The Lord of the Unitary Patents: a preview on European Parliament plenary vote

Now that all amendments and the voting list have been published, it is quite easy to anticipate what will happen on Tuesday December 11th, 2012, during the plenary vote of the European Parliament (EP) on the unitary patent regulation. Nevertheless few people would find a way to understand what will exactly be voted. And it is likely that the vast majority of Members of the European Parliament (MEPs) won't know themselves what is hiding behind the buttons they will push on. So here's the story behind shiny amendments numbers.

The usual way for the Parliament to vote on plenary is to have a proposal initially written by the European Commission. Then the responsible Committee of the EP works on this proposal and might vote some amendments to it. These modifications voted by the responsible Committee are presented side by side with the Commission's initial proposal to the plenary, with changes and deletions highlighted. Political groups or a group of 40 cross-party MEPs can also propose some amendments to the Commission's initial proposal, which are presented in the same way, possibly with some justifications. Amendments from the responsible Committee are voted first by the plenary, usually in a single vote en bloc, except for these Committee's amendments which address some parts of the Commission's initial text that are also addressed by some other amendments. In case of conflicting amendments to the same part of the Commission's initial text, the amendment which departs the most from the initial text is voted first. When all amendments have been voted, the whole text as amended is approved and the final resolution of the EP is eventually voted. With the regulation on the unitary patent, everything is different!

The Elves

The first amendment to be voted (n° 68) has been tabled by 40 Spanish MEPs from left and right wings, who are acting like Elves. Elves are very old creatures who have been living for so long that they know all ancient secrets of the world. Indeed, this amendment n° 68 tells us the whole story that the unitary patent regulation has lived before finishing to be proposed to the plenary. If this amendment is voted, the story will continue, since the whole text will go back to be examined further by the responsible Committee on Affairs (JURI). And it is always very wise to follow Elves' advices.

This is because JURI has not done its homework. The German socialist rapporteur, Bernhard RAPKAY, has tried. In autumn 2011, he had written some amendments. But he has dropped them after so-called informal trilogues, where the Commission, the Council and the responsible MEP for each political group of the EP meet together in order to find a text that would likely be accepted by both co-legislators of the European Union (EU), i.e. the EP and the Council. At this time, the Council has already defined its general approach that was agreed between ministers of participating Member States of the EU, i.e. all EU countries but Spain and Italy who have refused to join the project, forcing it to be adopted according to an enhanced cooperation procedure where other States alone with the EP are legislating. The main change to the Commission's initial proposal wanted by the Council was to refuse to delegate the executive arm of the EU, i.e. the Commission, the task to define renewal fees for unitary patents. It is to be noted that even in the Commission's initial proposal, the EU itself has never been expected to receive any money from unitary patents fees. Instead, the Council has delegated this task to a Select Committee of Member States representatives inside the European Patent Organisation, i.e. the international non-EU organisation governing the European Patent Office (EPO). These representatives are mostly heads of national patent offices. It is understandable that they want to take care of money generated by the centralised granting and administration tasks of the EPO, which are likely to deprive their own national patent office to collect this money. It is not understandable that the EU lets do this!

Yet, the rapporteur has dropped almost all his amendments. The Commission, along with negotiators for the EP, have accepted most of the Council's proposals. The comparison is telling. In the last column is the text agreed in trilogue. Doesn't it reflect quasi perfectly the second column, which represents Council's position? The only addition from the third column, which represents EP negotiators' position, is that Small and Medium-sized Enterprises (SMEs) will be taken into account when fees are fixed by heads of national patent offices. Since the level of these fees are unknown, it cannot be said whether this special treatment for SMEs will offset the major loss for EU SMEs of being forced to apply for unitary patents covering 25 countries instead of targeting only 3 to 5 of them, or even only one domestic national market. Such a loss has been vocally anticipated by European patent practitioners.

