Council meeting of May 30th 2011: some clouds threatening the official blue sky of unitary patent

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On Monday May 30th 2011, in a Council meeting, ministers and representatives of Member States have for the first time exchanged their views about the Commission proposals concerning the unitary patent, as well as about Commission non-paper concerning the jurisdiction. Although this meeting was quite boring, with each and every speaker stating more or less the same platitudes, some critics on major drawbacks have emerged from the delegations of France and Luxembourg. But the main achievement of this Council meeting, and the one which has hit the media's attention, was without any doubt the official declaration by Spain and Italy that both countries, which are the only Member States having refused to regulate under the enhanced cooperation regime, have filed an appeal before the European Court of Justice (ECJ) precisely against the Council's decision to launch the enhanced cooperation.

To make a long story short, what was repeated by almost all Member States during nearly two hours can be summarized as a general agreement with the Commission proposals, as amended by the Hungarian Presidency1. The main change brought by these amendments is the refusal by Member States to delegate powers to the Commission for setting the level of renewal fees and their distribution to the national patent officices.

Level of renewal fees and their distribution key are actually a major source of dysfunction in the governance of the European Patent Office (EPO) today, as repeatedly denounced by the own staff of EPO2. Just as Thierry Sueur3 once stated about the competition concerning renewal fees between national patent offices inside the EPO Administrative Council: “I am convinced that the way the EPO is managed today (by the Administrative Council) is such that it will mean either the death of the EPO or its transformation into a cash machine”, one can expect that such discussions could divise Member States for the creation of the unitary patent.

But what was striking, compared to last Council meeting, held in March 2011, was that the 27 Member States agreed, together with the Commission, that the creation of the unitary patent, the translation arrangements and the setting-up of a unified jurisdiction were belonging to the same political package. In March, the Commission had tried to present the unitary patent and the jurisdiction as two separate files. But at this time, the Council was asked to launch the enhanced cooperation for the creation of the unitary patent, while the work on the unified jurisdiction has just been smashed by the European Court of Justice.

Although the huge majority of Member States have diplomatically agreed to work on the unified jurisdiction, based on Commission non-paper, it seems that there is still a long way to go before they actually reach an agreement on the basic fundations of such a jurisdiction. The most convincing speaker who has pointed issues in this area was Ms Michèle EISENBARTH, Deputy Permanent Representative of Luxembourg:

Thank you President. I'd like to thank the presidency for all the efforts made in this dossier. I can agree to the regulation to create unitary patent and also the proposal concerning the language arrangements.
Number of delegations have said before: you can't neglect the jurisdiction outside of the patent. Let me say first of all that we want that to be an effective and robust system for the patent in institutional and legal terms, and of course it has to fully respect the opinion of the European Court of Justice.
We always have doubts about the compatibility with the Treaty of European Patent and Community Patent jurisdiction4 for which we asked the Court of Justice's opinion in 2010. It is with that reservation that we were willing to accept under the Swedish presidency the conclusions of December 2009.
The opinion of the Court was handed down recently and they reach the conclusion about incompatibility with the Treaty. What is advocated by the Commission in its document doesn't seem to clear off the underling problem raised by the Court of Justice, namely: maintaining the powers on national courts in interpreting and applying European Law. We won't fail to raise a number of questions in this regard in future work.
We regret the fact that the Commission discarded the other two solutions we have to confer jurisdiction on the community patent. We think it's possible5 to have confered on the ECJ the cases concerning of the unitary patent coupled with traditional patent. And this on basis of Article 262 of the Treaty and by way of an international agreement. Secondly, we can also take the jurisdictional model we have for trademarks.
We'd like the three possible options to remain on the table in our work, and each of those, in the light of Court of Justice opinion, be thought through looking at the pros and cons of each of these three solutions. Thank you very much.

