Brexit: FFII rejects the proposal by the German Ministry of Justice to present the Agreement on the Unified Patent Court (UPCA) to the German Parliament for ratification

This is the FFII’s answer to the 3 weeks ‘private’ consultation organised by the German Ministry of Justice, which ran till the 3rd of July 2020. Since the procedures around this ‘private’ consultation are not very clear, we call for an ‘open’ consultation with a proper procedure. The UPC is an unheard new architecture in the history of the contruction of the European Union, which has extreme complexity due to the outsourcing of civil disputes to an international tribunal. Public consultations on the UPC were denied in the past by the new Chairman of the German Federal Constitutional Court, Mr Harbart, who is a former lawyer and Member of the Parliament for the CDU.

UPDATE: Dr Ingve Björn Stjerna has published the letter from the german Ministry of Justice, deadline for comments is the Friday 3rd July (scroll the the bottom of the page “Update (16 and 17/06/2020)”).

UPDATE2: Guidelines for submissions: “Please note that the comments you submit will be published on our website. This also includes names and others personal data contained in the document. We ask for this Submission of the opinion in a PDF format. Unless you are publishing we do not agree to personal data, we ask you to remove this in advance from the remove document. If you object to the publication on the Internet as a whole, it will be mentioned on the website of the BMJV only notes that a contribution has been submitted and who wrote this.”

Introduction

Dear Ministry of Justice,

We welcome this private consultation on the Unitary Patent and its Court. Although we would have preferred a proper public consultation, this is an opportunity to put on the record the multiple problems of the proposed Unitary Patent Court

The Foundation for a Free Information Infrastructure e.V. (FFII) is a pan-European alliance defending the rights to free and competitive software creation since 1999. We are working towards the mitigation of legal risks in software development. We do so by
keeping software free from patents and promoting a digital infrastructure based on genuine open standards. More than 1,000 members, 3,000 companies and 100,000 supporters have entrusted the FFII to act as their voice in public policy questions
concerning exclusion rights (intellectual property) in digital creativity.

We already documented the problems of the predecessor of the UPC, the European Patent Litigation Agreement (EPLA). Most of the problems listed are roughly the same as the ones listed in 2007 (see http://epla.ffii.org/analysis):

  1. The software patents granted by the EPO will be made enforceable;
  2. Litigation will be more expensive, especially for defending SMEs;
  3. A captive Unitary Patent Court. We have independent national courts and Supreme Courts for civil patent cases, we will have a captive Unitary Patent Court, with no Court of the Justice of the EU nor the European Parliament as correctives;
  4. Lack of compliance with the European Convention on Human Rights (ECHR);
  5. Germany is violating the Brexit Withdrawal Agreement and its spirit.

We urge the Minister of Justice not to pursue a ratification of Germany later on this year, as the proposed Unitary Patent Court will worsen the access to the patent system, especially for defendants, and SMEs in particular. The future patent court will also probably eliminate the line of defense for SMEs, will show a pro-patent bias, and validate software patents despite their exclusion in the EPC art52.2.

Problem 1: Software Patents validated via the jurisprudence of a central patent court

We are concerned about the extension of patent law to the software sector. Patents are not designed for software development, and they are increasingly becoming a threat to the existence of our companies. Germany has a bifurcated court system, which is very
attractive to patent trolls, and the UPC will have the possibility to bifurcate as well, offering another pro-patent bias.

We started our interest in the development of a pan-european patent court system in July 2005, when the large software multinationals called to drop the software patent directive and pushed for a pan-european patent court instead. When the directive was rejected, the EICTA said:

All the European institutions and industry have worked hard and constructively on the issue of CII patents for some time. Europe’s high tech industry will support the efforts of the European institutions to find broader improvements to the European patent system that will particularly benefit the interests of smaller companies.

— EICTA, Europe’s High Tech Industry Welcomes European Parliament Decision

Less than 6 months after the rejection of the directive, the European Commission restarted a public consultation on a pan-european court system.

The ex-EPO representative in Brussels, David Sant, has also recognized the Unitary Patent is the perfect vehicule for validating software patents in Europe:

He explains that there is a pressing need in Europe to harmonise national patent rulings and to ensure legal certainty. The acrimonious debate over the proposed directive on computer-implemented inventions might never have arisen if the patent litigation system in Europe had been unified, thereby eliminating the possibility of disparate national rulings on the same patent matter.

— David Sant, former EPO lobbyist in Brussels, Intelligence in Science

Problem 2: Litigation will be more expensive, especially for defending SMEs

We believe the Unitary Patent and its Courts need to be renegotiated, and the departure of the UK is a good opportunity to do so.

