The IP legal community is facing renewed uncertainty over the future of the UPC, which would have provided for the establishment of a European patent with unitary effect, enforceable in all contracting member states. The most recent setback was the judgment of the German Federal Constitutional Court on the 20th March 2020, which found that the German ratification of the international Agreement on a Unified Patent Court was null and void.
By a 5-3 majority and relying upon Art 23(1) of the ‘German Basic Law’ (Constitution), the Court held that where an international treaty is ‘supplementary to or otherwise closely tied to the European Union’s integration agenda… [and] amends or supplements the Basic Law in substantive terms’ it requires support by a two-thirds majority in parliament in order to be validly adopted. The Act approving ratification of the Agreement came nowhere near to this threshold, having been passed by the lower house of the federal German parliament late at night with only about 35 members still left in the chamber to vote.
The fact that the judges were heavily split is a sign of the case’s contentiousness within German jurisprudence, but in the end the Court ruled that as the Agreement would confer binding judicial functions on a supranational Court it constituted a substantive change to the German Basic Law. Additionally it found that as the project was the result of efforts of the European Commission, supported by the European Parliament, to centralise judicial protection in this field it should be construed as tied to the EU’s ‘integration agenda’.
The judgment prevents the German President from signing the law into effect and, in a best case scenario for UPC proponents, this means that German ratification will be delayed while fresh legislation can be brought before the Parliament.
This has an immediate knock-on effect, given that 13 of the 25 participating EU member states, including Germany, must implement the UPC Agreement into national legislation before the Court can operate.
Yet, other IP law commentators have questioned whether the ruling is the death knell for the entire UPC project. The setback comes shortly after the UK Government surprised many by announcing that the UK will not be participating in the UPC, despite ratifying the agreement in 2016. Despite Brexit, it had been predicted by many that the UK would seek to remain in the project, which is technically a separate international Treaty, and which does not include all EU member states.
Even if the German ratification process is revived, which remains unlikely during the coronavirus crisis, the 24 UPC states would have to agree on where the central court divisions should be located. London was due to have been the host but this is obviously no longer possible.
Agreeing a replacement host might require the 24 UPC states, as well as non-participating states Spain and Poland, to renegotiate the treaty which could take a long while. To date the project has also relied upon strong support from within the legal profession, yet with the German claimants from the federal challenge promising fresh reviews if the Government re-attempts ratification, some IP lawyers have concluded the project will now struggle to get off the ground.
Meanwhile, back in the UK, the Law Society of England and Wales has been flagging to the UK Government that even if the UPC does not now proceed, there remains a window of opportunity to solidify the UK’s position as a jurisdiction of choice for patent litigation and to ensure that UK courts provide litigants with the very best service.
As part of a drive to prioritise intellectual property and invest in the IP Courts, LSEW has recommended that the now vacant court premises in Aldgate acquired for the London branch of the UPC Central Division could even become the exclusive home of the UK IP Courts and a remarkable centre of IP excellence. This could help cement the jurisdiction’s reputation for speed, flexibility and a judiciary experienced in intellectual property matters.