Breeding Issues: Fruits of Crossing the Administrative Council
Part II of the article published in epi Information 2/2019
Heiko Sendrowski (DE), German and European Patent Attorney
What means are available to the President and the Administrative Council in case they take umbrage at a potential development of case law? This question has arisen in unprecedented urgency in view of decision T 1063/08 which has evoked bitter reactions of all “EU trilog” institutions – EU Council, Parliament and Commission, and, in turn, of the corresponding EPC Member States. In the first part of this article, the President's right to refer questions to the EBA in the light of the aforementioned circumstances has been commented on. In the present second (and last) part, alternative approaches are discussed.
1. Presidential comments in individual appeal proceedings
Decision T 1063/08 is not the only case at the EPO in which patentability hinges on the applicability of R. 28 (2) EPC. Further appeals are pending in which this rule had been invoked by the examining division for refusing the grant of a patent. Instead of, or in addition to, referring questions himself to the EBA the President may ask the Board of Appeal for an invitation according to Art. 18 RPBA. Such invitation would allow him to comment on questions of general interest which arise in the course of an individual appeal proceedings. This approach, however, comes with difficulties of its own:
The right of the President to be invited to individual appeal proceedings is codified only in the RPBA. It is thus subject to the general reservation of Art. 23 RPBA. The position offered to the President by Art. 18 RPBA has no basis in the EPC. In decision J 14/90 the Board argued that the right of the President "supplements Art. 114 (1) and 117 (1) (b) EPC". This view is hardly convincing: The President is only allowed to provide his comments to questions of general interest. The "general interest" mentioned in Art. 18 RPBA cannot comprise a hypothetical "general interest" to have a specific patent granted or revoked. The grant or revocation of a European patent must not be made dependent from the applause of the general public or of vocal interest groups; the EPO carries out the grant of European Patents according to the law for the grant of patents established by the Convention only (Art. 1, 4 EPC). Thus, an invitation according to Art. 18 RPBA is not another opportunity for the executive to promote or prevent the grant of a specific patent. When commenting on questions of general interest the President is thus prevented from presenting observations concerning the patentability of the invention based on facts and evidence specific for the case in question. Unlike a third party according to Art. 115 EPC the President is not allowed to comment on the correct interpretation of the prior art or introduce new facts and evidence (unless they elucidate a comment to a question of general interest). Inviting the President to comment is thus not a fact finding exercise. Instead, the Board allows a third party, ad personam, to present opinions, to attend oral proceedings and even to comment on the spot. Care must be taken to avoid any impression that the President tries to instruct the Boards or that the Boards would be willing to receive any such guidance in their decision process.
In view of these constraints it is advisable that the President, before exerting his right to an invitation according to Art. 18 RPBA, obtains consent of the parties to his involvement in a specific appeal proceedings. Even considering that the parties have no effective means at their disposition to prevent the President from submitting comments, proceedings will run smoother if the parties do not take issue with these comments or question their appropriateness in the light of the EPC. In a situation like the present, where the EPO finds itself in the centre of a political storm, appellants are even likely to welcome an accession of the President in order to demonstrate that all political objections have indeed been heard by the Board.
For the sake of completeness it is observed that an invitation according to Art. 18 RPBA does not make the President a "party to the proceedings" within the meaning of Article 107 EPC. He has no right to submit requests (J 14/90 sec. 1.2). The President thus cannot use the invitation to request or force a referral to the EBA under the provisions of Art. 112 (1) (a) EPC. However, he may support a party's request for a referral by providing an independent argumentation.
Also it appears that the Present may have done himself and the Administrative Council a disservice by filing a referral. It is to be feared that the Board of Appeal will suspend all pending proceedings relating to the questions referred by the President as long as the admissibility of the referral has not been decided. During such factual stay of proceedings parties cannot by themselves request a referral of the President's questions under Art. 112 (1) (a) EPC. Thus, the referral ties the hands of the only persons who could, without the limitations applicable to the President, request that the questions be decided by the EBA.
