The Court of Justice of the European Union on 5 May 2015, in cases C-146/13 and C-147/13, has followed Advocate General Yves Bot’s1 opinion and dismissed, as expected, the Kingdom of Spain’s actions against the Regulations implementing enhanced cooperation for the creation of a unitary patent.
For more than four decades, attempts to create a unitary patent system for the European Union have failed, but significant developments in recent years have opened the door to a “Unitary Patent Package”. The intention of the European Legislature has been to maintain the current system of the Convention on the Grant of European Patents (EPC) and improve upon it. The “package” includes a unitary protection to European patents and establishes a specific unified Court. However, the Kingdom of Spain (Spain), the project’s main opponent, has introduced actions seeking the annulment of Regulations No 1257/2012 and 1260/2012 respectively, creating a unitary protection conferred by a patent and establishing the translation arrangements.
On 18 November 2014, Advocate General Yves Bot released his Opinion in which he suggested the Court of Justice dismiss Spain’s claims. The Court of Justice has now done so in its ruling on 5 May 2015. The two Regulations are part of the Unitary Patent Package, along with the Agreement on a Unified Patent Court and Statute that was signed by 25 Member States of the European Union on 19 February 2013.
The Court of Justice rejected the entirety of Spain’s arguments:
On the breach of the values of the rule of law (plea specific to Regulation No 1257/2012).
Spain argued that Regulation No 1257/2012 disregards the values of the rule of law in so far as it has been established on the basis of a right granted by the European Patent Office, whose acts are not subject to judicial review.
The Court of Justice noted that the aforementioned regulation alters neither the application and examination process of the European patent nor its granting formalities. The Court of Justice stated: “the contested regulation is in no way intended to delimit, even partially, the conditions for granting European patents – which are exclusively governed by the EPC and not by EU law”.2
The EPC’s system remains unchanged. Regulation 1257/2012 simply supplements the European patent system by adding the possibility for applicants to elect for a unitary effect.
On the lack of legal basis and alternatively breach of Article 118 of the Treaty on the Functioning of the European Union (TFEU).
Spain argued that Article 118 of the TFEU was not an adequate legal basis for adopting the contested Regulations.
According to the Court of Justice, Article 118 of the TFEU does not compel the European Parliament and Council to harmonize every aspect of intellectual property law. Indeed, the EU legislative body elected to refer to national laws, ensuring uniform protection by stating each European patent with unitary effect would be subject to the domestic law of one Member State, and this same national law would apply throughout the territory of the Member States as part of the enhanced cooperation project.
The Court of Justice stated: “the designation of the national law of a single Member State, which is applicable in the territory of all the participating Member States, and the substantive provisions of which define the acts against which an EPUE provides protection and the characteristics of that EPUE as an object of property, helps to ensure the uniformity of the protection conferred by that patent”.3
On the misuse of power through the use of enhanced cooperation.
Spain argued that European Parliament and Council have committed a misuse of powers, since Regulation No 1257/2013 does not respect the objective of enhanced cooperation provided in Article 20 of the Treaty on European Union (TEU). According to Spain, the very fact that the effects of the European patent with unitary effect are addressed in the Agreement on a Unified Patent Court is simply a means to avoid the European Union’s law and control.
The Court of Justice believes that Spain simply reiterated its assertion that the challenged regulation does not establish any judicial system capable of providing uniform intellectual property rights protection. Therefore, as for the previous argument, this one has also been rejected. The European Legislature is not prevented from referring to national laws, as long as a uniform protection is organized on the territory of the signatory states.
On the violation of Article 291(2) TFEU and misapplication of the Meroni case law on the delegation of power.
Spain argued that Article 291 of the TFEU does not allow the EU Legislature to delegate to the participating Member States the power to set the level of renewal fees and determine the share of distribution of those fees.
In the Court of Justice’s view: “contrary to what is maintained by some of the interveners, (…) the setting of the level of renewal fees and the share of distribution of those fees, referred to in Article 9(2) of the contested regulation, constitutes the implementation of a legally binding Union act for the purposes of Article 291(1) TFEU”.4
As the Advocate General stated is his Opinion on case C-146/13, Regulation No 1257/2012 confers the power to establish renewal fees of the European patent with unitary effect to the Member States and to determine how to distribute shares of those fees. “The exercise of that power takes place within a legislative framework established and clarified by the EU legislature which does not need to be implemented under uniform conditions in all the Member States”.5
Concerning the violation of the Meroni case law, the latter is not applicable here according to the Court of Justice. Indeed, the case law solely relates to the potential for a European institution to delegate some of its powers to an EU or external body, rather than conferring those powers to the Council or the Commission. In this case, it is the Member States that confer some powers to the European Patent Office.
On the violation of the principle of autonomy and uniformity.
Spain argued that the entry into force of both Regulations cannot depend on the date of entry into force of the Agreement in a Unified Patent Court.
However, the EU Legislature is of the view that the establishment of this Court is essential to guaranteeing the proper functioning of the unitary patent system and to ensuring legal certainty. The Court of Justice confirms this view, adding: “as the EU legislature has left it to the Member States, for the purposes of ensuring the application of the provisions of the contested regulation, to adopt several measures within the legal framework established by the EPC and to establish the Unified Patent Court, which — as is stated in recitals 24 and 25 of that regulation — is essential in order to ensure the proper functioning of the EPUE, consistency of case-law and hence legal certainty, and cost-effectiveness for patent proprietors”.6
However, it is interesting to underline that the Court of Justice did not adopt, deliberately or not, the Advocate General’s comments on the fact that the principle of sincere cooperation implies that all participating Member States must take appropriate measures to implement enhanced cooperation, including the ratification of the Agreement on a Unified Patent Court, and that the refusal to ratify said Agreement could violate the principle of sincere cooperation, which would jeopardize the attainment of the Union’s harmonization and uniform protection objectives.
On the infringement of the principles of non-discrimination and of legal certainty (plea specific to Regulation No 1260/2012 on the use of languages).
Spain argued that Regulation No 1260/2012 consists of a language arrangement that is prejudicial to individuals whose language is not one of the official languages of the EPO.
At paragraph 47 of case C-147/13, the Court of Justice has reiterated the opinion of the Advocate General:
“it must be concluded that the contested regulation maintains the necessary balance between the various interests and, therefore, does not go beyond what is necessary to achieve the legitimate objective pursued. (…) to differentiate between the official languages of the European Union, and to choose only English, French and German, is appropriate and proportionate to the legitimate objective pursued by that regulation”.7
The Court of Justice therefore considers that this limitation is adequate and appropriate as it ensures unitary patent protection throughout the territory of the participating Member States whilst enabling a significant reduction in translation costs to be achieved.8
Let’s hope that the level of the fees of the European patent with unitary effect, which have not been disclosed yet, will be appropriate and thus provide an incentive for businesses to adopt the proposed pan-European protection for their inventions — and that the Unified Patent Court shall be an attractive forum for big-ticket international patent disputes as well as small and medium-sized enterprises wishing to enforce their rights.
Finally, it must be pointed out that six countries have now ratified the Agreement on a Unified Patent Court: Austria; Belgium; Denmark; France; Malta; and Sweden.9 It is up to the remaining Member States to swiftly ratify the Agreement in order to speed up the implementation process. As of today, the Unitary Patent system as well as the Unitary patent Court with its seat in Paris are expected to be inaugurated in 2017.