In its non-paper, the Commission has proposed to create a unified jurisdiction by the way of an international agreement between EU Member States only, third countries which are signatories of European Patent Convention (EPC) but not members of the EU, as well as the EU itself, wouldn't be parties to this agreement. Member States would be collectively accountable for this international court to respect EU Law, by means of preliminary referrals to the ECJ, and would collectively be subject to sanctions in case of violation of EU Law. Indeed, this proposed solution can be questioned as to whether it is sufficient to answer incompatibilities with the Treaties, as raised in the ECJ opinion.

Mr Philippe LEGLISE-COSTA, Deputy Permanent Representative of France, has given further details about this:

Than you President, we would like to thank you very much indeed for the considerable efforts that you focusing on this major dossier and we hope that it will be possible to reach agreement on this by the end of June. We should use all the time intervaning to strike required clarifications and to find solutions to the pending issues, so we can guarantee the legal soundness of the entire system.
With regard to the regulation on unitary protection, we support your overall proposals. We feel that some technical discussions will soon be needed on three points.
One, implementation of the regulation in the framework of the EPO, i.e. with article 12 mechanism, that's the article 12 of the draft regulation. As you know, according to this mechanism, it will be the Member States which, as contracting parties to the European Patent Convention, would confer on this Office additional tasks to administer the unitary effect of the European patent and would take the general measures needed by this effect. So, this would oblige Member States to collectively, in a non-Union body, take the necessary measures to implement a Union act. Obviously that is provided for by the Treaty, in Article 291, but when uniform conditions are needed to implement acts, those measures have to be taken by Union institutions. We therefore need to verify, with the assistance of the Council and Commission legal services, whether those uniform conditions are needed to ensure the proper implementation of the regulation on the territory of all the countries participating to the enhanced cooperation.
Second point is the link between the regulations and the jurisdictional system. We of course recognize this political link. Nonetheless we have to spell out how it would take for legal effect. We need to avoid, in our view, putting in place a system which would make the entry into force of Union regulations dependant of another instrument, for we don't know either what it would contain or how and when it will be adopted.
The third point concerns the renewal fees. We feel we should be guided by two principles. First of all, we should have in place a system which would guarantee that, as contracting parties to the European Patent Convention, we can fully assume our responsabilities with regard to the cost of the additional tasks we would be confering on the EPO. So, we need some technical drafting work in order to ensure we have proper joint of linking between the regulations and Articles 146 and 147 of the Patent Convention. We must also, as has already been said, be faithful to what we agreed in the conclusions adopted by the Council in December 2009, regarding the criteria to be borne in mind for the distribution key.
With regard to the jurisdictional system now, France is prepared to examine the system put forward by the Commission in its non-paper, which would confer or create a common jurisdiction working for Member States. However, this proposal also raises important issues which we should look at carefully in order to guarantee compatibility of the system with the conditions laid down by the European Court of Justice in its opinion by 8 March. In particular, we feel we should ensure compliance with two fundamental principles.
One, all the necessary guarantees must be provided that the EU acquis and legislation will be complied with. First of all that means that the European Court of Justice should be able to give its opinion as often as necessary. And here, we should think about how we would refer matters to it which might be appropriate apart from referrals for preliminary rulings. France and other countries have already made comments on this in the Court itself. Secondly, it presupposes that any violation of EU Law would be the subject of effective procedures. First of all, we still need to clarify how procedures can operate collective failures and compensations as said in the Commission's non-paper.
We must also ensure that the Union's competences, in terms of the relevant EU acquis and the AERT case, are fully met when the new instrument is drawn up.
We feel that these elements, these principles should be reflected in the draft agreement which we would be looking at closely when the time comes and with the help of the Council legal service. Thank you.

The most interesting precision in this speech comes from the next to last paragraph and the reference to “AERT case”. This was a case relative to the European Agreement on Road Transport, where the ECJ has ruled that: “powers which, at the outset, have not been conferred exclusively upon the European Community may become so progressively through the exercise of those powers by the Community. In this case, the implementation of a common transport policy by the Community, through the laying down of common rules of an internal nature (adoption of a regulation), excludes the possibility of concurrent powers on the part of the Member States throughout the sphere of transport.” This seminal ruling of March 31st 1971 has raised several key principles of European construction: subsidiarity and primacy of European law over national law.

