession to EPC. This can be derived, for example, from the definition of a unitary patent – actually, of an EU patent, as it was called at the time — given in the general approach adopted by the Council (Competitiveness) on 4 December 2009 (16113/09 ADD 1): “a European patent designating the EU, granted by the EPO under the provisions of the EPC” would be transformed into a unitary patent.
But in the case where, as in the current proposal, there is no accession of EU to EPC, the only available option is the delegation of administrative powers to the EPO. Actually, such a delegation is already stated in Article 12 of the current proposal.
Such a delegation of powers should nevertheless comply with some requirements, as pointed by the Advocate Generals:
The question of knowing whether a possible delegation of powers to an international body such as the EPO would be compatible with the treaties or not may also be left in abeyance [see in particular in this connection the criteria drawn by the Court in its judgement of 13 June 1958, Meroni/Haute Autorité, 9/56, Coll. 1958 p. 9 (40)].
The criteria set by the CJEU in the case referred to by the Advocates General are notably as follows:
Decision n° 14/55 did not make the exercise of the powers which it conferred upon the Brussels agencies subject to any of the conditions to which it would have been subject if the High Authority had exercised them directly
This means that when the EU has been empowered by the Treaties for some acts, these acts can been delegated to a non-EU body, under the requirement that such acts from this non-EU body are subject to any control to which they would have been subject if the same acts had been exercised by an EU agency.
It should be noted that some scholars4 have interpreted, the other way around, that the theory of delegation was only applicable in the case that EU would access to EPC, hence that the current regulation on the unitary patent is based on a transformation. This interpretation could very well be correct. But it doesn't change anything.
Indeed, the Advocates General have referred for the theory of transformation to the Judgment of the Court (Grand Chamber) of 3 September 2008 in joined cases C-402/05 P and C-415/05 P, which states:
281. In this connection it is to be borne in mind that the Community is based on the rule of law, inasmuch as neither its Member States nor its institutions can avoid review of the conformity of their acts with the basic constitutional charter, the EC Treaty, which established a complete system of legal remedies and procedures designed to enable the Court of Justice to review the legality of acts of the institutions (Case 294/83 Les Verts v Parliament  ECR 1339, paragraph 23).
282. It is also to be recalled that an international agreement cannot affect the allocation of powers fixed by the Treaties or, consequently, the autonomy of the Community legal system, observance of which is ensured by the Court by virtue of the exclusive jurisdiction conferred on it by Article 220 EC, jurisdiction that the Court has, moreover, already held to form part of the very foundations of the Community (see, to that effect, Opinion 1/91  ECR I‑6079, paragraphs 35 and 71, and Case C-459/03 Commission v Ireland  ECR I‑4635, paragraph 123 and case-law cited).
283. In addition, according to settled case-law, fundamental rights form an integral part of the general principles of law whose observance the Court ensures. For that purpose, the Court draws inspiration from the constitutional traditions common to the Member States and from the guidelines supplied by international instruments for the protection of human rights on which the Member States have collaborated or to which they are signatories. In that regard, the ECHR has special significance (see, inter alia, Case C‑305/05 Ordre des barreaux francophones et germanophone and Others  ECR I‑5305, paragraph 29 and case-law cited).
284. It is also clear from the case-law that respect for human rights is a condition of the lawfulness of Community acts (Opinion 2/94, paragraph 34) and that measures incompatible with respect for human rights are not acceptable in the Community (Case C‑112/00 Schmidberger  ECR I‑5659, paragraph 73 and case-law cited).
285. It follows from all those considerations that the obligations imposed by an international agreement cannot have the effect of prejudicing the constitutional principles of the EC Treaty, which include the principle that all Community acts must respect fundamental rights, that respect constituting a condition of their lawfulness which it is for the Court to review in the framework of the complete system of legal remedies established by the Treaty.
316. As noted above in paragraphs 281 to 284, the review by the Court of the validity of any Community measure in the light of fundamental rights must be considered to be the expression, in a community based on the rule of law, of a constitutional guarantee stemming from the EC Treaty as an autonomous legal system which is not to be prejudiced by an international agreement.
As for the theory of delegation, this means that when a legal object — in our case an European patent granted by the EPO – is transformed into EU legal order – becoming an EU unitary patent – the compliance of such a legal object with EU law is to be review, in the same conditions as if this legal object had been directly created by an EU agency.
A way to implement this requirement, in case both of delegation and of transformation, can already be found in Article 2 of CPC:
3. Community patents shall have an autonomous character. They shall be subject only to the provisions of this Convention and those provisions of the European Patent Convention which are binding upon every European patent and which shall consequently be deemed to be provisions of this Convention.
This means that even if the grant of Community patents, according to the applicable rules under the EPC, is delegated to the EPO, such rules are subject to the same overview as if they had been directly included in the CPC.
An amendment to the current proposal for a regulation on the line of the above provision of the CPC about the autonomous character of the unitary patent would provide a way to fulfil conditions required to authorise the EU to delegate the granting of the unitary patent to the EPO. And such an amendment is very likely to be broadly accepted, since a similar provision about the autonomous character of the unitary patent has already been adopted by the Council in its general approach on the proposal for a Regulation on the EU Patent (16113/09 Add 1):
3. The EU patent shall have an autonomous character. Subject to paragraph 4, it shall be subject only to this Regulation and to the general principles of EU law. The provisions of this Regulation shall be without prejudice to the application of EU competition law or the law of Member States with regard to criminal liability, unfair competition and mergers.
