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You are here: BAILII >> Databases >> England and Wales High Court (Administrative Court) Decisions >> Lenzing AG, R (on the application of) v Comptroller General Of Patents, Designs & Trade Marks [1996] EWHC Admin 390 (20th December, 1996) URL: http://www.bailii.org/ew/cases/EWHC/Admin/1996/390.html Cite as: [1996] EWHC Admin 390 |
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1. An
Austrian company, Lenzing A.G., apply for a variety of forms of relief arising
out of allegations that a European Patent Office Board of Appeal
(“BoA”) mishandled an opposition to their patent and wrongly
ordered or, as Lenzing say, purported to order, that it be revoked. They seek
judicial review of the BoA’s decision and judicial review of the decision
of the Comptroller-General of the British Patent Office to mark the UK Register
of Patents with an entry to the effect that their patent has been revoked.
Those are proceedings in the Crown Office of the High Court. By way of
alternative attack Lenzing invoke the jurisdiction of the Patents Court to
order rectification of the entry in the Register of Patents. Also in the
Patents Court Lenzing’s principal (but not only) commercial adversaries,
Courtaulds Fibres (Holdings) Ltd and other Courtaulds companies seek an order
dismissing Lenzing’s claim for infringement of the patent concerned on
the ground that the patent has been revoked. Lenzing resist that, contending
that the revocation of their patent is a nullity. Courtaulds also seek an
order for costs in respect of their petition for revocation.
2. It
is first necessary to explain the legal framework of the problem. Until 1978,
a patent for an invention in the UK could only be obtained by application to
the UK Patent Office. The procedures for this were laid down in the Patents
Act 1949 and the Rules made pursuant to the rule-making power conferred by the
Act. Ultimately any decision adverse to an applicant could be the subject of
appeal to the Patents Court. Patents in other countries had to be obtained by
applications to the national patent office of each country concerned. This was
widely regarded as wasteful. It meant, for instance, that if you wanted a
patent in n European countries, you had to apply in different national patent
offices. Each of these would (or might since some did not) search the prior
art to see whether the invention was new. Further each country had its own,
distinct, substantive laws of validity and infringement.
3. Accordingly
in 1973 a number of European countries entered into the European Patent
Convention (“EPC”). This set up the European Patent Office
(“EPO”) in Munich. The 1977 Patents Act was passed, as its recital
says, “to give effect to certain international conventions” of
which the EPC was one. I described the broad effect of the position prevailing
after the 1977 Act came into force (mid-1978) in
Aumac’s
Patent
[1]
as follows:
4. Lenzing’s
patent has been knocked out centrally. Can they challenge that knock-out at
least so far as the UK patent is concerned? That is what I have to decide.
5. The
patent concerned is (or was) No. 0,356,419. Lenzing applied for it in the EPO
on 7
th August
1989. It is for a process for making cotton-like fabric from wood. Following
examination the patent was granted on 16
th
December 1992. Opposition was entered in the EPO by Courtaulds plc and Akzo
Fazer AG within the 9 month period from grant provided for by Art. 89(1)
of the EPC. On 6
th
May 1994 the Opposition Division orally announced its decision, refusing the
opposition. It gave its reasons on 4
th
July 1994. The opponents appealed to the BoA, to which appeals lie pursuant to
the provisions of Arts.106-111. Another Courtaulds company (Courtaulds Fibres
(Holdings) Ltd.) was permitted to join in the appeal. The BoA received written
submissions. It held an oral hearing on 3
rd
May 1996. In accordance with its usual practice (a practice often criticised),
following an adjournment of an hour or so, it announced its decision. The
patent was revoked. Written reasons followed on 12
th
July 1996. The fact of revocation was recorded on the register of European
Patents kept by the EPO. I do not know the precise date of such recordal but
it must have been shortly after the decision was given. There is no attempt to
attack that entry in these proceedings. The decision was duly communicated to
the Comptroller-General of Patents who caused an entry to be made in the UK
register of patents to the effect that the patent was revoked. The
communication took the form of the supply of the information on a tape or disc
which the Comptroller simply ran to alter the electronically kept Register. He
did not purport to exercise his discretion.
6. Meanwhile
proceedings had started in the Patents Court. Courtaulds, believing that the
patent represented a major threat to their investment in new plant in the UK,
on 29
th
September 1994 petitioned to revoke the European patent (UK). This was just
after the Opposition Division had upheld the patent. In November Lenzing
attacked, serving a writ for infringement. It was duly agreed that both
proceedings should run together. Discovery took place and the trial date was
set for December 1996. The revocation of the patent intervened. Courtaulds
now apply for the action to be dismissed and for their costs of the action and
petition.
7. Lenzing
say that the written reasons for the decision show that there was a serious
procedural injustice. In particular they say that the reasons were never put
to them, either at the hearing or before, and were not argued by the opponents.
They say that there was thereby:
8. Lenzing
further say that the decision was irrational or perverse, misunderstanding and
misconstruing both the cited prior art and their patent. And they say that the
BoA made up its mind in advance of the hearing and that such was admitted by
the Chairman of the Board in a conversation with their patent agent. This
makes the procedural misfeasance allegations all the more serious: the claim is
that the Board knew in advance of the grounds of their proposed decision, yet
deliberately kept it back. Lenzing say that if they had known of the point,
they could have answered it or offered suitable amendments to their patent to
deal with it.
