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UPC – Ratification of the UPC Agreement by Germany: Waiting for Godot?

12 Sep 2019

Ratification of the UPC Agreement by Germany: Waiting for Godot? By Dr. Tobias Wuttke and Carolin Stenz, Meissner Bolte

With its response dated 31 July 2019 to the brief parliamentary enquiry (in the following “Brief Inquiry”) of the German Parliament’s Liberal Party (“FDP”), the German Federal Government has fuelled new speculation of potential delays of the ratification of the UPC Agreement in Germany.

Whilst the German Federal Constitutional Court (“Bundesverfassungsgericht”) put the UPC case (docket no. 2 BvR 739/17) on the annual list of cases in 2019, the answer from the German Ministry of Justice to the Brief Inquiry has been received as an indirect confirmation of a delay of the ratification of the UPC Agreement – or at least of the lodging of the ratification instrument with the General Secretariat of the Council of the European Union pursuant Art. 84 (2) UPC Agreement – and that this will be delayed until the circumstances surrounding the UK leaving the European Union have become clearer.

This means that, regardless of the outcome of the UPC case, it is more likely than not that Germany will (further) delay the entering into force of the UPC Agreement.

Meanwhile, on 9 September 2019 a bill preventing a no-deal Brexit was approved by both houses of the British Parliament and entered into force, possibly delaying further the date for Brexit.

The answer to the Brief Enquiry of 31 July 2019
In Germany, political parties that are present in the Federal German Parliament have the right to present a request regarding specific facts to the Federal German Government (so called “Brief Enquiry”) as laid down in Article 104 Procedural Rules of the Federal German Parliament. Brief Enquiries are answered by the Federal Government in writing.

The German Liberal Party (“FDP”) included eight questions in its Brief Enquiry that are made in the context of budget allocation of the Federal German Government in relation to the UPC project. However, in essence these eight questions address the potential German ratification of the UPC Agreement and the consequences of Brexit happening in the meantime.

The most important questions of the Brief Enquiry are questions 1 and 2, set out below (convenience translation):

Q1: What are, in the government’s view, the effects of the United Kingdom leaving the European Union on the Agreement on a Unified Patent Court?

Q2: Has the Federal Government, in case that the United Kingdom actually leaves the European Union and that the ratification of the UPC Agreement in its current form is no longer possible, made plans for a further course of action? If so, how does such a further course of action look?

In its answer to these first two questions of the Brief Enquiry, the Federal German Government acknowledges that the consequences of the United Kingdom leaving the European Union

“play an important role in the further implementation process of the Unified Patent Court. The real and legal implications of withdrawing from the Convention must be examined and agreed at European level. This opinion is currently not finalized, not least because significant factors of the expected exit are not yet known.”

(Response of the Federal German Government, unofficial translation as provided by EPLAW).

While Germany is the last country whose ratification (respectively the deposition of the ratification instrument) is necessary for entry into force of the UPC Agreement, the answer of the German Federal Government renews questions on the ratification of the UPC Agreement (or the respective posting of the ratification instrument with the depositary) and whether the UPC will come into existence at all.

The Federal German Government’s answer can clearly be understood as an indirect confirmation of a potentially delayed ratification of the UPC Agreement (or posting of the ratification instrument).

However, the (current) Federal German Government is still committed to the UPC Project. This can be derived from its response to questions 7 and 8 of said Brief Enquiry. Here, the German Government, at least formally, confirms its continued commitment to the UPC project and refers to the allocation of at least EUR 4.3 million in the budget plan of 2020 (convenience translation):

”The Federal German Government, has always supported with verve the creation of a unitary patent system in Europe and therefore also a Unified Patent Court. This commitment continues to exist. […] The Government’s draft for the Federal Budget 2020 (Chapter 0710 Title 687 03 comprises a spending authorization of EUR 4,3 million).”

However, the answers to questions 1 and 2 strongly indicate that Germany will – in coordination with the remaining EU Member States – use its power in its role as key holder for the entry into force of the UPC project. This role is afforded to Germany due to the fact that the UPC Agreement will only enter into force after the deposit of the thirteenth instrument of ratification, wherein Germany, the United Kingdom and France must be included (the three Contracting Member States in which the highest number of European patents had effect in 2012).

As a reminder: what is the status of the constitutional complaint
The German Federal Constitutional Court has put the UPC case on the annual list of cases in 2019. To date, no oral hearing of the UPC case has been scheduled for the following months. After having already been put on the case row in 2018, practitioners had awaited a decision on the UPC case to be pronounced in 2019. However, it is not unusual for the Federal Constitutional Court to postpone the decision on cases more than once after their inscription on the case list. Also, the UPC case is not the only case on the current list of the Federal Constitutional Court having already appeared on the case list of 2018.

The pending steps to ratification: waiting or delaying?
The outcome of the constitutional complaint remains uncertain to this day. After the constitutional complaint was filed, the Federal Constitutional Court asked the German President to suspend the act of signing the ratification bill, preventing Germany from being bound by an international treaty which could potentially be declared unconstitutional at later date.

In the history of the German Federal Republic, there have only been very few cases where the German President refused to sign a bill on grounds of lack of conformity with the German Constitution.

In case the Federal Constitutional Court were to reject the constitutional complaint in its entirety, the only missing step towards ratification would be the German President’s signature on the ratification bill. However, even if this formality were completed by the German President, to take legal effect with a view to the UPC Agreement, the posting of the ratification instrument with the depositary would still be necessary. Thus, Germany de facto holds the key for the entry into force of the UPC project.

It might also be possible that the Federal Constitutional Court partially confirms the constitutional complaint in finding the ratification process unconstitutional, thereby obliging the German parliament to pass a second ratification bill. Given the political uncertainty of the future of the grand coalition (“Große Koalition”) among Christian and Social Democrats in Germany (“CDU/SPD”) and of a future majority in the German Parliament for a second ratification bill, this is another factor of uncertainty to be considered when predicting the future of the UPC project.