As a fan of Monty Pythons, I come now with something completely different.
The UPCA is on the verge of its entry into force and the UPC of opening its doors, but the Brexit hangs over the UPC like as Damocles’ sword.
It does not bode well to see on the one hand how Brexit has been first belittled by the supporters/proponents of the UP/UPC system as some of them claimed that the UK can continue to be part of the UPCA in spite of Brexit, when on the other hand it turns out that according the same, Brexit can actually be ignored with the help of a “magic trick”, i.e. by merely just amending the UPCA under Art 87(2) UPCA at 8am on the day the UPC opens at 9am, as all provisions in the UPCA not in conformity with EU law can merely be ignored.
1. Legal problems
There is a host of legal problems linked with the withdrawal of the UK. Those problems have been wilfully ignored by the proponents/supporters of the UPC.
As any treaty, the interpretation of the UPCA is submitted to the Vienna Convention on the Law of treaties (VCLT) and to its mechanisms of interpretation.
Against any odds, some of the proponents/supporters of the UPC even consider that there is no need to resort to the VCLT, see below.
The Articles of the VCLT which are important in the present situation are Art 25, 31, 56 and 62 VCLT.
1.1. Art 31 VCLT
Art 31 VCLT defines the general rules of interpretation of a treaty.
Art 31(1) VCLT provides that “A treaty shall be interpreted in good faith in accordance with the ordinary meaning to be given to the terms of the treaty in their context and in the light of its object and purpose”.
Art 31(3) VCLT provides that “There shall be taken into account, together with the context:
– (a) any subsequent agreement between the parties regarding the interpretation of the treaty or the application of its provisions;
– (b) any subsequent practice in the application of the treaty which establishes the agreement of the parties regarding its interpretation;
– (c) any relevant rules of international law applicable in the relations between the parties.
If the parties to a treaty decide on a given interpretation, it follows that this can only be in the form of a written agreement or a common declaration. No declaration under Art 31 VCLT has been published, although the intention of publishing a declaration has been uttered by the Preparatory Committee, see below. .
1.2 Art 25 VCLT
Art 25 VCLT deals with the provisional application of a treaty. The contracting states have devised a protocol on the provisional application of the UPCA.
Art 25(2) VCLT provides that “Unless the treaty otherwise provides or the negotiating States have otherwise agreed, the provisional application of a treaty or a part of a treaty with respect to a State shall be terminated if that State notifies the other States between which the treaty is being applied provisionally of its intention not to become a party to the treaty”.
Art 25(2) VCLT has been considered by some people as being applicable to the withdrawal of the UK. As the withdrawal of the UK occurred before the provisional application of the UPCA, Art 25(2) VCLT does not appear applicable to the withdrawal of the UK.
1.3 Art 56 VCLT
Art 56(1) VCLT provides that “A treaty which contains no provision regarding its termination and which does not provide for denunciation or withdrawal is not subject to denunciation or withdrawal unless:
(a) it is established that the parties intended to admit the possibility of denunciation or withdrawal; or
(b) a right of denunciation or withdrawal may be implied by the nature of the treaty.
It is difficult to see that the parties to the UPCA ever intended to admit the possibility of withdrawal or that this possibility was implied by the nature of the treaty. It rather seems that the contrary was intended. See Stjerna, 13.12.2022, point 1)a), p 5, under the link:
Such an exit clause is foreseen in the EPC, cf. Art 174 EPC.
There is only the possibility foreseen in Art 87(3) that a Review Conference of the Contracting Member States shall be convened if a contracting state does not agree to a decision taken under Art 87( or 2) UPCA. Whether a contracting state will be bound by the UPCA after revision is not foreseen and if it does not agree is flowingly excluded from the UPCA is neither foreseen
At least in Art 172(4) EPC it is foreseen that a contracting state which has not ratified or acceded to the revised text of the EPC at the time of its entry into force shall cease to be parties to the EPC as from that time.
1.4 Art 62 VCLT
Art 62 VCLT deals with a fundamental change of circumstances.
