Manipulation and Recycling of the Unified Patent Court (UPC)’s Impact Assessment

Margot Frohlinger

Margot Frohlinger, in "KoreaHerald: Europe’s unitary patent system will bring benefits to Korean firms", 7 April 2017, http://www.koreaherald.com/view.php?ud=20170407000524

In April 2021, we received a testimony from a whistleblower that this recycling of the UPC’s Impact Assessment was in fact intentional, he told to us that “Mdme Margot Fröhlingher did not want to redo the Impact Assessment of 2009 because otherwise it would have attracted critics”. Mdme Fröhlinger was in charge of the file at the European Commission till April 2012 before being offered a good job at the European Patent Office (EPO), possibly doing some “Pantouflage” and “Noyautage” after bowing to the demands of the European Patent Office (EPO) and removing the European Union institutions from playing a role. The design of 2011 patent package do not correspond to the one of 2009, the European Parliament and the European Court of Justice being excluded from patent law. The European Commission used a trick to avoid redoing the study.

Open Letter to the European Institutions, and Heads of State

Brussels, 26 November 2021.

Dear Commissioner Von Der Leyen,

Dear Commissioner Breton,

Dear Members of the European Parliament,

Dear Members of the Council,

Dear European Ombudsman,

FFII.org is a pan-European alliance of software companies and independent software developers, defending the rights to a free and competitive software creation since 1999. Over the years, more than 3,000 software companies accross Europe have supported our calls against software patenting [ref1][ref2].

We hereby call for an urgent investigation on the accusations regarding Mdme Frohlinger (European Commission official in charge of the file under Mr Barnier till 2012) and her near-successful attempt to recycle the impact assessment of the Unified Patent Court (UPC).

We call for an urgent freeze of the ratification of the UPC as long as this verification has not been made.

During the ratification of the Unitary Patent package by Germany, we noticed one strange thing when the German Ministry of Justice Christine Lambrecht (SPD) replied to a series of written questions by the Liberal Party FDP [ref4][ref5], about the lack of a proper Impact Assessment of the Unified Patent Court, justifying the Patent Package of 2011 with an old Impact Assessment made in 2009:

“Finally, it should be pointed out that the EU Commission carried out cost-benefit analysis of the European patent reform, which were incorporated into the deliberations on the reform ([…] Prof. Dietmar Harhoff, Ph.D., Economic Cost-Benefit Analysis of a Unified and Integrated European Patent Litigation System, 2009. [ref6]”

[ref4] FDP: Ratifikation des Übereinkommens über ein Einheitliches Patentgericht, Ratifikation des Übereinkommens über ein Einheitliches Patentgericht https://dserver.bundestag.de/btd/19/236/1923651.pdf

In April 2021, we received a testimony from a whistleblower that this recycling of the UPC’s Impact Assessment was in fact intentional, he told to us that “Mdme Margot Fröhlingher did not want to redo the Impact Assessment of 2009 because otherwise it would have attracted critics”. Mdme Fröhlinger was in charge of the file at the European Commission till April 2012 before being offered a good job at the European Patent Office (EPO), possibly doing some “Pantouflage” after bowing to the demands of the European Patent Office (EPO) and removing the European Union institutions from playing a role. The design of 2011 patent package do not correspond to the one of 2009, the European Parliament and the European Court of Justice being excluded from patent law. The European Commission used a trick to avoid redoing the study.

In March 2021, a similar situation attracted our attention where the EU Ombudsman recognized  maladministation by the European Commission, in recycling an old Impact Assessment on the negotiations of the Mercosur trade agreement [ref7], although the “Better Regulation” rules were changed in 2014, and are specific to trade agreements (or Sustainable Impact Assessments (SIAs)).

In May 2011, the Commission approved a proposal in the form of a negotiating “non-paper” [ref8], which is a 180deg U-turn compared to their proposal of 2009:

“the Commission adopted the non-paper contained in Annex II on solutions for a unified patent litigation system and the way forward. […] A unified patent court set up by Member States. In the light of the opinion 1/09 of the CJEU, such a unified patent court can only be set up by the Member States; the participation of third states should be excluded. The European Union would not be a party.

[ref8] Solutions For A Unified Patent Litigation System – The Way Forward After The Opinion 1/09 Of The CJEU non-paper of the Commission Services https://data.consilium.europa.eu/doc/document/ST-10630-2011-INIT/en/pdf

The Patent Package of 2011 consists of 2 regulations and 1 international agreement. In the 2 impact assessments attached to the 2 regulations of 2011, you still cannot find an updated impact assessment of the Court system [ref9]:

 “Finally, this IA does not address the unified patent litigation system that follows a parallel work stream and will be subject to different legal instrument.”