The current Unitary Patent Court is a self-financed court, which is problematic in itself. It makes the court dependent on the number of cases, and that itself is a no go. We already have a European Patent Office which finances itself from the number of patents it grants, we don’t want another institution which is dependent on the number of cases it judges.

In the case of Germany, defending itself in front of the UPC will be 3x more expensive then the current situation. This is totally not acceptable. Furthermore, the court fees were not decided by an elected legislator (the Parliament(s)), but by an ad-hoc administrative committee, advised by “experts” from the patent industry, but where no SMEs were represented. Among those “experts”, we can found large companies such as Nokia or
BASF, but not representative of small companies. Court fees are also different for validity and infringement, 10K EUR for an infringement case, while it is 20K EUR for a validity
case. This is another bias in favour of patents.

A recent article on Lexology also mentions the higher costs of the UPC for SMEs:

“Small and medium-sized enterprises (SMEs) in particular see a negative impact through the UPC. The main reason is the increased costs, especially the high legal costs.”

— Dr. Natalie Kirchhofer, patent attorney and partner at Cohausz & Florack, in Lexology article “New draft legislation in Germany to ratify the Unified Patent Court”

Problem 3: a captive patent court, with no Supreme Court on top, nor an elected parliament as legislator

Having a captive patent court without the judicial oversight of the European Court of Justice (CJEU) is dangerous for society. Patent law will evolve in its own bubble, without any interaction with other rights.
Specialized patent courts have shown a dangerous bias for patent maximalism, including on the question of software patents (cfr Alice decision in the US). The recent decisions of the American Supreme Court correcting 17 times those patent courts should have
inspired Europeans. As Judge Rifkin said in 1951 about specialized patent courts:

“Patent law does not live in the isolation and silence of a Trappist monastry. It is part of a broader set of laws.”

— Simon Rifkin, “A Specialized Court for Patent Litigation? The Danger of a Specialized Judiciary,” American Bar Association Journal, 37 (1951), 425–426.

FFII has recently learned the reason why the CJEU was removed from the 2012 deal:

“We heard the rumor that Mr David Cameron was asked by the large UK pharmaceutical firm GlaxoSmithKline (GSK) to remove the CJEU as having a say in patent law (articles 6 and 8). That was the condition to have a deal with the UK. Now that the UK has left,
you know why the CJEU was removed from having a say over patent law, and software patents in particular.

— FFII press release of 23rd March 2020 “EU Software Patent Court stopped by Constitutional Court, patent industry will try again”

The Patent Court will also operate in international waters and based on international patent law, which is not part of the “acquis communautaire”. It will be therefore out of reach for the EU institutions, and notably the European Parliament, the only elected law maker. The Unitary Patent Court will take decisions without being counterbalanced by an elected legislator. By accepting this compromise, the European Parliament has committed suicide as a legislator in patent law.

The bare minimum for a review of the Unitary Patent project would be at least to restore the supremacy of the European Court of Justice for judicial review. The Unitary Patent Court is ready for deviance and patent maximalism.

Problem 4: lack of compliance with the European Convention on Human Rights (ECHR)

The ministry of Justice has up to now refused to provide a legal analysis of the UPC towards the ECHR, while this is a requirement under the GGO guidelines. We have consulted many legal experts who are unanimous of the fact that the Rules of the Procedure of the Court cannot be made by an administrative committee.

The fact that those rules are not made nor ratified by elected parliaments is a violation of the ECHR art6, which requires a right to a fair trial, and notably the fact that the tribunals
are setuped by law:

“In the determination of his civil rights and obligations or of any criminal charge against him, everyone is entitled to a fair and public hearing within a reasonable time by an independent and impartial tribunal established by law.

— European Convention on Human Rights (ECHR), Article 6 https://en.wikipedia.org/wiki/Article_6_of_the_European_Convention_on_Human_Rights

The jurisprudence of the ECHR implies that the establishment by law means it has to be made by elected parliaments.
It is a safeguard against rogue, biased and undemocratic tribunals.
If the Ministry does not provide an analysis of the UPC’s non-compliance with the ECHR, the Bundestag should at least seize its legal service to provide an opinion on the matter.

This non-compliance carries the risk to blow up the entire project at the first case.

Problem 5: Germany is violating the Brexit Withdrawal Agreement and its spirit

The German Federal Constitutional Court (13 February 2020) has confirmed that the UPC Agreement is open only to EU Member States, as mentioned in the press release of the Court:

“The Agreement is open exclusively to EU Member States.

