Spain v Parliament & Council (C-146/13) – a giant step towards (dis)integration of the European patent system

Aurora Plomer

The green light for the introduction of a European unitary patent and a centralized patent court (UPC) was finally given by the CJEU in Spain v Parliament and Council (Case-146-3). This marks the end of longstanding but frustrated  efforts by the European Union to introduce a uniform patent system in Europe. Like its forerunners, the aim of the latest initiative in the form of the EU ‘patent package’,  is to create the legal conditions for a more secure, less complex  and less costly system for industry and investors to foster scientific and technological advances in the Union.  But whilst driven by the European Union,   the ‘patent package’   is a   mix of EU Regulations and an international Treaty  signed by twenty five out of the existing twenty eight Member States. The  ‘unitary patent’  or European patent with uniform effect (EPUE) across the twenty five signatories, has been created by means of Regulation (EU) No 1257/2012 of the European Parliament and of the Council of 17 December 2012 implementing enhanced cooperation in the area of the creation of unitary patent protection (OJ 2012 L 361, p. 1).  By contrast,  the centralized  ‘unified patent court’ (UPC),  with exclusive jurisdiction to enforce and revoke the EPUE,  is the product of an international treaty (the Agreement on a Unified Patent Court, signed at Brussels on 19 February 2013 (OJ 2013 C 175, p. 1.)  The  legal architecture of the patent package  is therefore complex  and raises important constitutional questions regarding the legal basis of the patent package under EU law, the delegation of powers to the European Patent Organization and the principles of autonomy and uniform application of EU law. These questions were raised by Spain in an application for annulment of the legal instruments creating unitary patent protection. The Grand Chamber’s decision of 5 May 2015, rejecting Spain’s application,  has removed the last legal objection to the implementation of the ‘patent package’.  Spain raised seven pleas, all rejected by the court, in a laconic judgment which leaves many questions open. Some of the most salient issues left open by the judgment are discussed below.

By way of background to the Court’s ruling, it is important to note that patents have historically been territorial in nature so their enforcement and validity is determined by national laws (Article 3 TRIPS).  Since the adoption of the European Patent Convention (EPC) in 1973, applicants have been able to obtain a European-wide patent granted by the European Patent Office (EPO) covering any designated Member State of the European Patent Convention (currently thirty eight). The EPC preserves the principle of territoriality, so the legal effect of a European Patent granted by the EPO is the same as if the patent had been granted by the national patent office of a Member State. The grant of a European Patent thus results in a ‘bundle’ of national patents whose validity and revocation post-grant stands to be determined under the national laws of each designated Member State. A large scale study of  9,000 patent suits from seven of the largest countries in the European Union during 2000-2010 shows that judicial outcomes of revocation and infringement proceedings post-grant diverge radically across the different countries and types of patented technologies in Europe, making for a complex, uncertain and costly legal environment.  In this light,  the creation of a centralized judicial system  with exclusive jurisdiction on enforcement  of the unitary patent (UPC) has undoubtedly, in theory, many attractions from an applicant’s perspective.  Whether the legal creature created by the EU will meet applicants expectations is less clear.

Under the patent package,  applications for a unitary patent will be processed and administered by the EPO (Article 9 of the Regulation) under the rules and procedures of the EPC (Article 2(a) of the Regulation). Once granted, the European patent with uniform effect (EPUE) shall have unitary effect amongst the participating Member States (Article 2(b)). Of the seven pleas raised by Spain and dismissed by the Court, three stand out.

