CJEU: EU courts may rule on infringement of foreign patents

Experts in patent litigation at Pinsent Masons said the important judgment of the Court of Justice of the EU (CJEU) suggests courts in EU member states have broader powers to rule on patents that are in force in non-EU jurisdictions than they do in relation to European patents or national patents in force in EU countries, and may have a major influence on business’ global patent litigation strategies going forward.

The CJEU was ruling on questions referred to it by a court in Sweden, which relate to the jurisdictional scope of EU courts in the context of a patent dispute between BSH Hausgeräte (BSH) and Electrolux.

BSH sued Electrolux in Sweden for infringement of a European patent concerning vacuum cleaning technology. The patent was validated in Sweden and several other EU countries. It was also validated in certain non-EU countries, including the UK and Turkey. Electrolux counterclaimed for invalidity of the Swedish part of the European patent as well as the foreign parts – those in force in both EU and non-EU countries – and argued that the Swedish court lacked jurisdiction over both the infringement and validity elements of the non-Swedish designations.

Article 4(1) of the EU’s Brussels Recast Regulation provides that a person based in an EU member state should be sued in the courts of that member state.  However, there is an exception to article 4(1) – where validity is in issue, article 24(4) Brussels Recast Regulation gives exclusive jurisdiction to the national courts where the patent is registered, regardless of where the defendant is based and irrespective of whether validity was raised by way of an action or defence. 

Electrolux sought to rely on article 24(4) of the Brussels Recast Regulation for its arguments, but BSH argued that article 24(4) did not apply since it had only brought infringement proceedings which it claimed is not, in itself, per the wording of article 24(4), “concerned with the…validity of patents”.

Electrolux was successful before the first instance court in Sweden, which dismissed BSH’s infringement claim. However, BSH appealed. To help it resolve the dispute before it, the Swedish Court of Appeal referred questions regarding the interpretation of EU law to the CJEU to answer.

First, the CJEU ruled on whether a court in an EU member state has jurisdiction to rule on the question of patent infringement in cases where the patent in question was registered in a different EU member state from that where the alleged infringer is based and the alleged infringer raises a defence before it that the patent is invalid.

According to the CJEU, in those circumstances, while the court cannot determine the question of validity – that is a matter solely for the court in the EU member state where the patent was granted – it can choose to either continue with ruling on the question of infringement or stay proceedings to allow the question of validity to be assessed and determined by the other national court first. The previous EU case law, established in the case of GAT v UK, was that where validity was challenged, the courts could not continue to consider the question of infringement.

The CJEU said that this interpretation of article 24(4) allows a patent rights holder to bring all of its infringement claims in one forum, therefore obtaining one decision and reducing the risk of conflicting outcomes. However, it did acknowledge that it may lead to bifurcation of infringement and validity proceedings, because any challenges to validity must be made before the national courts.

Next, the CJEU considered whether a court in an EU member state has jurisdiction to rule on infringement and validity of a patent in force in a non-EU country – a so-called ‘third state’, such as the UK – in cases where the alleged infringer is based in that EU member state.

The CJEU held that, in those circumstances, the court can determine infringement of a non-EU patent. It held that the court does not lose jurisdiction solely because the alleged infringer challenges validity by way of a defence, adding that the court can also rule on the question of validity for the purposes of determining whether the claimed defence to infringement applies in the case. However, it confirmed that any determination by the court that the patent is invalid only has ‘inter partes’ effect, in other words it only relates to the dispute between the parties before that court and will not cause the patent in question to be revoked – only a ruling by the courts in the country where the patent was granted that can have that effect.

The CJEU went on to confirm that only where an equivalent provision to article 24(4) is incorporated into an international treaty in effect between the EU and the third state, such as the Lugano Convention, is the court of the EU member state required to decline jurisdiction. In the present case, there was no such treaty between the EU and the third state in question, Turkey.

Carissa Kendall-Windless of Pinsent Masons said: “The decision confirms the availability of cross-border relief for patentees in proceedings before national courts of EU member states and the Unified Patent Court (UPC).”

Under the Brussels Recast Regulation, the UPC, as a common court, is deemed a court of an EU member state and has jurisdiction where, under the Brussels Recast Regulation, the national court of a UPC contracting member state would have jurisdiction.

“From a UPC perspective, there is now a question of whether this decision, in confirming that national courts in EU member states can rule on infringement of a patent that is validated in another EU member state without the risk of centralised revocation, may result in patentees favouring national litigation over UPC actions,” Kendall-Windless said.

Sarah Taylor, also of Pinsent Masons, added: “From the perspective of third states, such as the UK, the ruling aligns with the UPC’s recent ‘long-arm jurisdiction’ decision in the case of Fujifilm v Kodak, in which the Düsseldorf local division of the UPC held that relief can extend to non-UPC countries including the UK. That said, validity of the non-EU part of the patent was not in issue in that case and further rulings will be watched with interest. Further, although the aim of the CJEU is to limit the opportunities for defendants to ‘forum shop’ and obtain a stay of infringement proceedings when validity is raised, it also raises the possibility of defendants raising an increasing number of pre-emptive revocation or declaratory judgments of non-infringement actions in national courts to try to torpedo infringement actions,” she said.

“Of note is the fact that the CJEU did not limit its decision to patents granted by the European Patent Office. In theory, this means that the principles established in the ruling applicable to third states such as the UK and Turkey may also apply to patents granted further afield, including in, for example, the US and China. This would give courts in the EU broader jurisdiction to consider non-EU patent rights than they have in respect of EU patent rights. The ramifications of this are potentially wide ranging, not least because the judges of those national courts are unlikely to have the necessary experience to enable them to determine such issues,” Taylor said.