9. Lenzing
say the result of the events which they allege is that the decision of the BoA
should be regarded as a nullity. They accept that judicial review will not lie
against the impugned decision itself (because of the immunity of the EPO from
process) but, they say, that does not prevent a collateral attack. They make
that attack in three ways:
10. Admittedly
the procedures in which the question arises are different, but, say Lenzing,
given the fact that the decision should be regarded as a nullity, all three
procedures (or at least one or other of them) are appropriate. Indeed it was
common ground that this case does not turn on procedural questions.
11. Courtaulds
wish to dispute all of the allegations of fact. The EPO is not in a position
even to go into them - its position is that its Boards of Appeal are an
international tribunal over which national courts have no supervisory power.
So it is not necessary or legitimate to go into the facts. The EPO does not
appear before me. It has never been (and could not be) served in accordance
with any Rule of Court, though it has been given notice of these proceedings.
It has immunity from any relevant process for reasons I will examine later.
12. Lenzing
further say that if they have no other means of collaterally attacking the
BoA’s decision, then they have a remedy under European Union law. In
relation to that they seek a reference to the European Court of Justice. The
point is based on the World Trade Organisation Agreement (“WTO”)
and the agreement annexed thereto as Annex 1C, the “Agreement on
Trade-Related Aspects of Intellectual Property Rights”
(“TRIPS”). It is suggested that the EU remedy is for this court to
provide a means of judicial review.
13. When
the application for leave for judicial review and the first hearing of the
motion for rectification came before me it was clear that the case raised
issues of principle, quite apart from involving a substantial dispute on the
facts. Going into the latter would take time and, on one view of the case,
would be an impermissible exercise. The parties agreed that a preliminary
point would be appropriate. Accordingly the parties (with a little help from
me) agreed the questions.
14. Both
the collateral attack and the EU law point involve some detailed consideration
of the EPC, a Convention of which UK Courts are required to take judicial
notice pursuant to s.91(1)(a) of the Patents Act 1977.
16. The
EPC did not form and does not form part of the legal framework of the then
European Economic Community (now the European Union). Countries outside the
Community can be and are signatories. Switzerland, for instance, was a founder
member of the EPC and one of the first countries to ratify it. There are now
17 member states and others (including perhaps some Eastern European countries)
are actively thinking of and preparing to join. Thus the EPC is a
free-standing international convention.
17. The
early provisions of the EPC are important. So far as material I set them out
here, together with their titles:
19. A
system of law, common to the Contracting States, for the grant of patents for
inventions is hereby established.
21. Thus
the European Patent Organisation has two limbs, the Administrative Council and
the EPO. It is an international body, recognised as such pursuant to the
International Organisations Act 1968 and the appropriate statutory instrument
made thereunder
[2].
22. The
Protocol on Privileges and Immunities annexed to this Convention shall define
the conditions under which the Organisation. the members of the Administrative
Council, the employees of the European Patent Office and such other persons
specified in that Protocol as take part in the work of the Organisation, shall
enjoy, in the territory of each Contracting State, the privileges and
immunities necessary for the performance of their duties.
23. I
pause here to note Art. 3 of this Protocol, the whole of which forms part of
the EPC itself by virtue of Art.8. It reads:
24. The
EPO has not waived immunity in this case, and there is no reason why it should
have done so. There are a number of other provisions which make it clear that
the European Patent Organisation (of which the EPO forms one limb pursuant to
Art. 4 of the EPC) and its officials have diplomatic and other immunities in
much the same way as other international bodies.
25. For
implementing the procedures laid down in this Convention, there shall be set up
within the EPO:
26. Next
there are provisions about the Administrative Council which are unnecessary to
recite in detail. It is composed of representatives of each Contracting State.
27. Part
II of the EPC then deals with substantive patent law - the law which is to
operated by the EPO. The provisions correspond, for practical purposes, with
the substantive laws now contained in the national laws of the contracting
states. In the case of the UK this is the Patents Act 1977. Although much of
the wording of this Act differs from that in the EPC, our Act provides that:
28. Why
our draftsman did not simply copy the relevant provisions of the EPC as part of
our Act (preferably using the same numbers so that decisions of the EPO and
other countries are more readily followed) beats me. He did our law no service
by trying to rephrase the relevant provisions of the EPC with what he (though
no one else) may have thought was better or more elegant language. Whatever he
thought, the result is that we have the same substantive rules for the grant
and validity of patents as are provided for in the EPC.
29. Part
IV of the EPC deals with procedure up to grant. It provides for examination,
search and publication of the application, leading to a requirement to refuse
or grant, and publication of the specification of the patent as granted. The
provision (Art.99) about refusal or grant reads, so far as is material:
30. Section
130(7) also mentions two other treaties. It is not necessary to go into these
much. The Patent Co-operation Treaty is a world-wide system whereby you can
apply via one patent office for patents in all the countries (or groups of
countries) of the signatories - in practice nearly all by now. The Community
Patent Convention (“CPC”) has never entered into force. It
provides for a unitary patent for the entire EEC as it then was. A subsidiary
argument of Lenzing relates to how the provision for implementation of the CPC
was provided for in the 1977 Act.
31. Going
on with the EPC, Part III deals with the procedure for application and fees. I
need not go into much detail. Arts.75 -77 deal with filing and Art 78 with
formalities. Art.79 deals with the important question of which countries the
application is for. It provides:
32. Subsequent
Articles then deal with all the usual things that have to be provided for,
such as filing dates, designation of inventor, unity of invention and so on.
