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A long-awaited reform of pan-European IP protection falls foul of CJEU ruling

14 March 2011

The European Parliament gave its consent on February 15 2011 for a common EU patent system to be created using the enhanced cooperation procedure. In December last year, twelve Member States made a request to launch such a procedure, after it was concluded that not all the Member States could agree on an EU-wide patent system. All the other Member States, except Italy and Spain, have since indicated they will sign up to the procedure, though these two countries can still opt in at any time, if they wish.

The European Parliament gave its backing for the procedure to go ahead by 471 votes to 160, with 42 abstentions, and the European Competitiveness Council was (at the time of writing) due to adopt the decision, authorising enhanced cooperation on March 10. However, on March 8, The Court of Justice of the European Union (CJEU) rejected the proposal, deeming it incompatible with the provisions of the Treaty on European Union and the Treaty on the Functioning of the European Union, the two principle treaties on which the EU is based. Essentially, a single European patent was deemed incompatible with European Union law.

The proposal, upon which the CJEU’s verdict was given, included a single European court structure which would handle patent litigation for several contracting states of the European Patent Organisation, potentially including all EU states as well as other European countries. Currently, granted patents take effect individually in each separate country and any enforcement or litigation may only take place in the national courts of each country. The proposal for a unified patent litigation system, alongside the separate proposal of a community patent, sought to centralise the current complicated, varied and disjointed system.

According to the Chartered Institute of Patent Attorneys, Member States have been trying to agree on an EU-wide patent system for years but the necessary unanimity proved impossible to achieve, it says, with language issues being a particular bone of contention. Currently, national patents can coexist alongside a European patent (issued by the European Patent Office, a non-EU body) but the system is complex and expensive; a European patent, for example, can be ten times more expensive than a comparable US patent. A unitary patent system, abolishing differences between Member States over patent rights, would make it easier and cheaper for inventors to protect their patents throughout the EU, help tackle infringements and create a level playing field for Europe's innovative businesses.

This unexpected move by the CJEU has caused not a little consternation among patent attorneys. Clive Thorne, a partner at Reynolds Porter Chamberlain says the ruling "torpedoes" plans for a single European patent. “It would now take a new treaty to set up an EU patent court, which would be a major political headache for the EU," he said. "It is hard to see how plans for a single European patent can now be salvaged. Plans for a single patent system in the EU had their critics but they would have reduced the amount of litigation for rights holders protecting their intellectual property in Europe. Under the plans, rights holders would only have to enforce their patent in one European patent court as opposed to separate courts in each designated country under the current non-EU European Patent Convention system.
“This ruling has closed down an important avenue towards reducing expensive litigation for international rights holders. The European Court of Justice has flexed its muscles and affirmed the constitutional supremacy of its role in interpreting European law. Proposals to set up a new EU-wide court system were never likely to fare well under scrutiny by the CJEU, which exists to enforce the European Treaties and the supremacy of EU law over national law and has a history of rejecting any potential challenge to its jurisdiction.”

Will Cook, a partner at Marks & Clerk Solicitors, is similarly frustrated by the outcome: “The CJEU has poured cold water over the proposals for a unified patent litigation system, which have otherwise been widely supported by industry, judges and patent professionals alike," he says. "Its verdict is a huge step in the wrong direction for those frustrated by the existing diverse, complicated and varyingly expensive national systems.

“Proposals for the community patent went hand-in-hand with those for a unified patent litigation system. From an enforcement point of view, even if the community patent proposals go ahead, that patent seems likely to wither in the glare of uncertainty as to how involved the CJEU will become at appeal level. For the unitary court to work, there must be confidence that any final court of appeal will implement clearly and consistently the technical and specialised patent law covering the jurisdictions in question.

“Many industry players would need much more confidence that the CJEU would have significant specialist patent experience before entrusting their disputes, ultimately, to that court. Without the ability to enforce the community patent centrally, or at least in several countries at once, and in either case away from the non-technical review of the CJEU, users of the patent system are likely to stay with the current system of national enforcement.

“The CJEU has rejected the unified patent litigation system proposal on the grounds that it would not position the CJEU as the final court of appeal. But, with the exception of the CJEU, the one thing we all agree on is that the CJEU should not be the final court of appeal in a centralised system.”

A media statement on the ruling, together with links to more detailed documentation, is available here.

Les Hunt

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