Nevertheless, the rapporteur has been successful in making the agreement, imposed by Council, be voted by the JURI Committee in late December 2011, advising JURI members to refuse any other amendments, in order to not break this agreement. Too bad for Greens who have tabled amendments we have proposed for this vote in JURI. They were all refused and not even examined.. As were amendments proposed by the Committee on Industry (ITRE) which was giving an opinion on the regulation. Other amendments rejected by this vote in JURI include those tabled by Swedish liberal MEP, Cecilia WIKSTRÖM, who was forwarding wishes of the “patent microcosm“, to get rid of any review by the non-patent specialist Court of Justice of the European Union (CJEU) in any area of patent law. Their reasoning is that patent law is the sole property of patent specialists, and any intrusion of outsiders put the whole patent microcosm at risk. Contrary to other amendments referred above, these amendments have actually been examined, but rejected by the EP rapporteur and the JURI chairman, as well as by the Commission, for depriving the unitary patent regulation from what it was supposed to precisely regulates. Indeed amendments proposed by the patent microcosm and tabled by Cecilia WIKSTRÖM were about to delete from the regulation, Articles 6 to 8 defining what is a direct or indirect counterfeiting act to unitary patents, as well as exceptions to these counterfeiting acts. Since the legal basis of the regulation, Article 118.1 of the Treaty on the Functioning of the European Union (TFEU), empowers the EU to create patents with uniform protection throughout the UE, the regulation has to define the characteristics of such a uniform protection, i.e. effects of unitary patents, which was indeed the very purpose of Articles 6 to 8.

In the beginning of 2012, the Parliament was about to endorse in plenary the text as voted by JURI and agreed in trilogue, but it finally postponed its vote in order to wait for Member States who were arguing over the seat of the Central division of the Unified Patent Court (UPC). Something which is not in the unitary patent regulation but in the international convention between Member States that was discussed in the same package in order to install a specialised patent court which would have exclusive competence over infringements and invalidations of unitary patents, as well as of traditional EPO patents. The Parliament have no say in the UPC agreement, since it is an international agreement outside EU law. But trilogue has decided to join the fate of the UPC with the one of the unitary patent regulation. So the EP waited for what the rapporteur would later qualify as an “oriental bazaar” deal between Member States.

While finally reaching an agreement in late June, splitting the central seat of the UPC between Paris, Munich and London, the heads of State and government of the EU broke in the same movement the trilogue agreement on the unitary patent regulation. They've done so by eventually accepting the patent microcosm's demand to remove Articles 6 to 8. The Parliament reacted violently to such a move by postponing its plenary vote which was planned for early July 2012, rapporteur and JURI charmain, German conservative Klaus-Heiner LEHNE, who by the way is also an associate of Düsseldorf law firm Taylor-Wessing, qualifying the removal of Articles 6 to 8 as an “emasculation”. The EP could have stand on its position and go on with a plenary vote which would likely not be accepted by the Council. And that would have led to a second reading in compliance with EU legislative procedure. But the rapporteur and the chairman of JURI wanted to come up with a solution within a single reading. So in November 2012, they finally accepted a so-called “compromise” proposed by the Cyprus Presidency of the Council. We will explain this “compromise” later, since it is the object of another amendment. Suffice to say now that the legal services of the EP have declared that “this compromise text has not ended all legal concerns”, adding that it was still “a problematic situation”.

Despite that the rapporteur has promised he would not accept any text not compliant with EU law, which was exactly what was raised by EP legal services, he has finally decided to propose the regulation to plenary vote, including the “Cyprus compromise”.

Although we have not yet gone through all the problems raised by the unitary patent regulation, those highlighted by this recap of the legislative process should be more than enough to reject the text and send it back to the responsible committee. This is the subject of amendment n° 68. As said, this is an amendment with a taste of Elves' wisdom.

One amendment to rule them all

The next amendment to be voted on Tuesday December 11th, 2012 is Am. n° 70. This is an uncommon amendment since it includes the entire text of the regulation. Changes to Commission's initial text are highlighted in bold italics and deletions are indicated by a black rectangle symbol ▌. But the Commission's initial text is not included in this amendment. Therefore MEPs have no way to see, just by reading this amendment n° 70, what it actually proposes, compared to Commission's initial proposal. For instance, as we've shown above, they won't know that this amendment delegates the management of fees to heads of national patent offices, instead of being governed by the EU executive arm. And if they haven't followed events we have recalled above, they may not notice that Articles 6 to 8 have been deleted, all they will see is a black rectangle between Article 5a and Article 9.

Nevertheless, such a way to present an amendment is compliant with the EP Rules of Procedure, since it has been tabled as a “compromise” amendment, i.e. in the name of several political groups, namely by socialists, conservatives and liberals, the three major groups in the Parliament. So to say that this amendment is very likely to be passed. But we have to explain what really is included in this amendment. Because it is presented as introducing a single EU patent that would benefits to EU firms, in particular to SMEs. This is a lie.

