An increasing number of businesses are likely to ask the Unified Patent Court (UPC) to find that patents they hold rights in have been infringed in countries that do not participate in the UPC system or sit outside of the EU.
We expect this trend to emerge over the coming months as businesses seek to explore the boundaries of the UPC’s so-called ‘long arm jurisdiction’ – its scope to rule on matters concerning ‘foreign’ patents.
There is already a growing body of evidence of this trend emerging, as highlighted by three recent cases brought before UPC judges. The rulings in those cases, which we explore below, apply case law developed by the EU’s highest court in February, and build on other rulings this year, by local divisions of the UPC in Düsseldorf and Paris, respectively, where the UPC’s long arm jurisdiction has been at issue.
A brief summary of what’s gone before
In February, the Court of Justice of the EU (CJEU) confirmed that courts in EU member states have scope to rule on the infringement of ‘foreign’ patents, even when the validity of those patents is challenged. It also confirmed that those courts – which include the UPC – can further consider whether ‘foreign’ patents are valid when assessing infringement in certain circumstances.
The CJEU’s ruling was based on its interpretation of provisions set out in the EU’s Brussels Recast Regulation – a law governing where businesses can litigate cross-border claims. The underlying case that prompted the CJEU’s judgment was 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 in question was validated in EU and non-EU countries, including the UK and Turkey. Electrolux argued that the Swedish court lacked jurisdiction to determine matters relating to the UK and Turkish parts of the patent. The Swedish Court of Appeal asked the CJEU for its help in interpreting the Brussels Recast Regulation to help it resolve the dispute before it.
Experts at Pinsent Masons highlighted at the time that the CJEU did not limit its decision to patents granted by the European Patent Office, adding that, 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.
The CJEU’s ruling came after the Düsseldorf local division (LD) of the UPC held, in a dispute between Fujifilm and Kodak, that, where a defendant is based in a UPC contracting member state, the UPC can determine claims of infringement of European patents in every country in which those patents apply – which can include countries like the UK and Spain which do not participate in the UPC system.
Since the CJEU ruled, the Paris LD of the UPC determined that where an alleged infringer of a European patent is based in the EU, UPC courts are competent to decide on the question of infringement for all parts of a European patent – including the parts of that European patent that apply in EU countries that are not participants in the UPC system, in countries that are members of the Lugano Convention, as well in so-called third countries.
A company called Mul-T-Lock had argued that the Paris LD did not have jurisdiction to rule on infringement in relation to the Spanish, Swiss and UK parts of the patent in question, since those countries are not participants in the UPC system. However, the Paris court disagreed and applied the CJEU’s case law from the BSH v Electrolux case when reaching its determination.
The case law has also been referenced in other UPC disputes ruled on recently. We look at three cases in more detail, below.
TGI Sport Suomi Oy v AIM Sport
This case concerns a dispute between European patent rights holder AIM Sport and TGI Sport, previously Supponer. AIM Sport sued TGI Sport/Supponer before the Helsinki LD of the UPC, alleging patent infringement.
While the Helsinki LD initially allowed a preliminary objection that TGI Sport/Supponer raised and dismissed the action, its decision was overturned by the UPC Court of Appeal – it ruled businesses that have opted European patents out of being litigated before the UPC are only blocked from withdrawing that opt-out if national litigation concerning those patents was initiated after the UPC began operating, not before. The action was referred back to the Helsinki LD.
AIM Sport subsequently sought to amend its claim, to add a new UK defendant, TGI Sport Virtual UK Limited, and broaden the geographic scope of its infringement claims to cover both Germany, based on alleged infringement by TGI Sport Virtual UK Limited in Germany, and Spain – even though Spain does not participate in the UPC system. It further sought to add a claim for infringement by equivalents.
The Helsinki LD allowed the amendments.
The court said that if it were to refuse the addition of the new defendant, AIM Sport could commence separate proceedings against it either before the national court or UPC, with the potential for this to lead to procedural inefficiency and inconsistent decisions. The same reasoning applied in respect of Spain. It allowed the addition of Germany based on information that it agreed was not available to AIM Sport at the time the claim was initially lodged.
TGI Sport appealed.
The UPC Court of Appeal dismissed the appeal (9-page / 516KB PDF), finding that, overall, the Helsinki LD had exercised its discretion to allow the amendments reasonably, taking into account the potential need to bring new actions and the risk of inconsistent decisions.
In respect of the addition of claims relating to Spain, the Court of Appeal said that the amendment in question could not have been made earlier with reasonable diligence – even if not impossible, AIM Sport could not have been expected to include non-UPC countries such as Spain in the original claim until CJEU case law changed with the ruling in the BSH v Electrolux case. It further considered that AIM Sport was not obliged to include Spain within the scope of the original claim on the basis of the opinions of an advocate general to the CJEU in the BSH v Electrolux case, which had been issued before the original claim was filed, since such opinions are non-binding
In respect of the addition of claims relating to Germany, the Court of Appeal upheld the Helsinki LD’s ruling that Germany could be added because the claims are based on the same products and same patent and because the claimant did not have knowledge of the infringing acts before, so could not have reasonably added Germany to their statement of claim when commencing the action.
The CoA also allowed AIM Sport to add the infringement by equivalents argument since it is based on the same facts as its literal infringement claim.
