UPC: our rulings can extend to infringement of UK part of European patents

Sarah Taylor and Christopher Sharp of Pinsent Masons were commenting after the Düsseldorf local division (LD) of the Unified Patent Court (UPC) held that, where a defendant is based in a UPC contracting member state, the UPC can determine claims of infringement of European patents in every country in which those patents apply – which can include countries like the UK and Spain which do not participate in the UPC system.

It is the first time the UPC has addressed the issue of its so-called long-arm jurisdiction in a ruling. The term is used to describe the question of whether UPC decisions have the potential to extend to non-UPC countries – a matter that has attracted significant uncertainty and debate both before and since the UPC became operational. The uncertainty over the UPC’s long-arm jurisdiction is, in part, a reflection of the fact that there is wider range of European countries for which European patents can be registered and validated for than countries that participate in the UPC system, under which businesses can litigate European patents.

The UK, for example, is a signatory of the European Patent Convention (EPC), the treaty providing the basis for European patents, but is not a participant in the UPC system, having withdrawn from the system following Brexit. Participation in the UPC system is open to EU member states only. EU member states have to sign and then ratify certain international treaties – including the Unified Patent Court Agreement (UPCA) – that provide for the establishment and operation of the UPC system. Currently, there are 18 contracting member states in the UPC system, while there are 39 states that are EPC signatories.

While this is the first ruling of the UPC on long-arm jurisdiction, Taylor and Sharp said that if it is subsequently upheld by the UPC’s Court of Appeal, it is commercially important for businesses engaged in cross-border disputes involving European patents, and would enhance the attractiveness of the UPC as a forum for resolving such disputes, whilst having potential implications for patent litigation in the UK.

The Düsseldorf LD gave its view on the question of long-arm jurisdiction in a dispute between Fujifilm and Kodak.

Fujifilm sued three Kodak entities before the Düsseldorf LD, claiming infringement of a European patent for aluminium print making plates. The patent is in force in Germany and the UK. The defendants are based in Germany, which is a UPC contracting member state. Fujifilm asked the court to make a variety of orders, including one to refrain Kodak from infringing acts in the UK and to pay it compensation in relation to alleged legacy UK infringement. The claims were disputed by Kodak, which not only counter-claimed for the revocation of the German part of Fujifilm’s patent, on the basis that it considered it invalid, but also argued that the court could or should not determine the part of the claims against it that concerned the UK market.  Kodak did not challenge the validity of the UK part of the European patent.

On the UK issue, the Düsseldorf LD found in favour of Fuijifilm and decided that it had jurisdiction to determine infringement of the UK part of the relevant European patent in this case.

In a summary of its findings, the Düsseldorf LD said: "If the defendant is domiciled in a [UPCA] Contracting Member State (here: Germany), the Unified Patent Court has jurisdiction to hear the infringement action in respect of the UK part of the patent in suit. This also applies if the defendant has filed a counterclaim for revocation in respect of the German part of the patent in suit. Even then, as regards the infringement action concerning the United Kingdom, the Unified Patent Court has jurisdiction to hear the case."

In order to determine whether the UPC has jurisdiction to determine infringement of the UK part of the European patent in issue, the Düsseldorf LD undertook a detailed analysis of the relevant provisions of the UPCA and the Brussels Recast Regulation, the EU legislation which regulates jurisdiction and the recognition and enforcement of judgements between EU member states. 

Article 31 of the UPCA dictates that the UPC’s international jurisdiction is determined by the Brussels Recast Regulation. Articles 71a-d of the Brussels Recast Regulation incorporate the UPC into the Brussels Recast Regulation regime. Article 71a governs that the UPC, as a common court, shall be deemed to be a court of an EU member state. Article 71b(1) stipulates that the UPC has jurisdiction where, under Brussels Recast Regulation, the national court of a UPC contracting member state would have jurisdiction. 

The general rule to determine jurisdiction is set out in Article 4(1) of the Brussels Recast Regulation, which provides that a person based in an EU member state should be sued in the courts of that member state. In this case, as the Kodak entities were based in Germany, this meant that the German UPC local divisions were competent, because the UPC is equivalent to a national court under article 71b(1) of the Brussels Recast Regulation.

