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Unified at Last? Germany’s Constitutional Court Removes UPC Hurdle

On July 9, 2021, Germany’s Federal Constitutional Court rejected a pair of applications for a preliminary injunction directed against the German Approval Act on the Agreement on a Unified Patent Court (UPC) (decision of June 23, 2021, 2 BvR 2216/20). Thus, German ratification of the Agreement now only requires a presidential signature of the Approval Act and the subsequent deposition of the ratification.

The Constitutional Court’s press release can be found here (in English and German). The text of the decision itself is available here (in German only).

BACKGROUND

So far, 15 EU Member States have ratified the 2013 Agreement on a UPC. In recent years, the ratification process has faced several unexpected hurdles and proved to be cumbersome. Last year, post-Brexit, the United Kingdom formally revoked its ratification (as of July 20, 2020). Since then, of the ratifications required for entry into force, only Germany’s remained pending.

Germany’s Federal Constitutional Court annulled a first national ratification Approval Act on February 13, 2020, after a successful constitutional complaint. Now, following an apparently unsuccessful second round of constitutional complaints, nothing remains to prevent the second Approval Act, which was redrafted and approved by the German legislator in fall 2020, from being formally signed by the German president.

GROUNDS FOR THE CONSTITUTIONAL COURT’S DECISION

The Constitutional Court stated that the constitutional complaints were inadmissible on the merits because the complainants had not sufficiently substantiated the possibility of a violation of their fundamental rights.

Under German constitutional law, national legal acts may only transfer sovereign rights to the European Union or EU-related institutions under certain conditions. In particular, in order for a national act to be deemed unconstitutional, it must be established that the transfer of rights would undermine the German constitution or, in the words of German constitutional law, would affect the integral core or identity of the German constitution. In its 2020 decision, the Federal Constitutional Court recognized that the first Approval Act lacked the two-thirds majority in parliament required for such a significant transfer of sovereign rights. The first Approval Act was adopted unanimously, but only 35 of the approximately 600 German members of parliament were present for the vote, which was found to be too few for such a far-reaching piece of legislation.

In principle, the hurdles for a successful constitutional complaint are high. The Approval Act represents a democratically legitimized majority decision by a constitutional body. Now 570 members of parliament have voted in favor of the second Approval Act. Therefore, in the present decision, the Federal Constitutional Court (for the first time) considered the merits of the law rather than the formalities of passage.

In the present case, the complainants argued that Articles 6 et seq. of the UPC Agreement violated the independence of judges established in the German constitution and the constitutionally guaranteed principle of the rule of law due to the appointment of the judges of the UPC for six years, their possible reappointment and the [...]

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Paris Court of Appeals Rejects Pharmaceutical Supplementary Protection Certificate Applications

One of the conditions for obtaining an SPC is that “the product is protected by a basic patent in force”. The Court of Justice of the European Union (CJEU) clarified to what extent a product must be identified by the claims to meet this condition in Teva, Eli Lilly, and Royalty Pharma.

In Eli Lilly, the CJEU notes that an active ingredient which is not identified in the claims of a basic patent by means of a structural or functional definition cannot be considered to be “protected by a basic patent.”

The active ingredient does not, however, have to be identified in the claims by a structural formula. A functional definition of the active ingredient may suffice if it is possible to reach the conclusion on the basis of the claims (interpreted in light of the description of the invention) that they relate “implicitly but necessarily and specifically, to the active ingredient in question.

Click here to read the full article in our latest International News.




IP Ownership Considerations in Multi-jurisdictional Software Development Agreements

As a result of the healthcare sector’s growing dependence on software, health IT companies are increasingly taking advantage of globalisation to engage contractors in low wage jurisdictions to develop their user-facing software applications. This can trigger unforeseen legal risks owing to the differing laws across jurisdictions related to the ownership and transfer of intellectual property (IP) rights.

At the most extreme end, best practices in some jurisdictions are unenforceable or even impermissible in others. In view of these issues, it is strongly recommended that a company looking to take advantage of cross-border contracting for critical development eorts should carefully consider the choice of law provisions in their agreements, and engage with local counsel to ensure proper vesting of intellectual property rights.

An inability to demonstrate proper ownership of such rights can be a substantial obstacle for later financings or in corporate activities. Depending on the jurisdictions involved, a contracting company may need to concern itself with at least three types of IP in the software that is developed on its behalf: copyrights, moral or author’s rights, and patents.

Click here to read the full article in our latest edition of International News.




2020 IP Law Year in Review: European Issues

Executive Summary

From a German perspective, 2020 saw highly interesting developments that may well have an impact even beyond the borders of Germany. For example, the Federal Court of Justice (Bundesgerichtshof) in Sisvel v. Haier handed down a landmark decision on fair, reasonable and non-discriminatory (FRAND) law. This decision has already affected many FRAND cases tried before lower instance courts. Generally speaking, the FRAND law judgments issued in Germany in 2020 may have more upsides for standard-essential patent (SEP) holders than for implementers of standardised technologies.