In the context of the proposed jurisdiction for unitary patents, this reference points out that having EU not being a party to the agreement may not comply with EU fundamental principles. The French representative has raised such objections in a very diplomatical way, but Mr Vincenzo GRASSI, Deputy Permanent Representative of Italy has put it more firmly:

Thank you Chairman. We're not going to make any comments on the first two regulations but it's my proper duty to inform you on behalf of the Italian government that Italy has filed a claim with the Court of Justice for the revocation of the decision of the 10th of March relating to reinforced cooperation. And we do have the Court of Justice, which has already expressed its opinion very clearly on the jurisdictional aspect, can now do with this decision which I think is going to cause great divisions otherwise within Europe.
Now looking at the jurisdictional aspect, and on the Commission's non-paper, for certainly, this is the core of the problem. European companies, particulary SMEs, are very interested in having legal certainty more than unlegal discrimination.
Now, why a negative approach? The Commission has put forward arguments which we don't have to share, regarding to the spin consistant with the private law. Now, we don't understand why the Court shouldn't have this jurisdiction over classical patents, classical European patents. We feel that this is perfectly feasible. The legislator could in fact follow the natural legal basis under the Treaties, that is Article 262, to take account of the requirements of European industry for provisions for a unified and specialized legal system on patents.
So we could go for the jurisdictional model which has already been adopted by Council [for Community trademark]6. We can also think of the establishment of a legal body common to Member States, but only provided that it remains within the model of the Benelux Court. Without of them, as the Commission suggests, coming out put a totally different mechanism, so it is difficult for us to hold a discussion on the basis of the Commission's non-paper, because it gives rise to considerable doubts in our mind as to the legality of the approach.
We are looking for an agreement for countries within the Community, and which third countries [and European Union] will not participate. I think that this is something which is an idea which was very forcefully ruled against by the Court of Justice. If we have a look at the ECJ's opinion, certainly the whole approach is something which needs to be discussed, because this is really way outside certain aspects of the opinion. Looking at national jurisdictions, the model suggested by the Commission's non-paper is very different. But we would believe that there should be some role as it says given over to national courts. If we are looking on the central focus of the Court of Appeal, we have to look at the international jurisdiction, which excludes that of national jurisdiction. Not beyond the references to this model, the legal model suggested by the Commission, it is important to remember that in the Court's opinion there's particular emphasis on the role of the national jurisdiction. National jurisdiction is the first guardian of European Law and the Commission can certainly not deprivate it of this function, without altering the essential character of the separation of powers as enshrined in the Treaty.
I think it's important to look at the two conditions of the opinion. First of all the obligation of the national State to ensure that national legislation is preserved. And secondly the obligation, and this is still under the auspices of the Member State, to response to infringements of Union Law which come out of the conduct of a particular. Now, provided these two conditions are observed and looking at the responsability of international judges, the non-paper of the Commission use this idea of a “joint” as the provision. Now there's no indication however of what the conditions might be, and do it, this could operate under a body which does not have an international character.
The Commission suggests that we're involved amendments relating to the Community acquis. OK, but I think that more than these amendments, what we have to realise is that there's going to be a blockage initially of a whole series of Union standards, because this is incompatible in other words.
What we are doing is moving to a process of deharmonisation which is going to have an adverse impact on the Community acquis. So the intergovernmental agreement proposed by the Commission, as the Luxembourg delegation has just said, is going to give rise to for more doubts and problems than it is going to solve. However, in our opinion, I think we need to use the opinion of the Court, and in this way tackle with the doubts which have arisen in the minds of the Court and the minds above us.

