German Federal Constitutional Court clears the way for the Unified Patent Court

Germany

The German Federal Constitutional Court (FCC) dismissed two motions for interim measures against the German act approving the Agreement on a Unified Patent Court (UPCA). The way is thus clear for German ratification, an essential milestone for the start of the Unified Patent Court (UPC) and the Unitary Patent System.

Background

The UPCA is the last major step on the way to the introduction of the European patent with unitary effect.

The UPC was already about to be launched in 2017 despite the looming Brexit. However, an initial constitutional complaint in Germany including a motion for interim measures caused the German President not to sign the First German UPCA Approval Act into law. The future of the UPC has remained unclear for almost three years. Last year, the FCC finally declared the First UPCA Approval Act null and void on formal grounds.

Soon after this decision, the German government introduced the Second UPCA Approval Act in the German parliament (Bundestag), which passed the Act at the end of 2020 with the necessary two-thirds majority. After approval by the German parliament's second chamber (Bundesrat), two further constitutional complaints including motions for interim measures brought the Act and the German ratification of the UPCA again to a halt. The German President again did not sign the Act for the time being. Now, the FCC decided on 23 June 2021 to dismiss the motions for interim measures.

Current decision of the German Federal Constitutional Court

In its decision of 23 June 2021, the FCC decided to dismiss the motions for interim measures. The FCC reasoned its decision by stating that the underlying constitutional complaints were inadmissible on the merits. The claimants had not sufficiently shown that their fundamental rights or any equivalent constitutional rights had been violated. Under German law, a constitutional complaint, which lacks a sufficiently substantiated statement of grounds is inadmissible.

As far as can be seen from the decision of the FCC, the legal arguments of the claimants are well known from the past. In essence, they were already included in the constitutional complaint against the First UPCA Approval Act of 2017. The FCC overturned this Act due to the lack of a constitutionally required two-thirds majority in the Bundestag. It did not deal with the substantive arguments in depth in its first decision.

This time, the FCC could not identify any violation of constitutional rights by the Second UPCA Approval Act on the basis of the claimants' submissions:

The FCC especially did not follow the claimants' view that the UPCA would introduce an unrestricted supremacy of European Union law over national law. Neither did the FCC find sufficient substantiation in the submissions that the election procedure of UPC judges would violate the claimants' fundamental, constitutional rights respectively or basic democratic principles. In particular, a violation of the right to effective legal protection, as invoked by the claimants, was not apparent to the court. 

In consideration of the overall submissions, the FCC found that the constitutional complaints were currently to be regarded as inadmissible for lack of substantiated grounds on the merits. The motions for interim measures were therefore rejected.

Bright outlook for the UPC and the Unitary Patent System

The FCC decision is not yet the final conclusion to the protracted history of the UPC. Formally, the FCC has only ruled on the motions for interim measures, which does not exclude the possibility that the constitutional complaints will prove to be well founded in the main proceedings. The claimants are still free to support their complaints with further arguments.

However, the fact that the FCC has taken considerably more time with the current decision than was previously expected indicates that the court has already examined the constitutional complaints carefully. Based on the written reasoning of the decision, it also seems questionable if there is a chance at all that the claimants would be able to substantiate a violation of their constitutional rights.

For the time being, the decision of the FCC means that the German President can sign the Second UPCA Approval Act into law and the UPCA may enter into force in the foreseeable future. After decades of attempts, the introduction of a European patent with unitary effect is also within reach.

Until then, Germany and two other member states must also ratify the Protocol to the Agreement on a Unified Patent Court on Provisional Application (PPA). Bearing this in mind, it is currently assumed that the UPC will start at the end of 2022 to the beginning of 2023.

There is not much time left until then. The organisational preparations for the UPC have stalled considerably due to the German constitutional complaints and must now pick up speed as quickly as possible.

Companies must now decide which of their European patents to opt out of the UPC's jurisdiction.

Finally, how to deal with the UPC central chamber, originally to be located in London, still must be clarified. Its competence, particularly for pharmaceutical and chemical patents is to be temporarily taken over by the central chamber in Paris and the division in Munich. However, this is far from the end of the discussion on this matter.

For more information on the implications of the FCC decision and how it could affect your European or German business, contact your CMS partner or local CMS experts.