UPC’s reach reiterated with broadest ‘long-arm’ injunction yet

Karen Gallagher of Pinsent Masons in Dublin, a specialist in patent dispute resolution, was commenting after the local division of the UPC in The Hague confirmed the UPC’s so-called ‘long arm jurisdiction’ in a judgment it issued in a case concerning a European patent valid in a number of countries that do not participate in the UPC.

The geographic reach of the UPC’s decisions was an issue that came to the fore in the court’s second year, triggered in particular by a ruling by the Court of Justice of the EU (CJEU) ruling, in the case of BSH Hausgeräte v Electrolux.

The CJEU held that, where a defendant is based in a country that is an EU member state, the courts of member states – including the UPC, which is to be treated as such – have jurisdiction to determine claims of infringement of European patents in every country in which those patents apply. There are 45 countries in which European patents can be validated but only 27 of those countries are EU member states and therefore eligible to be UPC contracting member states – and only 18 of those 27 hold that status currently.

The CJEU’s case law has since been applied in multiple UPC cases. In the summer, the Mannheim local division became the first UPC division to issue an injunction that extends to the UK. The court’s reach has also extended to non-EU companies with representatives in Europe. 

In its most recent ruling, The Hague local division referred to the CJEU case law and confirmed that it has international jurisdiction regarding infringement of patents in countries outside the UPC territory where the patent is valid. Gallagher said the case – involving Stockholm-based European patent holder HL Display AB and Dutch company Black Sheep Retail Products B.V – will be of interest to companies seeking to enforce or challenge patent rights in the UPC and further afield.

HL Display claimed Black Sheep infringed a European patent it holds for a system for securing shelf accessories to a shelf. The patent is in force in several countries – some of which are UPC contracting member states and some of which are not. This latter group consisted of Liechtenstein, Ireland, Norway, Poland, Switzerland and the UK.

Gallagher said: “It is notable that Ireland, which is the only one of the aforementioned countries to have signed the UPC Agreement but not yet ratified or withdrawn from it, was included in this category of countries ‘outside the UPC territory’.”

While Black Sheep did not dispute the international jurisdiction of The Hague local division in this case, it did seek to challenge the claims of infringement against it – including by raising a counterclaim for revocation of HL Display’s patent, based on its belief that the patent was invalid.

Gallagher said: “Reflecting the position set out in the Electrolux decision, both the court and Black Sheep recognised that a nuanced approach would have to be taken in relation to Black Sheep’s counterclaim for revocation, depending on the status of the country concerned. Black Sheep confirmed that its counterclaim only applied to UPC contracting member states, and for all other countries, it should be considered a defence only.”

The court assumed competence for hearing the infringement claims regarding all designated countries in the European patent, despite the fact some are not UPC contracting member states. However, Gallagher highlighted how the position was more complicated in respect of the counterclaim over the patent’s validity.

“In all cases for countries outside the jurisdiction of the UPC, decisions on validity of patents are reserved to the courts of the country in which the patent is registered,” Gallagher said. “In respect of those non-contracting states which are also EU member states or signatories of the Lugano Convention, the court said it had to evaluate whether there was a serious, non-negligible chance that the competent national court in those countries would invalidate the patent. If that was the case, then following the CJEU decision, the UPC can decide to pause its infringement proceedings pending the outcome of the national court proceedings.”

“In the case of non-EU member states, the court confirmed that it could go further, and make a decision regarding the patent’s validity that would have effect between the parties only – such a decision would not serve to confirm the validity or invalidity of the patents in those countries as only the courts there have jurisdiction to issue a binding decision on that point,” she said.

The Hague local division ultimately considered that HL Display’s patent was valid and that Black Sheep was liable for infringement.

Gallagher said: “This is the broadest ranging decision on long arm jurisdiction from the UPC to date, involving UPC contracting states, a UPC signatory state (Ireland), a non UPC EU member state (Poland), Lugano countries (Norway, Switzerland), and non-EU countries (UK and Lichtenstein).”

“Although the issue was not in dispute in this case, the decision confirms that the UPC has power to rule on infringement of patents in the UK and Ireland, even though the former has officially withdrawn from the UPC system, and the latter has yet to fully ratify the UPC Agreement. In Ireland's case it is clear that whilst the failure to ratify the UPC Agreement restricts Ireland's ability to contribute to the court's jurisprudence, it does not restrict the UPC from making decisions that impact Irish businesses,” she said.