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19/05/2011

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This solutions paper indeed seems to be a non-paper in that it has not been published on the Commission's website; it can only be found on this EPLAW blog.

The non-paper suggests to move on with the EEUPC draft agreement, modified in the following respects:
1. non-EU states like CH cannot join;
2. the EU will not join either; only EU states will join;
3. there will be additional guarantees that the Court of Justice (CJEU) of the EU is able to fulfil its role under the EU Treaties.

The second element may be liked by EPLA supporters, as the main difference between EPLA and the EEUPC draft was the participation of the EU, which participation has led to some deteriorations in the draft as regards efficiency (languages!) and quality (appointment criteria) because in the EU, non-discrimination is more important than anything else.
However, the non-paper proposes to maintain as much as possible of the EEUPC draft, rather than going back to the far better EPLA draft, so that these deteriorations will not be turned back.

Importantly, it should be noted that it is essential to have a litigation system in place before the unitary patent can start.

In view thereof, the approach mentioned in the non-paper is hopeless, as it needs at least 25 ratifications or a substantial reduction of the number of EU Member States participating in the unitary patent system. To enable such reduction, it is necessary to delay adoption of the Council position (1st reading) on the draft unitary patent regulation until after e.g. 5 years after the EEUPC Agreement has been signed so as to allow for ratifications, as only by such a delayed adoption of the Council position the enhanced cooperation can be limited to only those EU states that have ratified the EEUPC Agreement.

This delay in the adoption of the Council position in 1st reading will completely kill the momentum for the unitary patent. Some people would be quite happy with just having a common litigation system for a coalition of the willing, and that may very well indeed be the result of this approach.

Importantly, this agreement-based approach does not solve concerns as regards the disadvantages of referrals to the CJEU, as somebody should interpret that EEUPC agreement, and at least as regards the overlap with EU law the CJEU will have to be involved in such interpretation. Note that as to Brussels Convention of 1968 (a similar agreement among EU states) it was the CJEU that was appointed as arbitrator to decide what was meant by the Brussels Convention.

As mentioned in the non-paper, Regulation 44/2001 should be amended so as to enable this litigation agreement, in view of at least Article 71 of Regulation 44/2001 that (contrary to the corresponding provision in Article 57 of the Brussels Convention) does not allow for future instruments as to particular matters. A problem here is that amendment of this Regulation follows the ordinary legislative procedure, so that the European Parliament should agree to adjusting Regulation 44/2001 to allow for a litigation agreement without EU participation, while in the past the European Parliament has opposed EPLA. This approach comes down to notwithstanding these European Parliament objections moving on with an EPLA-based structure in which the EU does not participate. The European Parliament may not like this.


The non-paper does not mention the option to establish an EPLA-like court system common to the Member States on the basis of a regulation based on e.g. Article 114 TFEU (and if that would be legally impossible, Article 352 TFEU).

This regulation-based approach is both straightforward and legally possible, but some people see as a disadvantage that then infringing acts are a matter of EU law and thus subject to CJEU referrals.

That concern could easily be addressed by adjusting the CJEU Statute such that the General Court instead of the Court of Justice handles IP referrals (see Article 256(3) TFEU), with a time-constraint that the preliminary ruling procedure may not take more than 6 months and that the General Court’s ruling should be given within 2 weeks from a hearing before the General Court. This would be doable for the General Court if the number of members of the General Court is increased by e.g. 3 or 5. Under Article 281 TFEU, a CJEU Statute amendment follows the ordinary legislative procedure, after consultation of the Court of Justice.

What is left is just a straightforward use of standard EU legislation, in line with all other convention (drafts) that are now regulations (e.g. CTM regulation, jurisdiction regulation, Rome-I regulation).

It would then be perfectly possible to ensure that the litigation system and the unitary patent enter into force simultaneously for a large number of Member States before the 2014 deadline mentioned in the Commission's plans on the Innovation Union.

Solutions for a unified patent litigation system –

The way forward after the opinion 1/09 of the CJEU


Non-paper of the Commission services


Introduction
As set out in the Council conclusions of 7 December 2009, the future
unified patent system needs to be based on two pillars: the creation of
unitary patent protection and the setting up of a unified and specialised
patent jurisdiction. Both aspects need to come to a result at the same
time.

Work has progressed considerably on the creation of unitary patent
protection. On 10 March 2011, the Council authorised 25 Member States to
establish enhanced cooperation in the area of the creation of unitary
patent protection. On 13 April, the Commission presented two proposals for
regulations implementing the enhanced cooperation: one on the creation of
unitary patent protection, the other on the applicable translation
arrangements. The work in Council on these proposals started on 14 April in
the Mertens Group. The Hungarian Presidency has indicated that its
objective is to agree on a general approach on both regulations at the
Competitiveness Council on 30 May.

