Will amendments to the Brussels I Regulation delay the start-up of the UPC? - 19 February 2013

Will amendments to the Brussels I Regulation delay the start-up of the UPC? - 19 February 2013

19 February 2013

The Agreement on a Unified Patent Court (the “UPC Agreement”) has now been signed by all contracting states with the exception of Poland and Spain who did not sign but can still accede to it at a later date. Bulgaria has not yet signed but is expected to do so in the coming days once internal procedures have been completed. However, before the UPC Agreement can enter into force, it must be ratified by 13 Member States including the UK, France and Germany. Amendments will also need to be made to the Brussels I Regulation1 to make it consistent with the UPC Agreement. This article sets out the legislative process for those amendments and comments on some potential issues and how this may affect the timings of the start-up of the UPC.

Background

The Brussels I Regulation sets out rules relating to the jurisdiction of courts of Member States and the enforcement of judgments of those courts.
 
The UPC Agreement provides for a Unified Patent Court (“UPC”) with jurisdiction for the settlement of disputes relating to European Patents and European Patents with unitary effect2. The Unified Patent Court will be a court common to those Member States signatory to the UPC Agreement and subject to the same obligations under European Union law as any national court of those Member States. In recognition of the interplay between the UPC Agreement and the Brussels I Regulation and the requirement to amend the latter to be consistent with the former, Article 89(1) of the UPC Agreement states:
 
“This Agreement shall enter into force on 1 January 2014 or on the first day of the fourth month after the deposit of the thirteenth instrument of ratification or accession in accordance with Article 84, including the three Member States in which the highest number of European patents had effect in the year preceding the year in which the signature of the Agreement takes place or on the first day of the fourth month after the date of entry into force of the amendments to Regulation (EU) No 1215/2012 concerning its relationship with this Agreement, whichever is the latest.
 
Hence, the UPC Agreement explicitly refers to amendments to the Brussels I Regulation concerning its relationship with the UPC Agreement and ties its entry into force to the entry into force of those amendments.
 
The legislative process for amendment
 
The Brussels I Regulation, has only recently been recast as Regulation (EU) No. 1215/20123 (the “recast Brussels I Regulation”) using the “Ordinary” legislative procedure. If the same procedure is used to make the required amendments referred to in the UPC Agreement, this recent recasting may serve as a guide to the time to entry into force of the amendments required by the UPC Agreement.
 
The Ordinary legislative procedure (formerly the co-decision procedure) gives equal weight to the European Parliament and the Council of the European Union. The European Commission presents a legislative proposal simultaneously to Parliament and Council. At the first reading, which does not have a time limit, Parliament adopts its position by simple majority and provides it to Council. Acting by qualified majority, Council can either adopt the original proposal or as proposed to be amended by Parliament or adopt another position and forward this position to Parliament for second reading. At the second reading, Parliament may, by absolute majority, either approve Council’s position or take no decision within the 3 month (extendable to 4 months) time limit. In which case the legislation is deemed adopted and is signed and published. Clearly, this process may take some time as there is no time limit for when Parliament must adopt its position at first reading and Council must always adopt its position by qualified majority.
 
Under the qualified majority (QM) voting system the voting power of a member state is adjusted in an attempt to properly represent the distribution of people throughout the European Union. Rather than one vote for each Member State, votes are weighted according to a Member State’s population. In the current system, the UK, Germany, France and Italy each have 29 votes and Spain and Poland 27. Broadly speaking, a Council decision must be supported by at least 14 countries, at least 255 of the total 345 voting weights and at least 311 million people represented by the states that vote in favour.
 
The voting process is complicated further by circumstances unique to the Brussels I Regulation. First, because the proposal to revise the Brussels I Regulation will be a civil judicial cooperation matter, the UK’s Protocol to Title V of the Treaty on the Functioning of the European Union will apply. This means that the UK’s participation in the amended Regulation will depend upon the UK notifying the Community of its wish to take part in the adoption and application of the Regulation (known as opt-in) within 3 months of the publication of the Commission’s proposal. It seems likely that the UK will do so.
 
Second, whilst the previous incarnation of the Brussels I Regulation, Regulation No. 44/2001, was not directly applicable to Denmark, it had effectively been extended to Denmark by agreement between Denmark and the EU. However, Denmark is not taking part in the adoption of the recast Brussels I Regulation, Regulation No. 1215/2012, and is not bound by it or subject to its application. It does, however, remain open to Denmark to make the required amendments to Regulation No. 44/2001 pursuant to its agreement with the EU. Accordingly, as matters currently stand, Denmark will not be part of the Council voting process concerning the amendments to the Brussels I Regulation. This means that Denmark’s weighted vote does not count in the QM process and the total weighted votes required is reduced to 250.
 
The fact that the Council must adopt its position by QM may therefore provide an opportunity for a Member State to delay or even block the entry into force of the UPC Agreement by preventing or delaying the amendments being made to the Brussels I Regulation. Under the QM system the amendments to the Brussels I Regulation could be approved by Council (notwithstanding that Denmark is not participating) even if Spain, Poland and Italy decided not to support the amendments and either abstain or vote against the amendments. However, in this situation the vote would be finely poised with only a further 6 weighted votes against or in abstention tipping the balance. So any country with a weighted vote of 6 or more would have the power to block the decision. That is each remaining Member State with the exception of Latvia, Slovenia, Estonia, Cyprus, Luxembourg and Malta, who would each need to join forces with one other to have such blocking power.
 