— Bundesverfassungsgericht: Act of Approval to the Agreement on a Unified Patent Court is void, press release of 20th March 2020

The United Kingdom has ratified the UPC Agreement, and unless a formal request is sent by the UK government to the Council of the EU expressing its decision to undo the earlier ratification of the UK of the UPCA, the UK must still be considered a Contracting Party to the UPCA.

This means that the German Federal Ministry of Justice is proposing to the German Parliament, the ratification of an agreement with a “third state” of the European Union. In view of case law “AETR”, 22/70 of the Court of Justice, EU Member States may not enter into obligations with “third states” which affect European Union rules.

“Each time the Community, with a view to implementing a common policy envisaged by the Treaty, adopts provisions laying down common rules, whatever form they may take, the Member States no longer have the right, acting individually or even collectively, to undertake obligations with third countries which affect those rules or alter their scope.“

— CJEU decision “AETR” 22/70

Patent litigation is clearly within the legislative competences of the European Union (Brussels I regulation, IPRED directive), and therefore EU Member States may not enter into agreements with “third states” without involving the EU Institutions.

In view of Article 31 of the Vienna Convention (1969) on the law of the Treaties, a Treaty shall be interpreted in good faith in accordance with the ordinary meaning to be given to the terms of the treaty in their context and in the light of its object and purpose.

This means that the UPCA must be read as it is written, and a likely withdrawal of the UK can not result in an interpretation of how UPCA may be interpreted if the UK would no longer be there. This means:

1) that the Federal Republic of Germany may not (in view of case law “AETR” of the CJEU) ratify the UPCA, as long as the status of the UK, as ratifying party of UPCA, has not been clarified.
2) In view of Article 31 of the Vienna Convention on the law of the Treaties, the German Government may not present UPCA for ratification to the German Parliament with an interpretation of how the UPCA would be interpreted if the UK would no longer be party to it.

Presenting a Treaty for ratification to the German Parliament with an interpretation of how the UPCA will be interpreted if the UK is no longer participating, is clearly violating the spirit of the Vienna Convention on the Law of the Treaties.

In such a situation where there is doubt on the content of a draft Treaty in view of the upcoming departure of one of its Contracting Parties, the ratification of the Treaty should be suspended, and the Treaty needs to be renegotiated. That is the correct procedure
under the Vienna Convention on the law of the Treaties.

There is an alternative solution:

As the UPCA is closely linked to the European Union (UPCA is open only to Member States of the EU), the German Government is, in view of the situation resulting from BREXIT, obliged to present the issue of the future of UPCA to the Council of the
EU.

The German Government is, especially in view of Article 4(3) of the Treaty on European Union and its upcoming Presidency of the EU, obliged to present the draft agreement on the Unified Patent Court to the Council of the European Union. Not doing so, would undermine the competences of the European Union, especially in view of Article 4(3) TEU and case law 22/70 of the Court of Justice:

“3. Pursuant to the principle of sincere cooperation, the Union and the Member States shall, in full mutual respect, assist each other in carrying out tasks which flow from the Treaties.”

Article 4(3) TFEU

The Member States shall take any appropriate measure, general or particular, to ensure fulfilment of the obligations arising out of the Treaties or resulting from the acts of the institutions of the Union.
The Member States shall facilitate the achievement of the Union’s tasks and refrain from any measure which could jeopardise the attainment of the Union’s objectives.

Furthermore, the Brexit Withdrawal Agreement does give any legal basis to reconsider the UK as still being a member of the EU for the purpose of the UPCA. While the Brexit Withdrawal Agreement indicates that the UK is still member of the EU till the end of the
year for the purpose of international agreements concluded by the EU, it cannot be reasonably understood that the UPCA is covered in this case, as the UPCA not yet in force, and therefore not part of EU law that need to be respected till the end of the year.

This would also be a violation of the spirit of the Withdrawal Agreement, which says in its preamble:

“STRESSING that the objective of this Agreement is to ensure an orderly withdrawal of the United Kingdom from the Union and Euratom,”

— Brexit Withdrawal Agreement, preamble

Article 7 of the Withdrawal agreement shall not be used to justify ratification of UPCA, because this goes against the basic intention of the withdrawal agreement, namely “to ensure an orderly withdrawal of the United Kingdom from the Union and Euratom”.
So what Germany is trying to do goes against the “good faith” article in the Vienna Convention on the Law of the Treaties.

We hope that the German Presidency of the European Union will take this issue seriously, and schedule a discussion before any ratification happens in Germany. This might create tensions with other Member States, such as Italy.

If Germany is misled by the patent industry and ratifies the UPCA, this would be a serious breach of procedure under EU law by the German government, and a new constitutional complaint will be launched. Germany would also expose itself to litigation from the EU institutions and other Member States.

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