The European Scrutiny Committee published yesterday its report “The Unified Patent Court: help or hindrance?”, and reached the following conclusions:

"We are surprised that Member States, including the UK, acquiesced so readily in this negotiating process, particularly in view of the widespread opposition to the UPC being voiced across the EU, and at a high level.

It also gives rise to a wider concern about the EU’s approach to obstacles to implementation of its policy, on which we have recently reported in relation to the fiscal compact treaty for the eurozone. On this occasion it appears to be one of wilful ignorance, or “see no evil, hear no evil”—remaining committed to a solution to enhancing patent protection that expert opinion almost uniformly thinks will significantly worsen the current situation.

Despite assertions from the Government that there was still scope for amendment of the agreement (“there is scope all the way along for amendment […] it does seem that if you keep talking and if you stay in the room long enough, you are likely to get the things that will help the process forward”), and that it was trying to make sure that Articles 6–8 were removed from the unitary patent Regulation, there has been no amendment to the UPC agreement or the unitary patent Regulation since 5 December. This is because of the reality that such a move would not be supported by Member States. We would have welcomed the Government saying this in oral evidence.

Further, in evidence the Minister appeared unwilling or unable to consider and assess the basis for the widespread opposition to the UPC agreement. We found her responses formulaic, or based on aspiration, and oddly detached from the practitioners’ perspective, despite words to the contrary.

Jurisdiction of the Court of Justice

We agree with those who so strongly oppose the inclusion of Articles 6 to 8 in the unified patent Regulation. There is, however, in our opinion an inevitability to their inclusion. Whilst the arguments of Professors Kraßer and Jacob strike us as right as a matter of patent law, the counter-arguments of the Commission on what is required to implement Article 118 TFEU seem to reflect the firm views of the EU institutions, including the Court of Justice, as a matter of EU law. This calls into question whether incorporating a unitary patent regime within the EU will ever be practicable.

Bifurcation

We recognise that a patent court which represents the traditions of 25 EU Member States, including Germany and Austria, will have to allow for bifurcation, but the probable consequences of this appear to us to be so grave, for the UK in particular, as to question the validity of a unified patent court in the EU in the first place.

Absence of suitable judges

The requirement for multinational panels of judges possessing the highest standards of competence in patent litigation is unrealistic. The quality of justice administered by any court is dependent on the expertise of its judges. Several of the witnesses, such as Henry Carr QC, conclude that it will be impossible to train such a large number of judges, who do not have the relevant experience, to an acceptable standard. We have little reason to prefer the assurances of the Government to the contrary over the experienced views of patent lawyers.

Cost of litigation and effect on SMEs

Despite Baroness Wilcox’s insistence that “there is a very strong commitment from all those involved in negotiations that the patent and court system should be affordable for SMEs” and “you can be sure that the one thing the Department for Business is not going to be doing is wanting to make small and medium-sized businesses disadvantaged”, the patent professions remain unconvinced. As CIPA stated, “the statement is strong on hopes and weak on certainties […] there are too many opportunities for things to go wrong”. We share the concerns expressed by the professions that the UPC will be prohibitively expensive, and also take the view that the EU impact assessment needs to be urgently revisited.

Exclusivity and transitional provisions

We conclude that the UPC should not be given a monopoly over both unitary and European patents until its capabilities have been proved.

Location of the Central Division

The location of the Central Division will be crucial, as it will inevitably have significant influence on the practice and procedures of the Court, as well as bring significant economic advantages to the host city. Bringing the Central Division to London (already a centre of international arbitration) would both build the credibility of the Court and bring economic benefits to London. If the Central Division is located outside the UK, there will be far less requirement for the high level of patent expertise that currently exists in this country. 

It appeared from the Minister’s evidence that this was, however, an issue on which the UK might compromise. This would be unacceptable. As one of our witnesses noted “Whoever gets the Central Division will be able to mitigate or to put its own national stamp—because it is the most important place—on how this Court works. For example, there will be decisions the Central Division makes that affect everywhere. You will be able to mitigate, definitely, the most serious effects.”

Supplementary protection certificates

On this issue, both the patent professions and the Government seem to agree that certain provisions are urgently required.

Procedural rules

We think that it is premature to conclude the negotiations on the UPC agreement.

We asked to be kept informed of significant developments in the negotiations on the Rules of Procedure, and of how consultations with stakeholders have influenced the Government’s position in those negotiations.

Overall conclusions

Although the theory of a unitary patent and unitary patent court in Europe has long been thought desirable, the practice has long been elusive. The latest attempt appears, regrettably, to be a further example of this. Moreover, some of the criticisms raised by witnesses result from traits that are so ingrained in the operation of the EU that a legitimate question arises whether an effective unitary patent can ever be achieved within the confines of the EU’s internal legal order.

We conclude overall that the draft agreement on the Unified Patent Court is likely to hinder, rather than help, the enforcement of patents within the European Union. This will particularly be so for SMEs, the main intended beneficiaries. Given our concerns, it is vital that the UK Government adopts a strong position reflecting the concerns of practitioners in final negotiations, as well as calling for the Central Division to be in London in order to mitigate the most damaging effects of a unitary EU-wide patent." Please read the report here.

Chairman of the European Scrutiny Committee, Bill Cash, said

"Although the theory of a single EU-wide patent – with a single court to administer it – has long been thought desirable, the practice has long been elusive. These latest proposals appear, regrettably, to be a further example of this. They would increase costs for SMEs and hinder the enforcement of patents within the EU, particularly by giving additional jurisdiction to the Court of Justice of the EU and not allowing the invalidity of a patent to be a defence to infringement proceedings. The negotiations have been rushed and effectively excluded the views of European patent professions.

We found the responses of the Minister, Baroness Wilcox, oddly detached from the evidence we heard on these important points. This appears now to be a damage-limitation exercise but the UK Government must bring the practical concerns we heard to the table as negotiations conclude, and in particular ensure that the Central Division of the UPC sits in London."