2. Referral to the ECJ
The most straightforward way of resolving the question underlying the disputed decision has unfortunately been ruled out by the EBA: A referral to the European Court of Justice (G 2/06 Headnote 1). Nevertheless, it is the solution advocated for herein.
The EBA argued that the powers of the Boards of Appeal are limited by the EPC. In the absence of any provision for a referral by any instance of the EPO, such referral is prima facie impossible. The Boards of Appeal are not courts or tribunals of an EU member state but of an international organization whose contracting states are not all members of the EU, thus Art. 267 TEU cannot apply. As the members of the Boards shall not be bound by any instructions in their decisions (Art 23 (3) EPC), any verdict of the ECJ could not be binding anyway. Furthermore, it is unclear if the ECJ would entertain a referral in the current situation, since it would be unclear who would be entitled to make submissions to the ECJ on any questions submitted. And the Boards of Appeal, while being recognized as courts or tribunals, are hardly comparable to highest national courts of EU Member States; some or possibly even all the members of a Board of Appeal might not even be nationals of an EU state. The EBA also ruled out any consequences arising from the location of the Boards (G 2/06 sec. 3 – 10).
The EBA's reasoning is overly formalistic and beyond the point. The question to be answered is not if there is an explicit legal norm in the EPC allowing the Boards to submit questions to the ECJ. Instead, the EBA should have assessed if the Boards are under an obligation to do so.
It is fundamental to remember that the EPC is the result of a transfer of power. It was not created by an act of God, nor was it created by a direct expression of the free will of the people. The EPC does not, sui generis, bring legislative, juridical or executive powers into existence. Any power wielded by an organ of the EPC is derived from and limited by the powers of the Member States: "no servant is greater than his master" (Joh 13:16). Thus, the EPC cannot remove any obligation of the Member States or grant unfettered sovereign autonomy to the organs created by the Convention. Where Member States have renounced sovereignty in certain areas they cannot re-usurp these rights merely by creating an international organisation which suddenly wields a power that its creators do not have. Otherwise, states could frustrate any constitutional limitation. For example, states could team up with those not bound by the European Convention for the Protection of Human Rights and Fundamental Freedoms to create an Organization for Inhumane Criminal Investigation and Punishment, which is patently absurd. The provisions of the EPC are thus not to be interpreted in isolation but in the context of the Member States; the object and purpose of any provision of the treaty cannot be one that the Member States themselves cannot legitimately pursue (cf. Art. 31 Vienna Convention).
The European Patent Organisation is a legal entity of international public law (Art. 5 (1) EPC). The Organisation is not per se exempt from legal action; immunity of the Organisation is defined exclusively by the Protocol on Privileges and Immunities (Art. 8 EPC). According to Art. 3 PPI the Organisation shall have immunity from jurisdiction and execution, but only in so far as is "strictly necessary for its administrative [!] and technical operation, as set out in the Convention" (Art. 3 (4) PPI). In so far as the Office claims that the Boards of Appeal perform juridical instead of administrative activities, the EPO is prima facie not immune from legal action. However, this is not a decisive issue: The question whether or not Boards of Appeal are obliged to refer questions to the ECJ is different from the question of whether the Organisation can be held accountable for any damages resulting from decisions of the Boards. The first one addresses issues of procedure, the second question addresses liability (nota bene not of the Boards but of the Organisation as a legal person). It is not logical to conclude that, because the Organisation can or cannot be held liable to damages, the Boards have to act some way or another.