Art 62(1) VCLT provides that “A fundamental change of circumstances which has occurred with regard to those existing at the time of the conclusion of a treaty, and which was not foreseen by the parties, may not be invoked as a ground for terminating or withdrawing from the treaty unless:
(a) the existence of those circumstances constituted an essential basis of the consent of the parties to be bound by the treaty; and
(b) the effect of the change is radically to transform the extent of obligations still to be performed under the treaty.
It has been argued that the UK’s withdrawal from the EU constituted a fundamental change in the circumstances existing at the time of the conclusion of the UPCA within the meaning of Art. 62(1) VCLT.
However, Art 62(1) VCLT only applies to a treaty which has entered into force. This is certainly not the case for the UPCA, in spite of the unilateral decision of the depository declaring the PPA having entered into force.
Furthermore Art 65(1) VCLT defines a procedure to be followed with respect to invalidity, termination, withdrawal from or suspension of the operation of a treaty. None of the conditions defined in Art 65(1) VCLT are fulfilled.
Art 67(1) VCLT provides that the notification provided for under Art 65(1) must be made in writing. It is thus doubtful that the “Note Verbale” of the UK withdrawing its participation to the UPCA is sufficient in this respect.
2. The withdrawal of the ratification by the UK
It has first to be noted that, for whatever reason, the UPCA does not contain any exit clause.
The ratification of the UPC by the UK has been withdrawn by a “Note Verbale” from the UK government which has informed the Parliament and The House of Lords.
A “Note Verbale” is a formal form of note and is so named by originally representing a formal record of information delivered orally.
It is first not clear at all whether a “Note Verbale” can be used to terminate the participation of a country in a treaty which provides no exit clause. See the above explanations with respect of Art 56(1) and 62(1) VCLT.
The ratification act of the UK was deposited with the General Secretariat of the Council of the European Union. It is doubtful that the depository has the powers to decide whether the withdrawal of the ratification is effective or not. This is however not the only odd action of the depository (see below).
It is also not clear whether the withdrawal applies for the future (“ex nunc”) or retroactively ab initio (“ex tunc”). It is certainly not for the depository to take such an important decision.
It has been shown above here that none of the conditions set out in Art 56 VCLT are fulfilled.
It can thus be argued by the ratification of the UPCA, which does not contain any possibility of withdrawal, the UK has accepted that there is no withdrawal from it. It can further be argued that that the “Note Verbale” has no effect whatsoever and that the UK is still bound by the UPCA.
The only way to come out of this deadlock would be to entirely renegotiate the UPCA. This solution has never been envisaged by the supporters/proponents of the UPCA. We can all guess why.
By merely filing a “Note Verbale” and not a proper Notification of Withdrawal, it seems that the UK has left a ticking time bomb under the UPCA.
3. Entry into force of the UPC and of the Protocols on Provisional Application and of the Protocol on Privileges and Immunity
3.1 Entry into force of the UPCA
In order to enter into force, according to Art 89(1) UPCA, the three Member States in which the highest number of European patents had effect in the year preceding the year in which the signature of the Agreement takes place have to ratify the agreement. This means that in order to enter into force, FR; DE and UK have to ratify.
If the withdrawal only applies ex nunc, then the withdrawal will have no effect on the conditions laid down in Art 89(1) UPCA. The UPCA would then be in a deadlock as on the one hand the UPCA needs the ratification by the UK, but the UK is not any longer member of the EU.
The situation might be different if the withdrawal applies ex tunc, but nothing is sure as the UPCA does not have an exit clause and moreover the withdrawal has only been signified with a “Note Verbale”.
With some goodwill, it could be argued under Art 31 VCLT that with a declaration of all the parties to the Agreement, IT could replace the UK as necessary country to ratify. There is however no legal basis for such an assumption.
In any case there is no declaration of the contracting states of UPCA to this effect. The conditions set out in Art 89(1) UPCA being clear as such, there is no need to resort to Art 31 VCLT. In any case, Art 31 VCLT cannot be used in order to replace UK by IT. There is nothing to interpret, and if an interpretation is desired it would at least need to be expressed by a common declaration of the contracting states of UPCA. We will see below that nothing alike has emerged.