33. Part
IV deals with procedure up to grant, covering matter such as examination for
formal requirements, search, and full examination of the application. Part V
(Arts. 99-105) deals with opposition procedure. Part VI (Arts. 106-112) deals
with appeals procedure. Part VII (Arts. 113-134) deals with common provisions.
Chapter I of this Part deals with common provisions governing procedure. Art.
113(1) is one of the provisions on which Lenzing rely so far as the facts are
concerned:
35. By
Rule 92(1)(r) of the Implementing Regulations made pursuant to the EPC one of
the matters to be entered on the Register is “the date and purport of the
decision on opposition.”
36. The
EPC has four appendices - or Protocols as the language of international law
calls them. There is the Protocol on Recognition, which deals with
jurisdiction and recognition of disputes over the right to the grant of a
European Patent. Then there is the Protocol on Privileges and Immunities,
which I have already mentioned, a Protocol on Centralisation of the European
Patent System and on its Introduction, and the much more commonly referred to
Protocol on the Interpretation of Art.69 of the Convention dealing with the
extent of protection.
37. It
is common ground that the EPC, as such, is an international treaty, taking
effect only in international law. The provisions of our Act which implement it
are contained in Part II of the Patents Act 1977 as amended. This contains
“Provisions about International Conventions.” Those concerning
“European patents and patent applications” are ss.77-83. The
relevant bits of these read:
39. I
have italicised the words on which so much of Lenzing’s argument depends.
They say that Parliament only requires a European Patent (UK) to be treated as
revoked if that revocation is in accordance with the EPC. So the words
concerned invite and require an inquiry into any purported revocation to see
whether it really was in accordance with the EPC. Or, put slightly
differently, if a party here (the Comptroller in making an entry in the
Register or a defendant to a patent action, e.g. Courtaulds) seeks to rely upon
an order of revocation in the EPO it is open to the patentee to rebut the prima
facie conclusion that the patent has been revoked by showing that the tribunal
ordering revocation (an opposition division or at least a BoA) did not act in
accordance with the Convention.
40. Lenzing
now accept that domestic judicial review proceedings will not lie against the
EPO. Originally (by their Form 86A) they sought an order that the decision of
the BoA insofar as it purported to revoke their EP(UK) be revoked. An awful
muddle therefore follows if they are right in saying that the decision here can
be treated as a nullity. The register of European Patents under Art.127 will
continue to record the revocation of the European Patent by the BoA whatever is
done to the UK Register. And Courtaulds and Akzo, who perfectly properly were
parties to the appeal before the EPO will, so far as this country is concerned,
in effect will be deprived of that appeal. By our law the appeal has not
happened, but it has as far as the EPO is concerned. I mention Akzo
particularly because they are not parties to the present proceedings and it is
doubtful whether they could be made such. More generally anyone who consulted
the EPO register and said “The patent is gone for all Europe: I need not
bother to look at national registers” would be misled. And even more
seriously, anyone who in reliance on the revocation as being final has made an
investment accordingly (either by way of direct investment in plant or R&D
or on the stock market) would be adversely affected.
41. Lenzing
accept that all that follows from their argument. Nonetheless they boldly
submit that Parliament did intend that there could be inquiry by way of
collateral attack here into the acts of a Board of Appeal of the EPO and that
was intended by Parliament. Further, they say, it would require very strong
language indeed for Parliament to exclude an inquiry into the lawfulness of
what was done to deprive a party of a UK property right. They say no such
language is used here. Thus, it would follow, that the decision of the BoA
should be treated in just the same way as that of a domestic tribunal with this
limited, but irrelevant limitation, that the decision itself cannot be directly
quashed or attacked.
42. Courtaulds
and the Comptroller say that the whole Lenzing approach is misconceived. They
begin by pointing out that the EPC as such is an international treaty, taking
effect in public international law. It establishes by Art.1 “ A system
of law common to the Contracting States for the grant of patents”. That
follows the recital specifying the States’ desire that there be a
“single procedure for the grant of patents”.
43. It
is, I think clear, (and Mr Prescott QC for Lenzing did not really contest
otherwise) that the “opposition” procedure was and is really
regarded so far as the Convention is concerned as part of the grant process.
It is somewhat Pickwickian to describe a post-grant attack on a patent as
“opposition” but the word does convey the notion that one is
concerned with the early life of the patent. Hence the fact that the attack
must be within 9 months of grant. The founding fathers of the Convention had
to chose between an opposition proper - which would or could have the result
that the applicant could be kept out of his monopoly for many years - and this
form of “belated opposition.” They chose the latter. We had a
similar system under the 1949 Act in addition to true opposition. It is still
a patent office jurisdiction, and although, so far as I know there is no
explicit decision to that effect, I imagine that the standard applied (other
than on questions of law) is to give any benefit of the doubt to the patentee,
there being an opportunity later in national courts for a further and better
attack on the patent. Be that as it may, I think it is indisputable that under
the Convention the contracting States intended that the opposition procedure
and result should apply to the European Patent as a whole. That is so as a
matter of public international law. And that is what the UK signed up to in
joining the EPC.
44. Next,
say Courtaulds, the activities of the EPO are not governed by English law and
are not justiciable in English courts. It is not open to the English courts to
consider whether or not the decision was “in excess” of the powers
of the BoA. They say that is so even if the BoA had taken a bribe to reach its
decision. That may well be a matter which would allow another Board to set the
earlier decision aside (as fraud in our courts enables an earlier decision to
be set aside) but that is a matter for the new system of law created by the EPC
on the international plane.
