The last hurdle to the Unitary Patent Court

On 5 May 2015, the CJEU dismissed two actions brought by Spain against the legality of the creation of the Unitary Patent (UP) and the Unitary Patent Court (UPC). This was the main legal challenge to the creation of the UPC and these decisions now lead the way to the implementation of the UPC.

The current system of European patent applications is centralised; governed by the European Patent Office (EPO) which was a creation of the European Patent Convention 1973 (EPC). Most of the contracting states to the EPC are European Union Member States with a few non-EU States. Once a patent is granted under the current system, any issues relating to validity and infringement are determined by national law. This means that patent enforcement is governed by the national law of each country, potentially leading to inconsistent legal decisions for the same patent in different European countries.

The creation of a single European patent, with unitary effect which will guarantee uniformity of protection, and the advantage of creating legal certainty, has been in the making for over 50 years. In February 2013, 24 EU Member States signed an agreement to create a pan-European Court, the UPC and the Unitary Patent. 

  The CJEU dismissed the first challenge brought to the legality of the “enhanced cooperation” procedure to create of the UPC by Spain and Italy in April 2013. In June 2014, Spain made its second challenge, which was considerably more substantial, to the legality of the unitary patent and language regulations (1257/12 and 1260/12) in cases C-146/13 and C-147/13. The decisions were delivered on 5 May 2015.

Case 146/13- Challenge to the creation of the UP Regulation (1257/2012)

Judicial review of decisions that have binding effects on third parties, form part of the rule of law in the EU. The UP Regulation gives certain rights to the EPO. Spain argued that the rule of law is breached due to the fact that the EPO, a body which is not subject to judicial review, hence not under the jurisdiction of the CJEU, and which is governed solely by the EPC, makes decisions.

The CJEU rejected this argument and held that the regulation is not intended to delimit, even partially, the conditions for granting European patents (governed by the EPC) and that it does not incorporate the procedure for granting European patents laid down by the EPC into EU law.
Spain also argued that the first paragraph of Article 118 TFEU (Treaty on the Functioning of the European Union) regarding the uniform protection of intellectual property rights is not an adequate legal basis of the regulation.

The CJEU held that the UP protection is apt to prevent divergences in terms of patent protection in the Member States and provides uniform protection within the meaning of the first paragraph of Article 118.

Further, Spain argued that the delegation to the EPO of the power to set the level of renewal fees and share the distribution for UPs infringes Article 291 TFEU and principles in case law (Meroni v High Authority 9/56, EU:C: 1958:7). Meroni established limits on delegation of Community powers to agencies.

The CJEU held that the EU, unlike its Member States, is not a party to the EPC, and that the EU legislature did not delegate any implementing powers which are exclusively its own under EU law to the participating Member States or the EPO and that the principles laid down in Meroni cannot apply.

Case C-147/13 – Challenge to the Translation Regulation (1260/2012)

Spain argued that the adoption of this regulation infringes the principle of non-discrimination as stated in Article 2 TFEU since it establishes a language arrangement which is prejudicial to those whose language is not one of the official languages of the EPO.

The CJEU held that the language arrangements established by the regulation are capable of making access to the UP and patent system much easier, less costly and legally more secure and introduced mechanisms such as a compensation scheme for the reimbursement of translation costs, or for potential infringers to obtain a full translation of the patent. The CJEU held that this regulation maintains the necessary balance between the various interests and does not go beyond what is necessary to achieve the legitimate objective.

Next Steps

Now that the Spanish challenge has been cleared, in order for the UPC Agreements to enter into force, it must be ratified by 13 countries including France, Germany and the UK. Thus far 6 countries- Belgium, Austria, Denmark, Malta, Sweden, France and Luxembourg have ratified, and on 1 May 2015, the Netherlands made the first step towards ratification.

Current timings indicate that the UPC will be up and running by the end of 2016 or early 2017.