International report - Constitutional complaint against UPC Agreement 14 Feb 18
Weickmann & Weickmann PartmbB - Germany
The United Kingdom and Germany are the only EU member states that have yet to ratify and promulgate the Unified Patent Court (UPC) Agreement. Despite the discussions surrounding Brexit, the presently valid forecast for the United Kingdom’s ratification is Autumn 2018. However, in June 2017 the IP world was shocked when President Steinmeier complied with a Federal Constitutional Court request to delay the signature of the UPC Agreement – which had been passed by the Bundestag and the Bundesrat – due to a constitutional complaint filed by an individual (2 BvR 739/17).
Experts agree that the Federal Constitutional Court would not have approached Steinmeier if the judges had deemed the constitutional complaint hopeless from the outset. Thus, it is fair to assume that the complaint has at least some strong arguments, which the Federal Constitutional Court needs to investigate in more detail before making a decision.
As a result, a lively discussion about the complaint’s chances of success emerged among interested persons, groups and organisations. The discussion focused on one specific point: the Boards of Appeal of the European Patent Office (EPO) and their lack of independence. Interestingly, a former Federal Constitutional Court judge, Professor Dr Siegfried Bross, was among the most vocal supporters of the position that the Boards of Appeal are not independent from the EPO, and as such, may not be considered as independent courts.
For Germans, this kind of discussion is not entirely unfamiliar – rather, it serves as a reminder that the Federal Patent Court was established in 1961 as a result of a successful plaint before the Federal Administrative Court (6 U 950/58; GRUR 1959 435ff) arguing that the appeal senates (which were at that time part of the German Patent Office) were not to be deemed independent from the German Patent Office, and as such, did not constitute a court within the meaning of Article 92 of the Constitution.
This report examines the reasons of the Federal Administrative Court’s decision.
Reasons behind the Federal Administrative Court’s decision
At the outset of its decision (6 U 950/58), the Federal Administrative Court stated that Article 92 of the German Constitution entrusts judicial power exclusively to judges. It concluded by stating that, according to Article 92, combined with the principle of separation of powers set out in Article 20 of the Constitution, any transfer of the right to dispense justice to members of the legislative or executive power constitutes a breach of the Constitution. This finding accorded with decisions issued by the Federal Constitutional Court (eg, BVerfGE 4 331) which ruled that courts, as part of the judicial power, must be considered special institutions completely separate from the executive power.
In other words, the Federal Administrative Court found that if the appeal senates must be considered part of the German Patent Office, they could not constitute a court because the office was clearly part of the executive power.
The judges deemed it irrelevant that:
- the overwhelming majority of experts considered the appeal senates to be independent;
- external signs similar to those used in courts were used (eg, robes and titles); and
- the appeal senates were referred to as ‘senates’ – the legislature had been free to clarify that an administrative act (eg, the rejection of a patent application) must be reviewed by another administrative body before being allowed to be brought before a court.
Rather, the judges focused on the organisation of the German Patent Office as defined in German patent law and its regulations.
The Federal Administrative Court judges concluded that the law and regulations clearly assumed the unity of the German Patent Office, as they both stipulated the role of a president heading the court in its entirety. In particular, they found that the president was the supervisor of all German Patent Office members and was therefore entitled to transfer staff from the examining divisions to the appeal senates (and vice versa) by simply changing the office’s duty allocation plan.
Essentially, the judges emphasised:
- that all decisions had been issued under the ‘German Patent Office’ label, even where the respective examining division or appeal senate designation had been added; and
- the central role of the president of the German Patent Office.
The judges ruled that the appeal senates were not independent from the German Patent Office and thus could not be considered a court under Article 92 of the Constitution.
As a result of this decision, Article 96 of the Constitution was amended to authorise the establishment of a federal court for IP matters. Based on this authorisation, the Federal Patent Court was established in 1961 as a court with full independence from the German Patent Office.
EPC and implementing regulations
New EPC Rules 12a to 12d
In 2016 the Implementing Regulations to the European Patent Convention (EPC) were amended by the EPO's Administrative Council, following a proposal by the president of the EPO. In particular, Rules 12a to 12d emphasised the independence of the Boards of Appeal.