The unitary patent, as introduced by this amendment, is not defined as a new patent title from the EU. Instead, it is a usual EPO patent. The only impact of this amendment is to attach to usual EPO patents an accessory unitary effect, meaning that these unitary patents are intended to provide some uniform effects throughout the territory of participating Member States. But the patents are granted by a non-EU agency, the EPO, under conditions set outside EU law, in the European Patent Convention (EPC) which is the international agreement, signed in 1973 in Munich, which has installed the EPO. This amendment does not define the unitary patent as an object of property. It does not define effects and limitation thereof, nor compulsory licenses, nor prior user rights, nor any usual way in patent law to balance powers conferred by patents. Instead all these matters are defined outside EU law, in national laws, with some of them being harmonized by the UPC agreement, which is also a non-EU international convention. This means that with Am. n° 70, the EU waives its powers with regard to patent policy in particular, and innovation policy in general, to international institutions and conventions. Consequently, the CJEU won't have any competence to give preliminary rulings on patent law issues. The only exception being patents on biotechnologies and supplementary protection certificates, since both have been regulated years ago by the EU, and being therefore included in EU law. The CJEU will also be competent with regard to the registration of the accessory unitary effects on EPO patents. But that's all.

Such a legal construction is likely to not be compliant with EU law. Moreover it is a complete departure from previous projects, which rightfully defined a new autonomous EU patent, as what was presented to the EP when it was asked to give its consent on the enhanced cooperation procedure1. Nobody can predict with a hundred percent certainty the legality or illegality of this legal machinery until it is confirmed or declared null by the CJEU. But academic studies have all raised serious grounds about its legality. This regulation is under close scrutiny by the CJEU. First about the enhanced cooperation procedure, but Spain has also already said that would the procedure be upheld, another recourse behind CJEU will be made with regard the implementing regulation. And in any case, since the unitary patent will coexist with traditional EPO and national patents, it is likely that companies won't adopt it with so strong legal and economic uncertainties. Patents are a matter of trust. A patent given to a company confers a trusted State-granted power to exclude competitors. With strong legal uncertainties, companies, and specially SMEs, won't trust powers conferred by unitary patents and won't even apply for them, as confirmed by informal polls among industry representatives.

This amendment has been split to be voted in four part. The first part includes the text as a whole excluding recitals § 21a and § 21 b, and Article 5a. Given that, as shown above, the first part does not introduce a single EU patent and moreover suffers from serious legal concerns with its compliance to EU law, MEPs have all reasons to reject it. Nevertheless, since it is tabled by (ir)responsible MEPS from the three leading EP political groups – namely Luigi BERLINGUER & Bernhard RAPKAY on behalf of the S&D (socialists) Group, Klaus-Heiner LEHNE, Tadeusz ZWIEFKA & Raffaele BALDASSARRE on behalf of the EPP (conservatives) Group, and Cecilia WIKSTRÖM on behalf of the ALDE (Liberals) Group, its fate is likely to be passed.

Parts 2 and 3 of Am. n° 70 relate to respectively recital § 21a and recital § 21 b, which state that unitary patents are to be enforced by the Unified Patent Court (UPC), and push Member States to ratify the UPC agreement. There would be a lot to say about the concerns raised by the UPC. But since it is an international non-EU agreement, the EP has no legislative power over it. And since recital are not legally binding, suffice to say that votes on second and third parts of Am. n° 70 are made in a context where many academics2 have convincingly shown that UPC do not comply with Opinion 1/09 of the CJEU of 8 March 2011. This is reinforced by the mere fact that the opinion (Council doc. 15856/11 of 21 October 2011) of the Legal Service of the Council on the compatibility of the draft agreement with the Court of Justice opinion is only partially available to the public, hiding any substantive clue on the assessment of such a compatibility. It is unlikely that MEPs have had access to the content of this document in a non-redacted form. In any case, for the same reasons than the first part of amendment n° 70, second and third parts are also likely to be passed.

The Cyprus Troll

Then comes the last part of Am. n° 70, which consists of Article 5a. We have already seen with previous amendments put to vote that the regulation was in a very bad shape to say the least. But this amendment gives it the coup de grâce. Actually Article 5a implements the “Cyprus compromise” referred above as the proposal from the Cyprus presidency of the Council to replace Articles 6 to 8, which defined the effects of the unitary patent, i.e. the uniform protection conferred by a unitary patent: direct and indirect infringing acts and exceptions thereof. The solution proposed by this amendment is to include in the unitary patent regulation a mere link to these provisions as defined in national laws. The uniformity of the effects of one unitary patent would be guaranteed by applying a single national law depending on the nationality of the patent applicant. And the uniformity between all unitary patents would rely on the mere harmonisation of these provisions as included in the UPC agreement.

