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Tuesday, May 5, 2015

Implementation of the Unified Patent Court Agreement in the Netherlands: Bad choices for the Caribbean

[A small warning is in place. While I aim as a treaty notifier to provide neutral and factual info on treaty ratification and implementation, this post is ... different, and describes the position of its author, with which you are free to (dis)agree.]

[Warning 2: this post is written about 10 hours before the European Court of Justice decides on challenges regarding the unitary patent in cases C-146/13 and C-147/13, which -if rejected- certainly will effect the fate of the UPC The challenges were dismissed. ]

In 2013, 25 EU countries signed the Agreement on a Unified Patent Court (UPC, full text): a single court, with subdivisions in several countries, with jurisdiction on European patents. After the agreement enters into force, its judgments (e.g. revocation, or declarations of infringement) will apply to European patents in all parties to the agreement (15 at the start, but all 28 EU states may become parties). Jurisdiction on European patents in the 10 non-EU European patent convention states as well as the non participating EU parties will remain with its national courts. Furthermore in the first years, national courts of member states have jurisdiction regarding European patents (EP) alongside the Unified patent court. It is in that period possible to opt out an EP from jurisdiction of the UPC so only national courts have jurisdiction. On the other hand, if "unitary effect"is attributed to a European patent (the so called "unitary patent", which may be requested after grant, and after fulfilling certain condition), which means a single renewal fee, a single object of property etc its the UPC that has sole jurisdiction. Lost? I tend to be too (and those not lost are still struggling how the interplay is between EU law, the patent agreement and some of its vaguer provisions)! take a look at several sources on the UPC and unitary patent here, here and here.

Back to the Netherlands. In an online consultation, the Dutch government announced how it will implement the UPC agreement. The package contains the draft changes to the Patent Act (incl a 50 page long explanatory memorandum) as well as the approval act of the Agreement (also incl explanatory memorandum). Most of the changes are considered "minor" and constitute a rigorous exercise in bringing the national patent provisions in line (even while that is not strictly required) with the UPC agreement and discusses at length translation techniques and effects. It also introduces two exceptions to infringement: software decompilation (mirroring UPC article 54k) as well as the so called pharmacist's exception  (UPC Article 54e) for consistency between national and UPC provisions, as otherwise it may (opinions regarding interpretation of the UPC provisions in national courts in  differ here) be that a different law is applied to the same situation; just dependent on which court is addressed... No problems here, as far as I am concerned, as there is a good case to be made...

Dutch implementation

The problem is however with the implementation in those parts of the Kingdom of the Netherlands located in the Caribbean: the former Netherlands Antilles. European patents are extended to 5 of its six islands (Aruba has its own patent) as part of the Dutch part of the EP. In the present situation CuraƧao, Sint Maarten, the Caribbean Netherlands and the European Netherlands thus constitute a single jurisdiction with regards to patents, governed by a single patent act (the Kingdom patent act that this consultation is about) with the courts of The Hague as the sole courts with jurisdiction.

There are 2 problems with the implementation from a Caribbean standpoint, at least one of which can absolutely be solved in national law; of the second problem the solution is probably possible, but I am not 100% sure.

1. Implementation of Unitary effect
When unitary effect is attributed to a patent, the unitary patent will apply to the Netherlands by virtue of the Unitary patent regulation. Because this regulation is a EU regulation, and none of the Caribbean islands form part of the territory of the European Union; the provisions of the unitary patent do not apply directly in the Caribbean. The result attribution of unitary patent is that the national EP is retroactively regarded as never to have existed. In the Netherlands however, the European part of the Dutch national EP (EP-NL) is regarded to never have existed, but the national EP remains in effect; albeit only with effect in the 5 Caribbean islands (EP-NL-Carib). Unification with the unitary patent, means thus a split of the unified Dutch EP.
Surprisingly, however, the provisions for EP-NL-Carib remain the same as for EP-NL (let;s say: limited territory; same rules). This means that (the same? there is no provision for reduced costs) renewal fees have to be paid for a territory that has just become 99% smaller in terms of GDP. Also, even although English is an official language in Sint Maarten, and it has a special status on Bonaire, Sint Eustatius and Saba, the requirements for a translation of conclusions in Dutch remains. This will become very serious hurdles for a small territory, and I don't expect many renewals (the consultation documents nevertheless enthusiastically state that there will be no strong effect on the Dutch patent office that registers EP-NL (Incl EP-NL-carib).