4. The EPC shall apply to EU patents and to applications for EU patents to the extent that this Regulation does not provide for specific rules.
Moreover, the Commission, in its explanatory memorandum of the proposal for a Council decision authorising enhanced cooperation in the area of the creation of unitary patent protection (COM(2010) 790), has stated that the autonomous nature of the unitary patent should be included in the envisaged implementing measures of the enhanced cooperation. While this promise is not legally binding, not respecting it would give some grounds to an appeal against the regulation on the unitary patent. Therefore, the current proposal should be amended to affirm the autonomous character of the unitary patent, along with the fact that rules of EPC used by the EPO in order to exercise the delegation of powers to grant unitary patents should be deemed to be liable in the same conditions as if they had been included in the regulation for the unitary patent.
We are proposing a set of amendments that notably implement all the corrections detailed above. Amendment 1 deletes the reference to Article 142 EPC in order to solve the second and third objections raised above. Amendment 2 makes sure that Article 118 TFEU is correctly applied, as detailed for the first objection above. Amendment 3 implement the autonomous character of the unitary patent, as we've just seen. Additionally, some other amendments are proposed in order to reinforce the legal certainty of the regulation with regard to EU Treaties. Amendments 4 to 6 are proposing different alternatives to clarify some provisions of the EPC related to substantive patent law. Amendment 7 reaffirms the primacy of EU law with regard to limitations of the effects of the unitary patent. Amendments 8 and 9, in conformity with the deletion of reference to Article 142 EPC, delete also references to Articles 143 and 145 EPC, and get European Parliament more involved in the governance and the supervision of the administrative acts accomplished by the EPO. Amendment 10 guarantees that the delegation of powers to the EPO is limited in compliance with rules laid down by the CJEU. Amendment 12 makes sure that the primacy of EU law is respected. And Amendment 13 associates the European Parliament in the review of this regulation.
The legislative bodies of the EU, and specially the European Parliament, would be very well advised to fix the questionable issues of the regulation on the unitary patent, by adopting amendments in the line of those we are proposing for the reasons detailed above. It seems that there is no alternative if one really wants the unitary patent to become promptly a reality. Moreover such amendments could open the way to a return of the European Patent System to the European Union, as it has been expected and advocated by the founding fathers of the EPO5.
- 1. It should be noted that the reasoned opinion by the Chamber of Deputies of the Republic of Italy is of the opinion that “the competence that Article 118 attributes to the Union is therefore, through its objective and its scope, an exclusive competence of the European Union. In accordance with the case-law of the Court of Justice, the nature of a competence of the European Union and its relationship with the competences of Member States must always be assessed in practice in relation to the specific legal basis relevant to the case in question. The fact that the competence referred to in Article 118 is not included among the exclusive competences of the Union laid down in Article 3(1) TFEU and that the same article refers specifically to the establishment and functioning of the internal market, which is one of the shared competences under Article 4 TFEU, does not preclude its exclusive nature”. Were Article 118 be an exclusive competence of EU, the following rational would not been altered, and actually, its conclusion – that Member States are not free to conclude on their own a special agreement within the meaning of Art. 142 EPC – would even be strengthened.
- 2. We translate.
- 3. We translate, emphasis in the original downloadable from the Commission website.
- 4. See Ullrich, Hanns, Harmonizing Patent Law: The Untamable Union Patent (March 22, 2012). HARMONISATION OF EUROPEAN IP LAW: FROM EUROPEAN RULES TO BELGIAN LAW AND PRACTICE, M.-Chr. Janssens, G. Van Overwalle, eds., Brussels (Bruylant) 2012, Forthcoming; Max Planck Institute for Intellectual Property & Competition Law Research Paper No. 12-03. Available at SSRN: http://ssrn.com/abstract=2027920; Jaeger, Thomas, All Back to Square One? - An Assessment of the Latest Proposals for a Patent and Court for the Internal Market and Possible Alternatives (December 15, 2011). International Review of Intellectual Property and Competition Law (IIC), Forthcoming; Max Planck Institute for Intellectual Property & Competition Law Research Paper No. 12-01. Available at SSRN: http://ssrn.com/abstract=1973518
- 5. See J.B. van Benthem, The European Patent System and European Integration, IIC Vol. 24, N°4/1993, pp. 435-445; O. Bossung, The Return of European Patent Law in the European Union., GRUR Int. 1995, N°12, pp. 923-935; P. Braendli, The Future of the European Patent System, IIC Vol. 26, N°6/1995, pp. 813-828; C. Lees, Strategic Reflections on the European Patent Office, Patent Word, December 1995/ January 1996, pp. 24-29.; E. Armitage, EU Industrial Property Policy: Priority for Patents?, EIPR Vol.18, N°10/1996, pp. 555-558; J. Straus, The Present State of the Patent System in the European Union, European Commission, Luxembourg, 1997. ISBN 92-826-9555-7; etc.