Spain argued that the contested regulation should be annulled as contrary to the rule of law  in Article 2 TEU because the administrative procedure for the grant of the unitary patent has been delegated to  the EPO (under Article 142 of the EPC)  but the decisions of the EPO boards are not subject to any form of judicial review to ensure the correct and uniform application of EU law and the protection of fundamental rights. The Court’s dismissal of Spain’s argument simply reiterates AG Bot’s technical answer (18th November 2014) that the contested regulation in no way delimits the condition for the grant of European patents which are exclusively governed by the EPC and not EU law. Yet, the Court’s reasoning, whilst formally correct,  represents the EPO’s intervention as an ‘accessory’ administrative act of registering a European patent granted under EPC rules as a European Patent with Unitary Effect.   In so doing, the answer evades the critical point raised by Spain that the decisions of the  EPO boards,  at the grant stage of the European patent and its ‘accessory’ registration as a EPUE – are not subject to judicial scrutiny under EU law or indeed any other form of judicial scrutiny.  Neither is the point of purely academic interest as underscored by the case  Virgin Atlantic Airway Ltd v Zodiac Seats UK Ltd [2013] UKSC 46. As the result of an administrative error by the  EPO examiners, the applicant was exposed to a claim worth £49 million  in infringement proceedings in the UK. The UK Court held that the error could not be rectified at the post-grant stage unless the EPO corrected the error. The applicant’s request to the EPO to correct the error was originally refused prompting further appeals at the EPO and in the UK courts highlighting the shortcomings of the EPO tribunal system (the case has been extensively discussed in IP blogs; for example IP Copy). By contrast, in legal proceedings in national courts or administrative bodies where EU law is engaged, an applicant in similar circumstances could invoke Article 41 of the EU Charter. Not so with the EPUE and the EPO boards.  The recent dismissal of one of the EPO officials has further fuelled concerns about  the independence and fairness of the EPO tribunals, prompting an unprecedented intervention by Sir Robin Jacob (see letter and EPO response). Also, for a discussion of parallel proceedings in German Courts Dr. Stjerna’s article on the topic is available in PDF here. Continue reading

Call for Applications – Future Directions in EU Labour Law

It may be of interest to readers that Early Career Scholars in EU labour law and social policy are invited to apply for a space on the British Academy-funded project on Future Directions in EU Labour Law, with a launch workshop organised on July 3 at Magdalen College, Oxford. The project will bring together early career academics and senior policy makers from across the Union to collaborate throughout 2015 to shape new ideas and policy proposals.

For further information, and details of how to apply, please visit the project website.

 

Spring EU law events

We’ll be back after the break, but in the meanwhile the following events might be of interest to readers:

Opinion 2/13 on accession by the European Union to the ECHR: Is it convincing? Is there a way forward? Are there wider constitutional implications?

UKAEL Seminar, 23 April 2015, 18.30 – 20.00

Council Room, Strand Campus, King’s College London

£25 current UKAEL members / £40 general public

Featuring Professor Sir Alan Dashwood QC, Dr Tobias Lock, Professor Michael Dougan and Professor Philippa Watson. You can book places here.

The Academy of European Law summer courses at the European University Institute, Florence

The Academy of European Law summer courses in Human Rights Law and European Union law, given by leading authorities from the worlds of practice and academia, provide high-level programmes for researchers and legal practitioners.

This year’s Human Rights Law Course will be held on 15 – 26 June. It comprises a General Course on ‘The Future of Human Rights Fact-finding’ by Philip Alston (New York University Law School) and a series of specialized courses on the topic of ‘The Futures of Human Rights’ by leading scholars.

The Law of the European Union Course will be held on 29 June – 10 July. It features a General Course on ‘What’s Left of the Law of Integration?’ by Julio Baquero Cruz (Member of the Legal Service of the European Commission) and a series of specialized courses on the topic of  ‘Harmonization in a Changing Legal Context’ by leading scholars and practitioners in the Law of the European Union.

The two-week courses are held at the European University Institute in Florence. Applications close on 8 April. For further information see the Academy’s website at www.ael.eu/AEL

Event: BIICL Annual Grotius Lecture 2015

On Thursday 26 March 2015 Eleanor Sharpston QC, Advocate General at the CJEU, will deliver the 2015 Annual Grotius Lecture on the subject ‘Squaring the Circle? Fighting Terrorism whilst Respecting Fundamental Rights’. This event looks to be of great interest to barristers, solicitors, judges, arbitrators, government officials, intergovernmental officials, academics, students and all with an interest in European law. More details are available here.