Beside the official announcement of the appeal to the ECJ, the main point in the Italian representative's speech is that the jurisdiction proposed by the Commission is geared outside the EU framework, while this is precisely what has been criticised in the ECJ opinion. And Mr Diego LÓPEZ GARRIDO, Secretary of State for the European Union, Ministry of Foreign Affairs and Cooperation of Spain has gone further on this:

Thank you President. As you know, Spain, together with Italy, is probably one of the few to oppose to what is proposed. I would therefore ask your forbearance as to time alloted.
Let me start by telling you that this morning, the Spanish Government has appealed for the decision of cooperation adopted by the Council to be revoked and this was presented to the Court of Justice of the European Union in Luxembourg. We consider that this decision, as we had the opportunity to say, goes against European law, that this is a major breach in the law, that it is discrimination because Spanish language, like other languages, has not the same linguistic status as French, German or English. And I had the opportunity to explain what is at stake, this discrimination has not been justified. Moreover, this goes against the logic of inclusive European Union. Therefore, we are against the regulations that are derived from this decision. And it is also predictable, we will be against their adoption and, if they were to be adopted, we will seek an appeal against them.
In these regulations before us today, we see things very clearly. This is also true as regards to the non-paper of the Commission on the jurisdiction. We see very well that is totally out of line of European law.
Then, Dickens was mentioned here and there in delegations, I would like to mention Andersen. Andersen's Tales and specifically The Little Match Girl. You know when she strikes a match, the world is changing. Well it is the same here. One clearly sees that, here we go, the European construction is moving toward something which is totally unknown, which is linked to different things, European conventions that are outside of European law, but have nothing to do with the European Union itself.
As regards to the Commission proposal on jurisdiction, the regulation on patents, it is similar: quite a departure from what has been agreed in 2009. We end up with a patent that ultimately is not a patent of the European Union, which is ultimately a patent of the Munich Convention. And as regards to the debate on fees, and well there too, we will rather discuss within the Munich Convention, but not within the European Union. But the Munich Convention, it comes under international law. And the Munich Convention, the EU is not a party simply because it is not acceptable that this is the case. Therefore, the Commission has no powers in respect of this Munich Convention.
In addition, there is the question of legal basis. Because the legal basis is not the 118 or 326 TFEU, but 142 of the Munich Convention, which is still not Community Law, as far as I know.
Regarding jurisdiction, the non-paper of the Commission, what does it says? Without explanation, the Commission says that it prefers the least European option among all. That is to say an ad hoc court, which has nothing to do with the European legal order. This is quite contrary to the opinion of the ECJ. The Court of Justice, in its Opinion 1/09, indicates that the court must be integrated into the institutional and judicial system of the European Union. That is to say, either national court, or Court of Justice in Luxembourg. While there, a court, an ad hoc court is proposed and it is totally not the same as the Luxembourg Court. Finally, we are in a process of decommunitaurising issues that are already communitaurised. We are not told exactly how we will do it, but that's what we're told. This goes quite counter to the logic of integration of the European Union.
How are we going to implement things? How are we going to interpret European Law? And how a jurisdiction which is not part of the legal order of EU is going to be able to interpret this EU Law? We will still have a court that is not part of the European Union and its legal system. So this confirms the doubts I had and reinforces the doubts that were expressed by other delegations. This is a provision that is quite different, a jurisdiction that is not related to the European Union, which is totally separated from the Court of Justice of the European Union and which is blind to all national constitutional requirements. Because the 2009 agreement said the opposite. It says very clearly in English that it is "with due regard": the constitutional requirements of Member States have to be taken with due regard. But here, we are delegating the jurisdiction to a court which has no connection with either the national or the European Union level. So I do not quite understand how one could attribute such powers to bodies outside the EU.
Moreover, on the linguistic point of view, there is blatant discrimination. The opinion of the Court of Justice did not go into this debate, I admit. The fact is that, how are we going to process? We'll have judges who will use one language or another, but this is quite contrary to legal requirements.
So I'd like to understand why we are embarked on this path. Obviously, the idea is to make the economy of unanimity. Now, however, unanimity is written black on white, as a rule with regard to intellectual property rights. And the Commission with its proposals, has sought to overcome this requirement of unanimity and therefore to go out of European law. I would argue strongly for us to get back to the community spirit, to get back to negotiations, which we knew very well that if one engages in these negociations even before he has an idea of the jurisdiction, well, that would be difficult. It is unclear what will happen later for the judicial system. And we have a legal basis which can not be lower with this kind of document. A legal basis loosely based on Commission non-paper. How will we achieve a true European Union patent? A true European Union patent is at 27, not at 25. That's what we want, and clearly, this is not the path we have chosen today with this document.

