24 Mar 2020 | News

The Decision of the German Constitutional Court on the Unitary Patent Court (UPC), and (possible) consequences for the future of the UPC

After what felt like a long wait, the 2nd Senate of the German Constitutional Court (BVerfG) has now dealt with the constitutional appeal against the act for the implementation of the UPC in Germany (EPGÜ-ZustG). In a nutshell, the BVerfG sees it as one function of the EPGÜ-ZustG to transfer national sovereign rights to the UPC. This, the Court ruled, requires a two-thirds majority in parliament, in accordance with Article 23.1 of the German Constitution. Since only 35 members of parliament participated in the vote, the Court declared the EPGÜ-ZustG null and void.

Before a more detailed analysis of the reasons for the decision, it should be noted that the BVerfG has not examined the EPGÜ-ZustG in full, since the nullity thereof already resulted from only one reason (the one discussed here). There is also a dissenting opinion of three justices: the decision was made with 5: 3 votes. It should further be noted that the constitutional appeals about inadequate legal protection at the European Patent Office against decisions of the Boards of Appeal were not dealt with in the decision. These complaints are still pending before the BVerfG. 

The other acts of the European regulatory package on patent law, the core of which is the introduction of a European patent with uniform effect as a new property right at the level of the European Union, had not been attacked either. 

Regarding the underlying history of the EPGÜ-ZustG, the Bundestag unanimously adopted the draft approval act (BTDrucks 18/11137) on March 10, 2017 in its third reading. Around 35 MPs were present. The quorum was not determined, nor did the President of the Bundestag determine that the Act had been passed by a qualified majority. The Federal Chancellor's accompanying letter to the proposed text contained the note: "Sovereign rights are transferred in accordance with Article 23 paragraph 1 sentence 2 of the German Constitution". The Bundesrat then unanimously approved the law at its meeting on March 31, 2017. The draft law was initially classified as particularly urgent in accordance with Article 76 paragraph 2 sentence 4 of the German Constitution in order to complete the ratification process as quickly as possible "so that the European Patent Court can start its work in early 2017." 

Contrary to several opinions as filed by invited parties, including one of the Federal Chamber of Attorneys at Law, the BVerfG ultimately decided that the constitutional complaint of March 31, 2017 was admissible insofar because it was about a violation of fundamental rights. This was the result of a violation of the requirement of a qualified voting majority on the EPGÜ-ZustG. For the rest of the arguments, the complaint was viewed as inadmissible. 

The Decision held that the Act interferes directly with the legal sphere of the individual (appellant), and that the appellant had sufficiently substantiated a possible violation of Article 38.1 sentence 1 of the German Constitution. In particular, he conclusively asserted that the required 2/3 majority of Article 79.2 in conjunction with Article 23.1 sentence 3 of the German Constitution had not been met in the present case. 

The appeal was regarded inadmissible to the extent as argued that the EPGÜ-ZustG would violate constitutional identity because the legal status of judges would be insufficiently regulated under the rule of law (regarded as "not sufficiently substantiated"), that fundamental rights interventions by the Unitary Patent Court would not be sufficiently legitimated by law (reimbursable costs were regarded as "reasonable and appropriate"), and that the UPC agreement itself would violate EU law (reference to "Principle of European law friendliness of the Constitution" - Article 23 German Constitution). 

The appeal was then justified to the extent that it was admissible. The Court argued that since the EPGÜ-ZustG relates to the transfer of new responsibilities to the European Union and/or the establishment of new intergovernmental institutions, this would go beyond existing authorizations and should therefore be made dependent on a correct and full (parliamentary) two-thirds majority. 

This would not be different in view of an effective "unanimous" adoption of the draft law as mentioned in the minutes of the Bundestag, and the transmission to the Bundesrat. The German Bundestag had therefore not effectively passed the EPGÜ-ZustG. 

The dissenting opinion argued that the new and expanded “formal transfer control” as established by the present decision could ultimately lead to the political process in the context of European integration not being made possible and secured, but being narrowed and hindered. The scope of protection of Article 38.1 sentence 1 of the German Constitution in the context of European integration would completely lose its contours. The appeal at issue was therefore to be dismissed as inadmissible in full. 

As a remedy, there would be opportunities for a constitutional appeal after the entry of the law in force, for example within the framework of national enforcement. In these proceedings, the formal unconstitutionality of the Consent Act could also be criticized. A relevant specific fundamental rights concern would then be the right “filter”. 

Now, the easy access to the Federal Constitutional Court using the formal transfer control argument would prompt the German Bundestag and the Bundesrat to strive for a two-thirds majority for almost every transfer of powers within the scope of Article 23.1 of the German Constitution, just to be on the "safe side" and thus not to be exposed to the risks of the formal transfer control. 

Commentary 

It remains to be seen whether the new and expanded “formal transfer control” as supposedly established by the decision will ultimately result in a series of narrowing and hindrance of political processes (among other things) in the context of European integration, as feared by the dissenting opinion. Nevertheless, the flawed transfer argument was sufficient for the nullity of the present EPGÜ-ZustG. 

In the end, the BVerfG gave the legislator a formal slap in the face for taking short cuts in enacting constitutionally relevant laws. In this regard, it may well be that the urgent lobbying of the "interested parties" ultimately backfired. When a bill is passed in the Bundestag at around 1 a.m. (as this was), it is likely that only a few parliamentarians are present. 

Even if some want to see the decision as merely a "technical difficulty", which could be simply "repaired" by a new vote, the law has been declared null and void (and not only the appeal was upheld). Thus, right now there is nothing left that could form the basis for a vote. 

It can also be assumed that the implementation of the UPC - even in an amended “continental form” - is ruled out due to BREXIT and the announcements of the British government. This will lead to the fact that the EPGÜ-ZustG, together with the other components of the patent package, will probably continue to only live in the commentary literature for the time being, similar to the Community Patent Convention (GPatG). 

Finally, the BVerfG has not fully reviewed the EPGÜ-ZustG under constitutional law, i.e. outside of the formal transfer control. The BVerfG has, for example, viewed the argument regarding the legal status of the judges at the UPC as merely insufficiently substantiated, which could also be seen as strategic behavior regarding complaints about inadequate legal protection at the European Patent Office against decisions of the Boards of Appeal (see above). 

Dr. Jan Krauß, patent attorney