Should Damages in Public Procurement Hinge on Disappointed Bidders’ Commercial Interests? A Comment on Energy Solutions EU Ltd v Nuclear Decommissioning Authority

ASGDr Albert Sanchez Graells, School of Law, University of Leicester

In its recent Judgment of 23 January 2015 in Energy Solutions EU Ltd v Nuclear Decommissioning Authority [2015] EWHC 73 (TCC), the High Court ruled on a preliminary issue in a public procurement dispute and held that the review court has no discretion (not) to grant damages for losses resulting from a breach of the public procurement rules. In my view, the Energy Solutions v NDA Judgment should be criticised at least for two reasons: firstly, because it misinterprets the EU rules on public procurement remedies and their link with the general principle of State liability for breaches of EU law; and secondly, because it creates an analytical framework based on the commercial decisions of disappointed bidders that would result in excessive (strategic) claims for damages. Moreover, the Energy Solutions v NDA Judgment sheds light on an important shortcoming of the system of public procurement remedies that is perpetuated under the recently adopted Public Contracts Regulations 2015 (SI 2015/102). This comment addresses these issues in turn.

Background

The dispute arises after Energy Solutions (as part of a bidding consortium, but that is not relevant for our purposes) was not chosen as the winning bidder in a tender for a nuclear waste management contract with the Nuclear Decommissioning Authority (NDA). After expressing its disagreement with the award decision and seeking additional information in the ensuing debriefing process, Energy Solutions eventually challenged the tender procedure within the 30-day limit applicable under reg.47D(2) of the applicable Public Contracts Regulations 2006 (SI 2006/5, as amended, primarily by SI2009/2992). By the time the challenge was effected, NDA had already entered into a contract with the winning bidder. Energy Solutions sought compensation for the damages it alleged to have suffered as a result of the improper conduct of the tender procedure.

NDA tried to bar the damages action by arguing that a failure to challenge the award decision within the 10-day standstill period provided for under reg.32(3) Public Contracts Regulations 2006 (which could have prevented it from entering into the contract) broke the causal link between any breach of the applicable procurement rules and the ensuing damages (which, If any, would then derive from the tardiness of the challenge). NDA basically claimed that having foregone the possibility to prevent the award of the contract to another tenderer by activating the suspension foreseen in reg. 47G Public Contracts Regulations 2006, Energy Solutions had also lost the possibility to seek damages compensation. In support of that position, NDA submitted that, under reg.47J(2)(c) Public Contracts Regulations 2006, the review court retained discretion (not) to award damages resulting from a breach of public procurement rules in circumstances such as those in the case (ie the lost opportunity of litigating within the standstill period).

The High Court ruled against NDA on both points. Edwards-Stuart J found no basis for the

submission that any award of damages is dependent on the level of gravity of the breach, or any other such factor, and thus dependent on an exercise of judicial “discretion” or judgment, or whether, absent any failure to mitigate its loss, having proved a breach of the [public procurement rules] a claimant is entitled to anything other than damages that should be assessed by reference to ordinary principles. It may well be that the claimant’s conduct will have been such that the court will be very reluctant to make any assumptions in its favour in relation to damages, but that is simply an aspect of the usual approach of the court to the assessment of damages (para 86).

As mentioned above, this finding is open to criticism, both for its inconsistency with EU law and because it creates an analytical framework that may result in excessive claims for damages. Each of these issues is addressed in turn. The problem derived from the diverging duration of the standstill period and the time limit for the challenge of award decisions is discussed last, as it also affects the brand new Public Contracts Regulations 2015. Continue reading

Sanneh and Others – access to welfare for Zambrano carers

 

Dr Iyiola Solanke

If citizenship is the fundamental status for EU citizens, what is its substance for child citizens who are too young to enjoy the rights set out in Articles 21-23 TEU to work, travel, vote or petition the EP? What does the principle in EU law of ‘genuine enjoyment of the substance of citizenship’ mean if you are a child? And what are the implications for your parent or parents? These are central questions for a specific group of children now growing up across the EU – those who themselves hold EU citizenship but their parents do not. As stated in the Zambrano case,  the parents of such ‘Zambrano Minors’ derive a right of residence in the EU so that the child is not deprived of the genuine substance of Union citizenship. Although the Court of Justice has subsequently considered when this genuine enjoyment is impinged (Macarthy, Dereci, O & O) it has not made any remarks on the substance of citizenship rights for the children. It may be necessary for it to do so to prevent these children from being consigned to lives of poverty by national interpretation of its principle.

