United States: Why The EPO's BoA Reform May Have Saved The Office's Blushes

Whether or not the Boards of Appeal of the EPO provide an independent judicial review of the office's decisions and due process has been debated for a long time.

The EPO responded with an institutional reform which took effect in 2016 and aimed at making the BoA more independent from the office structures of the EPO.

The German Federal Constitutional Court (FCC) has now dismissed five complaints against decisions by the BoA.

Essentially, the petitioners had argued that the BoA decisions and underlying EPO appeal system infringed their procedural rights conferred by German federal constitution (FC), namely the principle of a fair trial, the right to one's lawful judge and the fundamental right to be heard.

The reasons for the FCC's decision, handed down on November 8 2022, were published last month.

The FCC determined that the standard to be met by the EPO is not as strict as the one German courts must adhere to, since the procedural rights conferred by the FC do not directly apply to the EPO. While expressing doubts regarding the pre-reform status, the FCC concluded that the present appeal system at the EPO is not unconstitutional.

Case history

The petitioners were legal entities based in Germany, other EU member states and non-EU countries. The first complaint was filed in 2010. Further complaints followed, the last one in 2018.

The petitioners directly challenged decisions by the EPO's Technical BoA in which European patents had been revoked or nullified, as well as decisions by the Enlarged BoA confirming them.

Mainly, the petitioners asserted that the deficiencies in the organisation, structure and proceedings of the BoA are so severe that the BoA lacks the quality as a court and thus, absent effective judicial review, their decisions violate procedural principles laid down in the FC.

In essence, the complaints were based on the alleged violation of the following fundamental rights: the right to a fair trial; the right to a lawful judge; and the right to be heard.

The petitioners argued that the close interlocking of the BoA with the administration of the EPO, the influence of the president of the EPO on the nomination of the members of the BoA and his right to issue disciplinary measures do not guarantee impartiality of the BoA members.

Furthermore, the entire process allegedly suffers from serious defects (inter alia too long, surprise decisions, lack of consideration of auxiliary requests, no time limit for issuing the reasons for the decisions).

The German FCC dismissed all five complaints as inadmissible.

The petitioners did not manage to convince the FCC that the EPO's appeal system fails to provide the required minimum standard of effective legal protection.

The FCC acknowledged that prior to the big structural reform of the EPO in 2016, it may not be excluded that the EPO's (old) appeal system lacked effective legal protection.

For instance, prior to the 2016 reform the same individual embodied the chairman of the BoA, the Presidium, and the Enlarged BoA. Thus, he combined both executive and judicial roles, since he was also part of the EPO's administration.

Moreover, he was obliged to support the president of the EPO. The president, in turn, had the right to impose disciplinary measures against the members of the BoA and was also involved in their reappointment (or not).

However, according to the FCC, these shortcomings were rectified by the structural reform of 2016 which largely separated the BoA from the EPO administration. As a result, the BoA gained a high degree of independence, i.e. self-administration. The BoA president is now independent from the president of the EPO.

Against that background, the FCC concluded that the current organisation and form of the EPO's legal appeal system does not violate the FC.

Further findings by the FCC

Besides the main focus of the decision the FCC took the opportunity to further develop German constitutional law with regard to international organisations and entities.

According to the FCC, petitioners who are non-EU entities do not benefit from the rights conferred by the FC, thus such rights cannot be infringed.

As a result, those petitioners had no standing to lodge a constitutional complaint. Some of the petitioners in the FCC cases were domiciled in Australia, Switzerland, and the UK.

Interestingly, the latter petitioner lodged his complaint before the UK officially withdrew from the EU. However, the FCC emphasised that the petitioner was domiciled in a non-EU country at the time when the decision was issued (after Brexit). Exemptions in that regard laid down in the withdrawal agreement between the UK and the EU only apply to natural persons but not to legal entities.

The complaint filed by a petitioner domiciled in Switzerland had the same fate, since the treaty on free movement between Switzerland and the EU does not foresee such a possibility for legal entities.

The FCC also concluded that the right to a lawful judge and the right to be heard, as conferred by the FC, apply only in front of German courts. Thus, the petitioners could not successfully assert a violation of these rights by the EPO's BoA since the EPO is not part of the German judicial system. These rights are not as such, binding on international or supranational organisations.

Further, according to the FCC, the complaints directly targeting BoA decisions lacked an admissible subject matter. The FCC outlined in general terms that it shall only review measures by non-German sovereign entities insofar as they constitute the basis for acts of German public institutions or trigger obligations on the part of German constitutional institutions to react. Such acts by supranational institutions would need to violate the minimum standard of fundamental rights. This jurisprudence was laid down by the FCC in its famous decision against the OMT programme of the European Central Bank in 2016. The same standard also applies to (non-EU) supranational organisations like the EPO.

Impact on the European patent system?

Considering that the first complaint was lodged back in 2010 and further complaints on similar grounds were added the following years, it took the FCC more than a decade to issue a final decision and close a controversial chapter.

But the decision came by no means as a surprise. What may be seen as a surprise, however, is the length of the reasoning. Despite the fact that the complaints were deemed inadmissible, it took the FCC a total of 84 pages to present its reasons.

As a comparison: the decision of the German FCC on the unsuccessful constitutional complaint against the Agreement on the Unified Patent Court (UPC) took only 29 pages.

The first half of the FCC's BoA decision may be seen as an introductory reading of the EPO's structure and legal system. Subsequently, the FCC tried to formulate minimum standards for (European) supranational organisations which are in accordance with German Basic Rights and particularly, do not fall below the minimum level of effective legal protection.

With the now confirmed opening of the UPC on June 1 2023, this decision may be seen as a strengthening of the European Patent System, which includes both the EPO and the UPC, and it may take the wind out of any further potential constitutional complaints.

On the other hand, it makes fairly clear that the European Patent System cannot be "improved" in the courtroom but only by lawmakers.

However, it is remarkable that, with the reforms of 2016, the EPO "improved" itself.

The question of whether or not these improvements would have happened without any pending constitutional complaints will probably remain unanswered.

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