45. Thus,
say Courtaulds and the Comptroller, all that Parliament has required in the
1977 Act, ss.77(2) and 77(4A) is proof that the EPO has, acting in purported
exercise of its powers under the EPC (of which it, and not national courts are
the judge), revoked a European Patent. Once that is shown, then our law
automatically treats the European Patent (and with it the European Patent (UK))
as revoked. The Comptroller in making the entry in the register is acting in a
purely administrative capacity, just recording what has been done.
46. I
have no doubt that Courtaulds and the Comptroller are right. The EPO is indeed
an international organisation only. It is no different in this respect from
the International Tin Council (an association of States governed by an
international treaty) whose insolvency led to much litigation here. A galaxy
of legal talent, in a variety of ways, sought to find a way of getting at the
member States in our courts. Not surprisingly all ways failed. One of the
routes was an attempt to bring winding up proceedings under the Companies Act
1985. Part XXI of the Act concerned the winding up of “unregistered
company”, a term defined by s.665 as including “any partnership
(whether limited or not), any association and any company”). In
Re
International Tin Council
[3]
Millett J has to deal with the proposition that the English courts had the
power to wind up the International Tin Council. He said
[4]:
47. I
think that is exactly true here. This country has agreed with the other States
members of the EPC that the final arbiter of revocation under the new legal
system is to be the Board of Appeal of the EPO. Other States would be justly
entitled to complain if we in this country were to ignore such a final
decision. If Lenzing are right, for example, the commercial freedom of action
of Akzo-Nobel, a Dutch company, is impeded in this country. That might well
concern Holland, the State. Likewise an attack in Germany (and I am told one
has been mounted before the constitutional court), if successful, would or
might well have the effect of putting Germany in breach of its international
obligations to the other Contracting States. I think the general words of
s.77(4A) - “in accordance with the EPC” - no more have the effect
of enabling our courts to look into the propriety of the actions of the BoA,
than the general words of the Companies Act had in
Tin.
The suggested course would be to:
48. Suppose
the position were otherwise. Then so far as I can see there would be no limit
on collateral attacks on decisions of the BoA. This is reflected in the fifth
question posed in this case. A party would be able to say that a Board had
gone wrong to the extent of an excess of an exercise of its powers for any of
the kinds of reason set forth in that question: procedural misfeasance, error
of law (including both misinterpretation of the convention or a misreading of a
patent claim or the prior art) acting in the absence of any evidence and so on
might all be said to be otherwise than
in
accordance with the Convention
.
Parliament cannot have intended by those general words such a breach in the
“common system of law” created by the Convention.
49. Perhaps
recognising the full destructive power on the whole European patent system, of
a jurisdiction to permit a collateral attack on all the grounds of the fifth
question, Mr Prescott devised a more limited class of attack, public policy.
He relied on the rule in principle of
Pemberton
v Hughes
[7],
as most recently examined in
Adams
v Cape Industries
[8]
This is the principle that the English court will not recognise and enforce a
judgment of a foreign court where the proceedings in that court were in breach
of the principles of “natural justice” (the English law term for
the right to fair hearing - “due process” as the Americans call
it).
50. This,
I felt, was Mr Prescott’s most attractive argument. Why should the
English court (or for that matter any other national court) have to accept a
decision of a BoA reached by unfair means? The answer, which I think is clear,
is that it would be contrary to the international treaty even to inquire into
the question. Mr Prescott’s appeal to public policy is met by a
conflicting policy. The UK and the other Member States have agreed at an
international level via the EPC that the BoA is the final arbiter of
oppositions. It is the agreed EPO equivalent of the House of Lords, Cour de
Cassation, or Bundesgerichthof. It is not for national courts to query its
doings, whether in a direct or collateral attack.
51. Mr
Prescott’s final main submission was this: that the EPO was different
from other international organisations. Unlike, say the Tin Council, it is a
body whose decisions take effect in national law. He said (correctly) that
those decisions only take effect by virtue of an Act of Parliament. So the EPO
should be regarded as a public body constituted by Act of Parliament, rather
like any other UK decision making tribunal. This is fallacious. The EPO is
clearly recognised on the plane of international law. The Patents Act causes
its decisions to be recognised here as a matter of national law. But its
decisions remain decisions at the international level so it is no business of
our courts to go into them.
52. I
believe that what I have said above really deals with the problem. But I
should touch upon two subsidiary arguments.
53. Mr
Prescott urged that if Parliament meant to exclude investigation by our courts
of the position, then one would need the strongest possible words to effect
that. I have already dealt with that submission generally. But Mr Prescott
sought to reinforce it by saying that in this Act there is indeed an example of
such a provision where the Act deals with the CPC. He pointed to ss.86 and 87
of the Act which provide:
54. He
said these were words of great force, s.86 being an equivalent of s.2 of the
European Communities Act and s.87 requiring our courts to be bound by a
convention court.
55. I
think this argument is misplaced. I do not think the comparison is
appropriate. The provisions concerning the EPC and those concerning the CPC
are simply different and appropriately necessary provisions. I go further.
The proposed Community Patent (for the provisions of the Act have not come into
force) is a unitary patent for the EU. Such a patent could only be obtained
through the EPO. If the decisions of the EPO or its Boards of Appeal could be
regarded as a nullity in one country the whole CPC system could not operate.
That is because the CPC is founded on the basis that decisions of the EPO are
unitary in character, affecting the European Patent concerned as a whole.