All EU states are Member States of the EPC. By being EU states, they are bound to EU law as a whole and thereby are obliged to create a patent system conforming to the Biotech Directive (Art. 1 (1) of the Directive). They are not allowed to create an "Ersatz" patent system applicable to the field of biotechnology in conflict with the Biotech Directive. In particular, the Biotech Directive was enacted with a regard to the fact that until then the EPC ("Munich Convention") did not a priori exclude the patentability of biological matter (recital 15 of the Directive). When the Directive entered into force, all EU member states were required not only to bring their national patent laws in accordance with the Directive, they were in turn obliged to bring the EPC into corresponding conformity (see also an opinion given in OJ 1999, 573-576). Failure to do so would have brought, on the territory of the EU States, patents into force (Art. 2 (2) EPC) which these states were forbidden to grant. Assuming that the EU States were under no obligation to amend the EPC in accordance with the Biotech Directive presupposes that the States would have been willing to act disloyally to the Union (Art. 4 (3) TEU, see also ECJ Opinion 2/13, paragraphs 168 and 173). This entails that all EU states are only allowed to agree to a patent system providing full and effective juridical review. Or, to quote the ECJ: "The EU States are obliged, by reason, inter alia, of the principle of sincere cooperation, set out in the first sub-paragraph of Article 4(3) TEU, to ensure, in their respective territories [!], the application of and respect for European Union law" (see ECJ Opinion 1/09, paragraph 68).
Not all EPC Member States are EU States. But, as described above, obligations of the EU states do not disappear merely by association with other states. The status as non-EU-state does not prevent those states from agreeing to a proposal for an amendment of the EPC required by EU States. Also, there is no known objection by a non-EU state against bringing the EPC into alignment with the Biotech Directive.
Thus, it can be concluded that the objective will of the EU States must have been to install provisions in the EPC which conform to the Biotech Directive, and that non-EU States agreed to the amendment.
The EPC Member States chose not to merely introduce a reference to the Directive into the EPC. Instead, the EPC contains explicit provisions regarding the patenting of subject matter falling under the Biotech Directive (inter alia Art. 53 (b) EPC and contentious R. 28 (2) EPC), thereby preserving the EPC as a self-contained body of law. It is also questionable if a reference to the Directive would have been allowable. This would have given a carte blanche to the EU in case the Directive ever were to be amended. Non-EU Member States of the EPC are under no obligation to automatically accept a de facto amendment of the EPC by powers beyond their control. Thus, a formal agreement of those states to EPC amendments caused by a revision of the Biotech Directive is required. However, this does not remove from EU states the obligation to press for an EPC in accordance with the provisions of the Directive.
In summary, the provisions of the EPC must be applied in harmony with the Biotech Directive. If it were possible to interpret the EPC contrary to the Biotech Directive on matters where the Directive applies, then the function of the Directive could be severely undermined. For any practical definition, in the field of biotechnology the distinction between the EU legal order and the international legal order created, inter alia, by the EU national states is blurred or even non-existent.
It now remains to analyse whose task it is to interpret the Biotech Directive in so far as European patents are concerned.
According to Art. 1 (1) EPC the Convention establishes a law common to the contracting states for the grant of European patents. The EPO carries out the task of granting such patents (Art. 4 (3) EPC). To this purpose different organs within the EPO are established, among them are the Boards of Appeal (Art. 15 (f) EPC). It is the sole responsibility of the Boards to act within the procedures laid down in the EPC; national courts have no say (at least before conversion according to Art. 135 EPC). The Boards are the only instance entitled to and entrusted with a review of decisions of other EPO organs on individual European patents (Art. 106 EPC; see Pignatelli/Beckedorf/Kinkeldey in Benkard, EPÜ, 3rd edition, p. 180). Where the Boards have competence to decide, national courts have not. Thus, the only body with competence to decide on the interpretation of the Biotech Directive, during the granting and opposition stages of European patents, is the Boards of Appeal.
This exclusive competence does not make the Boards independent of legal cooperation. In their decisions on individual appeal cases, the Boards must accept decrees by at least one other department of the EPO, i.e. the EBA. Formally, the EBA is not a part of the Boards of Appeal of the EPO (Art. 15 (f), (g) EPC), yet the Boards are bound to the ratio of decisions of the EBA rendered according to Art. 112 (1) (a) EPC. Thus, obtaining a binding decision on points of law by a body outside of the Boards of Appeal is not alien to the EPC. It is therefore not convincing to put all decisions on points of law on a level with inappropriate instructions in the sense of Art. 23 (3) EPC. This Article does not limit the Boards' competence to decide how to form an opinion on the interpretation of the law, it merely forbids replacing this competence by an act of obedience to powers outside of the juridical system. In essence, the EPC does not forbid a referral to the ECJ, it merely is silent on this matter. The Boards are called to make sense of this silence and to fill in, using established juridical techniques of interpretation, any gaps in legislature.
