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Just weeks after we reported that the UK indicated its unwillingness to form part of the European Unified Patent Court (UPC), the German constitutional court last week dealt a further blow to the future of the UPC by upholding a constitutional complaint against the German ratification of the Agreement on the UPC.
The UPC Agreement is an ambitious piece of legislation, created with the intention of harmonizing patent law across the EU. This would provide patent protection via a Unitary Patent – as well as enforceability, validity and invalidity – across all of the EU Member States signed up to the Agreement. Alongside this Unitary Patent is a Unified Patent Court system, with its primary Central Division courts in London, Paris and Munich, which would decide on matters of patent validity and infringement.
A legal challenge against the ratification of the UPC Agreement was filed in 2017, alleging that it violated the German constitution. In view of the complaint, the constitutional court requested the German president not to ratify the Agreement until it had considered the merits of the complaint.
The German ratification is crucial for the potential future of the UPC. For the UPC to come into being, at least 13 EU Member States must ratify the Agreement, and these must include the UK, France and Germany.
Sixteen states have ratified the Agreement, including the UK and France, the UK doing so after the 2016 Brexit referendum. Therefore, as soon as Germany ratified the Agreement, the three-month transition period for the implementation of the UPC could begin.
However, the court upheld the complaint, by a 5-3 majority.
This was because the German act (‘Act of Approval’) by which it was to accede to the UPC Agreement was held to violate the democratic rights of the German population (Article 38 Basic Law). It was not passed with a 2/3 majority of all of the members of the Bundestag required for a transfer of authority or sovereign rights from Germany to the EU or a supranational entity such as the UPC (Article 23 Basic Law). As reversing a change in sovereign rights is extremely difficult to achieve, a higher threshold is written into German law before they can be enacted.
In fact, the 2/3 majority failed to materialise only because there were only 35 members of the German parliament (out of 709) present on the day of the vote. Despite the vote passing unanimously 35-0, this was well below the numbers required to obtain the 2/3 majority of the Bundestag. On this basis, the complaint was upheld.
It is not possible to appeal a decision of the German constitutional court.
However, the court did not uphold the complaint against the substance of the Act of Approval, and that it was incompatible with German law.
Where does this leave the prospects of the UPC now? Germany’s ratification of the UPC Agreement will be, at best, significantly delayed. This scenario, together with the UK’s recent indication that it did not now want to be involved in the UPC, despite earlier ratifying it, may cause there to be some reworking of the text of the UPC Agreement, for example to permit other countries, such as those within the European Economic Area, to join the UPC. Also, there will need to be further discussions regarding where one of the Central Division courts of the UPC – which was to be located in London – will instead be moved to.
While the decision cannot be appealed, there is still the possibility that the UPC Agreement is put before the German parliament again, when it may obtain the 2/3 majority needed to fulfil the Basic Law; but this is unlikely to be done before any renegotiations of the details of the UPC are completed.
However, given that negotiations between the EU member states are always slow, the UPC will likely remain on ice for quite a while longer.
If you have any questions about the UPC, or patents and intellectual property in general, please contact us.