Dainese v Alpinestars
In this case, the Milan LD of the UPC confirmed (9-page / 362KB PDF) that, following the CJEU’s ruling in the BSH v Electrolux case, it has jurisdiction to determine patent infringement claims involving European patents validated in non-UPC countries, in this case Spain.
Dainese sued Alpinestars, a company based in UPC participating state Italy, over alleged infringement of a European patent validated in numerous other UPC states, as well as Spain, a non-UPC country. Alpinestars raised a preliminary objection to challenge the UPC’s jurisdiction in respect of Spain.
Applying the Brussels Recast Regulation, the BSH v Electrolux CJEU case law, and UPC case law on long-arm jurisdiction – including the Düsseldorf LD’s decision in the Fujifilm v Kodak case and the Paris LD order in the Mul-T-Lock case – the Milan LD ruled against Alpinestar’s jurisdictional objection.
Specifically, the Milan LD held that the UPC has international jurisdiction and is to be deemed as a court of an EU member state. It considered that all the provisions of the Brussels Recast Regulation and CJEU case law applies to the UPC as if it were a national court.
In light of the BSH v Electrolux ruling, the Milan LD considered it has jurisdiction to determine the European patent infringement issues in relation to activities by a defendant – in this case, Alpinestars – based in Italy.
To interpret the EU legislation and case law any differently would mean that the UPC’s jurisdiction is more limited than a national court, the Milan LD said, holding that this would be contrary to article 71a(7)(f) of the Brussels Recast Regulation.
It further said that the UPC Agreement (UPCA) – an international treaty that makes provision for the operation of the UPC – does not limit the UPC’s jurisdiction to only UPC contracting member states. The court said that this is not affected by the UPC Court of Appeal’s decision in the case of Abbott v SiBio where the court revoked a preliminary injunction erroneously extended by The Hague LD to Ireland. This was distinguished because the applicant requested the preliminary injunction extend to “the Contracting Member States for which the patent is in force”, and Ireland is not a UPC contracting member state as it has not yet ratified the UPCA.
The Milan LD therefore held that as it is the court of the country where Alpinestars is based, it also has jurisdiction to determine infringement in respect of patents validated in non-UPC countries, in this case Spain.
The Milan LD acknowledged that there is no revocation claim or counterclaim in this action. This is relevant because the CJEU’s decision in the BSH v Electrolux case gives courts a discretion to put a temporary halt on infringement proceedings where validity is challenged in disputes involving EU member states. There is no such requirement in respect of third countries. It will therefore be interesting to see how the UPC deals with these situations in other cases.
Syngenta v Sumi Agro
In this case, the Munich LD allowed Syngenta’s request (5-page / 386KB PDF) to amend its claim to extend the geographic scope of its claims of infringement following the CJEU’s decision in the BSH v Electrolux case. The amended claims applied to: Czechia, which is an EU member state that has signed but not ratified the UPCA; Poland, which, though an EU member state, is, like Spain, not a participant in the UPC system; and the UK, a so-called ‘third country’ for the purposes of the UPC proceedings.
The Munich LD said that the amendment in question could not have been made earlier with reasonable diligence – even if not impossible – and that Syngenta could not have been expected to include non-UPC countries in the original claim given the pre-BSH CJEU case law that stood at the time. It further considered, like the UPC Court of Appeal did in the AIM Sport case, that Syngenta was not obliged to include the countries in the original claim on the basis of the non-binding opinion issued in the BSH v Electrolux case.
Sumi Agro requested a two-month extension of the existing schedule for exchanges of pleadings to account for the amended claims. While the court said that the amendment will not unduly hinder the company, the extension was granted. However, the court said the dates for the interim conference and oral hearing would remain the same.
The emerging trend
These decisions all demonstrate that European patent rights holders are pivoting, following the CJEU’s ruling in the BSH v Electrolux case, to extend their UPC claims to include non-UPC countries, including third countries such as the UK.
They also show that the UPC – across various different divisions, including the Court of Appeal – is keen to demonstrate the breadth of its rulings in the aftermath of this new case law.
However, none of the above decisions are on the merits of those disputes, and the UPC has yet to make a damages award or issue an injunction which extends to a non-UPC territory. Any such decision – including scrutiny by the UPC’s Court of Appeal – will be informative for businesses and practitioners alike.
In the meantime, the trend is significant for businesses in all sectors and should be borne in mind when considering patent litigation strategies in Europe.
In the almost two years since it opened, the increasing number of UPC cases has been accompanied by a relative fall in filings before national courts in Europe. While the UPC’s rulings on its long-arm jurisdiction, so far, are largely favourable to UPC litigation from the perspective of patent holders, for defendants they, and the CJEU’s BSH decision, may move the focus of such disputes back to the national courts, and in particular to the UK, where defendants may consider the use of anti-suit injunctions (ASIs). ASIs are common in standard-essential patent (SEP) litigation, but may become more prevalent in other sectors going forward to restrain the UPC’s activities.
Defendants may also wish to consider bringing pre-emptive invalidity challenges in the non-UPC countries, including the UK, to ‘seise’ jurisdiction and dampen the effect of any UPC infringement determination.
As we move into the third year of the UPC, expect considerations relating to the reach of the UPC’s long arm to heat up.
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