UPC imposes DNA sequencing tech sales ban – including in the UK

The Munich local division (LD) of the Unified Patent Court (UPC) granted Oxford Nanopore Technologies (Oxford) an urgent preliminary injunction against MGI Tech GmbH (MGI). Oxford, a UK company, holds European patents for nanopore sequencing technology and sells devices which sequence polynucleotide molecules using nanopores embedded in a membrane. The preliminary injunction prohibits MGI from selling its rival CycloneSEQ devices in Denmark, France, Germany, Ireland, Liechtenstein, the Netherlands, Switzerland and the UK. The court set penalties for non-compliance.

The UPC system enables holders of unitary patents or European patents not opted out of the system to more easily enforce their patent rights on a cross-jurisdictional basis. Conversely, patents in-scope of the UPC’s jurisdiction are at risk of being revoked in multiple countries via a single ruling. Only EU member states can participate in the UPC system, though just 18 of the 27 countries eligible to participate have become UPC contracting member states to-date.

However, as the UPC Court of Appeal confirmed in a landmark ruling in a case involving Fujifilm and Kodak, in certain circumstances, the UPC may exert its ‘long-arm jurisdiction’ to award relief arising from the infringement of a European patent in certain jurisdictions outside its territory – including EU countries that have said they will not participate in the UPC system, like Spain; EU countries that have indicated a desire to participate but are yet to complete the ratification process, like Ireland; and non-EU ‘third countries’ such as the UK, Switzerland and Liechtenstein.

The UPC’s powers to grant provisional measures – including preliminary injunctions – are derived from Article 62 of the UPC Agreement (UPCA). Applicants for preliminary injunctive relief must provide reasonable evidence that their rights are being infringed or that such infringement is imminent to help the court satisfy itself with a sufficient degree of certainty that there is such a risk meriting an injunction being issued. The UPC’s rules of procedure give practical effect to those provisions, with Rule 211 setting out the criteria the UPC can consider when assessing applications for PIs.

The Munich LD’s ruling against MGI is the latest example of a UPC division exercising its ‘long arm jurisdiction’ when granting preliminary injunctions. This is the first published decision in which the UPC has extended a preliminary injunction to the UK.

MGI Tech GmbH is part of the Beijing Genomics Institute (the BGI Group), along with the three Chinese respondents to this action, MGI Tech Co., Ltd, BGI Hangzhou Cycloneseq Technology Co., Ltd, and Shenzhen BGI Genomics Co., Ltd. Multiple MGI and BGI Group companies face separate proceedings in the High Court of England and Wales for breach of confidence and trade secret infringement in respect of its Cyclone Platform, which comprises its CycloneSEQ devices together with flow cells and reagents. The company also faces patent infringement proceedings before the Federal Court of Australia.

Developments before the Australian courts were relevant to the Munich LD’s decision to grant a preliminary injunction in this case. In the Australian proceedings, sister companies to MGI Tech GmbH are challenging the validity of the Australian patents at issue but have confirmed they will not contest the question of infringement.

“While not decisive, this is a useful reminder of the need to carefully coordinate strategies in multi-jurisdictional litigation because admissions and concessions before courts in other countries may become powerful corroborative evidence elsewhere,” said Sarah Taylor, patent law expert at Pinsent Masons.

The Munich LD determined that Oxford’s European patents are more likely to be valid than invalid, and more likely to have been infringed than not, and that granting a preliminary injunction was both necessary and proportionate to preserve the status quo in the market Oxford currently monopolises.

Oxford is the sole European provider of long-read nanopore sequencing technology, so any market entry constitutes direct competition.

Oxford applied to the court for relief after its general counsel saw a LinkedIn post by one of the respondents in this action, Shenzhen BGI Genomics, in which CycloneSEQ services were being offered to European customers at a discounted price. The Munich LD accepted this as evidence of imminent infringement requiring urgent action. It considered the 50% discount on offer to create an immediate risk of price erosion for Oxford.

Other evidence also counted against MGI, including a You Tube video showing an MGI device at its Berlin premises, which was considered to show that the allegedly infringing devices were being imported and stored in Germany, as well as information displayed via MGI's Customer Experience Centre.

“While social media postings and promotional videos are useful in driving sales, this is a reminder that they can also play an important evidentiary role in patent disputes, as was the case here, emphasising the importance of a collaborative approach to product launches within a business,” said Taylor.  

Applying the common design doctrine, endorsed by the UPC Court of Appeal, to attribute conduct across a multi-entity corporate group spanning multiple jurisdictions, the Munich LD also considered MGI Tech GmbH could be considered liable for the acts of sister companies in the BGI Group that it said each play a separate role in relation to European operations, manufacturing, distribution, and services, respectively.

The court granted a preliminary injunction in favour of Oxford, exercise its long-arm jurisdiction in respect of long-arm jurisdiction territories Ireland, Switzerland, Liechtenstein and the UK. 

Venus Lam of Pinsent Masons said: “The court acknowledged, however, that whether or not the formal request for the long-arm territories is well-founded would need to be decided on the basis of national law. In cases such as this one, this requirement would, however, make the evidential burden significant.”