The second Spanish challenge to the UPC system - the AG's Opinion - 19 November 2014

The second Spanish challenge to the UPC system - the AG's Opinion - 19 November 2014

19 November 2014

Ignacio Gonzalez Royo, David George

On 18 November 2014, Advocate General Yves Bot gave his opinion on each of the cases brought in the CJEU by Spain to challenge the legality of Regulations 1257/12 and 1260/12 creating the unitary patent system. In this item we look in a little detail at the reasoning behind the recommendation to dismiss the challenges. The significance of the opinion is, of course, that if followed, this would overcome the last remaining legal obstacle to the introduction of the unitary patent and Unified Patent Court system.

 
C-146/13 (appeal against Regulation no 1257/2012 creating the unitary patent system)

  1. First argument: Breach of the values of the rule of law mentioned in article 2 TFEU in so far as the Regulation has been established on the basis of a right granted by the European Patent Office (EPO), whose acts are not subject to judicial review (which is necessary to guarantee the correct and uniform application of the European Union law and the protection of fundamental rights). Specifically, Spain believes that the Regulation infringes these values because the administrative procedure for granting a patent is excluded from judicial review.

 
The AG takes the view that the Regulation does not affect the granting procedure regulated by the European Patent Convention. Rather, the unitary protection created by the contested Regulation only provides European patents with an additional quality, namely, the unitary effect. The effect only applies once the European patent is granted and while it is in force. Consequently, the AG suggests rejecting the first argument because it is manifestly unfounded.

  1. Second argument: Lack of legal basis of the Regulation. According to Spain, article 118 TFEU is not the appropriate legal basis for the Regulation and, thus, it should be deemed non-existent. Specifically, this Regulation lacks material content because it does not specify the acts for which the unitary patent offers protection. In essence, the content and purpose of the contested Regulation do not correspond to the legal basis on which the Regulation is founded. Moreover, the reference to the national legislation of the participant Member States does no guarantee uniform protection in the EU regarding IP rights and the Regulation does not approximate the laws of the Member States to that effect.

 
The AG rejects this argument for the following reasons:

  • The selection of the legal basis must be done according to the purpose and content of the act.
  • The purpose of the Regulation is to offer unitary protection which offers a clear advantage in terms of uniformity. Until the regulation becomes applicable, the proprietor of the European patent was obliged to apply for registration of his European patent in each State which was a party to the Convention in which he wished to receive protection. This also meant that, for the same offence committed in a number of Member States, there were as many different procedures and laws applicable to the settlement of disputes, which caused considerable legal uncertainty.
  • The content is not an “empty shell” as Spain argues because (a) article 3.1 provides for the requirements of the unitary effect, (b) article 4 defines the date after which the unitary protection has effects, (c) article 5 regulates the effects of the unitary character and the way of guaranteeing the uniform protection in all the participant States
  • Article 118 TFEU does not exclude that the created right makes reference to national law.
     
  1. Third argument: Misuse of power through the use of enhanced cooperation for purposes other than those provided for in the treaties. Spain insists that the Regulation is an “empty shell” and does not guarantee a uniform protection, which is the purpose of the enhanced cooperation. In essence, Spain insists that the Regulation lacks material content.

 
The AG rejects this argument in light of the case law on misuse of power, which requires objective, relevant and consistent evidence that an act has been adopted exclusively or substantially for different purposes than those permitted by the power in question. The AG rejects the evidence submitted by Spain because (a) it refers to and insists on the Regulation lacking material content and (b) is incorrect for the same reasons for rejecting the second argument (namely, the Regulation does have material content).

  1. Fourth argument: Infringement of article 291(2) TFEU and, in the alternative misapplication of the Meroni case law in the regulation of the system for setting renewal fees and for determining the “share of distribution” of those fees.

 
The AG points out that neither the Meroni case law nor the decision UK v Parliament and Council (C 270/12) developing the principles of Meroni are applicable here because the facts are different. Meroni refers to the possibility of an institution of the Union delegating some of its powers, which is not the case here.

  1. Fifth argument: Misapplication of the Meroni case law in the delegation to the EPO of certain administrative tasks relating to the European patent with unitary effect.


The AG rejects the argument because in the contested Regulation it is not the EU legislative who delegates tasks to the EPO but the participant Member States. Consequently, the facts are, again, different to the Meroni case law.