The work on the setting up of the unified patent jurisdiction led by
different Presidencies between 2007 and 2009 resulted in the draft
agreement on the European and EU Patents Court (EEUPC). The draft agreement
provided for the setting up of a unified patent court, the EEUPC,
consisting of a Court of First Instance (with local and central divisions)
and a Court of Appeal, with exclusive jurisdiction for both European
patents and EU patents (now: European patents with unitary effect). The
draft agreement was designed to be concluded by the Union, the Member
States and certain third states party to the European Patent Convention,
for instance Switzerland. On 6 July 2009 the Council, on the basis of
Article 218 (11) TFEU, requested the Court of Justice of the European Union
(CJEU) to give an opinion on whether the envisaged draft agreement was
compatible with the Treaties. Meanwhile, without prejudice to the pending
opinion of the CJEU, the Council adopted conclusions on the main features
of the EEUPC on 4 December 2009 (doc. 17229/09). The CJEU delivered its
opinion on 8 March 2011. It held that the draft agreement was, in its
current state, incompatible with the Treaties.

It was concluded at the last meeting of the Competitiveness Council on 10
March 2011 that it is important to resume work on the unified patent
litigation system quickly and to agree on the way forward following the
delivery of the opinion of the CJEU. The aim of this Commission services'
non-paper is to examine and outline a possible solution in the light of the
opinion of the CJEU.


The opinion 1/09 of the CJEU

The CJEU confirmed that entrusting jurisdiction to the CJEU by making use
of Article 262 TFEU is not the only option available for the creation of a
unified patent litigation system. It can therefore be deduced that a court
set up by Member States through an international agreement could be
compatible with the Treaty.

The concerns of the CJEU in its opinion 1/09 relate to the lack of
sufficient guarantees to ensure that the EEUPC will respect the primacy of
Union law and apply Union law in conformity with the interpretation of the
CJEU. The CJEU in particular focused on the risk that the EEUPC might
refrain from requesting a preliminary ruling from the CJEU, even in a case
where the proper interpretation of Union law would need to be decided on by
the CJEU, and pointed out that, unlike in the case of national courts,
infringement proceedings against the Member States would not be possible if
the EEUPC were to breach Union law. Further, such decisions of the EEUPC
could not give rise to any financial liability of the Member States.

The CJEU also observes that the Member States are obliged, by reason of
inter alia the principle of sincere cooperation (Article 4(3) TEU), to
ensure in their respective territories the application of and respect for
Union law. Its concern seems to relate in particular to the setting up of
an international court outside the framework of the EU Treaties with the
participation of third states. The CJEU considers that by the principle of
loyal cooperation Member States should ensure the respect of the primacy of
European Union law and the role of the CJEU as the ultimate interpreter of
Union law. The CJEU points out that national courts are obliged to request
preliminary rulings and, in collaboration with the CJEU, fulfil a duty
entrusted on them both of ensuring that in the interpretation and
application of the Treaties the law is observed. The CJEU and national
courts are in direct cooperation in the correct application and uniform
interpretation of Union law and in protection of individual rights
conferred by the Union legal order.

However, the CJEU distinguishes the envisaged EEUPC from that of the
Benelux Court of Justice. Indeed, the latter being a court common to a
number of Member States and, situated, consequently, within the judicial
system of the European Union, its decisions are subject to mechanisms
capable of ensuring the full effectiveness of the rules of the Union.


the suggested Solution

As a result of opinion 1/09 of the CJEU, it appears that the participation
of third countries must be excluded. The following options may therefore be
considered:

• conferral of exclusive jurisdiction on patent litigation upon the CJEU,

• the jurisdiction could rest with national courts which could deliver
judgments for the whole territory of the participating Member States,
as for the Community trademark, or

• conferral of exclusive jurisdiction upon an independent court to be
established by the Member States.


The first two options would appear not to meet the political requirements
of the Member States and the interests of the users of the patent system.
Member States have expressed in the past their opposition to the first
option, i.e. to confer jurisdiction on the CJEU. Moreover, this option
would not allow for the creation of a unified patent jurisdiction because
the CJEU may not be entrusted with the jurisdiction on disputes relating to
"classical" European patents. This is one of the reasons why the users of
the patent system are opposed to such a solution. This resulted clearly
from the Commission's consultation on the future patent policy in 2006 and
has ever since been confirmed by the users of the patent system on various
occasions. The second option, leaving the jurisdiction on the unitary
patent protection to national courts, as in the trade mark area, would most
likely not be acceptable to most Member States and industry, raising
concerns that the high quality of judgements and uniform interpretation
through judgments for the whole territory of the participating Member
States may not be achieved by making use of national courts, in particular
due to the lack of a common appeal instance. Strong opposition to such a
solution has continuously been voiced by the users of the patent system.