57. This
provision enabled Contracting States to include in their laws permission for a
national patent application where a European patent was revoked by the EPO. The
Comptroller (and the EPO in a letter to the Comptroller) says this reservation
(which has not been implemented anywhere) makes no sense if there was in any
event a possibility of judicial review of an EPO decision. Lenzing’s
argument, it was said, was an attempt to get the court to legislate by saying
that a national patent can be granted or treated as in being where the
application has been revoked in the EPO contrary to English principles of
natural justice. Parliament had the power, and the UK had permission under the
Treaty, so to legislate but did not. It is not for the court to step in.
58. I
am not particularly impressed by this point. Art.135(1)(b) has nothing to do
with potential judicial review. It would enable national legislatures to go
much further than provide for a judicial review. It would be possible, for
instance, to say that whenever a patent was revoked or refused by the EPO a
national patent office should treat the application as an application before it
or the patent as granted. That would be nothing whatever to do with a case
based on an allegation that the EPO had gone wrong in its procedures. I do not
think the case turns on Art. 135(1)(b) at all. If it were not there, the
position would be the same for the reasons I have given above.
59. Mr
Prescott tried to turn Art. 135(1)(b) in his favour. He pointed to the travaux
preparatoires where Art.135(1)(b) was debated. The German delegation wanted
this provision because, it suggested, the German constitutional court might not
regard the EPO procedures as sufficiently judicial for the purposes of the
constitution. So, he said, the German delegation was pointing out that the
German constitution might override the Convention in German law. Thus the
Contracting States recognised that there might be an attack under national law
on a decision of the EPO or one of its tribunals. I think this is beside the
point. First the question of the German constitution and its relationship with
the EPC is simply (I am glad to say) not a matter before me. Secondly it
simply is irrelevant to say that by the German constitution the workings of the
EPO might, for Germany, be reviewed (with, consequences for Germany in
international law if such review is possible).
60. So
the main argument fails. Those who apply for patents in the EPO must accept
the results of its findings and its methods of procedure. Whether they can or
should be strengthened is a matter for the Administrative Council. I can turn
to the TRIPS point.
62. Both
Courtaulds and the Comptroller dispute steps (5) to (9), accepting that steps
(1) to (4) are either right or at least arguable. I do not need to consider
the latter further. Steps (7) and (8) are bound up with step (6): if Art.32
is not sufficiently precise and unconditional, then national courts would not
know what to do. So in the result there are really three issues left for
argument, (5), (6) and (9). In relation to these the Comptroller and
Courtaulds invite me not only to decide the point, but to hold that the
position is
acte
claire
.
They invited me to refuse a reference to the European Court of Justice on that
basis, or alternatively on the basis that it is not necessary to make a
reference at this stage. Lenzing ask me to make a reference, but only if I
hold that their main argument is wrong, as I have held it is. They suggest
that a reference now is the most expeditious way to proceed. I do not
understand why that is so only if the are wrong on the main argument but there
it is.
63. I
also remind myself of what Sir Thomas Bingham MR said in
R
v International Stock Exchange, ex parte Else
[11]:
64. That
could be important here because here it is rightly said that issues of
fundamental constitutional importance are raised. On the other hand just
because an issue is of fundamental importance does not mean that it is
necessarily difficult. Indeed it may be trite.
65. TRIPS
forms part of the WTO agreement. That agreement was signed on 15
th
April 1994 in the name of the Council of the EU (on which all Member States are
represented). It was also signed by the individual Member States. The Council
Decision
[12]
whereby the WTO Agreement was ratified for the Community contains the following
recital:
66. So,
in the face of the fact that TRIPS (one of the Annexes) is an agreement which
all member States explicitly considered (through the recital) not to create
direct effect, it is said that the Court of Justice may nonetheless hold
otherwise. I think that is fantastic. And it is highly fantastic when one
considers that the predecessor of the WTO Agreement, namely the 1947 General
Agreement on Trade and Tariffs (GATT) was held by the ECJ not to create
directly enforceable rights,
International
Fruit
[13].
Lenzing are driven to say that the replacement Agreement has the opposite
effect even though there is nothing in it which says it is intended to have
this effect. It should be remembered that this Agreement is not like a
Community Directive - an instruction within Community law to the individual
Member States to bring its laws into conformity with the Directive. This is a
world-wide agreement between States. The criteria in Community law for such an
agreement having direct effect can hardly be as strong as in the case of a
Directive - if only because it would be very odd if there were different
results for different nations party to the Treaty, depending whether or not
their own laws gave the Treaty direct effect. Why should the Treaty be of
direct effect within the national laws of EU States but not (as is accepted to
be the case) in the USA? This would produce a lopsided result - something that
cannot happen with an EU Directive which, if of direct effect, is universally
so throughout the Community.
67. I
think the point really merits no further consideration, but it is only fair
that I go into some of the arguments further. First then I think it worthy of
note that the language of TRIPS is not that of a Treaty intended by the
signatories to have direct effect:
68. The
WTO uses exactly the same language in its preamble. (I note in passing that if
the provisions of the WTO were of direct effect in some States but not others
it would hardly be “reciprocal” - a point not taken by the Court in
International
Fruit
).
Next the Court noted that GATT was:
69. It
next went into the detail of these matters, noting the various provisions
relating to mutual “sympathetic consideration” for consultation,
measures covering alleged compliance (which in the end could result in a party
withdrawing from the agreement) and the power of a contracting party
unilaterally to withdraw or modify concessions.
70. Now
what Lenzing say here is that things are different under the WTO and
particularly TRIPS. First they note that there is a specific requirement (Art.
