On December 18, 2020, the German Federal Council (Bundesrat) unanimously approved the ratification of the Unified Patent Court (UPC) Agreement (UPCA), which concluded the parliamentary ratification process for the second time.
Shortly afterwards, two complaints were filed in the Federal Constitutional Court (Bundesverfassungsgericht), one by Düsseldorf lawyer Ingve Björn Stjerna and one by Munich-based non-profit Foundation for a Free Information Infrastructure (FFII). Stjerna had filed the complaint against the first attempt to ratify the UPCA in 2017, which led to a judgment on February 13, 2020. The court held that the necessary quorum was not present in parliament when the law was approved. That error has now been repaired.
The UPC experienced another setback on July 20, 2020 when the UK government formally announced its withdrawal from the UPCA. Until then the UK’s position had been that it would participate despite leaving the EU, but this changed. As a consequence, the UPC jurisdiction will no longer cover the UK and London can no longer be one of the seats of the UPC’s Central Division.
Although this was a disappointment for industry, it did not materially change their support for the UPC. Some have argued that life science cases cannot be brought before another seat of the Central Division, as article 7 of the UPCA provides that one of the seats of the Central Division shall be in London, whereas annex II provides that at this seat the cases in categories A and C of the World Intellectual Property Organization International Patent Classification will be handled, which basically are the chemical and life sciences cases.
If this poses a problem, it will come up only when the first life science case in the Central Division is handled in another location, so it doesn’t need to affect the inauguration of the UPC as such.
The UPCA was signed on February 19, 2013, and the preparatory committee has been working on setting up the court ever since. The German ratification is the last one required for the UPCA to enter into force.
What next?
The big question now of course is: what will happen next? Will the UPC ever open for business and when will that be? In order to assess the possible scenarios, it is important to have a closer look at the issues before the Bundesverfassungsgericht.
So far nobody knows the exact content of the new complaints. However, Stjerna is an intelligent man. His 2017 complaint was 160 pages long. It seems unlikely that he overlooked possible arguments in drafting it. There have not been any relevant new facts since that complaint was filed.
The UK withdrawal from the UPCA has no effect on whether the UPCA is in line with the German constitution. This makes it likely that the new complaint contains the same arguments, except the one on the quorum in the Bundestag, as that has now been resolved.
”Stjerna is an intelligent man. His 2017 complaint was 160 pages long. It seems unlikely that he overlooked possible arguments in drafting it.”
Wouter Pors, Bird & Bird
The complaints of the FFII are also unknown. In general, the FFII is against software patents, but it is hard to see how that relates to the German constitution. On the FFII website they complain that the UPCA doesn’t allow the Court of Justice of the EU (CJEU) to have a say in patent law.
That is not completely true, since the UPCA will apply EU law in as far as it relates to patents and will refer questions on EU law to the CJEU, but in addition it is hard to see why this would be a violation of the German constitution.
It seems that FFII believes that the UPCA violates the rule of law because the UPC can enforce European patents. That would be based on the idea that the opposition procedures at the European Patent Office would not meet the requirements of the German constitution. That, however, already is the issue in proceedings that have been pending at the constitutional court for quite some time. It is unlikely that the FFII has raised additional issues that Stjerna had not already thought of.
For all these reasons it seems likely that the two new complaints, apart from the specific issues raised by the FFII, focus on the issues already raised in Stjerna’s 2017 complaint. These relate to concerns around the fact that judges are not appointed for life but only for six-year terms and to the procedure for their appointment.
There was also a complaint that there would be an insufficient justification for interference with fundamental rights under the German constitution, and a complaint that the UPCA would violate EU law. All these complaints were declared inadmissible by the Bundesverfassungsgericht. The court addressed the arguments presented in the complaint and decided that each of those was insufficient to find a violation of the German constitution.
The court specifically stated that a national law would remain valid, even if it were in violation of EU law. EU law doesn’t take priority over German national law and therefore a violation of EU law doesn’t in itself imply a violation of the German constitution. The court nevertheless explained in detail why the UPCA is in line with EU law.
Finally, the court mentioned that the absolute priority of EU law over national law in article 20 UPCA might be in violation of the German constitution, but that a final ruling on that issue was not necessary, since the ratification act was already invalid due to the lack of quorum. Therefore, this could still be an outstanding issue.
The court explained in its February 2020 judgment that a ratification law can be the subject of a complaint if the parliamentary procedure is finished and the only remaining step is for it to be issued by the federal president, since otherwise there would be no effective protection.
This also explains why it is standard practice for the court to request the president to stop the procedure until the court has been able to rule on the action. That is where we are now. It is still very possible that the court declares both complaints inadmissible at short notice. If that happens, the ratification can proceed.
”The Bundesverfassungsgericht might declare the new complaints inadmissible because they do not raise any relevant new issues.”
The court might decide that no new arguments have been presented on the issues that were already addressed in the previous judgment. That judgment however did leave an opportunity to present such new arguments, as some complaints were declared inadmissible because the grounds as presented were insufficient to assume a violation of the constitution, not because the issue itself could not be a violation of the constitution.
Even if additional grounds have now been included in the complaint, the court might still rule that these could and should have been included in the original complaint and declare the new complaints inadmissible on that basis, but it might also allow them.
In addition, there still is the outstanding issue of the priority of EU law over national law. That could be a problem if specific provisions in EU Regulations and Directives that need to be applied by the UPC would be in violation of German national law. Although this is unlikely, it may happen in theory. Based on the reasoning adopted by the court in its February 2020 judgment, it seems that concrete examples would need to be presented in the complaint in order for the court to rule on this.
Possible outcomes
All of this means that different scenarios are possible. The Bundesverfassungsgericht might declare the new complaints inadmissible because they do not raise any relevant new issues. This could happen at short notice, but probably not within weeks since the court has allowed several institutions and organisations to submit their views on these complaints.
The court could also decide that the arguments presented in these new complaints require a thorough evaluation. In that case a decision might take months, or more than a year. The outcome might then still be that the complaints are inadmissible and if not, they could of course be rejected. In both scenarios the ratification process can continue once the court has issued its judgment.
The first thing that will need to be done is two further ratifications of the Protocol on Provisional Application. That will allow for the recruitment, selection and education of judges, which will take around a year. In the meantime, the IT system and administration can be finished.
After that year Germany will then submit its ratification of the UPCA, as a result of which the court will open for business three months later, which in the most optimistic scenario will be in the summer of 2022.
This of course can be later if the Bundesverfassungsgericht needs more time. The worst-case scenario would be that the court finds that there is a substantive violation of the German constitution that requires substantial changes to the UPCA. That might cause years of further delay, although I think this is the least likely scenario.
Wouter Pors is a partner at Bird & Bird. He can be contacted at: wouter.pors@twobirds.com
Video: Envato Elements / Aleksandr Kutakh