The process for reform of the Brussels I Regulation started in 2007, however, the European Commission provided the legislative proposal in December 2010 and the Act was adopted by Council after the first reading in December 2012. The recast Brussels I Regulation was published in the Official Journal on 20 December 2012 and entered into force 20 days later - however, the majority of the provisions will not apply until 10 January 2015. Now, the entry into force of the UPC Agreement is tied to the entry into force of the amendments to the Brussels I Regulation. However, it must surely be the case that the UPC Agreement cannot come into effect until the amendments to the Brussels I Regulation are not only in force but also applicable. Otherwise, the “applicable” Brussels I Regulation will be inconsistent with the UPC Agreement. Given that the current unamended Brussels I Regulation does not apply until 10 January 2015, it would seem inconceivable that the required amendments to it could either come into force or come into effect before that date. This would seem to suggest that the earliest date the UPC could come into effect is 10 January 2015.
 
Subject to the above, now that the UPC Agreement has come into existence, there is presumably political consensus to implement the required amendments to the Brussels I Regulation and it may be possible to complete the legislative process relatively quickly. Some of the potential issues which will need to be resolved in order to make the Brussels I Regulation consistent with the UPC Agreement will be explored below. Many of these issues may not be straightforward and, coupled with the potential for Member States to block or delay the legislative process, the legislative process to implement the required amendments to the Brussels I Regulation may take some time.
 
Some potential issues
 
One of the key issues which will need to be addressed is the interaction between the Brussels I Regulation and the UPC Agreement during the transition regime provided by Article 83 of the UPC Agreement. In particular, the amendments to the Brussels I Regulation will need to address the balance of jurisdiction between national courts and the UPC.
 
The Brussels I Regulation currently gives the national court of a Member State exclusive jurisdiction for revocation actions concerning European Patents registered in that Members State4. Leaving aside for the moment European Patents with unitary effect, Article 1 of the UPC Agreement gives the UPC exclusive jurisdiction concerning disputes relating to European Patents without unitary effect. However, Article 83(1) provides that during a transitional period of seven years an action for infringement or for revocation of a European Patent may still be brought before national courts or other competent national authorities. Thus, for revocation and infringement proceedings concerning European Patents during the transitional period, jurisdiction is shared between the UPC and national courts of Member States. Both patentees and defendants will, respectively, have a choice as to whether to bring infringement and revocation actions in either the UPC or national courts. The Brussels I Regulation will need to be amended to allow for the non-exclusive jurisdiction provided for in Article 83(1) of the UPC Agreement.
 
Article 83 of the UPC Agreement does not appear to prevent a defendant to proceedings for infringement of a European Patent in either the UPC or a national court of a Contracting Member State from applying to revoke that European Patent in both the UPC and a national court, thus giving the defendant two bites at the cherry. This would be the case both during the transition period of 7 years (Article 83(1)) and, because Article 83(3) would appear to allow a patentee to opt-out of the exclusive jurisdiction of the UPC ad infinitum, after the end of the transition period. However, as discussed above, the Brussels I Regulation currently gives exclusive jurisdiction to the national court of a Member State for revocation actions concerning European Patents registered in that Members State. It also precludes proceedings before the courts of different Member States concerning the same cause of action and between the same parties5. It remains to be seen whether the Brussels I Regulation will be amended to prevent parallel revocation actions in the national court and the UPC and, if so, whether such amendments are consistent with the UPC Agreement.
 
Denmark’s relationship with the Brussels I Regulation not only affects the voting process as discussed above but also raises potential issues for Denmark and the operation of the UPC. We are not aware that Denmark intends to adopt the recast Brussels I Regulation. If Denmark does not adopt the recast Regulation itself, it would appear to be impossible for Denmark to adopt the amendments to it. If the UPC Agreement comes into force with Denmark as a signatory and Demark has not adopted the amendments to the Brussels I Regulation, it will be bound by a Regulation which is inconsistent with the UPC Agreement. In this case, for example, on the one hand under Regulation No. 44/2001 applicable in Denmark, revocation proceedings concerning European Patents designating Denmark must be brought before the national court in Denmark only. Further, in Denmark, the UPC will not be recognised as a competent court. However, on the other hand, according to the UPC Agreement, it should be possible to bring revocation proceedings concerning a European Patent designating Denmark in the UPC. Further, after the expiry of the transitional period, revocation proceedings concerning a European Patent designating Denmark which has not been opted-out must be brought in the UPC. These two positions are inconsistent.
 
In assigning exclusive jurisdiction to national courts for revocation actions concerning patents, the Brussels I Regulation currently refers to the place of registration of the patent. For example, under the current, pre-UPC, system a European Patent designating the UK is registered in the UK at the UK IPO and the UK courts have exclusive jurisdiction for proceedings concerning its validity. Under the UPC regime, and leaving aside the issues relating to the transition regime and opt-outs discussed above, where is the place of registration for a European Patent with unitary effect6? What about a European Patent designating a number of Member States but without unitary effect? Which court has exclusive jurisdiction in each case? The Brussels I Regulation will need to deal with these issues.
 
Judgments of the UPC must also be recognised and enforced in all contracting Member States to the UPC Agreement. How will the Brussels I Regulation deal with the recognition and enforcement of UPC judgments in any non-contracting states, such as Spain and Poland? 
 
These are just some of the potential issues which may mean that the drafting of the amendments to the Brussels I Regulation - required for the UPC Agreement to enter into force - is not straightforward. We wait with anticipation as to how the legislators navigate these potential issues and most importantly, how long will that process take.

 



1 Regulation (EU) No. 1215/2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters which is a recast of Regulation No. 44/2001.
2 Article 1 of the UPC Agreement.
3 Published in the Official Journal of the European Union on 20 December 2012.
4 Article 24(4) of the Brussels I Regulation.
5 Article 29 of the Brussels I Regulation.
6 See Article 2(e) of Regulation No. 1257/2012.
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