XVI(4) of the WTO) on Contracting States that:
71. I
do not see that this is a significant difference, it does no indicate in TRIPS
an intention by the Contracting States that individuals should have private
rights springing from the WTO itself.
72. Second
they say that the nature of TRIPS is very different from GATT 1947. This is
because TRIPS seeks to impose detailed minimum standards for IP laws of member
states. Thus the Preamble says:
73. It
is true that TRIPS imposes on member states minimum requirements as to their IP
laws. But that is far from conclusive. In itself it is at best purely neutral.
74. Third
they say that the “flexibility” of GATT 1947 concerning dispute
resolution relied upon by the Court in
International
Fruit
has been replaced by a clearly defined dispute resolution system contained in
Annex 2 (the “Understanding on Rules and Procedures Governing the
Settlement of Disputes”). In addition to the provisions consultations
and sympathetic consideration carried over from GATT 1947 (see Art.4 of the
Understanding), there are provisions for “Good Offices, Conciliation and
Mediation (Art.5). Significantly according to Lenzing there is also provision
for a Dispute Settlement Body (“DSB”) set up by Art. 1 which,
through a system of Panels, which, in absence of agreement to contrary is to
have the following terms of reference:
75. Thus
far this is simply an internationally agreed machinery for resolving a dispute
as to whether a Member is or is not in breach of its treaty obligation. Art.
21 requires prompt compliance with recommendations or rulings of the DSB. So
far as sanctions are concerned, compensation for breach of an obligation is
voluntary (Art.22) and there can be suspension of concessions if a member does
not implement a ruling within a reasonable time. Such suspension is not
mandatory. Art. 22(6) provides:
76. I
do not see any of this as altering the fundamental character of the WTO and
TRIPS as merely an agreement between nations. In the end there is still great
flexibility. Moreover the very nature of the machinery imposed, urging members
towards compliance, is inconsistent with the notion that the Treaty itself is
self-executing by way of conferring private rights on citizens. Mr Hoskins who
argued the TRIPS point so splendidly, said that TRIPS is “far more
binding” than GATT 1947. But ultimately it is not binding and I have no
doubt that the distinctions of procedure he relies upon are distinctions
without a difference.
77. Mr
Hoskins also had to deal with the Preamble to the Council Decision which I have
set out above. What he said about that was that it was for the Court of
Justice, not the Council, to decide on the legal nature of any measure adopted
by the Community. So much was not and could not be in dispute. Of course the
Court is the ultimate arbiter of the law. What I have to consider is what the
Court would do when faced with this Community instrument. I remain wholly
unpersuaded that there is any chance that the Court would, in the face of the
preamble, say “Notwithstanding the clearly expressed view of the Council,
the Commission and all Member States that what is being adopted is not of
direct effect, we hold otherwise.” This is not a Regulation, a piece of
Community legislation. In relation to these a recital is an aid to
interpretation and not itself a rule (see
Casa
Fleishhandels
[15]).
Here there is no explicit rule to interpret.
78. Mr
Hoskins referred me to an article by Mr Timmermans, Deputy Director-General of
the Commission’s Legal Services giving his personal views. I would add
that Mr Hoskins told me that the official view of the Commission is that there
is no direct effect - which came as no surprise. In this article
[16]
(written shortly before the WTO was adopted) Mr Timmermans said, having noted
that “our main trading partners will exclude direct effect”:
79. He
does not take a “definite position.” However he goes on to point
out that the WTO dispute resolution procedure is “not without a
bargaining aspect” and, more importantly notes that:
81. So
he only inclines to the non-direct effect position. I do not regard Mr
Timmerman’s timidity in not taking a stronger line as raising enough
doubt for the point to be regarded as otherwise than
acte
claire.
Mr Timmermans does not suggest any reason (still less any good reason) why the
Court should hold that there is direct effect. No Community purpose would be
served by such a finding. And I just cannot see any shadow of a reason for the
Court to hold that the Community has put the yoke (for yoke it would be) of
direct effect - especially horizontal direct effect - on the business world of
the Community when world competitors are not under a equivalent restrictions.
82. I
conclude that the WTO and TRIPS is not capable of having direct effect and that
the point is so self-evident as to fall within the
acte
claire
doctrine.
83. Lenzing
have two further hurdles in their way. Even if some portions of TRIPS were to
have direct effect, Courtaulds and the Comptroller say that Art. 32 could not
be of direct effect. Moreover, they say, even if it were, it could only
operate vertically and could not confer private rights on citizens.
86. This
Article only requires review by a judicial or quasi-judicial authority and is
in apparent conflict with Art. 32. However Courtaulds were prepared to fight
on the stronger requirement of Art.32. So I need not consider the difference,
if any.
87. A
directive can only be of direct effect if it satisfies the well-known test of
being “unconditional and sufficiently precise.” At least this test
must be satisfied by an international treaty to which the Community is a party,
though in such a case I can well see that other factors may also be involved.
For present purposes the dispute was whether Art. 32 is sufficiently
unconditional and sufficiently precise. “Judicial review” is not
defined. And by Art.1(1) of TRIPS:
88. There
are a variety of ways in which the EPC system could have provided a system of
judicial review (assuming, for the moment, that it had not got one). I think
that itself tells you that the obligation under Art.32 is too general to be of
direct effect. So, for instance, suppose a member of the WTO were to complain
that the EPC system does not provide for “judicial review”. And
suppose the disputes procedure is gone through. And suppose the DSB held that
there was indeed a breach. Then the parties to the EPC (all of whom would be
in breach and possibly liable to sanctions) could remedy the position by
amendment of EPC to provide an unarguably clear means of judicial review of a
revocation decision. That would involve compliance with TRIPS but in no way
involve national courts. This shows that the provision is not sufficiently
precise. Lenzing’s argument involves something altogether different -
that national courts should review the decisions of the Boards of Appeal.
