CJEU refuses to throw España in the works – part II

As discussed in Part I of this two-part series, the Court of Justice of the European Union today dismissed two challenges filed by Spain against the legislative framework put in place to create the European Patent with Unitary Effect (“EPUE”), better known as the Unitary Patent.

This post deals with the second decision, C-147/13, which examined the legality of the translation arrangements of Council Regulation (EU) No 1260/2012(the “contested regulation”).

Essential reading
for patent attorneys?

As background, the current pre-grant language regime of the EPO is unchanged by the contested regulation, i.e. a single language of proceedings which is English, French or German, with the claims being translated at grant into the other two languages. A further feature is that an application can be initially filed in another language such as Spanish or Hungarian before being translated into one of the three working languages of the EPO. For the benefit of readers unfamiliar with the current post-grant regime, certain countries have signed up to the London Agreement and either dispense entirely with any further translations, or only require their claims to be translated into the country's official language; other countries, such as Spain, have not signed up to that agreement and require a full translation of the specification into their official language or else the European patent lapses for that country.

The contested regulation is relatively short and sweet (or bitter, one supposes, depending on who’s doing the tasting). It sets out a language regime that has the following key features.

• Where the specification of a European patent, which benefits from unitary effect has been published in accordance with Article 14(6) of the EPC, no further translations shall be required. (Art. 3)

• In infringement proceedings the patent proprietor must provide at the request and the choice of an alleged infringer, a full translation of the specification into an official language of the country in which the alleged infringement took place or the alleged infringer’s domicile. At the request of a court hearing an infringement dispute, the patent proprietor shall provide a full translation of the patent into the language used by that court. (Art. 4)

• Given that European patent applications may be filed in a non-working language of the EPO (i.e. not English, French or German), the Member States participating in the unitary patent regime entrust the EPO with administering a compensation scheme. The compensation scheme, funded by renewal fees, reimburses all translation costs up to a ceiling, for such individual/SME/non-profit/university applicants who file in one of the official languages of the Union that is not  working language of the EPO. (Art. 5)

• During a transitional period lasting up from 6 to 12 years (depending on when an expert group deems the quality of machine translations to be satisfactory) the proprietor will be obliged to file a full translation of the specification for information purposes only into English (if the language of proceedings is French or German) or into any other official language of the Union (if the language of proceedings is English). (Art. 6)

• Entry into force of these provisions was to occur on the later of 1 January 2014 or 20 days from the date of entry into force of the Agreement on a Unified Patent Court. (Art. 7)

Spain relied on five pleas, all of which had been dismissed in Advocate-General Bot’s Opinion and were similarly dismissed by the Court here. As with the decision in the parallel case, there were no real surprises relative to the A-G’s opinion.

The 1st plea: Infringement of the principle of non-discrimination on the ground of language

Spain claimed that the regulation disregards the principle of non-discrimination, stated in Article 2 of the Treaty on the European Union (TEU), since the language regime is prejudicial to individuals whose language is not English, French or German. While acknowledging that such unequal treatment might be permissible sometimes it had to be proportionate and justified on public interest grounds.

The Court noted that there is no general principle of EU law to the effect that anything that might affect the interests of a European Union citizen should be drawn up in his language in all circumstances. Acknowledging the lack of equality, the Court held this to be justified in terms of the objective of creating a uniform and simple translation regime especially compared to the current EPC regime post-grant.

Coverage wanted in every country?
For Risk, yes; for patents, only maybe

This Kat notes that the Court took it for granted (as indeed have the political forces behind the unitary patent project) that it is self-evident that patent proprietors want to obtain a patent in every EU member state, and it is this goal that is held to justify departing from equal treatment for all languages in order to keep the costs down. However, the evidence shows that most patentees are content with protection in a smaller number of countries. While it might be complex and costly to obtain protection EU-wide, the fact remains that in the post-London Agreement world many patentees never have to translate their patent at all. However, such considerations never appear in the Court’s decision.

The 2nd plea: Infringement of the principles stated in the Meroni judgment 

Meroni was also raised in C-146/13. It is an old decision that sets limits on how EU organs like the Council and Commission can delegate powers to outside agencies. Spain argued that the principles were breached by the Council having delegated certain powers to the EPO, namely the compensation scheme and the power to publish translations.