This raises several issues. First, the choice of the national law by reference to the patent applicant leaves rooms for uncertainty during the life of the patent, which can be sold or transferred. Second, harmonisation leaves a degree of freedom to each contracting State of the UPC agreement to comply with it. Third, this article is just an empty shell, no uniform protection is actually defined, since it is to be found elsewhere, namely in national laws harmonised by an international agreement. Fourth, the uniform protection conferred by unitary patent is not defined by ordinary legislative EU procedure, as required by Article 118.1 TFEU, with Parliament and Council as co-legislator and voting weight defined in EU Treaties. Instead it is defined by non-EU rules of the UPC, with one vote by contracting State, and a veto-right even in the case that amendment of UPC provisions are needed to bring it into line with EU law, with no involvement of the EP. Just imagine that over the time, an exception to the protection conferred by unitary patents, for instance the exception for farmers and breeders or the exception for research purpose, proves to be insufficient. The EU legislator, and in particular the European Parliament, won't have any power to change this exception inside the UPC agreement.

The consequences are twofold. First, this amendment achieve the goals wanted by the patent microcosm: the CJEU won't have competence to gives preliminary rulings on patent infringement. This has been noted by MEP Cecilia WIKSTRÖM, who was the major supporter inside the EP of the exclusion of the CJEU as far as possible and who has praised the Cyprus compromise. Second, as shown by the above quote of the EP legal services, this amendment do not comply more to Article 118.1 TFEU, the legal basis of the unitary patent regulation, than the envisaged pure deletion of Articles 6 to 8.

In short, the fourth and last part of amendment n° 70 is just an ugly troll. In the best case, it will make the CJEU to conclude to the illegality of the unitary patent regulation. In the worse case it will deprive the EU of any control over patent policy. Nevertheless, for the same reasons than its cousin parts of amendment n° 70, this troll is likely to be passed, crushing everything in its path.

The Hobbits

After all parts of amendment n° 70 have been voted, all other amendments addressing chunks of text modified or deleted by this amendment will just fall. This is the case of the amendments voted by the (ir)responsible JURI committee, and of amendments n° 77, 78, 79, 80, 81, 83, 84, 85 and 87. All these amendments won't even be put to vote. Too bad for an efficient breeders' and farmers' exception. Too bad for making any decision of the EPO subject to a review by an independent court, which was yet a requirement expressed by Advocates General of the CJEU. To bad for including the EP in the governance of the unitary patent. But since these amendments are very likely to be ignored by the plenary, we won't detail them further here.

And then come the Hobbits! Hobbits are gentle little creatures who work hard. For the unitary patent, hobbits have worked hard to make it efficient, despite its initial unsteady architecture. Amendment n° 71 proposes to delete the statement that the unitary patent regulation shall constitute a special agreement within the meaning of Article 142 EPC. This article of the EPC, the non-EU international Convention having installed the EPO, authorises Contracting States of the EPC to conclude by an agreement that patents covering their territory provide a uniform protection. While this is the same objective than the unitary patent regulation, it is a provision of an international convention addressed to its Contracting States. The EU, as a legal entity, is not a Contracting State of the EPC. The unitary patent regulation is a normative act of the EU, it cannot be seen as an international agreement, and it is the expression of the EU, not of its Member States. The conflict between two legal orders, international public law on one hand, and EU domestic law on the other hand, puts the legal certainty of the unitary patent regulation at risk. Any Contracting State of the EPC, including Spain and Italy who are not participating to the unitary patent but also non-EU States such as Switzerland, Turkey or Monaco, could attack the legality of the unitary patent regulation. Therefore, Amendment n° 71 would offer a safe harbour for the unitary patent regulation.

This is also the case for Amendment n° 75, which defines explicitly that the unitary patent is a patent title of the EU. In compliance with Article 118.1 TFEU, this would make indisputable that the regulation creates a new patent title.

Amendment n° 76 has the same purpose of securing the legal certainty of the unitary patent regulation by explicitly asserting its autonomous character. This means that the unitary patent would be governed by and only by EU law. The consequence is that any rule used for a unitary patent to exists shall be deemed to be included in EU law, and therefore can be review by the CJEU. This includes rules on patentability, on revocation or on the uniform protection conferred by unitary patents. It should be noted that such an autonomous character was defined in all previous projects3 for a single EU patent, was agreed unanimously by the Council4, and was presented to the EP when it was asked to give its consent on the enhanced cooperation procedure. This amendment is indeed the key to define a genuine single EU patent, giving full power to the EU, and in particular the EP, over European patent and innovation policy.