  1. Sixth argument and seventh argument (dealt with jointly by the AG) regarding the breach of the principles of autonomy and uniformity in the application of EU law, as regards the rules governing the entry into force of the Regulation)
 
  • Despite some confusion in Spain’s sixth argument, the AG infers that Spain seeks, in essence, to challenge the UPC Agreement and evidence that it misapplies Report 1/09 (C:2011:123). However, in the AG’s view the CJEU is not competent to analyse the Unified Patent Court Agreement because an agreement such as this is not among the listed acts which can be reviewed by the CJEU. The UPC Agreement is an intergovernmental negotiated agreement and signed only by some countries on the basis of international law.
  • In addition, the AG rejects Spain’s view that the application of the Regulation depends on the entry into force of the UPC Agreement and thus on the will of the participating Member States to ratify the UPC Agreement. Indeed, the AG held that all the participating Member States have the obligation to ratify the UPC Agreement because failure to do so would breach of the principle of sincere cooperation.

 
Finally, with respect to Spain’s petition to partially annul the Regulation, the AG believes that this petition is not permitted because annulling the section that Spain requests would affect the nature of the Regulation and, according to CJEU’s case law, partial annulments are only possible when the sections are separate and independent and the annulment would not compromise the nature of the act.
 
C-147/13 (appeal against Regulation no 1260/2012 relating to the language regime in the unitary patent system)

  1. First argument: Infringement of the principle of non-discrimination established in article 2 TEU in introducing a language scheme of detriment to persons whose mother tongue is not English, French or German (the languages of the EPO and the new European patent with unitary effect system). Spain alleges that this scheme is disproportionate and not justified on grounds of public interest and that it creates inequalities between persons which would be able to afford the means necessary to understand with the required degree of accuracy documents produced in those languages, and those who would have to commit and pay for translations to reach the same level of understanding. Also, the lack of translations for the patent documents and claims reduces legal certainty and could negatively affect competition.

 
The AG infers that Spain wants patents to be translated into all of the languages of the EU. In that respect, using the decision on Kik v OHIM, the AG concludes that there is no principle in the EU of language equality. Further, he takes into consideration the high costs of the current European patent system and the importance of the EU’s objective of favouring the adequate functioning of the internal market and fostering innovation. Therefore, he finds it proportionate to limit the languages to keep costs to a minimum. The chosen languages are adequate to the reality of the patent sector, since English, French and German are the languages in which the majority of scientific papers are published, as well as the languages spoken in the countries with most patent applications.

  1. Second argument: Failure to have regard to the case law in Meroni by delegating the administration of the compensation scheme (article 5) and the publication of the translations (article 6(2)) to the EPO.

 
The AG refers here to the analysis made in assessing Spain’s fourth and fifth claims in C-146/13, reaching the conclusion that this case law refers to different facts.

  1. Third argument: Lack of legal basis for article 4 by regulating translation in the event of a dispute. Spain considers that this article does not directly affect the language arrangements for the intellectual property right referred to in the second paragraph of Article 118 TFEU and therefore it cannot be used as legal basis to incorporate procedural safeguards.

 
The AG disagrees with Spain’s view. Recital 16 of the Regulation states that one of its main goals is the creation of a uniform and simple translation regime, therefore article 4 is closely linked to the language regime and thus that article 4 has clear legal basis.

  1. Fourth argument: Breach of the principle of legal certainty. Spain claims that the Regulation limits the access to information of economic operators; it does not specify the methods of publication of the grant and registration of patents; it does not specify the caps that would affect the cost compensation system or how this must be established; and the automatic translation system mentioned in the Regulation did not actually exist at the time this was enacted.

 
The AG accepts the arguments of the Council and does not consider a breach of legal certainty to leave certain aspects of the compensation system or the automatic translation scheme to the regulation of member states. Inter alia, he takes the view that having only one authentic translation increases legal certainty because it avoids discrepancies between the different language versions.

  1. Fifth argument regarding breach of the principle of autonomy of Union law. Spain alleges that article 7 of the Regulation is contrary to this principle because the parties to the UPC Agreement are empowered to decide the date of entry into force of a law of the Union and, consequently, its application.

 
The AG rejects Spain’s position by referring to arguments Six and Seven in C 146/13. In essence, all the participating Member States have the obligation to ratify the UPC Agreement because failure to do so would breach of the principle of sincere cooperation.
 
Finally, as in case C-146/13, Spain’s petition to partially annul the Regulation is rejected because annulling the sections requested by Spain would compromise the nature of the Regulation.

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