The Boards of Appeal are thus intended to function as court common to all EU Member States. It is of no concern that the Boards of Appeal form separate judicial bodies (for example a legal Board or several technical Boards). In summary their purpose is to ensure that the law common to the EPC Member States, including all EU States, are applied uniformly. In so far as the Biotech Directive is concerned, the law applied by the Boards is intimately linked to EU secondary law.
Having established that the jurisdiction of the Boards extends to matters covered by the Biotech Directive, it is shown next that the Boards, like courts and tribunals of the EU states, are required to refer questions to the ECJ according to Art. 267 TFEU.
One of the main obligations of EU states is to ensure effective judicial protection for individual parties in the fields covered by EU law (ECJ, C-64/16, paragraph 34). To this end they are required to establish a system of legal remedies and procedures ensuring effective judicial review: "The very existence of effective judicial review designed to ensure compliance with EU law is of the essence of the rule of law. It follows that every [EU] Member State must ensure that the bodies which, as ‘courts or tribunals’ within the meaning of EU law, come within its judicial system in the fields covered by that law, meet the requirements of effective judicial protection" (ECJ, C-64/16, paragraphs 36, 37). "Courts and tribunals" are primarily the courts and tribunals established by national law. The Boards of Appeal, however, are not courts or tribunals "of" an EU state. The Boards are established by means of an international agreement as part of an international organisation distinct from the EU states and from the EU itself, they are not part of the judicial system of one or more EU states.
The ECJ has repeatedly emphasised that there is no good reason why a court common to a number of EU states should not be able to submit questions to the Court of Justice, in the same way as courts or tribunals of any of those states. The Boards of Appeal fulfil the necessary criteria for a court or tribunal according to ECJ standards, because they are established by law, they are permanent, their jurisdiction is compulsory, they decide in inter partes procedures, generally apply rules of law and claim to be independent (see ECJ C-196/09, paragraph 37 and the case-law cited therein). By deciding in patent appeal cases, the Boards do not intend to perform functions of administrative but of judicial nature (ECJ C-192/98, sec. 22). However, the ECJ demanded that courts or tribunals must have "links with the judicial systems of the [EU] Member States" in order to refer questions under Art. 267 TFEU. In this respect, mere functional links with the EU are insufficient (ECJ C-196/09, sec. 41-43).
As described above, it is a task of the Boards to ensure that legal rules common to the EU states are applied uniformly (ECJ C-284/16, sec. 48). These legal rules themselves are intimately linked with EU secondary law, i.e. the Biotech Directive; in so far the EPC provisions must be interpreted by taking recourse to the Directive (R. 26 (1) EPC). In a situation where the distinction between the EU legal order and national legal orders are "less marked", the ECJ has recently even assumed full competence to annul a national court decision in criminal proceedings (joint ECJ cases C-202/18 and C-238/18, sec. 69). While the ECJ cautioned that its right for annulment resulted from "exceptional circumstances", the ratio decendi can be generalised: The "exceptional circumstances" invoked by the ECJ were that the statute of the ESCB and of the ECB contained an explicit provision for appeal to the ECJ. However, this can hardly be decisive, because in other cases (for example ECJ C-196/09) the ECJ did not see any close link, despite the fact that the provisions in question contained an explicit obligation to refer cases to the ECJ. The key aspect rather is that more is at stake than the mere application of "general principles of EU law" (ECJ C-196/09, paragraph 43). As described above, in a situation where the Boards of Appeal were forced to decide on patent matters overlapping with the ambit of the Biotech Directive without having the possibility of recourse to the ECJ, there is a high risk of establishing, in the territory of EU states, divergent interpretations of EU law. The divergence does not only pertain to matters within the EPO; grant and revocation of a European patent immediately changes rights and obligations of the proprietor and the general public. Thus, it is important in the interest of legal certainty that the application of patent law does not depend on the organisation entrusted to provide a ruling; a lasting divergence between decisions of EPO Boards and national courts on patentability of identical applications would facilitate unjustified "forum shopping". It is also important to remember that the EPO decides far more cases on plant biotechnology than the EU member states. Applicants and their competitors cannot be told to wait for a national court referral to the ECJ.