Amendment n° 72 goes a step further by asking the Commission to present a future legislation on substantive patent law. While the objective of the unitary patent regulation is to unify patent law for the EU, it is starting with the roof instead of the foundations. Patent law is regulated by the EU in a very small number of area, namely biotechnological inventions and supplementary protection certificates. A proper balanced and efficient patent policy for the EU would require more work from the EU legislator. Amendment n° 72 proposed to plan this work.

Amendment n° 73 starts this work by including in the unitary patent legislation the definition of patentability, just as it is defined in the EPC, and adding to the EPC some clarity to the exclusions from patentability that have resulted in divergent interpretations by various national courts. Hence, this amendment contributes to the goal of having a unified enforcement of unitary patents.

Amendment n° 74 clearly excludes software patents, in the same line than what was endorsed by the EP in 2003 and 2005. The rapporteur RAPKAY doesn't seem to realise how the tens of thousands of software patents already granted by the EPO, against the letter and the spirit of the law, are threatening to explode with the unitary patent and the unified patent court. We have already demonstrated this, and amendment n° 74 would provide a solution to protect European firms.

Amendment n° 82 recalls that administrative tasks related to the unitary patent that have been delegated to the EPO shall comply, not only with the EPC, but first with EU law.

Finally, in the same way, Amendment n° 86 recalls that unitary patent shall not only be in compliance with competition law and the law relating to unfair competition, but with Union law in its entirety, including fundamental rights and freedoms, which are indeed often in conflict with patent law.

But Hobbits are small creatures, their amendments have been supported only by the Greens group. Therefore all these amendments have only a tiny chance to be voted. Too bad for efficiency, legal certainty and improvements provided by their hard work!

Conclusion

Given the balance of powers, which is quite clear by the mere observation of who has tabled which amendment, it is not very hard to predict the result of this vote. Elves' amendment is likely to be rejected. Because MEPs, ignoring Elves' wisdom, assume that Elves don't want anything but safeguarding Elvish languages. The amendment to rule them all is likely pass. All parts of it, including the Cyprus troll. Because the (ir)responsible MEPs of the three main political groups have cleverly hidden its illegality and its inefficiency to foster innovation and to protect EU SMEs. And Hobbits' amendments are likely to be rejected. Because Hobbits are a small species and MEPs think they only tell fantasies.

Nevertheless, this fate can still be changed. If only one single amendment, other that Amendment n° 70, is passed, or if any part of Amendment n° 70 is rejected, the unitary patent regulation will go towards a second reading. Then who knows whether this astonishing result would eventually open MEPs' eyes, and makes them be finally ready to take EU patent law seriously. Readers are encouraged to teach MEPs what they have learnt here. There is less than 24 hours to call them free of charge. Citizens, you, can change the balance of powers!

• 1. COM/2010/0790 final - NLE 2010/0384, Proposal for a COUNCIL DECISION authorising enhanced cooperation in the area of the creation of unitary patent protection, MEASURES IMPLEMENTING ENHANCED COOPERATION: “4.The unitary patent should be of autonomous nature”.
• 2. See inter alia Thomas Jaeger, All Back to Square One? - An Assessment of the Latest Proposals for a Patent and Court for the Internal Market and Possible Alternatives (December 15, 2011), International Review of Intellectual Property and Competition Law (IIC), Forthcoming, Max Planck Institute for Intellectual Property & Competition Law Research Paper No. 12-01, available at SSRN: http://ssrn.com/abstract=1973518; or Fernand de Visscher, European Unified Patent Court: Another More Realistic and More Equitable Approach Should be Examined, GRUR Int 2012, Heft 3.
• 3. 76/76/EEC: Convention for the European patent for the common market (Community Patent Convention), Official Journal L 017 , 26/01/1976 P. 0001 - 0028, Article 2: “3. Community patents shall have an autonomous character. They shall be subject only to the provisions of this Convention and those provisions of the European Patent Convention which are binding upon every European patent and which shall consequently be deemed to be provisions of this Convention”.
• 4. Council document 16113/09 ADD 1, Proposal for a Council Regulation on the Community patent - General approach, Article 2: “3. The EU patent shall have an autonomous character”.