3.2 Entry into force of the Protocols on Provisional Application (PPA) and of the Protocol on Privileges and Immunity (PPI)
The situation is fundamentally different with those two Protocols. In Art 3(1) PPA and Art 18(1) PPI UK is mentioned expressis verbis. It is thus mandatory that the UK ratifies the PPA and the PPI in order for them to enter into force.
The ratification of the PPA and the PPA has been withdrawn with the same “Note Verbale” as the ratification of the UPCA. Prima facie, the problems mentioned there apply mutatis mutandis to the PPA and the PPI.
The “Preparatory Committee” had announced a common declaration under Art 31 VCLT with the aim of replacing UK by IT in order for the PPA and PPI to enter into force.
In a presentation “Unified Patent Court Update” before the “Institut Stanislas de Boufflers” on 11 February 2022. Me P. Véron, a strong supporter/proponent of the UPC noted the following on slide 44:
Report of the Preparatory Committee meeting 27 October 2021:
“The Chairman presented a draft Declaration on the authentic interpretation of Art. 3 of the PAP-Protocol*, following the United Kingdom’s withdrawal from the Unitary Patent System. In line with public international law, this Declaration will confirm the entry into force of the PAP-Protocol, once the required 13 Member States become bound by said Protocol, recognizing that Art. 3 of the PAP-Protocol is to be interpreted as mirroring Art. 89 of the UPCA**. The delegations supported the approach proposed by the Chairman, hence giving him the mandate to organize a signing ceremony of the Declaration, foreseen in the margins of a future COREPER meeting.”
* “including Germany, France and the United Kingdom”
** “the three Member States in which the highest number of European patents had effect”
Such a declaration has never been thought for and has neither been signed nor published.
On the contrary, the depository declared on its volition that that the PPA and the PPI were in force. New legal considerations must have been made in the meantime, see below.
The legal basis allowing the depository to decide on the entry in force of the UPC appears lacking. Simply receiving the ratifications cannot be equated with a right to decide whether some legal texts are in force or not.
On the other hand, in view of the crystal clear mention of the UK in Art 3(1) PPA and Art 18(1) PPI as mandatory ratification state, Art 31 VCLT is of no apparent use.
There is nothing really to interpret, and if an interpretation is desired, it would at least need to be expressed by a common declaration of the contracting states of UPCA. We have just seen that nothing alike has emerged.
4. Art 7(2) UPCA – The London Section of the Central Division
Art 7(2) UPCA provides that “The central division shall have its seat in Paris, with sections in London and Munich. The cases before the central division shall be distributed in accordance with Annex II, which shall form an integral part of this Agreement.
Annex II provides that the following IPC classes should be dealt with at the London Section of the Central Division:
– (A) Human necessities
– (C) Chemistry, metallurgy
With the withdrawal of the UK, an important question has emerged: what should happen with the London Section and where should the files in classes A and C of the IPC be allocated?
As the UPCA insists upon the primacy of Union Law, it appears difficult to envisage maintaining in the UPC a non EU member state, the more so, if said ex-member state refuses the jurisdiction of the EUCJ.
On the other hand, the text of Art 7(2) UPCA has not been amended following the Brexit.
In view of the crystal clear mention of London in Art 7(2) UPCA it is difficult to apply Art 31 VCLT. Like for the other points discussed here, if an interpretation is desired it could at best be expressed by a common declaration of the contracting states of UPCA. Nothing of this kind is foreseen.
4.1 The solution proposed by the supporters/proponents of the UPC
The solution proposed by the by the supporters/proponents of the UPC foresees the “provisional” allocation of the duties originally allocated to London to the remaining sections in Paris and Munich and the later definitive allocation of the duties to a section in a different contracting state by using Art 87(2) UPCA.
The solution proposed is best illustrated by statements made by Mr L. Steenbeek, Head of the IP Department at Philips which he has published as comments on the following link:
“Within the EU, the principle of supremacy of EU law applies.
