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On 29 June, Hungary’s Constitutional Court published a ruling in which it held that the terms of the UPC Agreement are incompatible with Hungary’s constitutional framework.

The Hungarian court took into account the fact that the Unified Patent Court (UPC) Agreement is not formal EU legislation, but an international treaty formed through the ‘enhanced cooperation’ mechanism provided for under the Lisbon Treaty. It permits nine or more EU countries to use the EU’s processes and structures to make agreements that bind only those countries. It is through the enhanced cooperation mechanism that plans to develop a new unitary patent and UPC regime have been developed.

The Hungarian court said it would be unconstitutional to allow jurisdiction for resolving private legal disputes to transfer from Hungary’s courts to an international institution – the UPC – that is not established within the boundaries of the EU’s founding treaties, according to a summary provided by Hungary’s Intellectual Property Office.

Whilst the Hungarian decision will require the Constitution in Hungary to be amended, it is not deemed to be a deal breaker. It is the ongoing German constitutional complaint which emerged last Summer which threatens to jeopardise the future of the UPC project as a whole. Despite finalising legislation for ratification in 2017, the German ratification process has been held up by a legal challenge before the country’s Constitutional Court.

The Karlsruhe court has listed the case to be heard some time this year, but it is unclear when this will happen or when a judgment can be expected.

Munich-based Peter Koch of Pinsent Masons, said: “It appears that the Hungarian decision will require the Constitution in Hungary to be amended, …this is seen to delay Hungary’s participation without being or becoming a real deal breaker.”

“On the contrary, the German constitutional complaint deals with various issues, some of which are easier to overcome than others, for example that a two-thirds majority in both houses of parliament is obtained for ratification of the UPC Agreement in Germany,” he said.

Koch continues, “Attorney Ingve Stjerna, the man behind the constitutional complaint in Germany, claims that ratifying the UPC Agreement brings about an illegitimate transfer of sovereign rights from Germany to the EU and that UPC judges are not independent, among other things. This is a much bigger threat to the UPC system.”

9 Aug 2021



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