Readers may have seen our report on the news coming out of the meeting of the European Council on 29 June. The news was that agreement had been reached on what rather ironically (it turns out) had been called the “last outstanding issue” on the proposed EU patent package - the location of the Central Division of the Unified Patent Court (UPC).

We have previously reported on the concerns of industry, practitioners and judges alike regarding the proposed system, and the reluctance of the institutions of the EU to take these views into account in the long-running negotiations on the substance of the patent package. Rather than repeating those here, the reader is referred to our articles on the matter1.  

One point of contention on the patent package has, however, now taken centre stage in the light of recent developments—the role (or not) of the CJEU in the interpretation of substantive patent law.

29 June 2012: “Agreement” on the Central Division is reached, but at what cost?

As mentioned above, the only sticking point (as far as the public-facing spokespersons of the EU institutions were concerned) on the progress of the patent package was the location of the Central Division of the UPC. The decision is significant because of the likely number of cases that will, one way or another, end up in that division (rather than staying exclusively within the satellite Local or Regional Divisions that are envisaged by the system).

We learned that, at the recent meeting of the European Council (comprising the Heads of State or Government of the EU Member States), a deal was struck whereby the headquarters of the Central Division would be in Paris, but London and Munich would host specialist sub-divisions. We are generalising somewhat, but the London part of the Central Division would deal with disputes concerning life sciences, chemistry, pharmaceuticals, and the like, whereas Munich would deal with disputes in the field of engineering and medical devices.

So, all agreed then? Actually, probably not.  

All indications are that this compromise on the Central Division came at a price. A further element of the agreement reached by the European Council is quoted here:

“We suggest that Articles 6 to 8 of the Regulation [on] the creation of unitary patent protection [….] be deleted.”

This is a highly significant development. Articles 6 to 8 of the Regulation concern, infringement of the unitary patent right. As the Regulation is an instrument of EU law, the interpretation of its provisions would come within the jurisdiction of the Court of Justice of EU (CJEU)2.

The fear amongst users of the patent system was, therefore, that substantive issues on patent infringement would potentially become the subject of referrals to the CJEU. This referral process can cause delay and increase the costs of the litigation. Furthermore, serious questions had been raised as to whether the ultimate arbiters of substantive law in a supposedly highly specialist court system should be the non-specialist judges of the CJEU.

There was therefore a sense of relief amongst some commentators when it appeared that the participation of the CJEU in the fundamentals of patent law would be avoided under the deal cut by the European Council.

However, this is unlikely to be the end of the story. There has been considerable debate over the past months about whether or not the provisions on infringement of the unitary patent right had to be, as a matter of constitutional legality, included in the EU Regulation. The mantra of the EU institutions appeared to be that inclusion was indeed necessary, whereas many legal commentators were not so sure. The debate remained heated, in no small part due to the secrecy surrounding the legal advice that the EU institutions had apparently taken on the issue.

A new “last outstanding issue” on the patent package?

It was therefore unsurprising that, hot on the heels of the jubilant declarations of “a historic breakthrough” from the European Council, came news that the other players in the EU’s legislative process were not so impressed with the somewhat out of the blue excision of Articles 6 to 8 from the EU Regulation.

For example, the EU Parliament had been scheduled to vote on 4 July on what (it thought was) the already agreed proposals. However, following the European Council’s surgery on the EU Regulation, the vote was postponed in a flurry of rather colourful statements.  

Representatives of the EU Parliament have been reported as likening the European Council’s approach to reaching agreement on the patent package to haggling at an oriental bazaar.

Similarly, the European Council’s decision to break ranks on Articles 6 to 8 has been described as “a striking break” with procedure, and as “emasculating” the system. In our view, this is an emotional exaggeration. At the heart of this particular issue is whether we have a system which is acceptable to the political interest of the European Commission and the European Parliament; or whether we have one which will work and earn the respect of its users.

What happens next?

At least for now, the position has been taken by the EU Parliament that, should the European Council’s “suggestion” that Articles 6 to 8 be removed from the EU Regulation be taken forwards, the re-cast proposal “would go straight to the European Court of Justice”.

Those of our readers who have followed this saga for some years will recall the last time the CJEU was asked to adjudicate on the legality of the proposed EU patent court system (then in a different form). In that case, the CJEU was against a system which fell outside its jurisdiction or otherwise diluted its status as ultimate arbiter on matters concerning the EU legal order.  

Now, the issues were different in that case, so it is probably unfair to draw too close an analogy to the current situation. Nevertheless, absent a radical change of heart on the status of Articles 6 to 8 by the negotiating parties, there is every chance the patent package may stall yet again.  

It looks like we have another period of uncertainty ahead. This is not only in relation to the ultimate court of appeal. Even when that is settled, before the system comes into operation there are a few other matters to be sorted: we have to find a sufficient number of well qualified judges, train them in the new procedures (which have yet to be properly worked out), set up the courts and find some money to do all of this. With goodwill and with wise heads accepting that the interests of the customers should be paramount over political expediency, we could still have a system we can be proud of. However, the projected date of 2014 does look optimistic.