The only possible solution that has been identified is the conclusion of an
international agreement between the Member States to set up a unified
patent court with jurisdiction for the Member States only. The Member
States participating in the enhanced cooperation have signalled their
commitment to create a unified patent court; therefore they would have to
be party to the agreement creating such a jurisdiction. The Member States
who have decided not to take part in the enhanced cooperation may seek to
participate in the creation of the unified court for disputes related to
"classical" European patents valid on their territories. In the interest of
the users of the patent system and to reach an agreement as quickly as
possible, the results of the negotiations on the draft agreement on the
European and EU patent court should be preserved as far as possible;
amendments to the text should be made where necessary in particular in the
light of the opinion 1/09 of the CJEU.

On this basis, a future patent litigation system should rest on the
following pillars:

- A unified patent court set up by Member States. In the light of the
opinion 1/09 of the CJEU, such a unified patent court can only be set up by
the Member States; the participation of third states should be excluded.
The European Union would not be a party.

- Exclusive jurisdiction in respect of civil litigation related to
infringement and validity for both the "classical" European patents and the
European patents with unitary effect. The jurisdiction of the unified
patent court should comprise jurisdiction for both the "classical" European
patents as well as the European patents with unitary effect. Limiting the
jurisdiction of the specialised patent court to "classical" European
patents would render the unitary patent protection unattractive and may
even result in the unitary patent protection not being created, whereas
limiting the jurisdiction to the unitary patent protection could lead to
the establishment of two different common courts in the area of European
patents. Such duplication would not be reasonable, in particular given the
limited number of competent judges and the risk of contradictory judgments.


- The main features of the EEUPC should be maintained: The unified patent
court should also maintain the basic features of the EEUPC set out in the
Council conclusions of December 2009, including the setting up of the Court
with a Court of First instance (with local and central divisions), a Court
of Appeal and a Registry, the composition of the panels, the jurisdiction
in respect of actions and counterclaims for revocations, the rules on the
languages of proceedings and the transitional period. These features have
been developed in long and detailed discussions between the Member States:
they strike a fine balance between the different interests at stake,
represent a difficult but fair compromise and have also found broad support
from the users of the patent system.

- Guarantees to ensure the respect of Union law by the unified patent
court, fully situated within the judicial system of the Union: To ensure
conformity with the Treaty as set out in the opinion 1/09 of the CJEU, it
is necessary to ensure that the unified patent court respects Union law and
requests preliminary rulings in accordance with the conditions applicable
to national courts. It is also necessary to ensure that sanctions, in the
form of infringement proceedings and financial liability, can be imposed.
Considering that the unified patent court would be a court set up by Member
States only, it would seem possible for the Commission to start
infringement proceedings against all Member States jointly in cases where
the unified patent court violated Union law. Similarly, in such a case, the
rules on financial liability to make good damages caused to individuals as
a result of a breach of Union law also seem to be applicable to all Member
States jointly. Both aspects would nevertheless need to be clarified in the
agreement including where a Köbler claim could be brought (namely in a
forum where its full effectiveness is ensured).

The Member States would need to respect the acquis when establishing a
common patent court by way of an agreement. To the extent that amendments
to the acquis may be necessary, these would have to be adopted before such
an agreement could enter into force. It would appear that at least
Regulation (EC) No 44/2001 on jurisdiction and the recognition and
enforcement of judgments in civil and commercial matters (Brussels I) might
need to be amended as its jurisdictional choices could otherwise be
interpreted as conflicting with such an agreement.

It is also worth noting that an agreement between Member States would not
bind EFTA states (nor obviously other third states), which might not
recognise its judgements within the framework of the Lugano Convention.

The compatibility with national (constitutional) law of granting the above-
mentioned competences to a court common to all (participating) Member
States established by an agreement between them remains to be addressed by
the Member States.


A possible Way Forward

The unified patent court could therefore be set up by an agreement to be
concluded between the Member States on the creation of a common
jurisdiction. As set out above, on the basis of the opinion of the CJEU,
third states may not participate in this agreement.

The work should continue on the basis of the Council conclusions of 7
December 2009 (doc. 17229/09) and the Working document on a revised
Presidency text on a draft Agreement on the European and EU Patents Court
and Draft Statute of 23 March 2009 (doc. 7928/09). Appropriate changes
should be introduced in a new Presidency text and submitted to the Member
States for discussion. These would need to include changes related to the
contracting parties, the necessary remedies and guarantees to ensure the
respect of Union law by the unified patent court. The basic institutional
architecture of the unified patent court as foreseen for the EEUPC and
agreed by the Council in 2009 (doc. 17229/09) should however be maintained.

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