The Court of Appeal has delivered a decision concerning access by the parents of Zambrano Minors to social assistance. The parents challenged the Regulations adopted by the Coalition Government to incorporate the Zambrano principle into national law. Three Regulations were designed to specifically exclude these parents from rights to social assistance that they would otherwise have as lawfully resident persons. In line with its policy to make Britain hostile to immigrants, the Government decided that these parents should be in the same position as those who do not have a lawful right to reside. The ‘Amendment Regulations’ therefore exclude all ‘Zambrano Parents – those in work and those out of work – from income-related benefits including income support, jobseekers allowance, employment allowance, pension credit, housing benefit, council tax benefit, child benefit and child tax credit. The Home Office justifies this policy as a measure to prevent and deter ‘benefit tourism’ but the parents argued that this policy was a faulty application of the Zambrano principle and discriminatory under EU law. It was argued that a proper application of the principle called for them to be in the same position as other EU nationals.

The Justices agreed with the Home Office. Drawing upon the ‘effective citizenship principle’, they held that

  1. Rights derived from an EU citizen [3] are not EU rights [95]. Thus although ‘their status is derived from the EU citizenship rights of the child as interpreted by the CJEU’ ‘EU law has no competence in the level of social assistance to be paid to the carer’. This is ‘exclusively governed by national law’ [27];
  2. ‘Zambrano carers’ derive their right to reside from Article 20 TFEU and therefore fall outside the EU cross-border social benefits legislative scheme (the ‘EU CBSBL scheme’) set out in the Citizenship Directive, the Long Term residence Directive and the Family reunion Directive [42];
  3. ‘Genuine enjoyment’ does not ‘require the State to guarantee any particular quality of life’ [32 & 171] – a ‘Zambrano carer’ is protected from compulsion to leave but this does not provide as a corollary a right for parent and child to live free from want and poverty. Zambrano carers are not to be left ‘destitute’ but member states remain free to determine access to benefits where individual situations fall outside of the scope of EU Directives [83];
  4. The proportionality principle is irrelevant because the question is beyond the scope of EU law;
  5. The EU principle of non-discrimination in EU law and the ECHR is inapplicable.

Continue reading

Vacancy: Judge at the General Court of the European Union

This week a vacancy was announced at the General Court which readers of this blog may be interested in. A selection exercise is to be run to identify the next UK representative of the General Court of the European Union on behalf of the Foreign and Commonwealth Office. The intent to apply deadline is Monday 2 February; more information is available via the link.

Upcoming events for EU lawyers

european-union-flags-at-t-0021Annual European Law Conference, organised by the Centre of European Law
Friday 13 March 2015, Royal College of Surgeons, London

Speakers at this prestigious event include Advocate General Julianne Kokott from the European Court of Justice. Details of the programme and booking information are available here.

Mackenzie Stuart Lecture 2015: Anthony Gardner, US Ambassador to the EU
Thursday 29th January 2015, University of Cambridge

The topic for this years’ Mackenzie Stuart Lecture is Facing Legal Challenges in U.S. – EU Relations. For more information and booking please visit the website.

Round table discussion on Benefits and EU law

The City Law School is hosting a debate on Monday 26th January organized under the aegis of the Jean Monnet Chair in European Law. More information (including the speakers’ biographies) is available here.

If your organisation is hosting an event that you think our readers would be interested in, please get in touch.

