A Single Patent Court for Europe: Dream or Reality?

By Alejandro I. Garcia

Alejandro I. Garcia, Associate, Bird & Bird, U.K., practices in England and Wales, New York and Chile, concentrating on international arbitration and cross-border litigation of disputes involving IP, information technology, telecommunications and complex commercial issues. In this article Mr. Garcia discusses the imminence of a single patent court for Europe.

In Ungar v Sugg (1892), Lord Esher commented with unparalleled eloquence on the distress suffered by patentees seeking to enforce their rights: “What, that a man had better have his patent infringed, or have anything happen to him in this world, short of losing all his family by influenza, than have a dispute about a patent.” One wonders whether Lord Esher would have found words to describe the challenges inherent in modern patent litigation, particularly in an international context.

At the time that Ungar v Sugg was decided, international trade was based on tangible goods; as was the wealth of countries. National authorities granted patent rights according to the requirements they deemed fit – often paying little or no attention to the practice in other countries. Patent litigation was rare and took place in only a handful of countries.

The 20th century, particularly its last decades, saw a fundamental shift in most economies in the world. Intellectual creations became the economic engine of most developed countries. Developed and developing economies became interdependent. International trade became truly global; with the Internet no country or player is too small. The patent system, to some extent, adapted to this new reality, particularly by making it easier for inventors and companies to secure patent rights in several countries at once. The 1970 Patent Cooperation Treaty (PCT) provided a single procedure for filing patent applications in each of its Contracting States. The European Patent Convention (EPC), signed in 1973, provided for a centralized patent prosecution mechanism.¹ These instruments enable patentees to exploit their IP rights on a global scale. Patent litigation, however, has remained confined to the jurisdiction of national courts.

International enforcement of patent rights may involve legal proceedings in multiple jurisdictions (and even proceedings within proceedings in some countries, such as Germany), which are generally subject to the laws of the country granting the patent. The aggregate costs of enforcing patent rights in multiple jurisdictions can be enormous. A February 2009 report requested by the European Commission cites the average legal costs parties must bear in patent litigation in four countries, namely, France, Germany, the Netherlands and the U.K. The report estimates that, in big commercial cases, at first instance, party costs amount to €200,000 in both France and the Netherlands, €250,000 in Germany and €1.5 million in the U.K.  Such costs often prevent small and medium-sized enterprises (SMEs) from enforcing their patent rights in all the jurisdictions in which a pan-European patent infringement might take place.

Various solutions to the issue of multi-jurisdictional enforcement have been put forward. Parties to a multi-jurisdictional patent dispute may conclude arbitration agreements whereby they agree to resolve their dispute before a single arbitral forum. In such “consolidated” cases, arbitration is often cheaper and quicker than resorting to litigation in several jurisdictions. The main drawback of arbitration in this respect is that it requires the consent of all parties involved, an unlikely prospect in many patent infringement cases. In theory, patentees may attempt to “consolidate” a multi-jurisdictional case in a single national court. This potential solution has been rejected by certain national courts² and, in any event, would bring about serious cross-border enforcement issues.

Unifying European patent courts:

The EPLA

Considering the limitations of the above measures, it might appear that resolving the issue of multi-jurisdictional patent litigation would require legislative action. That is the approach being pursued in Europe. Since 1999, an alternative agreement to the EPC that would provide for the creation of a unified court system has been under consideration within the framework of the European Patent Organization.

In November 2003, the Working Party on Litigation published a draft European Patent Litigation Agreement (EPLA), providing for the creation of such a system. But in February 2007, an interim legal opinion by the European Parliament’s Legal Service caused a major setback when it concluded that the EPLA touched on issues under the exclusive jurisdiction of the European Community (EC) and, consequently, would breach, prima facie, Article 292 of the EC Treaty.

The UPLS

The European Commission has made significant efforts to resolve the issues arising from piecemeal patent litigation. In its April 2007 communication entitled “Enhancing the Patent System in Europe,” the Commission recommended creating a single European Patent Court whose decisions concerning disputes over patents granted by the EPO would have effect in all EU member states. Following subsequent discussions, a proposal for the possible structure of a European Patent Court was prepared in October of that year .

In late 2007 and 2008, it became clear that EU member states disagreed as to whether such a court would constitute an international entity or an EC body. In the first half of 2009, the Commission recommended to the European Council the negotiation and adoption of an agreement creating a Unified Patent Litigation System (UPLS). A compromise solution, that system would be a hybrid between an international organization and a full EU body. The patent court system would have the following main features under the UPLS:

(a) jurisdiction over European and Community patents (once granted) for infringement and revocation actions;
(b) decisions would have effect in all countries in which the patents at issue are in force (i.e., EU and non-EU countries); and
(c) it would provide for a single judiciary composed of specialist judges, following standardized procedures.

One of the main reasons for supporting the adoption of the UPLS is economic. According to a report published on February 26, 2009, by 2013, users of a unified European patent system would save €148 to €289 million per year, compared to the costs of piecemeal litigation . Such reductions in legal costs could allow many SMEs to enforce their patent rights in all EU and EPC countries.

Hurdles to adopting the UPLS

Nevertheless, the UPLS has yet to overcome certain legal hurdles. In April 2009, the EU Presidency (Czech Republic), in accordance with the wishes of the majority of its member states, requested that the European Court of Justice (ECJ) issue an opinion on the compatibility of the UPLS with the EC Treaty . The ECJ would have to decide two specific issues: (a) whether an international organization may render decisions on Community issues; and (b) whether the patent court would be allowed to refer issues to the ECJ (as proposed under the UPLS). It may take the ECJ up to 18 months to provide its opinion.

The UPLS, being connected to the establishment of a Community patent, may still be hindered in its progress by certain concerns, particularly in relation to the language(s) of legal proceedings. In December 2009, the Competitiveness Council met to discuss “political issues” in relation to the UPLS. A press release by the Swedish Ministry of Foreign Affairs (Sweden then held the EU Presidency) claimed, “the Competitiveness Council […] reached a unanimous agreement on the general focus of the European patent regulation and Council conclusions on a common European Patent Court.” However, issues related to the language of proceedings and translation requirements were not resolved.

More dream than reality

Although the establishment of a unified patent system in Europe might seem to be near, some of the issues that caused the EPLA to fail in 2007 remain. As such, it is uncertain whether piecemeal patent litigation in Europe will become a thing of the past. For now, to the disappointment of many patentees – who might well share Lord Esher’s trepidations – a single patent court for Europe is more dream than reality.
 

_________________

1 At present, all EU countries are EPC members, as are some non-EU countries – such as Croatia, Iceland, Norway and Switzerland.
2 See e.g. in the U.S. Voda v Cordis Corp, Fed Cir App No. 05-1238.