[ref9] Commission Working Paper Summary Of The Impact Assessment, {COM(2011) 215 final} {COM(2011) 216 final} {SEC(2011) 482 final}, Brussels, 13.4.2011 https://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=SEC:2011:0483:FIN:EN:PDF

The Impact Assessment study of 2009 was about the old Community Patent project, and not about the Unitary Patent Package of 2011, which differ significatively on many important aspects, and none of the proposed changes were assessed in an updated Impact Assessment:

 1. The project of 2009 was the Community Patent (or European Union Patent, Article 118 TFEU), not the Unitary Patent (which is in fact the classical EPO’s “European Patent” but with a Unitary effect);

2. The enhanced cooperation was used in December 2010 to bypass the blockage of Spain and Italy over the language issue, meaning the new Unitary Patent would not be covering all the Member States, but only in the participating ones, which creates some effects of market distorsion;

3. The EU should have joined the European Patent Convention (EPC) and the Unified Patent Litigation System (UPLS) with the 2009 project [ref20], while in the Unitary Patent Package of 2011 this was avoided, some associations of patent owners like IPO have argued it would have taken too much time to modify the EPC to accomodate the European Union as a member [ref10]; which has for the consequence that patent law is not part of EU law (“acquis communautaire”), and that the European Court of Justice (CJEU) does not have direct access to substantive patent law, including on software patents and its exclusion in the Art52.2 EPC; Patent law will evolve disconnected from other laws, and will evolve in its own bubble and can drift to ‘patent maximalism’, which is dangerous for society;

4. Another difference is that the participation of the European Union and its institutions is avoided. The European Parliament won’t be able to oversee the system and act as a counterpower. The European Parliament is the only democratic institution where citizens and companies could make their complaints heard in case of problems, like increasing patent trolls problems, and over the disfunctions of the European Patent Office (EPO) or the Unified Patent Court (UPC);

5. The financing of the 2009 Court system would have been done (at least partially) with EU funds, while the 2011 project is financed by contributing Member States and companies that litigate in front of the Court; the project of 2009 did not had a self-financed objective, which is a controversial topic as Courts should not have financial targets and it could endanger the integrity of Justice and promote patent maximalism decisions; due to that change in financing, the 2011 UPCA later was designed to have a self-financing goal; this can explain why the proposed court fees of 20.000EUR are unaffordable for SMEs, a reason why the business associations of Czech Republic, Spain, Portugal, and Hungary members of Business Europe could not endorse the recent call for ratifying the UPCA [ref16]. On the point of financing, in April 2012, some British members of the Scrutiny Committee of the British Parliament had already questioned the validity of the outdated impact assessment in their report [ref17]:

“Validity of the EU impact assessment – Vicki Salmon of CIPA expressed concerns about the EU’s impact assessment being “out of date” because: [U]p until the bringing in of the enhanced cooperation, the EU was going to be heavily involved in the Court and was therefore going to provide a lot of funding from central resources for the divisions of the Court and for the training of the judges. With the change of that, following the enhanced cooperation, the EU funding was then not going to be available anymore. […] “We share the concerns expressed by the professions that the UPC will be prohibitively expensive, and also take the view that the EU impact assessment needs to be urgently revisited.”

[ref17] House of Commons: The Unified Patent Court: help of hindrance? (2012) https://publications.parliament.uk/pa/cm201012/cmselect/cmeuleg/1799/1799.pdf

About Impact Assessments in general, we can understand that some DGs are relunctant to produce such assessments of their own policies [ref18]:

 “Internal resistance within a number of Commission Directorates-General to producing such time- and resource-consuming documents has meant that implementation of the system has been variable, at best.”

[ref18] European Policy Center: Assessing the assessors: Improving the quality of European Commission proposals https://www.epc.eu/en/Publications/Assessing-the-assessors-Improving-the-quality-of-European-Commission~1ba620

It’s our interpretation that this Impact Assessment is invalid and should be remade, and the whole Patent Package should be renegotiated in the light of Brexit.

National impact assessments carried out by some member states (Poland, Czech Republic) came back negative about the impact of such project for their economy (-19B EUR over 30 years according to the Polish study commissioned to Deloitte [ref19]). Individual numbers for each country of Europe do not exist, as there is no serious impact assessment of this important reform.

Let hope “Better Law Making” are not just empty words.

