The Presidency of the Council of the European Union published on 28 September 2012 the new draft of the Unified Patent Court (UPC) agreement. The draft incorporates elements agreed at the December 2011 Competitiveness Council and the June 2012 European Council meeting, but controversial issues remain.

BACKGROUND

Over the last 40 years, the European Union has debated whether or not to create a unitary patent covering all Member States and a new, pan-EU court system to deal with patent litigation. This debate has continued with renewed vigor in response to the recent economic crisis, in the hope that the proposals could spark innovation within the European Union.

By the end of the Polish Presidency in December 2011, a package of draft legislation to implement the new system had been prepared and was agreed between the Member States, with the exception of Italy and Spain, both of which opted not to participate. The package of proposals consists of a draft Regulation that implements enhanced co-operation in the creation of unitary patent protection, a draft Regulation on the applicable language regime for unitary patent protection and a draft international treaty relating to the UPC. The Court of Justice of the European Union (CJEU) has since heard Spain and Italy’s arguments relating to the use of the “enhanced procedure” to press ahead with the unitary patent system without their agreement, and how this breaches EU law.

One of the major points of contention in the proposed arrangements was the location of the Central Division. On 29 June 2012, the European Council agreed a compromise establishing the Central Division of the Court of First Instance in Paris, with specialist divisions located in London (chemistry, pharmaceuticals and life sciences) and Munich (mechanical engineering). However, as part of the compromise, it was also agreed that Articles 6 to 8 of the relevant Regulation would be deleted. These articles define the scope of the unitary patent protection including, amongst other things, the right of the proprietor to prevent the direct and indirect use of the invention, set out the limitations of the effects of a European patent with unitary effect, and also provide for the possibility for any European court to refer questions on the interpretation of EU law to the CJEU.

DISCUSSION

The consolidated text includes some of the amendments agreed upon during the 5 December 2011 Competitiveness Council and the 29/30 June 2012 EU Council summits, as well as making quite a few amendments in terms of language and consistency.

The most interesting changes introduced in the draft relate to the definition of “European patent”, which has been adapted to make it clear that the UPC will have the same jurisdiction with regard to European patents as national courts have currently, and that the jurisdiction of the UPC does not lag behind the jurisdiction of national courts. It also incorporates the agreed location of the Central Division, which will be split between Paris, London and Munich.

This most recent draft still, however, features Articles 6 to 8 of the Regulation. The first debate by the Legal Affairs Committee of the European Parliament on this new draft was held on 11 October 2012. While the European Parliament representatives expressed dismay at how the Council’s June agreement to remove Articles 6 to 8 was beyond the Council’s competence and flies in the face of European law, there seems to be recognition that it is no longer possible to retain these Articles without some form of amendment. Against that backdrop, the Council will have to propose a solution to this controversial issue that is acceptable to both the Member States and the European Parliament.

COMMENT

Despite the remaining complications, the Cypriot Presidency still aims to finalise the UPC agreement before the end of the calendar year. As such, the draft adheres to the ambitious timeline of the unitary patent system entering into force on 1 January 2014.