What an accurate inventory of issues where Commission's proposals are departing from the EU institutional, legal and jurisdictional framework, towards passing the buck to the EPO!

Unfortunately, as a side note, English spoken citizens who have listened to the translation provided by the Council services, as in the video extract above, would not get these issues as rightly stated by the Spanish Secretary of State. With the translation provided by the Council services, Mr LÓPEZ GARRIDO looks rather like a fool talking nonsense. So we have chosen to give you our own English translation, based on the French version of the speech. And we'll soon write about this mistranslation in a specific post on this website…

Now, for the proposed jurisdiction, why has the Commission chosen the “least EU option”? The answer has been given by Commissionner Barnier himslef during this Council meeting: “We have to choose the jurisdiction which is really interests of users. […] It is really essential that the Council now send a clear signal to all users of the patent system.”. The reason is that this choice is aimed to satisfy the users of the patent system's interests.

This is a major failure coming from a regulating body. A patent is a very powerful legal title giving its owner a – temporary – monopoly allowing her to exclude competitors. Users of the patent system are patent owners. And their primary interest is to get the broadest exclusion as possible over as many subject matters as possible. In order to balance this exception to free competition, society is expected to gain from disclosure and incentives to innovate. Therefore the role of the European Commission, and above all of the EU legislator, i.e. the Council and the European Parliament, should be to guarantee that the interests of the EU society and the EU economy, as a whole, are preserved. Instead of discarding options because, as written black on white in the Commission non-paper: “The first two options would appear not to meet […] the interests of the users of the patent system. […] This is one of the reasons why the users of the patent system are opposed to such a solution. […] Strong opposition to such a solution has continuously been voiced by the users of the patent system […] In the interest of the users of the patent system”, etc., any jurisdiction competent for patent litigations should be able to take into account not only patent law, but also potentially conflicting rights, such as competition law or fundamental rights and freedoms.

The “patent microcosm” has reacted to ECJ decision on the incompatibility with the Treaties of the envisaged agreement with regard to unified patent jurisdiction, by rightly interpreting this opinion as a mandatory oversight by the ECJ. And they've yelled this would result with “unpredictability of the result because of the lack of patent experience of the [European Court of Justice]”7. But that is the point: the EU legislator cannot let only judges selected by the patent microcosm give them ruling that they expect. It would be detrimental for EU economy and society as a whole.

In conclusion, we urge the European Parliament and the Council to follow the request from Luxembourg and to weight all available options concerning the appropriate jurisdiction, with the primary objective to bring some checks and balances in the validity of patents granted by the EPO. And as for the regulation on the creation of unitary patent, we have proposed a set of amendments, aiming at giving back more powers to EU institutions, for example by explicitly including substantive patent law inside EU Law.

  • 1. These amendments have been reported as comments to the original text on this website.
  • 2. As listed in the criticisms of the EPO governance: “There is a strong belief amongst staff that the financial benefits to the Member States arising from the renewal fees motivate the Administrative Council, and consequently the EPO administration, to focus on the quantity rather than the quality of the granted patents”.
  • 3. Chairman of the Patent Working Group of Business Europe, a lobby for European enterprises that doesn't hide to seek influence on the Council and the Commission in a number of files, including the unitary patent: “BUSINESSEUROPE requests to be closely involved in the discussions on the substance of the proposals that will follow [the authorisation of enhanced cooperation in the area of EU patent]”.
  • 4. The English translation by Council services says “European Patent and European Community jurisdiction”, which is obviously wrong.
  • 5. It seems that the English translation by Council services says here “difficult”, but the original French speech actually says ”possible”.
  • 6. The English translation provided by Council has forgotten to mention that the adopted model was for the Community trademark, original speech in Italian has actually made this precision.
  • 7. See, that we have commented on this website.