The latest version of the Presidency’s draft Agreement on the European and Community Patents Court was published on 23 March of this year. The Intellectual Property (Patents) Working Party met on 2 April to discuss this latest version of the draft Agreement.
Previous attempts to reach agreement on the judicial arrangements for a European and Community Patents Court have floundered for a variety of different reasons including but not limited to (1) concern over a non-sophisticated court making decisions with pan-European effect on the infringement and validity of patents covering highly technical subject matter; (2) the role of the ECJ in the court system and (3) the language in which the proceedings are conducted.
We consider below some of the key aspects of the latest version of the draft Agreement which have been designed to deal with these various concerns.
The draft Agreement establishes a European Patent Court which has exclusive jurisdiction to decide on the infringement and validity of European Patents as well as Community Patents (as and when they are granted). The Court would also have exclusive jurisdiction over various ancillary matters such as Supplementary Protection Certificates and compulsory licences.
The Court itself would comprise Courts of First Instance with a central division as well as various local or regional divisions and a centrally based Court of Appeal.
There is a need for the ECJ to have a role in the functioning of the European Patents Court. This need arises because as with national patent litigation at present, questions of interpretation of the Treaty (e.g., Articles 28 and 30) or the validity or interpretation of Community law which impacts on the enforcement of patents (e.g., the Biotechnology Directive, the Enforcement Directive and the SPC Regulation) must be referred to the ECJ for an opinion.
Previous versions of the draft Agreement had provided that the ECJ should have an appellate jurisdiction in respect of actions brought before the European Patents Court. The concern here was that this would be counter-productive because (as seen in the trade mark field) the ECJ tends to be slow to render opinions and the opinions which it does render are often difficult to interpret in practice.
This concern appears to have been met in the latest version of the draft Agreement by limiting the ECJ’s jurisdiction to questions of interpretation of the EU Treaty or the validity or interpretation of acts of EU institutions.
The Courts of First Instance comprise both a central division and various local or regional divisions. The concern about an unsophisticated court making decisions with pan-European effect on the infringement and validity of patents has been addressed in numerous ways.
First, the tripartite panel of Judges hearing the action whether in the central or a local or regional division is to be multinational. Second, the Judges from the Pool of Judges who are used to staff the central division and also supply the multinational element to the local and regional divisions are to include technically as well as legally qualified Judges. Third, the panels for the central division will always comprise two legally qualified Judges and one technically qualified Judge. Fourth, the local and regional divisions are given the power to request that a technically qualified Judge is appointed as the multinational Judge element from the Pool of Judges. Fifth, the local or regional divisions are given the power to transfer an action in which there is a revocation counterclaim to the central division (instead of requesting the appointment of a technical Judge from the Pool of Judges). Sixth, all revocation only actions will be heard by the central division. Seventh, there is provision for the setting up of a training programme for Judges so as to improve the patent litigation expertise of the existing as well as the future Judges.
Whilst many of these proposals have been well received, one which is causing some disquiet is the jurisdiction given to the central division over revocation actions – forcing litigants to start revocation actions in the central division and giving local and regional divisions the power to transfer revocation counterclaims to the central division whilst the infringement action is stayed will in both cases have the potential to cause delay and thereby also increase costs.
The provisions regarding language are intended to enable the Contracting States or failing that the court or failing that the parties to opt for the language of the proceedings to be that in which the patent was granted or failing that one of the three official languages of the EPO i.e., in both cases English, French or German.
Thus, (1) the language of the proceedings at the central division shall be the language in which the patent was granted, or (2) the parties can agree to the language of the proceedings being that in which the patent was granted and if the local or regional division does not agree with that decision, the case can be transferred to the central division, or (3) the local or regional division can themselves decide on the language of the proceedings being that in which the patent was granted on grounds of fairness and convenience, or (4) the Contracting States may designate one or more of the official languages of the EPO as the language of proceedings of their local or regional division. Failing that, the language of the proceedings before a local or regional division is the official language of the Contracting State or States hosting the local or regional division or the official language designated by the Contracting States sharing a regional division.
In practice, the language of most proceedings is likely to be English, French or German. There is however the possibility that it will be another less widely spoken official language of a Contracting State in which translations and interpretation would be required throughout for at least one of the parties to the proceedings.
The draft Agreement specifies that the Court fees shall be fixed at such a level to ensure the right balance between the principle of fair access to justice and an adequate contribution of the parties for the costs incurred by the Court. It remains to be seen how much users will be charged for using the new European Patents Court.
The economic rationale for establishing the European Patents Court would appear to be based on the assumption that it would be able to deliver litigation for roughly the same cost as the three largest low-cost European national systems namely Germany, France and The Netherlands.
If that assumption is correct (which obviously would remain to be seen in practice) and also assuming that litigation of European Patents before the European Patents Court becomes compulsory (which as explained below is what is envisaged in the draft Agreement), then for those companies that can afford to litigate in only one of those low cost national systems, litigation would no longer be an option because they could not afford it and for those companies that can bear the cost of litigating in many jurisdictions, they would lose the tactical advantage of so doing. For those companies that can afford to litigate in a few jurisdictions but do not wish to obtain any tactical advantage from litigating in many jurisdictions, litigation before the European Patents Court would have the potential to offer a costs advantage.
Whether in practice however litigation before the European Patents Court would offer users an advantage over the current national litigation systems would seem to depend upon the circumstances of the parties to the action being litigated and the nature of that action.
Although the transitional provisions come at the end of the draft Agreement, in many respects, they represent the starting point of a consideration by user as to whether the new European Patents Court will be a good thing.
There are two aspects to the transitional provisions. The first is that for a period of seven years after the Agreement comes into force, infringement and revocation actions can be initiated as now before the national courts of the Contracting States. The second is that, provided that they notify the Court’s Registry more than one month before the expiry of the seven year transitional period, patentees have the right to opt out of the Agreement in relation to those patents and patent applications which were granted or pending as at the end of the seven year transitional period.
After the end of the seven year transitional period therefore (subject to the right to opt out in relation to their then granted patents or pending patent applications) patentees will be obliged to litigate their European Patents before the new European Patents Court. Although as explained above, it is envisaged that there will be several if not many first instance courts or divisions, the rules under which they will be operating will essentially be the same.
For the reasons explained above, there are likely to be a significant number of patentees who, given the choice, might not necessarily choose to litigate their European Patents before the new European Patents Court but would prefer the flexibility offered by the current national litigation systems. The problem from the point of view of the Commission (and indeed the Contracting States) however is one of cost. To help the Court pay its way, the Commission is intent on obliging users to litigate their European Patents before the new European Patents Court and by so doing, ensure that they contribute towards the costs of establishing and running it.
On 20 March 2009, the Commission issued a recommendation that the Council authorise the Commission to open negotiations for the adoption of an Agreement creating a Unified Patent Litigation System. If the recommendation is accepted then discussions concerning the Community Patent and European/Community Patents Court will commence in earnest again.
It obviously remains to be seen whether the Commission can persuade the users that the latest set of proposals will deal with their historical concerns and provide a litigation regime which is as, if not more, fair, efficient and cost effective than the existing national litigation system.