Where patent validity is in issue, article 24(4) of the Brussels Recast Regulation gives exclusive jurisdiction to the national courts where the patent is registered, regardless of where the defendant is based. The Düsseldorf LD found, however, that this provision does not apply to the question of which court has jurisdiction in infringement proceedings.  

The court also found that case law established by the Court of Justice of the EU (CJEU) – the EU’s highest court and the ultimate arbiter for disputes arising before the UPC that concern the interpretation of EU law – supports the position that article 24(4) only applies to circumstances involving relations between the EU member states and not to third countries, such as the UK. According to the Düsseldorf LD, this therefore means that article 24(4) does not give UK courts exclusive jurisdiction over the UK part of a European patent.

The Düsseldorf LD said that its conclusion is not altered by article 34 UPCA, which provides that “decisions of the [UPC] shall cover, in the case of a European patent, the territory of those Contracting Member States for which the European patent has effect”. Contrary to Kodak’s arguments, the Düsseldorf LD said that this does not limit the UPC’s jurisdiction to only UPC contracting member states. 

The Düsseldorf LD also said that article 71b of the Brussels Recast Regulation, under which the long-arm jurisdiction of the UPC arises, does not alter its findings. Via article 71b(2), it gives the UPC jurisdiction over defendants based outside the EU for acts of patent infringement committed within UPC countries. It also introduces the power, subject to certain limitations, for the UPC to award damages arising from infringement of a European patent in certain jurisdictions outside the EU, via article 71b(3). The jurisdiction is discretionary and therefore it has caused much discussion as to if or how it might apply in practice.

The court said that the wording of article 71b(1) should not be read as being limited to the territorial scope of the UPC contracting member states. This, according to the Düsseldorf LD, supports the position that the UPC does have jurisdiction over third state patent infringement actions, like those arising in the UK, and that that interpretation of the Brussels Recast Regulation accords with CJEU case law.

The question of whether the UPC had jurisdiction to decide whether the UK part of the European patent was invalid did not arise in these proceedings because Kodak only sought revocation of Fujifilm’s patent rights in Germany. 

However, ultimately, the court’s finding that it did have jurisdiction to decide infringement of the UK part of the patent was immaterial because Kodak was successful in challenging validity, so the German part of Fujifilm’s European patent was revoked. As such, the court ruled that no finding of infringement could be made with regard to Germany.

It also dismissed the allegations of infringement in respect of the UK part of the patent because, even though validity was not in issue in these proceedings, it assumed that the same arguments, and therefore conclusion concerning invalidity, would also apply.

Taylor said: “This is an important ruling, with the potential to extend the scope of UPC rulings to countries such as the UK which do not participate in the UPC. This makes the UPC a very attractive venue for rights holders. Indeed, it is another decision in a series of pro-patentee decisions by the court. Recently, the UPC Court of Appeal ruled in the case of Fives v REEL, in which the court overturned the Hamburg LD’s earlier decision, that the UPC is competent to determine a damages assessment where a national court has previously determined infringement. Such rulings make the UPC an attractive venue for cross-border enforcement and has potentially important implications for businesses involved in cross-border patent disputes, which may even extend further afield.”

“This is, though, only one decision of one local division, and it would be astonishing if this decision is not appealed to the UPC Court of Appeal for determination on the jurisdictional points. However, Klaus Grabinski, president of the UPC Court of Appeal, has previously indicated that he expects the UPC to confirm its long-arm jurisdiction and therefore it is entirely plausible that this decision may stand,” she said.

“It will be interesting to see what will happen if the validity of a UK patent is in issue. Further, it is notable that the Düsseldorf LD decided that the CJEU’s long-awaited decision in the case of BSH v Electrolux – which will decide whether the exclusive jurisdiction under article 24(4) of the Brussels Recast Regulation applies to designations of patents in non-EU countries – is not decisive for the outcome of this case, but that in another dispute involving the same parties, the Mannheim LD decided that it would wait until the CJEU has issued its decision before rendering a judgment. A decision in that case is expected this month.”

Sharp added: “The UPC decision may arguably lead to more procedural games between the UK and the UPC courts, with defendants considering the use of anti-suit injunctions to restrain the UPC of the sort we have seen recently in the context of standard-essential patent litigation. It may also force defendants to consider bringing pre-emptive or reactive invalidity challenges in the UK to nullify the effect of any UPC infringement finding.”