1.1 Alternative solution
In my opinion, a solution should be sought that "attaches" the EP-NL-carib to the Unitary patent in order to obtain "de facto" a unified area in the Kingdom of the Netherlands, to make EP-NL-carib not needlessly expensive, and to impose no Dutch language requirements on a population predominantly speaking English, Papiamento (ok, and Dutch). This can be easily done with the following provisions:
*No validation, translation or registration for EP-NL-Carib
*The ownership of EP-NL-carib follows automatically the ownership of the Unitary patent and as an object of property (incl ponding etc)  also always follows the unitary patent and is -only as an object of property- governed by the law of the unitary patent.
*Any licence or contract regarding the unitary patent that applies to the Netherlands also applies to the EP-NL-carib (note: the unitary effect still allows licensing with regards to individual countries, so EP-NL-Carib should follow the unitary patent as far as it covers the (European) Netherlands.
*Revocation actions against a EP-NL-Carib can not be initiated (as the revocation will follow the unitary patent)
*infringement actions can as with any EP-NL be brought before the Dutch judge in The Hague (there is no experience to do this on Curacao); and possibly before the unified patent court (see point 2).
*Supplementary protection certificates (SPC) based on EP-NL-carib can follow unitary patent SPC in a similar fashion. This provision can -for now- however been left out, as it will take some time before unitary patent based SPC will become relevant.

2. Territorial extent of ratification
With every treaty ratification in the Netherlands, the territorial extent is made explicit. Unlike the UK (where a treaty may be extended to the Isle of Man etc), the different parts of the Kingdom are all "countries" within the Kingdom and thus the government has to specify where the treaty applies. This is done and accepted in international law, even if no explicit clause exists that allows for ratifications by different parts of a state. The draft legislation now provides for ratification only on the part of the European Netherlands. Without further justification, it is suggested that this is the only option. This means that EP-NL (non unitary patents) can be brought before the UPC in the first years, which will however not have jurisdiction to rule on infringement in the Caribbean. Revocation  of the EP-NL by the UPC however will have effect for the EP-NL as a whole, and thus affect the Caribbean. Disputes regarding the EP-NL-carib however can only be brought before the court of The Hague (even after the initial period), and a risk therefore exist of diverging decision regarding the EP-NL-carib (Dutch court) and EP-unitary (UPC) as well as parallel litigation.

2.1 Preferred option: ratification for the whole Kingdom except Aruba
In my view the Netherlands can (and should) ratify on behalf of the full Kingdom (except Aruba). As it is stated explicitly in Article 34 of the UPC agreement, that decisions regarding (non unitary) EP are valid for the whole territory where the EP is valid, it is implicit that a country also can (and must) ratify for those parts of its territory where also the EP is valid. The only argument against this reasoning is that the parties to the agreement are "Member States of the European Union", and while it is the full Kingdom that is the subject of international law and thus that Member State, it could be argued, that this implies that only the EU territory of the states is concerned. The UPC Agreement is however not an EU treaty and refers both to  EU regulations and to the European patent convention, so there is (again, in my opinion) no reason to read to much into the territorial extent based on the term Member States .
Ratification also for the Caribbean part, will allow the judge to also consider EP-NL-Carib based on the provisions for non-unitary patents in the UPC agreement, as well as the Kingdom act (national law). Recourse needs to be taken to national law probably a bit more than for other EP, as EU law does not formally apply. In view of the uniform implementation of EU law in the Kingdom act, this should practice not constitute a big problem.


The suggested benefits of the unitary patent and Unified Patent Court Agreement for the European Netherlands puts five territories at a significant disadvantage. It is striking that this is not even addressed as a concern in the proposed legislation and that the policy choices here are given as the only path forward. In this post I have shown that there are two (independent) options to rectify the situation: 
*coupling the Dutch part of the European patent that is only valid in the Caribbean directly to the unitary patent that governs protection in the European Netherlands.
*Ratification of the UPC for the European Netherlands, as well as the Caribbean parts of the Kingdom, thus enabling full jurisdiction of the UPC over all Dutch EP in all parts of the Kingdom. 

Why do I care? There is certainly not much litigation expected from the small territories of these islands. I care, because from a historical perspective, the Kingdom has a special responsibility towards the islands and we shouldn't easily put aside their trouble for our own (envisioned) advantages. My concern echos the wider concern (see here: The Caribbean territory of the Kingdom and the EU: on the complicated relationship between European law and national law regarding Kingdom affairs) that further unification of the EU gives problems with the unification within the Kingdom; and thus may make further (and generally regarded unsatisfactory) changes inevitable (ranging from less integration of laws, becoming part of the EU to even: independence).

The approach seems also different from the Isle of Man, as the UK seems to do everything to apply the unitary patent also there (althouth they are unclear as to the legal strategy of how to accompoish this). It would thus be interesting to compare the UK and NL (and FR) strategies regarding its non EU territories where European Patent Convention fully applies. 

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