The Court dismissed this without too much soul-searching: it was not the Council that had delegated powers, but rather the Member States. As such, Meroni was not applicable.

The 3rd plea: Lack of legal basis for Article 4

The legal basis for introducing the contested regulation was stated to be Article 118 of the Treaty of the Functioning of the European Union, in particular the second paragraph of that Article. Article 118 authorises the EU to establish Europe-wide IP rights, and the second paragraph allows the Council of the EU to “establish language arrangements” for European IP rights.

Spain’s argument was that Article 4 of the regulation, dealing with the provision by the patentee of translations in cases of dispute, was not a “language arrangement” but rather was about establishing procedural safeguards in the context of legal proceedings. As such there was no basis in Article 118 for this provision of the contested regulation.

The Court dismissed the argument, saying that Article 4 was directly part of the language arrangement for the EPUE and could not be separated from the arrangements as a whole in the contested regulation, defined in Articles 3, 4 and 6. Moreover it was not prohibited, when establishing the language arrangements for a European IP right, to rely on the existing language arrangements of e.g. the EPC, and nor was it obligatory for the regulation to define all aspects of the language arrangements of the EPUE.

The 4th plea: Infringement of the principle of legal certainty

This plea encompassed several disparate objections, all alleged to lack legal certainty:

The Kingdom of Spain claims that the Council infringed the principle of legal certainty. First, the contested regulation limits access to information for economic operators, since the specification of the EPUE is published only in the language of the proceedings, to the exclusion of other official languages of the EPO. Next, the contested regulation does not specify the arrangements, pertaining to language or otherwise, for the grant of the EPUE. Further, the contested regulation does not indicate, in the context of administration of the compensation scheme, either the costs ceiling or how compensation is to be determined. Moreover, the provisions of Article 4 of that regulation are not sufficient to offset the lack of information relating to the EPUE. A translation of the EPUE provided in the event of a dispute has no legal value and Article 4 does not set out the specific consequences of the possibility that an infringer of a patent has acted in good faith. Last, a machine translation system did not exist when the contested regulation was adopted and there is no guarantee that such a system can function in an area where accurate translation is of fundamental importance.

The Court dutifully makes its way down this catalogue of objections in paragraphs 79-88 of the judgment (to which readers are referred if they want to know why each objection is dismissed), explaining that it can at no point identify any breach of the principle of legal certainty.

The 5th plea: Infringement of the principle of the autonomy of EU law.

The objection here is about the entry into force of the contested regulation which was set at 1 January 2014 or with reference to the date of entry into force of the UPC Agreement, whichever is later. Spain argued that this infringed on the autonomy of EU law because “the contracting parties to the UPC Agreement were given the power to determine the date when provisions of EU law would become applicable, and consequently when the powers of the European Union are exercised.”

As in case C-146/13 where a similar objection was raised, the Court here considered that it was sometimes permissible for a regulation’s entry into force to be dependent on Member States making the necessary legislative arrangements, and that this was one of those cases.

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So once again, a comprehensive rejection of the case made by Spain. Reading the two decisions together, this Kat’s reaction is one of wearied submission. One can’t help feeling that the Court views the unitary patent package as A Good Thing and equally views the attempts by the Kingdom of Spain to stymie its introduction as A Bad Thing (this may be influenced by the fact that some of Spain’s grounds were rehashing matters decided in the earlier challenge taken by Spain and Italy). One gets the impression that almost regardless of the arguments made, Spain was going to fail in its attempt to hold up this process any further.

While this Kat is not in a position to opine on whether the judgment is legally correct as a matter of EU administrative and procedural law (but hopes that readers will do so in the comments), it seems a pity that the Court did not appear to want to scratch beneath the surface of the regulations and think about what the unitary patent system will really look like when in operation.

The Court in both decisions appeared much more comfortable considering the contested regulations almost in the abstract, and in constructing a convoluted legal path between the requirements on the one hand for the Council to have acted within the limits and constraints set by the underlying EU treaties while on the other hand absolving the Council of any responsibility for those parts of the two regulations that handed any powers over to the EPO (in which case it was not the Council but rather the Member States that were said to be handing over the keys to the kingdom). The result seems a little too neat to be convincing, but at least we now have a final answer on the legal challenges.

All that's left now is for the major countries to ratify. Which presumably is just around the corner, right?