UPC fines medtech company over preliminary injunction breaches

Patent law expert Alasdhair McDonald of Pinsent Masons said the decision is important because it highlights the fact that parties subject to a UPC preliminary injunction (PI) are required to do more than simply cease sales of allegedly infringing products.

Last year, the Hamburg local division (LD) of the UPC granted Swiss medical device manufacturer Occlutech a PI over heart occluder devices developed by Lepu Medical Technology (Lepu). A PI is a court order that provides the party to whom it is granted with temporary relief until the court’s final determination of the dispute. Article 62 of the UPC Agreement (UPCA) provides powers to the divisions of the UPC to grant such relief to prevent ‘imminent infringement’ of a patent.

At the time, the Hamburg LD considered that evidence Occlutech had adduced concerning Lepu’s obtaining and advertising of the grant of a CE marking for its devices and showcasing of those products at trade fairs demonstrated the planned European launch of those products by the Chinese company and constituted a risk of imminent infringement of Occlutech’s European patent.

The Hamburg LD awarded a PI which covered Germany, France, Italy, the Netherlands and Ireland, with Lepu liable for a penalty payment of up to € 250,000 for each individual case of non-compliance.

Now the Hamburg LD has found Lepu breached its previous order (14-page / 1.06MB PDF). It has imposed a fine totalling €58,800 for non-compliance, plus recurring daily penalties for continued breaches of the PI. The court issued the fine after it found that, after the PI was issued against it, Lepu continued to offer its devices through its own website, a marketplace listing, and follow up distributor communications. 

Lepu made no sales of the allegedly infringing products, but the Hamburg LD concluded that its promotional activity through websites and listings, including product pages with technical listings, ordering information and contact forms, were sufficient to amount to “offering” for sale under Article 25 UPCA and therefore could amount to patent infringement.

The fines imposed by the Hamburg LD in this case are relatively low compared with fines imposed by the UPC in other cases. However, the court justified the lower levels because Occlutech did not put forward any evidence to counter Lepu’s defence that no single unit had actually been sold in the five countries to which the PI relates.

In its ruling, which is not binding on other UPC divisions, the Hamburg LD suggested that companies subject to a PI issued by the UPC must perform “feasible and reasonable acts necessary to remedy the disturbance” and cannot rely on mere inaction on their part to meet their obligations to refrain from an act covered by the injunction. The obligation also requires a permanent compliance with effective measurements to ensure that the compliance is uninterrupted and permanent, it added.

The potential for economic harm to arise to Occlutech from Lepu’s activities was a focus of the Hamburg LD in reaching its decision.

The LD found that Lepu continued to offer the allegedly infringing devices through the company’s European website, which was accessible in Germany. The LD said that the prohibition on offering patent-infringing products is intended to cover acts occurring prior to the conclusion of contracts which may result in the patent holder losing business. Therefore, the prohibition on “offering” must be understood in an economic sense and should not be based on the legal concept of a binding contractual offer. ‘Offering’ in this sense can be evidenced if an item is presented in such a way that observers can make an offer to acquire it, such as to conclude a sale, hire or lease agreement, according to the court, confirming it does not require that all the details necessary for the immediate conclusion of a contract through mere acceptance of the offer to be in place.

In this case, the court found these criteria were fulfilled because the website presented the device under its commercial name, highlighted technical features, described its composition, specified medical indications, and provided detailed ordering information, such as catalogue numbers and size dimensions. In addition, the website contained a prominently placed ‘enquire now’ function and contact form through which interested customers could directly submit inquiries and that this was combined with an express invitation to email the company for further information. 

The Hamburg LD further confirmed that the responsibility for complying with a PI cannot be outsourced to third parties, such as companies that maintain websites or operate marketing platforms on their behalf.

In this regard, the court rejected the argument that a third-party web developer was responsible for the temporary disappearance of disclaimers from Lepu’s own website. It also said the implementation of geo-blocking measures by a third party business-to-business marketing platform, which were designed to block the option to purchase for buyers in the five countries covered by the PI, was not sufficient for Lepu to comply with the terms of the PI. The court said the fact Lepu supplied content in English for the platform that was then automatically translated into German was no defence to the prohibition around ‘offering’ to customers in Germany.

McDonald said: “This judgment demonstrates that the UPC takes a hardline approach to the scope of injunction orders. It places a primary focus on the potential for economic harm to the patentee. Parties against whom an injunction is granted must take active steps to prevent that economic harm arising. It is not sufficient just to refuse orders at the point of service. Even active steps such as placing disclaimers on adverts and geo-blocking websites may not be sufficient.  The UPC will also apply penal provisions for non-compliance.”

“All of this illustrates that companies operating internationally must take great care in complying with UPC injunctions,” he added.