Steve Peers

Two recent rulings by the Court of Justice of the European Union (CJEU) confirm the EU regulations for a unitary patent system are legal. This analysis examines the Court’s reasoning and evaluates its coherence.

Background

Establishing EU-wide patent regulations has been a long-standing challenge. The Lisbon Treaty introduced Article 118 TFEU, aiming to streamline intellectual property rules. While most rules fall under ordinary legislative procedures (requiring qualified majority voting), language regulations necessitate unanimous agreement.

Due to persistent disagreements on translation rules, a group of Member States opted for “enhanced cooperation,” allowing them to establish legislation applicable only among themselves. This involved obtaining authorization for enhanced cooperation (granted in 2011) followed by enacting implementing legislation. Spain and Italy initially contested the authorization but were overruled by the CJEU in 2013. Subsequently, two regulations establishing the substantive framework for a unitary patent and its associated language regulations were adopted in late 2012. Spain challenged these measures, leading to the recent CJEU rulings.

These regulations are intertwined with two international agreements. Firstly, the 1973 European Patent Convention (EPC), binding all EU Member States and some non-EU states, provides a framework for patent registration in multiple European countries through the European Patent Office (EPO). This results in a “European patent,” but its legal standing varies based on each country’s national law. The EU legislation seeks to establish a uniform European patent, simplifying the process and reducing translation costs.

Secondly, a treaty establishing a Unified Patent Court (UPC) aims to reduce litigation costs for European and unitary patents. While the CJEU previously raised concerns about certain aspects, Member States believe they have addressed these. The treaty becomes effective upon ratification by thirteen Member States, including France, Germany, and the UK. Six Member States, including France, have ratified it so far. The EU’s unitary patent law hinges on the UPC’s implementation and will only be valid in ratifying Member States.

The judgments

Spain challenged the two regulations on several grounds. Regarding the main regulation, Spain argued it was invalid because it hinged on the EPO, whose actions aren’t subject to judicial review, and failed to create “uniform protection” as required by Article 118 TFEU. Additionally, Spain claimed “misuse of power,” arguing enhanced cooperation was misused. Finally, Spain contested the delegation of implementing power to Member States for aspects like renewal fees, deeming it a breach of rules for conferring power to the Commission.

Concerning the language regulation, Spain argued that prioritizing English, French, and German constituted discrimination. It further argued that the EU lacked the authority to regulate language disputes and that the regulation violated legal certainty principles.

Spain also claimed the rules for implementing measures were flawed, as power was granted to the EPO, a non-EU entity. Furthermore, making the regulations’ application conditional on the UPC treaty ratification was deemed a violation of EU law autonomy.

The CJEU dismissed all of Spain’s arguments. It deemed the main regulation valid, viewing it as a “special agreement” under the EPC framework. It confirmed Article 118 TFEU as the appropriate legal basis, asserting it established a system of uniform protection for unitary patents, even if some aspects relied on national law. The Court argued that this approach still provided more harmonization than the EPC, which effectively represents a collection of national patents. The Court found no “misuse of power,” as the regulation’s stated objectives aligned with its implementation.

Regarding implementing powers, the Court deemed it acceptable for Member States to exercise this power collectively through the EPO, as the EU Treaties only mandate implementing powers for the Commission when “uniform” measures are necessary. It also found no violation of the principle prohibiting the delegation of discretionary powers. Spain’s challenges regarding the UPC treaty were deemed inadmissible, and its arguments concerning the timing of the regulations’ application were rejected. The Court concluded that the EU has the authority to delay implementing legislation and restricting the regulation’s application to Member States that ratified the UPC treaty was acceptable, given its limited impact on the regulation’s provisions.

Addressing the language regulation, the CJEU acknowledged the inherent discrimination in prioritizing three languages. However, it found no EU law requiring equal validity for all languages across all EU law aspects. The Court justified the linguistic discrimination based on cost reduction and promoting innovation. It found the use of the EPO’s existing three languages appropriate and deemed the regulation proportionate, given its provisions addressing concerns of patent holders using other languages. The Court concluded that the regulation fell within the scope of the “legal base” concerning language issues and found no breach of legal certainty principles.

Comments

The CJEU’s ruling avoided addressing significant questions concerning the implementation of enhanced cooperation, as Spain did not raise them. However, the argument regarding discrimination indirectly touches upon these issues.

While some aspects of the Court’s reasoning are convincing, such as the ability to delay EU law implementation and the legal certainty and legal basis issues surrounding the language regulation, other parts are less persuasive. The argument for limiting languages hinges on the assumption that the unitary patent system fosters innovation, a claim disputed by critics who argue it hinders innovation by granting excessively long monopolies. However, it’s unrealistic to expect the Court to engage in this debate, especially as Spain didn’t raise it.

Similarly, the Court’s argument against a violation of the principle prohibiting delegation of discretionary powers is reasonable only if one accepts its conclusion that the main regulation validly conferred implementing powers upon Member States. This leads to contradictions within the Court’s reasoning. The powers exercised by Member States when implementing the unitary patent regulations won’t result in divergent approaches across national laws. Instead, they must exercise these powers collectively within the EPO framework to ensure uniform application. This implies that uniform rules were necessary, suggesting that, according to the Treaties, such powers should have been bestowed upon the Commission.

The Court’s dismissal of the argument against limiting the main regulation’s application to states that ratified the UPC treaty is also unconvincing. The Court is correct that this affects only a few provisions, but these provisions relate to the patent’s uniform nature, a point heavily relied upon when defending the regulation’s legal basis.

This emphasis on uniformity contradicts the initial part of the Court’s reasoning, which defers to the EPC system and argues that EU law does not alter it. The Court inadequately addressed the argument that the EU lacked the power to do so and sidestepped the crucial point that the EPO should be subject to judicial review. This contrasts with the Court’s insistence on adequate review mechanisms for international bodies whose actions impact the EU legal order.

The Court appears to validate the unitary patent system both because it largely defers to the EPO system and because it does not. This contradictory reasoning suggests the Court sought to approve the system regardless of legal challenges. This approach, while confirming the legal validity of the EU’s unitary patent system, may ultimately undermine its broader legitimacy by prioritizing expediency over rigorous legal analysis.