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European UPC Almost Ready to Launch as Austrian Parliament Approves Ratification

Austria became the 13th country to join the protocol on a European Unified Patent Court (UPC) on provisional application (PPA) when the second chamber of the Austrian parliament (Bundesrat) approved the PPA unanimously on December 2, 2021. The Austrian government is expected to formally deposit its ratification shortly.

As expected, Austria followed Slovenia as the last of the 13 EU Member States that were required to ratify in order for the PPA to take effect. This group mandatorily included Germany, Italy and France (i.e., the three Member States in which the most European patents were in effect in 2012).

With the upcoming Austrian ratification, the UPC Preparatory Committee (Committee) will be able to formally start its work. Although there is no timeline set for the initial provisional application stage, the Committee expects that stage to take approximately six to 10 months. As stated in a note published by the Presidency of the Council of the European Union on September 24, 2021, this stage includes the adoption of the secondary legislation of the UPC, including procedures, establishment of a budget, recruitment of judges and administrative staff, election of a president, final configuration and testing of the file management system and ensuring that all IT infrastructure is properly set up and secured. In addition, a working agreement with the European Patent Office (EPO) on patent application and validation remains to be completed. Many observers regard the timeline to complete preparations as challenging, noting that several of these steps will likely require significant discussion.

As noted in the Presidency of the Council’s statement, the UPC will be in force when these preparations are completed, which could be as early as the second half of 2022. The exact start date of the UPC and the Unitary Patent System depends on how long the initial provisional application stage takes. It also depends on when Germany formally deposits its UPC Agreement ratification, which has been withheld so far in order to give the committee time to complete its work. Once the UPC member states agree that the initial provisional application stage is almost complete (likely during the next two to six months), Germany will deposit its UPC Agreement ratification, which will trigger another four-month period before the UPC may officially take its first cases. The UPC will finally open its doors four months after that last instrument deposit. At that point, European patents with unitary effect could be available at the EPO.

Practice Note: Entities doing business in the European Union should check whether their intellectual property strategy is fit for the UPC entering into force and European patents with unitary effect becoming available.




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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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