89. Lenzing
face another difficulty. The obligation is on Members to provide a means of
judicial review. If they fail to do so it is impossible to see how that should
confer on one citizen a monopoly right enforceable against another citizen.
The obligation can be only vertical, as between the State and an individual.
90. Lenzing
rely on
Marguerite
Johnson v Chief Constable of the RUC
.[17]
Council Directive 76/207 required member states to introduce into their
internal legal systems such measures as are need to enable all persons who
consider themselves wronged by discrimination [on grounds of sex] “to
pursue their claims by judicial process.”. Mrs Johnston was employed by
the RUC. But when the Chief Constable decided members of the RUC should be
armed he also decided that only men should be armed. So her contract was not
renewed, the action being taking solely on grounds of her sex. It was held
that there was a breach of a directly applicable provision of the Directive and
that Mrs Johnston was entitled to pursue a claim in the civil courts for
compensation or reinstatement.
91. I
do not see how this case is relevant. Mrs Johnson had an undoubted right under
Community law not to be discriminated against. All the court was saying is
that in those circumstances she could pursue her claim in the courts. The case
is not authority for the proposition that in the absence of a community right a
means of judicial review should somehow be devised by the courts of member
states.
92. I
conclude that Art. 32 even if in principle some provisions of TRIPS are
potentially capable of having direct effect, is not sufficiently clear and
precise to do so. Again I think the point is so clear as to fall within the
acte claire doctrine.
93. Lenzing
also unarguably fall at the final hurdle. They boldly submit that the Boards
of Appeal of the EPO do not provide a means of “judicial review”. A
reader may well have been wondering why I set out so many provisions of the EPC
earlier in this judgment. They are relevant to this point. But before I refer
to them it is I think telling how our Act and our House of Lords have
considered the matter. Both call the Boards of Appeal “a court.”
95. I
have emphasised Lord Hoffmann’s use of the word “court”. He
could hardly have used that word if he did not think that what the Boards were
doing was acting as a court - providing a means of judicial review in any
ordinary sense.
96. Next
I turn to the provisions of the EPC. There are a host of requirements which to
my mind mean that the Boards of the EPO provide judicial review. They are
summarised accurately by Courtaulds as follows:
97. Art
23 is of especial importance here. The members of the Boards are not subject
to any instructions from the President or anyone else in their work (see
Art.23(3)). And the very provision alleged to be breached, Art. 113(1), to my
mind reinforces the firm conviction that the Boards undoubtedly provide a
judicial review.
98. Furthermore
there are a number of decisions of the Enlarged Board which underline this
view. It is said that it cannot pick itself up by its own bootstraps. But I
do not agree. The fact that it requires itself to act judicially is clearly
relevant. A helpful summary of the position is provided by an article by Mr
Gori (then Vice-President of the EPO in charge of DG3 and Chairman of the
Enlarged Board) in the International Review of Industrial Property and
Copyright Law
[19].
A couple of examples show the judicial nature of the proceedings. In
Akzo
v BASF
[20]
the Enlarged Board held that an Board of Appeal had no power to pursue matters
raised by an appellant if that appellant withdrew his appeal. The reason is
that an appeal is an appeal is a procedure proper rather than the action of a
purely administrative body. The Board’s function is “party
disposition.” And in
BASF
v Rohm & Haas
[21]
an Enlarged Board strengthened by the presence of two great national patent
judges (Judge Brinkhof from Holland and the late Judge Bruchhausen from
Germany) held that the powers of a Board of Appeal were limited to the extent
to which the patent is opposed.
99. Indeed
it can fairly be said that the legal position of the Boards of Appeal complies
completely with English notions of a judicial tribunal. Courtaulds point to
the current
[22]
edition of Judicial Review of Administrative Action by
de
Smith, Woolf and Jowell
which, in paras. A-21-34 consider what criteria have to be satisfied for a
tribunal to be considered as judicial. The Board of Appeal plainly satisfies
those criteria and I did not understand this to be challenged. In summary the
Board’s decisions are conclusive, resolve an
inter-partes
lis
applying objective criteria and have the characteristic “trappings and
procedure” of a court. Professor Wade in the 7
th
Edition of his
Administrative
Law
puts the matter no differently. He says
[23]:
100. The
Boards of Appeal fit entirely within Professor Wade’s conception of
judicial tribunals. They attempt to find the correct solution according to
legal rules and principles.
101. How
then do Lenzing attack the “judicialness” of a Board of Appeal? It
is via the appointment, re-appointment and control of its members. They say
that the members are subject to the supervisory authority of the President via
Art. 10(f), that they can be appointed by the Administrative Council only on a
proposal from the President and can only be re-appointed after consultation
with the President (Art.11(3)). If a member is not re-appointed then by
virtue of Article 41(3) of the Service Regulations if a member of the Board of
Appeal is not re-appointed after 5 years he must be given another post carrying
the same salary grade.
