UPC looks to CJEU to determine limits to jurisdictional reach

The CJEU’s consideration of the limits of the UPC’s long-arm jurisdiction will clarify the patent court’s reach for businesses in a variety of sectors - including manufacturers of pharmaceuticals and medical and electrical devices whose sales in Europe rely on the presence of an authorised representative to comply with local safety requirements.

The UPC’s Court of Appeal (10-page / 1.13MB PDF) has referred a number of questions to the CJEU relating to a long-running case between electronics maker Dyson and Hong Kong-based manufacturer Dreame International concerning hair stylers.

It has sought clarity over whether it can issue relief against companies based outside the EU for patent infringement in non-UPC EU countries, and whether an authorised representative of the manufacturer acts as an ‘anchor defendant’ to bring such companies into the UPC’s jurisdiction.

The referral came after the UPC’s Hamburg Local Division granted Dyson a preliminary injunction against various Dreame entities and Dreame’s authorised representative in the EU, Eurep, which marked the first time the UPC’s long-arm jurisdiction had extended to Spain, which is an EU member state but not a UPC country. 

It was also the first time the UPC had granted a preliminary injunction - as opposed to a permanent injunction -  based on its long-arm jurisdiction and following the CJEU’s landmark ruling in BSH Hausgeräte v Electrolux. The decision also made headlines as the UPC extended its long-arm relief in respect of Spain against a company domiciled outside of the EU based on the fact that its authorised representative acts as an anchor defendant within the meaning of Article 8(1) Recast Brussels Regulation (Regulation 1215/2012).

This rule allows multiple defendants to be sued in one court if the claims against them are so closely connected that separate proceedings may lead to irreconcilable judgments.

The UPC Court of Appeal affirmed the original preliminary injunction and extended its scope over newer Dyson products within the UPC’s territory. However, it stayed the appeal concerning jurisdiction over the third country domiciled defendant Dreame International for its acts of infringement in non-UPC EU member state Spain, and also against Eurep and the role of EU-based authorised representatives in enabling the UPC to establish jurisdiction over third country domiciled defendants, to seek clarity over the interpretation of EU law.

As a result, the Court of Appeal has asked the CJEU to address a number of issues which concern the meaning of the relevant provisions of the Recast Brussels Regulation and the IP Enforcement Directive (Directive 2004/48).

The Court of Appeal has asked the CJEU to determine whether an authorised representative domiciled in an EU member state can act as an anchor defendant within the meaning of Article 8(1) of the Recast Brussels Regulation and provide the UPC with jurisdiction over the allegedly infringing activities of a non-EU based manufacturer in an EU member state that does not participate in the UPC.

The Court of Appeal has also asked the CJEU to determine whether the UPC has jurisdiction to issue a preliminary injunction that covers a non-UPC EU member state as well as UPC countries when the products are being sold in all of those countries via websites which are identical, save for language differences.

Finally, it has asked if Eurep provides a service which enables Dreame International to infringe the patent, or whether the German company acts as an “intermediary” for the purpose of the IP Enforcement Directive if its function is only to ensure compliance with EU product safety laws. 

Sarah Taylor, patent law expert at Pinsent Masons, said that while the outcome of this referral will not be known for a while, it will ultimately play an important role in determining the limits of the reach of the UPC’s long-arm jurisdiction.

“The CJEU’s timelines are not usually quick, with rulings typically taking one to two years to be handed down,” she explained.  “Once the preliminary ruling is issued, it will then return to the Court of Appeal for further consideration. It may therefore be some time before we have clarity on the UPC’s approach to these issues, which will be of concern to businesses in many innovative and competitive sectors who need an EU-based authorised representative to sell their products in this very large market.

“However, while many manufacturing facilities are based outside the EU and the requirement for an EU-based authorised representative to comply with safety requirements and sell products in Europe impacts a wide range of industries, there will be many scenarios where long-arm relief is raised and which are not impacted by this referral.

“In particular, the referral does not capture situations where the product manufacturer or reseller - as anchor defendant - is based in a UPC country, or infringement in non-EU EPC countries like the UK. At this time, therefore, UPC long-arm preliminary injunctions may still be available in those scenarios.”

She added that the question of enforcement of such long-arm relief in non-EU non-UPC countries like the UK remains questionable, however, particularly in the wake of comments in a recent decision in the dispute involving Fujifilm and Kodak.

“Judge Tochterman, in the recent decision of the Mannheim Local Division in Fujifilm v Kodak (20-page / 605KB PDF), noted that the question of international jurisdiction of the UPC is very different from the question of whether any such decision is enforceable in the territory concerned, such as the UK,” she said.

“This is another question on the precise scope of the UPC’s long-arm jurisdiction on which businesses will welcome some clarity and which will undoubtedly evolve over the coming months.”

Mark Marfe, patent law expert at Pinsent Masons, added that although the CJEU’s decision may take some time to arrive, determining whether an authorised representative can act as an anchor defendant is a crucial issue for manufacturers operating within the EU.

“These businesses need certainty on how best to organise and manage their commercial activities,” he said.

“Until now, the notion of an ‘intermediary’ has largely been applied to service providers – such as logistics companies – that facilitate a third party’s infringing acts. The CJEU must now consider whether this concept should also apply to providers of legal compliance services who, in practice, have no real ability to control the alleged infringement.

“This referral, together with the recent Adobe v Keeex Court of Appeal decision concerning Article 7 of the Recast Brussels Regulation, highlights a rapidly evolving area of law that should be factored into strategic business planning.”.