From the AETR decision C-22/70 and Opinion 1/09 of the EU Court of Justice, it follows that non-EU states cannot participate in the UPC Agreement.
So, from Brexit, in the UPC protocol on provisional application, the requirement that the UK should have ratified that protocol is null and void. It thus suffices that 13 states have ratified including Germany and France, and that threshold has been met. So, the UPC protocol on provisional application has fully lawfully entered into force.
Also, from Brexit, in the UPC Agreement itself where it refers to London, there is a mismatch between EU law and the UPC Agreement. Such mismatches can be easily repaired by the UPC Administrative Committee under Article 87(2) of the UPC Agreement.
If they do so on June 1, 2023 at 8 AM, then when the UPC opens its doors at 9 AM, the UPC will have a fully operational Central Division having jurisdiction for all IPC classes.”
It continues as follows:
“As regards the protocol on provisional application (PPA): the principle of primacy of Union law means that whatever legal provision is not compliant with Union law must be disregarded. There are numerous court decisions (both from national courts and the CJEU) [= a mere allegation] that show that certain national legal provisions must be disregarded when such national legal provisions were incompatible with Union law.
As regards treaties, in a previous post I have referred to CJEU case law concerning investment treaties having a dispute resolution clause, in which the dispute resolution clause had to be disregarded because it was incompatible with Union law. So, instead of some arbitration panel, a national court in the EU has jurisdiction, and decisions by the arbitration panel had to be disregarded as the arbitration panel referred to in the investment treaty had no jurisdiction in view of EU law, having regard to the principle of supremacy of EU law, also regarding treaties that have provisions that conflict with EU law. See also https://ec.europa.eu/commission/presscorner/detail/fi/MEMO_18_4529
In view thereof, it is pretty straightforward to conclude that the PPA requirement that the UK must be a PPA party has to be disregarded for the simple reason that 2 CJEU decisions (AETR C-22/70 and Opinion 1/09) show that non-EU states cannot be a party to the UPC system.
As regards the UPC Agreement itself, there is no requirement that the UK must be a party: the entry into force provision in the UPC Agreement simply refers to 3 EU states meeting a certain criterion, and after Brexit, those 3 EU states are DE, FR and IT.
As regards the UPC Agreement mentioning London: clearly, London has been mentioned in the UPC Agreement based on the assumption that the UK would be a party. So, from Brexit, those references to London are incompatible with EU law as because of the AETR decision and Opinion 1/09 of the CJEU, a non-EU state like UK cannot participate in the UPC system. That means that Article 87(2) UPC Agreement empowers the UPC Administrative Committee to take whatever decision that is needed to bring the UPC Agreement into line with EU law.
Note that the wording of Article 87(2) is not limited to one-way street situations in which only 1 possible decision can be taken. It suffices that prior to the UPC Administrative Committee decision, there is a conflict with EU law, and that after the UPC Administrative Committee decision, there is no longer a conflict with EU law.
So, a hypothetical decision to replace the references to London by references to one or more other cities within the EU would be perfectly OK under Article 87(2) UPC Agreement.
By agreeing to the UPC Agreement, national parliaments have also agreed to Article 87(2) of the UPC Agreement. So, no power is stolen from national parliaments. They have explicitly authorized the UPC Administrative Committee to take whatever decision that is needed to bring the UPC Agreement into line with EU law”.
It goes further and Mr Steenbeek explains that there is no need to refer to Art 31 VCLT:
“If you read my posts, it is clear that I do not promote to ignore the VCLT. I do acknowledge that London is mentioned in the UPC Agreement. I just say that there is a UPC Agreement provision, viz. Article 87(2), that allows modification of the UPC Agreement provisions that refer to London. So, no violation of the VCLT.
The entry into force provision of Article 89 UPC Agreement has to be evaluated at the date that it is presumed that the provision is met. That date is now presumed to be in 2023. In 2023, a reference to “Member States” no longer covers UK as UK is not an EU Member State anymore.