It must therefore be concluded that the EPO Boards of Appeal have, as final juridical instance in patent application and opposition proceedings, the competence and duty to refer questions to the ECJ in cases falling within the scope of the Biotech Directive. Notably, in such cases the ECJ would not rule on the application of the EPC but would provide an interpretation of the Directive; this interpretation would in turn have to be applied for the interpretation of the EPC by the Boards.
As a control: The ECJ has already decided that the EU states cannot defer jurisdiction to a court created by an international agreement which would deprive national courts of their task to implement European Union law and, thereby, of the power provided for in Article 267 TFEU (ECJ Opinion 1/09, sec. 80): "by conferring on an international court which is outside the institutional and judicial framework of the European Union an exclusive jurisdiction to hear a significant number of actions brought by individuals in the field of the Community patent and to interpret and apply EU law in that field, would deprive courts of Member States of their powers in relation to the interpretation and application of European Union law and the [ECJ] of its powers to reply, by preliminary ruling, to questions referred by those courts and, consequently, would alter the essential character of the powers which the Treaties confer on the institutions of the European Union and on the Member States and which are indispensable to the preservation of the very nature of European Union law" (ECJ Opinion 1/09, sec. 89). So either the Boards themselves are an adequate substitute for national courts – which entails a power and obligation to refer questions to the ECJ -, or the EPC must not have an overlap with EU law. The latter could only be achieved by preventing the grant of any European patents in the field of biotechnology. Judging by the number of cases treated by the EPO, such broad patentability exemption is not desirable to practitioners.
3. Amendment of the Convention
"When judiciary-driven legal development meets its limits, it is time for the legislator to take over" (G 3/08 sec. 7.2.7). However, all means available to the legislator are not suitable for resolving the present conflict:
If the Administrative Council invokes its competence according to Art. 33 (1) (b) EPC to amend Art. 53 (2) EPC, such an amendment would still be open to annulment by the Boards of Appeal: as the Boards are bound by the law their first obligation is to decide on the authoritative text of the EPC. They would have to decide if they are to apply the EPC in its present form or in the form after an amendment. Thus, the application of an amended EPC is subject to an approval by the Board. And it is not apparent that the Board in question is inclined to agree that there is a consensus of EU legislation relating to patents (provided that the ECJ still would not have interpreted the Biotech Directive). Furthermore, such an amendment would be in suspension for one year (Art. 35 (3) EPC), which is hardly compatible with the aim of finding "a solution in the short term following the decision T 1063/18", one of the main reasons for the present referral G 3/19.
Likewise, a revision according to Art. 172 EPC would not clarify the situation, because it still could not remove the lack of an ECJ ruling required for interpretation of the "Biotech Articles" of the EPC. In fact, a revision would likely aggravate the situation if the new EPC deepens the rift between the Boards of Appeal and the ECJ in the correct application and uniform interpretation of EU law, and in the protection of individual rights conferred by that legal order (ECJ Opinion 1/09, sec. 84).
And, finally, neither type of EPC reform could affect the cases currently pending at the EPO due to the prohibition of retroactivity: it is only for the Boards to decide how the law should always have been understood. The Administrative Council or even a full Diplomatic Conference have no power to change, by invoking a right to "authentic interpretation", substantive patentability criteria and thus to take away from an applicant what was (according to decision T 1063/18) legitimately patentable at the filing day. While such rights of authentic interpretation is known in Austria (see also J 16/96, sec. 2.1), it is not common to all EPC Member States (Art. 125 EPC) and has even been repeatedly denied by the FCC in Germany (BVerfG 1 BvR 2530/05, sec. 73); it would, in fact, border on expropriation.
In summary, a decision by the ECJ on the meaning of the contentious provisions of the Biotech Directive is indispensable. After such decision the EPC could be safely amended, if an amendment turned out to be required at all.