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New details confirm the complexity of the legal challenge to Germany's ratification of the Unified Patent Court reforms, says expert

Businesses should not expect a speedy resolution to the legal challenge brought in Germany against the Unified Patent Court (UPC) reforms, an expert has said.23 Aug 2017

Munich-based patent law expert Dr. Michael Schneider of Pinsent Masons, the law firm behind Out-Law.com, said the publication of more details about the nature of the challenge suggests the case is "highly complex".

Earlier this year, Germany's parliament voted to ratify the UPC Agreement.  However, news that Germany's Constitutional Court was considering whether the legislation was constitutional subsequently emerged earlier this summer.

At the time, it was reported that a legal challenge had been brought against the not-yet-enacted ratification laws and that Germany's president, Frank-Walter Steinmeier, had been informally requested by the Constitutional Court to step back from signing the reforms into law to allow it to consider the challenge that had been raised. However, at that stage there was a lack of information about both the identity of the complainant and the basis of the complaint.

Now, while the identity of the complainant and motives behind the complaint remain unknown, details have emerged from the Constitutional Court in Karlsruhe regarding the grounds of the legal challenge, in response to a multitude of requests from the patent community at large.

Schneider said: "There are apparently four grounds to the complaint, which each raise a question over whether the proposed reforms align with Germany's constitution. The constitution regulates the basis for Germany's participation in, and the internal workings concerned with, the transfer of powers to the EU. It also sets out the fundamental elements of the constitution, such as the democratic legitimacy and judicial rights, for example, which have to be safeguarded in such transfer."

"If viewed from this angle, as the complainant apparently advocates, in essence it requires that any transfer of sovereign rights from Germany's judiciary to another organisation – in this case the transfer of patent litigation powers to the UPC – has to approved by a certain quorum and majority of votes in parliament.  The late night vote in the Bundestag which passed the UPC laws would call into question whether there was the required quorum to pass the legislation," he said.

"If this was the only basis of the legal challenge then it would be possible to foresee a straightforward solution whereby the legislation could be reintroduced before the Bundestag and Bundesrat after the September elections to achieve the two-thirds majority of votes needed to pass the thresholds for compliance with the constitution, but there are two further grounds of complaint that have been raised," Schneider said.

"The complaint has called into question whether judges of the UPC will be independent in the sense prescribed by the German constitution. Under the UPC reforms an administrative council will, for example, play a role in the reappointment of judges on a periodical basis, which the legal challenge appears to raise constitutional concerns about. The nature of this aspect of the complaint reflects already existing tensions that apply to the process for reappointment of judges to the Board of Appeal at the European Patent Office (EPO)," he said.

"The final ground of appeal seems to relate to the way that the unitary patent reforms as a whole have been structured. The Constitutional Court in its statement points to an alleged breach of the constitutional mandate to promote Germany's integration within the EU due to an alleged irreconcilability of the UPC with EU law. This again leaves room for speculation at this point. It may be that the decision, in response to concerns raised by the UK among others, to move core provisions of material patent law away from the Unitary Patent Regulation and into the UPC Agreement, which results in a limited role of the Court of Justice of the EU (CJEU) in the interpretation of these provisions, is picked up under this heading.

Schneider said the complexity of the case, as it now emerges, is likely to result in a significant delay to, and could even potentially jeopardise entirely, Germany's ratification of the UPC Agreement. The Karlsruhe court declined to give any indication of when the pending challenge will be decided, saying only that "a specific date for the decision is presently not foreseeable".

"With this case involving material issues of constitutional law, it is fair to speculate that this legal case will take time for the court to consider and resolve," Schneider said. "Proceedings are not likely to just take a couple of months. This has obvious ramifications for the timeframe involved for the new unitary patent and UPC system to become operational, notwithstanding the further uncertainty that exists over the participation of the UK in the unitary patent framework post-Brexit."

For the new UPC system to take effect, at least 13 EU countries, including the three with the most European patents in effect in 2012 – Germany, France and the UK, must pass national legislation to ratify the UPC Agreement that the countries behind the new system finalised in 2013.

France is one of the 12 countries to have completed ratification to-date.

In June, the body tasked with laying the foundations for the new judicial system to take effect outlined a tentative new timetable for the reforms which suggested that current delays to the operation of the new unitary patent and UPC system might be capable of being measured in months and not years.