“The likelihood is that this represents the end of the Unified Patent Court project, or at least a lengthy delay. The existing system whereby European patents are enforced separately in each member state will continue for the foreseeable future.”
Judges in Germany have dealt what may be a fatal blow to the project to create a Unified Patent Court (UPC) in Europe.
In a decision published today, the German Federal Constitutional Court said the Act of the Approval of the UPC Agreement was void. (BVerfG, Beschluss des Zweiten Senats vom 13. February 2020 – 2 BvR 739/17 -, Rn. (1-21).)
The Act of Approval was passed unanimously by the Second Chamber of the Bundestag but only about 35 members were present. The Court said that a two-thirds majority of the Bundestag was required.
The UPC Agreement was signed in February 2013, and had to be ratified by 13 EU member states, including the three largest patenting countries. It would set up a single court, with branches across Europe, to hear disputes on the validity and infringement of European patents.
Germany’s ratification would have brought the UPC into effect, but the president suspended ratification pending the Court’s decision. Separately, the UK recently said that it will not take part in the UPC after Brexit.
Two-Thirds Majority Required
In its decision, the Constitutional Court said that the UPC amends the German constitution in substantive terms, and hence requires a two-thirds majority in the Bundestag. Three of the eight judges dissented from the decision, which can be read (in German) here.
The Court’s press release states that sovereign powers should only be conferred in ways provided for by the Basic Law: “An act of approval to an international treaty that has been adopted in violation thereof cannot provide democratic legitimation for the exercise of public authority by the EU or any other international institution supplementary to or otherwise closely tied to the EU.”
The UPC had been broadly supported by industry and patent practitioners in Europe, who believed that, in combination with the proposed unitary patent, it would make it simpler to protect and enforce patents in Europe.
However, the Agreement involved compromises over issues such as language, jurisdiction and location—and was never universally supported. Notably, Spain and Poland decided not to participate.
The German constitutional challenge was brought by Düsseldorf lawyer Dr. Ingve Stjerna on several grounds. As the Court accepted the Bundestag argument, it did not consider the other grounds.
Unlikely to Move Forward in the Current Climate
The decision could leave it open to the Bundestag to try to pass the Act again with the required two-thirds majority. However, there must be some doubt in the current climate about whether (and when) the German government will be willing to bring forward another Act, whether it would secure the two-thirds majority, and – even if it did – whether another complaint would be brought.
The likelihood therefore is that this represents the end of the UPC project, or at least a lengthy delay. The existing system whereby European patents are enforced separately in each member state will continue for the foreseeable future.
The UPC Preparatory Committee said that, despite the decision, “the preparatory work will continue, while the judgment and the way forward is further analysed.”
These were some initial reactions on Twitter: