Court of Appeal limits reach of UPC's long-arm jurisdiction

The UPC’s Court of Appeal ruled that the court’s jurisdiction for where the allegedly infringing acts have taken place and caused harm is limited to patent infringement within the UPC territory. 

This means that the UPC will not be able rule on infringements in non-UPC countries, such as Spain and the UK, when jurisdiction is invoked on this basis.   

This decision came following an infringement action brought by digital verification service KeeeX against a number of defendants – including Adobe and OpenAI – and imposes a clear limit on the UPC’s long arm jurisdiction, confirming that it can be established only in certain circumstances, namely where a defendant is either based in a UPC country, or where the defendant is closely connected to a so-called anchor defendant that is domiciled in a UPC country.

Sarah Taylor, a patent law expert with Pinsent Masons, said the decision was ‘another important ruling’ in the recent series of UPC decisions helping to define the court’s jurisdiction to hear and issue relief over activities which take place beyond its borders,

“This will provide greater certainty for businesses who may be involved in UPC proceedings,” she added.

The Court of Appeal’s decision comes soon after the UPC referred several questions to the Court of Justice of the European Union (CJEU) over its ability to issue relief for patent infringement in EU non-UPC countries such as Spain, and the liability of EU-based authorised representatives who are required to comply with EU product safety regulations to enable international businesses to sell certain products in the EU market.

In this instance, KeeeX had asserted its patent in the eight UPC countries in which it is in force, along with six additional countries which are not part of the UPC - Ireland, Spain, Poland, Switzerland, Norway and the UK.  None of the defendants in the dispute are domiciled in a UPC country, instead being based in the US and Ireland. 

The Paris Local Division held that the UPC had jurisdiction not only over infringement within the UPC countries but also had long-arm jurisdiction to determine infringement in the non-UPC countries.  However, the Court of Appeal overturned that decision.

The court referred to the CJEU’s landmark ruling in BSH Hausgerate v Electrolux, which determined that raising patent validity as a defence does not automatically mean the court of the defendant’s domicile – which includes the UPC as a common court - will lose jurisdiction to hear patent infringement, but may stay the proceedings if there is a realistic chance the patent may be found invalid by a court in the member state in which the patent is registered, and may issue inter partes validity rulings for patents registered in third countries like the UK. 

The Court of Appeal confirmed this allows the UPC’s jurisdiction to be extended to third countries provided that a defendant is domiciled within the UPC territory, pursuant to Article 4(1) of the Recast Brussels Regulation (Regulation 1215/2012). However, in this case, none of the defendants were domiciled in a UPC country so its jurisdiction could not extend beyond the UPC territory. 

The Court of Appeal also clarified that the UPC does have jurisdiction for defendants outside the UPC territory under Article 7(2), but only when the allegedly infringing acts occurred within a UPC country. This means the UPC’s jurisdiction as the court for the place where the harmful event occurred is limited to infringement within the UPC territory – there is no long-arm jurisdiction.

The decision means KeeeX could not seek relief over the non-UPC countries.

The company had also argued that Article 71b(3) gave the UPC jurisdiction to determine infringement in the non-UPC countries, claiming that as both Adobe and OpenAI had subsidiaries in France, the criteria for action was fulfilled under legislation which gives UPC jurisdiction over international defendants where infringement causes damage within the UPC territory, the defendant has sufficient property within and the dispute has a sufficient connection with, the UPC territory. 

However, the court confirmed that while this can extend the UPC’s reach in certain situations, any such allegation must be properly substantiated by robust evidence and clear pleadings – and must must be fully developed at the outset with a clear indication of the non-EU-domiciled defendant, a demonstration of harm within the EU, evidence of non-trivial assets in a UPC member state, and evidence that the dispute has sufficient connection with that member state.  KeeeX did not do this so could not rely on this provision.

“Given the recently widened scope of UPC rulings, this decision provides welcome clarification, making clear the jurisdictional grounds which enable parties to plead long-arm jurisdiction claims,” said Taylor.

“It is not surprising that the court requires parties to set out their reasoning upfront.  This approach aligns with the UPC’s overall front-loaded approach, requiring parties to set out their stall at an early stage to provide clarity to defendants so they know and are able to swiftly address the arguments against them, enabling the court to maintain its reputation as a quick and efficient forum.”

The focus on the UPC’s ability to grant relief in non-UPC territories will continue in the coming months.  An appeal against the Mannheim Local Division’s decision to issue an injunction over the UK in the dispute between Fujifilm and Kodak was heard in March, with the ruling expected in May.

Mark Marfé, a patent expert and UPC representative with Pinsent Masons, agreed that the UPC continues to clarify the extent of its long arm jurisdiction, coming just days after the Paris LD ruled on the issue in another case, which found a UK defendant cannot be expected to be sued before the UPC where its acts are limited to UK territory.

“Just last week, the Paris LD again ruled on this issue in BMS Innovation v BYD,” he explained.

“In the BMS case, BYD UK was only alleged to have carried out acts of infringement in the UK and not the UPC territory. As BYD UK is not domiciled within the EU or the UPC territory, and the alleged acts take place exclusively in the UK, there is no connection with the UPC or EU at all.

“It is therefore not appropriate to declare a UPC local division competent to hear the action, concerning that defendant.”