Under the new implementing regulations, the Boards of Appeal and the Enlarged Board of Appeal are organised as a single unit: the Boards of Appeal Unit (Rule 12a(1) 1 of the EPC). Further, a new position has been created: the president of the Boards of Appeal (Rule 12a(1) 2 of the EPC). Under Rule 12a(2) 1 of the EPC, the president of the EPO delegates functions and powers to the president of the Boards of Appeal, thereby allowing him or her to manage the Boards of Appeal Unit. In exercising the delegated functions and powers, the president of the Boards of Appeal is responsible solely to the Administrative Council and is subject to its hierarchical and disciplinary authority (Rule 12a(2) 2 of the EPC).
Federal Administrative Court perspective
At first glance, the aforementioned amendments to the implementing regulations are a significant step towards greater independence for the Boards of Appeal. However, Bross expressed considerable doubts, as the EPC itself was left unchanged (EPC changes are not within the remit of the Administrative Council, but require a diplomatic conference of all EPC member states). In fact, there are several points which merit discussion in view of the Federal Administrative Court’s 1959 decision.
The new rules fail to clarify which functions and powers (eg, administrative and disciplinary) must be delegated to the president of the Boards of Appeal in order to allow him or her to manage the Boards of Appeal according to Rule 12a(2) 1 of the EPC. According to the EPC (which, legally speaking, is ranked higher than the implementing regulations), all functions and powers delegated to the president of the Boards of Appeal are intrinsic to the president of the EPO (Article 10(2) of the EPC) and will remain after delegation.
Under Article 10(2)(i) of the EPC, the president of the EPO may delegate his or her functions and powers – in fact, it seems to be within his or her discretion:
- to decide which functions and powers should be delegated to the president of the Boards of Appeal; and
- to revoke the delegation whenever he or she deems it appropriate.
In March 2017 the Official Journal merely informed the public that “on 14 February 2017 the President of the European Patent Office signed the Act delegating certain functions and powers to the President of the Boards of Appeal” (emphasis added).
The EPO’s website stated that:
“In an Act of Delegation, the President of the EPO delegated to the President of the Boards of Appeal powers relating to the appointment and re-appointment of members of the Boards of Appeal and managerial and disciplinary matters.”
Therefore, whether the president of the EPO delegated full disciplinary power to the president of the Boards of Appeal or reserved some rights (eg, the right to propose disciplinary action against members of the Boards of Appeal (Article 10(2)(h) of the EPC)) remains unclear.
Under Rules 12a(3) 1 and 12a(3) 2 of the EPC, the president of the Boards of Appeal must prepare a substantiated annual budget request for the Boards of Appeal Unit and forward it to the president of the EPO for consideration. Under Rule 12a(3) 3 of the EPC, the president of the EPO must provide the president of the Boards of Appeal with the “necessary” resources. However, it seems to remain within the president of the EPO’s discretion to decide which resources are necessary as, according to Article 10(2)(d) of the EPC, the budget remains the responsibility of the president of the EPO.
Articles 15(f) and 15(g) of the EPC still refer to the Boards of Appeal and the Enlarged Board of Appeal as parts of the EPO. Boards of Appeal and Enlarged Board of Appeal decisions continue to be issued under the ‘European Patent Office’ label. The headline of Board of Appeal decisions reads ‘BOARDS OF APPEAL OF THE EUROPEAN PATENT OFFICE’, while the headline of a recent decision of the Enlarged Board of Appeal read ‘European Patent Office’, with ‘Enlarged Board of Appeal’ in lower case.
Previous Federal Constitutional Court decisions
Issues surrounding the “rule of law of proceedings before the Boards of Appeal of the EPO” were addressed in previous Federal Constitutional Court decisions (eg, 2 BvR 2368/99 and 2 BvR 1848/07). However, these decisions were not the result of a Federal Constitutional Court senate diving into the details of the respective constitutional complaint – rather, they were issued by Chambers of the Second Senate of the Federal Constitutional Court refusing to accept the respective constitutional complaint for proceedings due to the plaintiff’s failure to provide sufficient reasoning. The pending complaint does not evidently suffer from this drawback and allows the Second Senate to examine all of the plaintiff's arguments in detail.
While the EPO's Administrative Council, in an attempt to avoid a diplomatic conference, has endeavoured to strengthen the independence of the Boards of Appeal by amending the implementing regulations, certain aspects may still support Bross’s position and strengthen the constitutional complaint.
However, the situation is less clear cut than the case decided by the Federal Administrative Court in 1959. Whether the independence of the Boards of Appeal prompted the Federal Constitutional Court to request that Steinmeier delay the signature of the UPC Agreement remains unclear.
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