Court of Justice of the European Union holds European and Community Patent Court to be incompatible with EU Law

One of the reasons why the UK lies in 7th place in the number of European patent applications behind the USA, Germany , Japan , France , the Netherlands  and Switzerland  and just barely ahead of South Korea  is that England is arguably the most expensive country in the world in which to enforce a patent.  In November 2003 the Intellectual property Advisory Committee compared the costs of patent enforcement in England, France, Germany, the Netherlands and the USA.   On page 50 of “The Enforcement of Patent Rights”, they reported that the average cost in France, Germany and the Netherlands ranged from €10,000 to €50,000 but the average cost in England was £150,000 to £250,000 in the Patents County Court and a whopping £1 million in the Patents Court. The only country with comparable costs was the USA but in that jurisdiction costs do not usually follow the event, counsel can accept instructions on a contingency fee and the law is in many respects more favourable to patentees.

We have recently done something about litigation in the Patents County Court by limiting the costs that can be awarded in that court to a scale with an ultimate ceiling of £50,000 (see my article “New Patent County Court Rules” IP/IT Update blog 31 Oct 2010) but for heavier claims our best hope lay in the draft Agreement on the European and Community Patent Court of 29 March 2009. That would have provided for a court of first instance comprising a central division and local and regional divisions, a court of appeal and a joint registry.  In other words, a level playing field for businesses and lawyers across the EU.

Most member states agreed that “the envisaged agreement constitutes a legally possible way to achieve the envisaged aims”. Alas, the Irish, Greek, Italian, Spanish and one or two other governments did not and so the Council asked the Court of Justice of the European Union for an opinion on the question pursuant to art 218 (11) of the Treaty on the Functioning of the European Union. The Court has today delivered its opinion (Opinion 1/09 of the Full Court 8 March 2011) and concluded that:

“The envisaged agreement creating a unified patent litigation system (currently called ‘European and Community Patents Court’) is not compatible with the provisions of the EU Treaty and the FEU Treaty.”

The Court seems to have reached its decision by the following reasoning:

(1)           The Treaty of Rome established a new legal order in which EU law takes primacy over national law:

“It is apparent from the Court’s settled case-law that the founding treaties of the European Union, unlike ordinary international treaties, established a new legal order, possessing its own institutions, for the benefit of which the States have limited their sovereign rights, in ever wider fields, and the subjects of which comprise not only Member States but also their nationals (see, inter alia, Case 26/62 van Gend & Loos [1963] ECR 1, 12 and Case 6/64 Costa [1964] ECR 585, 593). The essential characteristics of the European Union legal order thus constituted are in particular its primacy over the laws of the Member States and the direct effect of a whole series of provisions which are applicable to their nationals and to the Member States themselves (see Opinion 1/91 [1991] ECR I‑6079, paragraph 21).” (para [65] of the judgment)

(2)       “The guardians of that legal order and the judicial system of the European Union are the Court of Justice and the courts and tribunals of the Member States.” (para [66]).

(3)       The proposed Patents Court would lie outside the EU institutional and judicial framework (para [71]).

(4)       It would nevertheless have to decide questions of EU patent law and possibly other legislation (para [78]).

The Court’s position is summarized in para [89]:

“Consequently, the envisaged agreement, by conferring on an international court which is outside the institutional and judicial framework of the European Union an exclusive jurisdiction to hear a significant number of actions brought by individuals in the field of the Community patent and to interpret and apply European Union law in that field, would deprive courts of Member States of their powers in relation to the interpretation and application of European Union law and the Court of its powers to reply, by preliminary ruling, to questions referred by those courts and, consequently, would alter the essential character of the powers which the Treaties confer on the institutions of the European Union and on the Member States and which are indispensable to the preservation of the very nature of European Union law.”

It seems to me that exactly the same objections could be made of the Boards of Appeal of the European Patent Office which have subsisted quite happily alongside the Court of Justice and national courts for well over 30 years.

How do we get round this latest roadblock? We could revive the idea of designating national courts as EU patent courts as set out in the Community Patent Convention. We could revisit a French idea for a European Patent Judiciary with advisory powers only.   For so long as Spain and Italy insist on adding their languages to the three already in use in Munich the best we can expect is a patent for some of the member states of the EU.   The courts that will enforce rights under that patent will be national courts.   There is no reason why they should not make preliminary references to the Court of Justice on issues of EU law and seek guidance from a European Patent Judiciary on the construction and enforcement of the European Patent Convention.

Anyone who wants to discuss this article or the proposals for the European and Community Patents Court in general can call me on 0800 862 0055 or use my contact form.

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About Jane Lambert

I am a barrister specializing in intellectual property, technology, media and entertainment and competition law. I specialize in helping SME (small and medium enterprises) protect and exploit their investment in brands, design, technology and the arts. SME require intellectual property (legal protection for their intellectual assets) at least as much as big business but their limited means restrict the way they can use it. Looking after such clients wisely requires skills and knowledge which have taken me years to learn.
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