102. Lenzing
say that all this makes a member of a Board of Appeal too close to the EPO as
an administrative body. It is suggested that a member will want to please the
President to get the job in the first place, or to hang onto it, or to get a
good job elsewhere in the EPO if he does not get re-appointed. So members are
not truly independent. I find this argument absurd. The fact is that the
members are independent in their judicial function and that independence is
guaranteed by the EPC itself. They are judges in all but name - and it is
rather a pity that they were not so-called by the Convention.
103. I
should briefly deal with the principal authority cited on behalf of Lenzing.
There is of course no case directly on the point. But Art. 177 of the Rome
Treaty enables a national court or tribunal to refer a matter to the ECJ.
This raises the question of what is a “court or tribunal” in that
context The notion conveyed by the phrase is of a judicial body: other
language versions of the Treaty use a single word to this effect. Sometimes
bodies which do not satisfy Art. 177 attempt to make a reference. So, although
as Mr Hoskins pointed out, the court is inclined to be liberal in its view (he
hinted that the TRIPS criteria might be narrower) there are cases where the
referring body simply was not judicial. Such a case was
Corbiau[24].
The would-be referrer was the head of the Luxembourg Revenue service. Under
the internal rules of the service a taxpayer could take a disputed assessment
to him. But in deciding the matter he was acting as a taxgatherer - as judge,
jury, prosecutor all in one. He did not “rule in law” as Darmon AG
put it
[25].
Not surprisingly the Court held he was not a “court or tribunal”.
The reason given was what that there was a clear “organisational
link” between the head of the service and those below him responsible for
the assessment. And a “court or tribunal” is a concept of
Community law which, by its very nature, can only mean an authority acting as a
third party in relation to the authority which adopted the decision
[26].
104. I
think this case is against Lenzing’s submissions. A Board of Appeal does
act as a third party in relation to the Opposition Division, deciding by
objective criteria whether or not it was right in law and fact. The suggestion
that the provisions of the EPC relied upon provide an “organisational
link” of the kind referred to in
Corbiau
is simply bad.
105. I
conclude that the Boards of Appeal do provide judicial review within Art. 32 of
TRIPS. Although strictly this is a matter purely of international law, I also
conclude that there is no doubt whatsoever that the ECJ (which has competence
to consider the point) would also so find. The point is again
acte
claire.
That is not to say that the judicial structure and procedures of the EPO could
not be strengthened. Some hold the view it needs to be in view of the
increasing success and importance of the EPO and of the current delays in
opposition procedure. But that is a matter for the Administrative Council and
not a matter for national courts to consider.
108. I
only add that I am sorry this judgment is so long considering how plain I think
the answers are. I console myself with the fact that I have only referred to a
fraction of the authorities cited in the 9 volumes produced by the parties. I
will therefore dismiss the applications for judicial review and rectification
of the Register and will dismiss the pending patent proceedings. As to what I
should do about the proceedings for revocation of the patent and the costs of
the patent infringement and revocation proceedings it was agreed that I should
hear argument and I will hear counsel accordingly.
109. Following
my main decision, which included a decision that the infringement action be
dismissed, with the consequence that the counterclaim for revocation and the
petition also goes, a serious question of costs arises. Procedurally, it seems
to me to be common ground that the infringement actiion should indeed be struck
out and that the counterclaim and petition should be dealt with on the basis
that they are respectively discontinued and withdrawn. But what about the
costs incurred in the proceedings in this country?
110. The
system provided for by the European Patent Convention contemplates parallel
proceedings in national courts and the European Patent Office whereunder the
patent may be attacked. In some ways that seems odd but it is a result of the
compromise position reached whereunder, for a short while after grant, a
European patent is open to be attacked essentially. It is inherent in the
system that the European Patent Office may ultimately revoke the patent,
rendering any concurrent national proceedings otiose.
111. In
this case Courtaulds, having lost before the opposition division of the
European Patent Office decided, in Mr Prescott's words, to open a second front
by petitioning for revocation here, and Lenzing joined with them by serving a
writ for infringement. The commercial circumstances in which Courtaulds took
that first step were that the patent threatened a major investment of theirs
which was being made at the time, and Lenzing were claiming a monopoly in this
country. I think that latter act of claiming a monopoly in this country was in
fact the first aggressive act as between these two commercial parties.
112. I
propose to approach the question of costs on the basis of this test: did
Courtaulds behave unreasonably in starting proceedings here? I believe that to
be the correct test in considering whether or not they should get their costs
of those proceedings here.
113. I
have no doubt they did act reasonably. If they had acted unreasonably, then
the position would be different. One can imagine such a case where a man, who
has no particular commercial position threatened, decides to open up revocation
proceedings simply with a view to increasing costs. But that is far from this
case. Courtaulds legitimately saw themselves as being attacked. I believe
they behaved reasonably in launching the proceedings here. Costs were incurred
because Lenzing decided to defend those proceedings, and I believe Courtaulds
should get their costs.
114. Mr
Prescott argued, amongst other things, that because the European patent has now
gone the petition and counterclaim for revocation would necessarily fail, there
being nothing to be revoked. Ingenious though I think the argument is, it
fails and it fails for this reason. The costs we are talking about are the
costs incurred by Lenzing disputing the claim that the patent was bad. True it
is that technically the event is that the petition fails because there is no
patent to be revoked, but the costs we are talking about are nothing to do with
that technicality. I think Courtaulds properly incurred them. It seems that
under the appropriate costs provision of the rules it is not necessary for me
to certify that the particulars of objection were proved or were reasonable or
proper. The taxing master should treat these costs as costs in the same way as
any other costs in any other action.