German Federal Constitutional Court finds UPCA ratification unconstitutional

The German Federal Constitutional Court upheld the constitutional complaint against the ratification of the Agreement on the Unified Patent Court.

Remaining participating EU Member States now have some much needed time to renegotiate and amend the UPC Agreement where necessary.

In its decision of 13 February 2020 which has just been published today, the German Federal Constitutional Court upheld the constitutional complaint against the ratification of the Agreement on the Unified Patent Court. According the court, the ratification statute was not signed by the requisite 2/3 majority of the members of the German federal parliament (Bundestag) and therefore deemed void. After the UK’s exit at the end of January, this appears to be the final nail in the UPC's coffin as we prepare ourselves for an amended version, somewhere in the far future.

Background

The Unitary Patent Court (UPC) is an attempt by several European nations to create, like they have already successfully done for trademarks and designs, a truly harmonized European patent system. No such unitary patent exists in Europe today. The only tool available is the European patent, which after grant (and possible opposition) falls apart into a bundle of national patents. By way of example, each national patent belonging to a European Patent bundle can only be invalidated (after EPO opposition) by the corresponding national court.

The proposed UPC system, which includes a unified patent and a Unified Patent Court for all participating countries of the European Union (i.e. all EU countries except Spain, Croatia and Poland), is an attempt to remedy this situation. This Unified Patent Court would have jurisdiction to invalidate or uphold patents across all participating EU Member States, and grant relief for infringement effective in all those states. In order to achieve this goal, Regulation (EU) No 1257/2012 and the UPC Agreement were drawn up, with the latter requiring the ratification by at least thirteen Member States, including at least Germany, France and the UK. France ratified quickly, the UK did so shortly after (in spite of on-going Brexit machinations), but Germany held out due to a constitutional complaint filed with the German Constitutional Court. This complaint has now been accepted by the court, as we explain below.

Brexit and German complaint

Since the UK’s divorce from the EU on 31 January 2020, patent enthusiasts were still hoping that the country could participate in the new UPC. However, it recently became clear that the UK will not be joining the UPC as this would require it to respect the jurisdiction of the CJEU in relation to the UPC system, which constitutes an absolute deal-breaker for the country.

But Brexit was far from the only problem. In June 2017, German attorney Dr. Stjerna lodged a complaint with the German Constitutional Court alleging that the UPC Agreement violated the German constitution. Rumor has it that the court asked the German president not to sign off on the implementation of the UPC until it reached its decision. That decision was published today.

According to the German Constitutional Court the creation of a centralized patent system (including a centralized court system) constitutes a transfer of adjudication authorities, which implicates the constitutional rights of the German people. Accordingly, a qualified majority (2/3) within the parliament is required to authorize such a transfer of authorities. Although the Bundestag’s decision was unanimous, only about 35-38 Members of Parliament were present when it came to the final vote. The requisite majority was therefore not reached and the ratification statute found to be null and void.

What’s next?

If Brexit killed the UPC, then the decision of the German Constitutional Court has taken its corpse and buried it under a layer of concrete. It is clear that the UPC, as originally intended, is not going to happen. However, that does not mean that the UPC will never be realized. On the contrary, seeing as the German ratification has now effectively been postponed until a new ratification law is presented, the remaining participating EU Member States now have some much needed time to renegotiate and amend the UPC Agreement where necessary. For example, the question remains as to which city will be awarded the London Section of the UPC's central division. However, the central question is whether the UPC will be worth it without the UK (and without Spain, Croatia and Poland, which already were not participating). One thing is for sure: the rocky road to the UPC is not yet at its end. We are eagerly looking forward to how this story will develop and will keep you posted on any new developments.


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