I did not refer to any declaration under Article 31 VCLT as no such declaration is necessary in my reasoning. It suffices to disregard requirements that conflict with EU law. I also showed that such disregarding of conflicting provisions is required under EU law and practiced in CJEU case law”.
4.2 The solution proposed by the supporters/proponents is not legally sound
4.2.1 The decision AETR C-22/70
This decision settled a dispute between the Commission and the Council.
The AETR judgment shows that powers which, at the outset, have not been conferred exclusively upon the European Community may become so progressively through the exercise of those powers by the Community. In this case, the implementation of a common transport policy by the Community, through the laying down of common rules of an internal nature (adoption of a regulation), excludes the possibility of concurrent powers on the part of the Member States throughout the sphere of transport. The Court of Justice, while aware that the system of internal Community measures may not be separated from that of external relations, concludes that Member States may no longer enter into agreements with third countries in this field.
The situation underlying the decision AETR C-22/70 has nothing in common with the situation resulting from the Brexit. In case of the UPCA there is no conflict between the Commission and the Council. There was also no separate agreement agreed between some member states with third countries (this was the case with EPLA).
Moreover, the Commission has never been engaged in negotiations with the aim of concluding an Agreement on a Unified Patent Court with third countries. At the time of signature and later ratification, all states engaged in the negotiations, especially the UK, were member states of the EU.
4.2.2 The opinion C 1/09
The opinion resulted from a request from the Council in order to assess whether the EPLA was compatible with Union Law. The CJEU was of the opinion that the EPLA as such was not compatible with Union Law. .
From opinion C 1/09 it can only be concluded that only member states of the EU can be contracting states to the UPCA. At the time of signature and ratification, the UK was member state of the EU.
It is on this basis that “experts” like Mr Tilmann, e.g. GRUR 2020, 847, and Mr Ohly concluded that the UK could remain in the UPCA in spite of having left the EU. It is only after the UK government declared that it does “not agree to any obligations for our laws to be aligned with the EU’s, or for the EU’s institutions, including the Court of Justice, to have any jurisdiction in the UK”, that those ideas have been binned.
It is clear that the Brexit has changed the situation and that it cannot be envisaged to establish a section of the central division in a non-EU member state. But this does not appear possible in ignoring the VCLT and the actual purpose of Art 87(2) UPCA.
4.2.3 The applicability of the VCLT
The UPCA has been ratified and has not been amended since Brexit. That ways have to be found in order to remedy the situation is not at stake. What is at stake is the correct legal basis for taking care of the situation.
Being an international agreement, claiming that the UPCA should not be submitted to the VCLT and only to the case law of the CJEU is an interesting idea, which however lacks any legal basis. I am not aware that the VCLT can be dispensed with in view of the case law of a court defined itself by an international agreement. This would boil down to an interpretation of the VCLT itself.
Even a staunch supporter of the UPC, Mr Tilmann agrees that the UPCA is an international treaty regulated by the VCLT, cf. GRUR 2020, 847.
The only proper way in order to respect the right of the parliaments having ratified the UPCA was, after Brexit, and certainly after withdrawal of the ratification by the UK, would have been to renegotiate Art 7(2) UPCA and amend the Agreement which has not yet entered into force.
4.2.4 The actual purpose of Art 87(2) UPCA
According to Art 87(2) UPCA, “The Administrative Committee may amend this Agreement to bring it into line with an international treaty relating to patents or Union law”. When looked in the context of Art 87 UPCA as a whole, Art 87(2) UPCA has a totally different purpose.
When all contracting states of the UPCA have amended their national legislation in order to render it compatible with an international treaty relating to patents or Union law, then the UPCA might be revised by an act of the Administrative Committee.
This avoids a long a tedious procedure in order to adapt the UPCA and avoids the necessity to call for a diplomatic conference. It presupposes however that national legislation has previously been adapted in the contracting states in order to render it compatible with an international treaty relating to patents or Union law. If for example a Regulation creating a European SPC would have entered the national legislation of all the member states of the EU, then Art 87(2) UPCA would authorise the Administrative Committee to carry out an adaptation of the UPCA to the new situation so created.
