ECJ paves the way for proposed unitary patent regime

On May 5 2015 the European Court of Justice (ECJ), the highest court for EU law matters, handed down two judgments rejecting actions brought by the Spanish government against the legality of the regulations establishing the unitary patent. These regulations are part of the unitary patent package. Hence, if the Spanish actions had been successful it would have been the end of the proposed unitary patent regime. As steps are already being taken across member states to establish the Unified Patent Court, the ECJ’s decisions have been welcomed.

Background
The current European patent protection system is governed by the European Patent Convention, an international agreement which is not subject to EU law. This convention provides that in each of the contracting states for which it is granted, the European patent has the effect of and is subject to the same conditions as a national patent granted by that state.

Through the unitary patent package, the EU legislature sought to confer unitary protection on the European patent and to establish a unified court in this area. Under the current European Patent Convention system, in each state party to the convention a European patent provides protection whose extent is defined by the national law of that state. In contrast, under the unitary patent system the national law designated by EU Regulation 1257/2012 will apply in the territory of all of the participating member states in which the patent has unitary effect, guaranteeing the uniformity of the protection conferred by that patent. The translation arrangements for the unitary patent, which are based on existing European Patent Office (EPO) procedure, are designed to achieve the necessary balance between the interests of economic operators and the public interest in terms of the cost of proceedings and the availability of technical information. The official EPO languages are English, French and German. The EU legislature also considered that it was essential to establish a court with jurisdiction to hear cases concerning the unitary patent in order to ensure the proper functioning of the patent, the consistency of case law and thus legal certainty, as well as cost-effectiveness for patent owners.

Spain sought the annulment of two regulations within the package: the regulation on the creation of unitary patent protection (Case C-146/13) and the regulation governing the applicable translation arrangements (Case C-147/13).

Decision
In its May 5 2015 judgments the ECJ dismissed both actions. 

The Spanish actions against the legality of the two EU regulations were based on a number of legal objections: 

• Spain asserted that the regulation for the creation of a unitary patent lacked legal basis under EU law.
• In addition, Spain argued that the rule of law was infringed as the grant of unitary patents would be entrusted to a non-EU body – namely, the EPO, whose decisions are not subject to judicial review by the ECJ and hence may pose a risk to the correct, uniform application of EU law. 
• With regard to the regulation on translation arrangements, Spain argued that the regulation would result in a discrimination against EU citizens whose language was not French, German or English. 

This last objection was always the core issue of Spain’s persistent opposition to any new European patent regime in the past, and eventually led to the establishment of enhanced cooperation between 25 EU member states, excluding Spain and Italy.

Following Advocate General Bot’s opinion of November 2014, the ECJ dismissed all of Spain’s objections as unjustified. In summary, the ECJ held as follows:

• Since the unitary patent protection was intended to prevent divergence in terms of patent protection in the participating member states, it provided for the uniform protection of IP rights in those states. Consequently, Article 118(1) of the Treaty on the Functioning of the European Union was an adequate legal basis for the regulation for creation of a unitary patent.
• According to the Treaty on the Functioning of the European Union, it is for member states to adopt all of the measures of national law necessary to implement legally binding EU acts. Moreover, it inevitably falls to participating member states – and not to the European Commission or the European Council – to adopt all of the measures necessary to carry out those tasks, given that the European Union (unlike its member states) is not a party to the European Patent Convention. Therefore, the ECJ concluded that the EU legislature did not delegate any implementing powers which were exclusively its own under EU law to the participating member states or the EPO.
• The regulation differentiates between the official languages of the European Union. However, the ECJ emphasised that the regulation has a legitimate objective – namely, the creation of a uniform and simple translation regime for the unitary patent in order to facilitate access to patent protection, particularly for small and medium-sized enterprises. The complexity and high costs of the existing European patent protection system constitute an obstacle to patent protection within the European Union and affect adversely European businesses' capacity to innovate and compete. The ECJ went on to emphasise that the language arrangements established by the regulation make access to the unitary patent – and the patent system as a whole – easier, less costly and legally more secure. The regulation is also proportionate, as it maintains the necessary balance between the interests of unitary patent applicants and the interests of other economic operators in regard to access to translations of texts which confer rights, or proceedings involving more than one economic operator, by introducing a number of mechanisms (including a compensation scheme for the reimbursement of translation costs, a transitional period until a high-quality machine translation system is available for all official EU languages and a full translation of the unitary patent for operators suspected of infringement in the event of a dispute).

The establishment of the Unified Patent Court and the unitary patent regime will now fail only if member states do not ratify the Unified Patent Court Agreement. The agreement must be ratified by 13 member states. At present, six member states (including France) have already ratified, which means that a further seven member states, which must include the United Kingdom and Germany, are required for successful ratification (the current state of the ratification process can be seen at http://ec.europa.eu/growth/industry/intellectual-property/industrial-property/patent/ratification/index_en.htm).

The Unified Patent Court is expected to commence work in 2016 or 2017.