A successful constitutional complaint against the German act to ratify the Unified Patent Court (UPC) Agreement delivered a serious blow to the attempt to establish the UPC. However, German Federal Parliament and Federal Council managed, just before the end of 2020, to pass another UPC ratification act, thereby rectifying the mistake that led to the success of the constitutional complaint. The fate of the UPC project remains somewhat unclear, however, in light of newly filed constitutional complaints.

Finally, 2020 saw the United Kingdom officially withdraw from the European Union on 1 February and become a third-party country after a transitional period that ended on 31 December. This event has multiple consequences for EU intellectual property rights, particularly EU trademarks, depending on whether they were filed or registered as of 1 January 2021.

European Issues

  1. Germany and the UPC
  2. German Federal Court of Justice on FRAND Law: Sisvel v. Haier
  3. How Does Brexit Affect European Trademark Rights?

2021 Outlook

Even though there were major developments in Germany regarding FRAND law and the UPC in 2020, these topics are far from being finally settled.

After the Federal Court of Justice’s Sisvel v. Haier decision led to relatively SEP-holder-friendly decisions by the Munich I District Court and the Mannheim District Court, the Düsseldorf District Court referred several FRAND-related questions to the CJEU in November 2020. The expected CJEU decision has the potential to shape the future of FRAND law not just in Germany, but in the whole European Union.

It will be interesting to follow the further development of the UPC project in the light of new constitutional complaints filed against Germany’s new act to ratify the UPC Agreement. These complaints may put another hold on the UPC undertaking. In any event, Germany is not expected to deposit its instrument of ratification very soon because the UPC still needs time to set up its infrastructure, including the appointment of judges.

The question of whether competitors and consumer associations can issue warning letters for violations of the General Data Protection Regulation (GDPR) continued to occupy the courts in 2020, and likely will do so in 2021 as well. According to a decision of the Stuttgart Court of Appeal dated 27 February 2020 (2 U 257/19), competition associations can issue warning letters for violations of the GDPR. The Berlin Court of Appeal previously affirmed this on 20 December 2019 (5 U 9/18) for consumer associations in the [...]

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BREXIT: How Will It Impact Your European Trademark Rights?

The United Kingdom (UK) has officially withdrawn from the European Union (EU) on February 1, 2020, but will only become a third party after a transition period ending on December 31, 2020. With that date fast approaching, you are probably wondering what will change for your trademark rights on January 1, 2021?

EU TRADEMARKS REGISTERED BEFORE JANUARY 1, 2021

  • Owners of EU trademarks (and EU parts of International Registrations) registered on or before December 31, 2020 will automatically receive a registered and enforceable UK trademark on January 1, 2021, without any re-examination or additional costs. The UK trademark will be for the same sign, the same goods, and the same filing, priority or seniority date as its corresponding EU trademark.
  • Trademark owners will have the right to opt-out from this automatic cloning as of January 1, 2021 if they have no interest in the UK territory.
  • As of January 1, 2021, EU registered trademarks and corresponding UK clones must be renewed separately.
  • Renewals made before January 1, 2021 for EU trademark registrations expiring after this date will not apply to UK clones. Also, UK clones expiring within the six (6) months following January 1, 2021 will benefit from an additional six (6)-month renewal period, with no late renewal fee to be paid.
  • If a EU trademark is declared invalid or cancelled in the EU as result of a procedure that was ongoing on December 31, 2020, its UK clone will also be deemed invalid or cancelled on the same date if the grounds are applicable in the UK.

EU TRADEMARK APPLICATIONS FILED BEFORE JANUARY 1, 2021

  • EU trademark applications (and EU parts of International Registrations) filed, but not yet registered, before January 1, 2021 will not be automatically cloned into UK trademark applications.
  • The holders of such applications have until September 30, 2021 to reapply for an identical trademark in the UK that will benefit from the earlier filing date of its corresponding EU trademark. These new UK filings will be subject to an examination process as well as UK national filing fees.

EU TRADEMARK APPLICATIONS FILED AFTER JANUARY 1, 2021

  • As of January 1, 2021, new EU trademark applications will cover the 27 remaining EU Member States, but will not be protected in the UK.
  • To acquire trademark protection in the UK, one will have to apply for a separate UK trademark which may still claim priority of an earlier national or EU trademark filed within the preceding six (6) months.

ADDITIONAL CONSIDERATIONS

  • As of January 1, 2021, pending or new oppositions or invalidity actions based solely on UK rights will be dismissed.
  • Licenses recorded for EU trademarks will not automatically be recorded for UK clones or new UK filings.
  • Existing EU Customs applications for action will not continue to have effect in the UK unless granted by UK customs authorities.
  • Agreements will have to be checked to amend provisions if appropriate.

If you are conducting or planning to conduct business [...]

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