Art 87(2) UPCA never had the aim to solve a conflict with EU law for the UPCA as such.
The national parliaments might have ratified Art 87(2) UPCA, but it is very doubtful that the parliaments have ever agreed on the provisional allocation of the duties of the London Section to the Paris and/or Munich sections of the Central Division and a later definitive allocation to another country/city. .
It is thus very doubtful that a subsequent allocation to another contracting state has ever been thought of and that such a new place is designated at the occasion of a revision of the UPCA under Art 87(2) UPCA.
A correct legal basis for this double move has never been given. Claiming that such a double move can be decided by the Administrative Committee of the UPC is simply denying the parliaments of the contracting states the legal control of a treaty.
The mere wording of Art 87(3), “on the basis of its relevant internal decision-making procedures”, excludes that the parliaments do not have to be involved in such a fundamental change of the wording and meaning of the UPCA.
Claiming that the mismatch between EU law and the UPCA can be repaired between 8 AM and 9 AM, when the UPC open its doors, so that the UPC will have a fully operational Central Division having jurisdiction for all IPC classes is simply ludicrous.
One fundamental aspect has further been missed in this reasoning. Art 87 UPCA only applies once the UPC opens its doors, which is when the UPCA enters into force. It follows that the UPCA cannot be amended under Art 87(2) UPCA beforehand. Moreover, Art 87 UPCA is outside the scope of the PPA, so that it cannot be actioned on 8 AM on the day the UPC opens at 9 AM.
4.3 Is the Central Division “provisionally” limited to its Paris and/or Munich sections a tribunal established by law?
We have just seen that neither the VCLT nor Art 87(2) UPCA can actually be used in order to amend the UPCA against the express provisions it contains. Any attempt of bringing the UPCA in accordance with Union law is to be welcomed, but it has to be carried out within the framework of the existing legal provisions which cannot simply ignored.
It is thus legitimate to ask the question whether the Central Division with only sections in Paris and Munch is an “impartial tribunal established by law” according to Art 6(1) ECHR.
The answer can only be negative. The Administrative Committee of the UPC does not have any legitimacy to fundamentally amend the UPC as it intends to do it.
Any decision of the Central Division taken in the IPC classes A and C would thus appear to be be ultra vires and cannot be enforced.
It is to be expected that the enforcement of such decisions of the Central Division will be challenged at national level.
The “long arm jurisdiction” of the Central Division might end up being rather short.
It is clear that the supporters/proponents of the UPC will try by any apparently legal trick to push the entry into force of the UPCA and the opening of the UPC.
Supporters/proponents of the UPC have shown all along a rather flexible understanding of the legal provisions relating to the UPC so that the last pirouette does not come as a surprise.
Modifying the UPCA by an administrative at 8 AM the day when the UPC opens at 9 AM is the last expression of this quest to “save the soldier UPC”.
As C 1/09 was the death knell for EPLA, Brexit might become the death knell of the UPCA as it stands.
It would have been correct to amend the UPCA after Brexit and not come at the latest possible moment with the present farcical proposal.
Mr Karcher having been the person in charge of the UPC in the German Ministry of Justice and being presently chairman of the Administrative Committee will certainly support the position expressed by Mr Steenbeek.
What is more worrying is that legally qualified persons are prepared to support such a dodgy “legal” (?) practice.
2 replies on “Is, after Brexit, the UPC Agreement compatible with EU law?”
Interesting read, Daniel. Thank you.
At this point, I would not even be surprised to find that, prior to the entry into force, some city district in Paris, housing the Division, might be officially renamed to “London”, just to make sure. 😉
Thanks for your comment.
When looking at the level of argumentation of the proponents/supporters of the UPC, the solution would not come as a surprise.
One could think of giving a fake address of the Paris section of the central division at the British embassy in Paris. The embassy would just have to forward the post to the actual address of the section.
The same could apply in Munich. since there is no embassy, the same trick could apply at the British Consulate General.
Who as a better solution? ;-))