EU and WTO/TRIPS & FTAs: Hard Standards and Flexibilities

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1 EU and WTO/TRIPS & FTAs: Hard Standards and Flexibilities ESF SCSS Exploratory Workshop: The Future of Patent Governance in Europe Hamburg, 1-2 September 2014 Dr Henning Grosse Ruse - Khan Faculty of Law

2 Outline 1. The UPC Agreement and EU Patent Law what is the role for TRIPS? 2. EU regional and bilateral agreements (EPAs, FTAs, IIAs) affecting the UPC and/or EU Patent law? 3. Investor-State Dispute Settlement the final arbiter of EU Patent Law?

3 The Role of TRIPS The Unified Patent Court Agreement (UPCA) and TRIPS: Direct applicability of TRIPS under Art.24:1 d)? ( ) when hearing a case brought before it under this Agreement, the Court shall base its decisions on: ( ) d) other international agreements applicable to patents and binding on all the Contracting Member States No - Art.24 is subject to the primacy of & respect for EU law (Art.20), incl. CJEU decisions on role of TRIPS: Post Lisbon, the whole of TRIPS falls within exclusive EU competence under Art.207:1 TFEU (Daiichi, para.51-61, 2013) and does not apply directly However, as part of EU law, Mgs. Courts (incl. UPC) and the CJEU have to interpret EU & nat. rules in light of TRIPS

4 The Role of TRIPS TRIPS and the UPCA: TRIPS Consistency Substantive patent rules (Artt.25-30) appear consistent with TRIPS: Patent rights under Art.25 mirror Art.28 TRIPS (Art.26 is TRIPS-plus) Exceptions under Art.27 (private & experimental use, Bolar, farmer s privilege, etc) and prior use rights under Art.28 are consistent with Art.30 TRIPS (Distinct to EU Copyright Law, no 3-step-test straightjacket, see Art.5:5 CISD) Regional exhaustion (Art.29) consistent with Art.6 TRIPS

5 The Role of TRIPS TRIPS and the UPCA: Making use of TRIPS flexibilities? UPCA interpretation: Based on Artt.7, 8 TRIPS? no specific rule on interpretation, emphasis on correct application and uniform interpretation of EU law (see Preamble) Narrow farmer s privilege based on UPOV 1991: limited to reuse of patented seeds on own holdings no exchange What about (review of) compulsory licenses (CL) granted vis-à-vis a unitary patent? No rules in UPCA, but Art.7 EU Reg.1257/2012; CL for exports addressed in EU Reg.816/2006 ebay test for injunctive relief (Art.44:2 TRIPS)? Discretion under Art.62 (provisional measures) and arguably also under Art.63 (permanent injunctions)

6 TRIPS-plus Standards under FTAs, EPAs Role of patent & enforcement provisions in FTAs, EPAs UPCA must be interpreted in light of relevant patent rules in FTAs, EPAs binding all EU Mgs (Art.24:1 d), but no direct effect (CJEU in Daiichi, Merck Genericos) As most EU FTAs, EPAs do not contain detailed rules on patent protection (other than exporting existing EU rules on data exclusivity & patent term extension), patent rules in EU FTAs so far will be of little relevance But the detailed and comprehensive TRIPS-plus enforcement rules may carry some conflict potential with UPCA enforcement rules in Art or allow for an expansive reading of UPCA

7 International Investment Law and the UPC International Investment Law, usually in form of BITs or Investment Chapters in FTAs, protects assets, incl. IPRs, of foreign investors against measures of the host state International Investment Agreements (IIAs) often allow foreign investors to challenge host state measures directly in international dispute settlement in front of an arbitration tribunal (ISDS) Increasingly, the measures challenged involve IPRs: plain packaging, patent revocation Since Lisbon, the EU has the exclusive competence for FDI and has recently concluded with CETA the 1 st Agreement with investment protection rules binding the EU

8 Patent Revocation in Canada

9 Eli Lilly vs Canada

10 ISDS Challenges of UPC Decisions? Nature of UPC decisions: As court common to the Contracting Member States and part of their judicial system, the UPC is a national court of the Contracting Member States (UPCA Preamble) As a national court, its decisions could be challenged by investors who enjoy protection under any IIA agreed by any participating Member State, as well as new EU IIAs Patent holders may treaty shop for the most favourable IIA available

11 ISDS Challenges of UPC Decisions? Scenarios for ISDS challenges of UPC decisions: Decisions revoking a patent under Art.32:1 d), 65: as a form of indirect expropriation or breach of the fair and equitable treatment (FET) standard? Can foreign patent holder claim legitimate expectation based on patent grant? Declaratory judgements of non-infringement based on Art.32:1 b): in breach of the duty to provide full protection and security, encompassing duty to protect patents against third party harm?

12 ISDS Challenges of UPC Decisions? Potential safeguards against ISDS challenges: In CETA, expropriation protection does not apply to the issuance of compulsory licenses granted in relation to intellectual property rights, to the extent that such issuance is consistent with the Agreement on Trade-Related Aspects of Intellectual Property Rights in Annex 1C to the WTO Agreements ('TRIPS Agreement'). For greater certainty, the revocation, limitation or creation of intellectual property rights to the extent that these measures are consistent with TRIPS and Chapter X (Intellectual Property) of this Agreement, do not constitute expropriation. Moreover, a determination that these actions are inconsistent with the TRIPS Agreement or Chapter X (Intellectual Property) of this Agreement does not establish that there has been an expropriation.

13 ISDS Challenges of UPC Decisions? Additional CETA Declaration on IP, motivated by Eli Lilly case: Mindful that investor state dispute settlement tribunals ( ) are not an appeal mechanism for the decisions of domestic courts, the Parties recall that the domestic courts of each Party are responsible for the determination of the existence and validity of intellectual property rights. The Parties further recognize that each Party shall be free to determine the appropriate method of implementing the provisions of this Agreement regarding intellectual property within their own legal system and practice. The Parties agree to review the relation between intellectual property rights and investment disciplines within 3 years after entry into force of the agreement or at the request of a Party. Further to this review and to the extent required, the Parties may issue binding interpretations to ensure the proper interpretation of the scope of investment protection under this Agreement in accordance with the provisions of Article X.27: Applicable Law and Rules of Interpretation of Chapter x (Investment)."

14 Conclusion TRIPS affects the UPCA and EU patent law by means of interpretation, whereby the UPC and CJEU aim to ensure consistency with TRIPS (as understood by CJEU) EU TRIPS-plus FTAs and EPAs can equally play such an interpretative role especially detailed enforcement norms restrict policy space in the future IIAs and ISDS may result in challenges of UPC decisions as breaches of expropriation or FET standards but 1 st EU IIA shows how such challenges can be minimised

15 Thank you for your attention! Full paper on IP in ISDS at Questions and Comments welcome or to 15