 

 

A criticism of the CJEU’s ruling that allowing London taxis to use bus lanes while prohibiting private hire vehicles from doing so does not appear to involve State aid (Eventech, C-518/13)

Dr Albert Sanchez Graells, School of Law, University of Leicester

In its judgment of 14 January 2015 in Eventech (C-518/13, EU:C:2015:9), the Court of Justice of the EU (CJEU) ruled on the preliminary question referred by the Court of Appeal (England and Wales) in the Addison Lee “taxis in bus lanes” case [as part of the challenge of the High Court’s decision in Eventech Ltd (R on the application of) v Parking Adjudicator (2012) [2012] EWHC 1903 (Admin)]. The CJEU decided that allowing London taxis (black cabs) to use bus lanes while prohibiting private hire vehicles (PHVs) from doing so does not appear to involve State aid. While the Eventech judgment leaves a minimum scope for the Court of Appeals to find differently in view of the specific facts of the case and the parts of the file not referred to the CJEU, this is most likely the end of the dispute.

The decision comes at a time when the regulation of the taxi sector is under significant pressure due to the political and economic waves that sharing economy initiatives (such as Uber) create – or, in the words of AG Wahl in the Eventech Opinion, “taxis and PHVs are engaged in fierce competition with each other across Europe, and London is not the only city where conflicts have arisen” (EU:C:2014:2239, para 2). This is a sector where competition rules have always been difficult to enforce due to the heavy regulation to which it is subjected (OECD, Competition Roundtable on ‘Taxi Services: Competition and Regulation’, 2007). Some claim that it is a sector ripe for proper deregulation and liberalisation, while others claim the opposite [for recent discussion, see L Eskenazi, ‘The French Taxi Case: Where Competition Meets—and Overrides—Regulation’ (2014) Journal of European Competition Law & Practice, and Publicpolicy.ie, The Taxi Market in Ireland: To Regulate or Deregulate? (2014)]. The discussion on the State aid implications of certain privileges derived from such regulation in crisis, and particularly the privileged use of bus lanes, added one layer of complication that the CJEU seems to have been keen on taking off the table.

The legal dispute in front of the CJEU can be condensed to opposing views on whether allowing black cabs to use bus lanes while prohibiting PHVs from doing so infringed the prohibition in Article 107(1) TFEU. It can be further narrowed down to the two key issues of whether this policy involves a commitment of State resources and whether it confers on taxis a selective economic advantage. Both elements need to be present for the prohibition of Article 107(1) TFEU to apply. The CJEU found in the negative on both aspects and determined that the practice of permitting, “in order to establish a safe and efficient transport system, black cabs to use bus lanes on public roads during the hours when the traffic restrictions relating to those lanes are operational, while prohibiting minicabs from using those lanes, except in order to pick up and set down passengers who have pre-booked such vehicles, does not appear, though it is for the referring court to determine, to be such as to involve a commitment of State resources or to confer on black cabs a selective economic advantage for the purpose of Article 107(1) TFEU” (C-518/13, para 63).

In my view, the Eventech judgment is criticisable in both areas. It fails to address the issues of economic advantage and selectivity in a functional manner—not least because the analysis of the selectivity of the measure ultimately relies on an assessment of ‘equality’ or ‘comparability’ of the legal position of black cabs vis-à-vis PHVs that falls into a logic trap derived from the pre-existing regulation of black cabs. Moreover, the analysis of the element of transfer of State resources is very counterintuitive and seems to contradict both economic theory (particularly as the use of public goods is concerned) and the case law on access to essential facilities under private ownership.

The finding that State resources are not involved is partial and flawed

Following the Opinion of AG Wahl, the CJEU engages in a rather counterintuitive approach to the issue of the transfer of State resources, which focusses on whether the State is forfeiting revenue by not charging black cabs for access to the bus lanes or by not imposing fines on them when they use the bus lanes, as it does with PHVs (judgment, paras 36-46). This approach comes from the AG Opinion, where he had decided to assess the question from the perspective of the regulatory powers of the Member State and fundamentally concluded that, in the exercise of those regulatory powers, there is no obligation to impose a charge for access to public infrastructure (Opinion, paras 24-35). Continue reading

Dr Iyiola Solanke joins the editorial team

We’re delighted to announce that regular contributor Dr Iyiola Solanke has joined the blog as a full editor. In addition to writing articles on discrimination law ranging from the recent CJEU decision in Kaltoft on weight discrimination to equality of treatment in free movement to spousal reunion, Dr Solanke is a Senior Lecturer in Law at the University of Leeds and is widely published. Her biography is available on the Editors page.