German government responds to FDP’s questions on UPC

German government responds to FDP’s questions on UPC

17 November 2020

As reported here, the draft legislation required for Germany to ratify the Unified Patent Court Agreement (UPCA) and the Protocol on Provisional Application is currently being considered by Bundestag committees before it returns to the Bundestag for a second reading. If approved with no amendments, it will immediately be given a third reading, when it must be approved by two-thirds of the Bundestag’s members. The support of the FDP (Free Democratic Party), a parliamentary group with 80 of the 709 Bundestag seats, is considered important for obtaining that majority. However, the FDP recently asked the federal government, in a Kleine Anfrage in the Bundestag, several questions about its second attempt to ratify the UPC Agreement in its current form, expressing concern that, even if this time the required majority was met, the UPCA may be unconstitutional and also about the effect of the UPC/unitary patent system on SMEs. The government’s answer refutes those concerns. Before answering the specific questions, the government noted that the unitary patent/UPC project has, over the many years of negotiations, had strong support from German and European industry, including SMEs. The government’s answers are summarised below.

  1. Has the government commissioned an independent scientific cost-benefit analysis of the European patent reform, in particular with regard to the UPC, and if yes, what was the result of the analysis?
  2. How has the government concluded that the European patent reform is beneficial to SMEs, in view of the risks for SMEs which the European Commission has admitted and the lack of a cost-benefit analysis?
    The government answered these questions together. It listed in some detail the advantages of the unitary patent/UPC system to innovative businesses, e.g. a simple procedure and significantly lower costs for EU patent protection, no translations needed after grant so lower costs and no errors leading to different scopes of protection, and a single court procedure for determining infringement and validity giving legal certainty. As well as these advantages enabling cross-border activity and being particularly beneficial for SMEs, it noted that German SMEs will benefit from courts being in four locations in Germany (due not only to location but to the rules on language). The government referred to various studies and analysis carried out (although not specifically commissioned by itself), including a cost-benefit analysis by the European Commission. It concluded that, against this background, it considers an additional cost-benefit analysis is not required.
  3. What measures has the government taken to ensure that the special needs of SMEs are taken into account in the design of the European patent reform, in particular in proceedings before the European Court of Justice (CJEU)?
    The government first referred to its previous answers, stating that SMEs will be able to obtain inexpensive and legally certain patent protection in Europe for their inventions and so operate successfully in the European market. Regarding judicial proceedings, the government noted that these are according to the rules of a fair trial, reflecting the law of the EU and its member states, and referred to the UPCA, which provides that the UPC shall base its decisions on, inter alia, Union law, and refer to the CJEU to ensure its correct interpretation. The government therefore did not consider a special arrangement for SMEs was required.

  4. What measures has the government taken to ensure that, in proceedings before the UPC, SMEs can operate on an equal footing with economically stronger competitors and are not at a disadvantage because of cost?
    The government replied that it had successfully advocated this position in the negotiations. Regarding court fees, giving some examples, it said that, apart from in exceptional cases, the costs for infringement and invalidity proceedings in the UPC will be significantly less than in German courts, and the cost benefit (for court fees and other procedural costs) will be even greater due to proceedings being in a single court rather than in courts in several member states. The government also noted the provisions in the UPC’s draft rules of procedures for reduced fees for SMEs, and the recovery of costs provisions in the UPCA and the rules.

  5. Has the government advocated that the special interests of SMEs are represented in the “expert panel” of the UPC’s Preparatory Committee, and if so, when and how was this done, if not, why not?
    The government noted that most of the expert panel are judges and legal representatives particularly experienced in patent proceedings, and it did not consider any special representation of the interests of SMEs was required.

  6. Has the government examined the compatibility of the UPCA with the Basic Law, in particular the fundamental rights, and with Union law, and if so, with regard to what aspects were these checked?
    The government replied that these were examined comprehensively.

  7. What consequences does the government see from the fact that in the first attempt to ratify the UPCA constitutional deficits have repeatedly emerged?’
    The government referred to the decision of the BVerfG (German constitutional court) that the requisite majorities were not met in the first attempt to ratify, and said that the government did not see any further constitutional deficits. Regarding the current bill, it noted that the procedural requirements (in art 76(2) of the Basic Law) for the introduction of bills have been observed.

It remains to be seen whether these answers will have satisfied the FDP sufficiently for its members to support the bill, and if so then whether or not there are any further constitutional challenges.

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