Concerns

Our first concern with the Unitary Patent Package is that the European Court of Justice (CJEU) won’t have a say on patent law, and on software patents in particular. In the context of Brexit difficulties, we are calling on reopening the negotiations on that precise point (ex art6-8), where the UK put their veto in 2012. It’s unthinkable to design a “european” system where the CJEU does not have the last word over patent law.

Our second concern is that the proposed UPC court fees of 20.000EUR are way too high for defending small companies), which are the majority in our sector. Those ‘SME-killer’ court fees are on average 100X more expensive than the national court systems, and will exclude small companies from defending themselves [ref3]. The goal to make the patent system cheaper has not been reached, quite the opposite. If SMEs don’t have access to ‘Justice’, this project is an economic suicide.

References

[ref1] https://www.ffii.org

[ref2] https://www.stopsoftwarepatents.eu and signatories per country https://stopsoftwarepatents.eu/Stop%20Software%20Patents%20Petition%20stats.htm

[ref3] European Commission cheated Unitary Patent’s Impact Assessment to hide its high costs for SMEs https://ffii.org/european-commission-cheated-unified-patent-courts-impact-assessment-to-hide-the-high-costs-for-smes/

[ref4] FDP: Ratifikation des Übereinkommens über ein Einheitliches Patentgericht, Ratifikation des Übereinkommens über ein Einheitliches Patentgericht https://dserver.bundestag.de/btd/19/236/1923651.pdf

[ref5] BristowsUPC: German government responds to FDP’s questions on UPC https://www.bristowsupc.com/latest-news/german-government-responds-to-fdp-s-questions-on-upc/

[ref6] Prof. Dietmar Harhoff, Ph.D., Economic Cost-Benefit Analysis of a Unified and Integrated European Patent Litigation System, 2009 https://www.researchgate.net/publication/267839173_Economic_Cost-Benefit_Analysis_of_a_Unified_and_Integrated_European_Patent_Litigation_System

[ref7] European Ombudsman: Decision in case 1026/2020/MAS concerning the failure by the European Commission to finalise an updated ‘sustainability impact assessment’ before concluding the EU-Mercosur trade negotiations https://www.ombudsman.europa.eu/en/decision/en/139418

[ref8] Solutions For A Unified Patent Litigation System – The Way Forward After The Opinion 1/09 Of The CJEU non-paper of the Commission Services https://data.consilium.europa.eu/doc/document/ST-10630-2011-INIT/en/pdf

[ref9] Commission Working Paper Summary Of The Impact Assessment, {COM(2011) 215 final} {COM(2011) 216 final} {SEC(2011) 482 final}, Brussels, 13.4.2011 https://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=SEC:2011:0483:FIN:EN:PDF

[ref10] Intellectual Property Owners Association: “No amendments to the European Patent Convention (EPC) needed or desired”, October 7, 2010 https://ipo.org/wp-content/uploads/2013/03/EPCLetteronEUPatent.pdf

[ref16] BusinessEurope: European Business Community calls for the rapid ratification and entry into operation of the Unitary Patent system – This paper and the positions reflected in it are not supported by the Spanish Confederation of Employers and Industries (CEOE), Confederação Empresarial de Portugal (CIP), the Confederation of Industry of the Czech Republic (SPCR) and BusinessHungary (MGYOSZ) https://www.businesseurope.eu/sites/buseur/files/media/position_papers/legal/2021-10-12_joint_business_statement_unitary_patent_unified_patent_court.pdf

[ref17] House of Commons: The Unified Patent Court: help of hindrance? (2012) https://publications.parliament.uk/pa/cm201012/cmselect/cmeuleg/1799/1799.pdf

[ref18] European Policy Center: Assessing the assessors: Improving the quality of European Commission proposals https://www.epc.eu/en/Publications/Assessing-the-assessors-Improving-the-quality-of-European-Commission~1ba620

[ref19] D Xenos, “The European Unified Patent Court: Assessment and Implications of the Federalisation of the Patent System in Europe”, (2013) 10:2 SCRIPTed 246 http://script-ed.org/?p=1071 or https://script-ed.org/article/european-unified-patent-court-assessment-implications-federalisation-patent-system-europe/

[ref20] Belgian delegation to Working Party on Intellectual Property (Patents), Institutional aspects of the EC’s accession to the European Patent Convention, 9 November 2001 https://data.consilium.europa.eu/doc/document/ST-13742-2001-INIT/en/pdf

[ref21] KluwerPatentBlog: Member States will sign Declaration to clear way for preparatory phase Unified Patent Court http://patentblog.kluweriplaw.com/2021/10/28/member-states-will-sign-declaration-to-clear-way-for-preparatory-phase-unified-patent-court/

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