Paris ruling raises European Patent Convention membership debate

Patent law specialist Gareth Morgan of Pinsent Masons said countries such as the UK, Spain and Switzerland are likely to be concerned that the ruling by the Paris LD (9-page / 468KB PDF), in following case law developed by the EU’s highest court recently, represents the continuation of a trend that could undermine their country’s judicial system for patents.

Last month, the Court of Justice of the EU (CJEU) ruled that courts in EU member states have scope to rule on the infringement of ‘foreign’ patents even when the validity of those patents is challenged. In interpreting the EU’s Brussels Recast Regulation, which concerns jurisdictional matters, the CJEU also considered that EU courts can consider whether ‘foreign’ patents are valid when assessing infringement in certain circumstances.

Experts at Pinsent Masons said at the time that the ruling suggests courts in EU member states have broader powers to rule on patents that are in force in non-EU jurisdictions than they do in relation to European patents or national patents in force in EU countries. They added that the judgment may have a major influence on business’ global patent litigation strategies going forward.

The CJEU’s ruling, issued in a case involving BSH Hausgeräte(BSH) and Electrolux, aligned with the UPC’s recent ‘long-arm jurisdiction’ decision in the case of Fujifilm v Kodak, in which the Düsseldorf LD of the UPC held that relief can extend to non-UPC countries including the UK. The ruling of the Paris LD is the first by a division of the UPC regarding jurisdictional matters since the CJEU’s judgment.

The Paris LD determined that where an alleged infringer of a European patent is based in the EU, UPC courts are competent to decide on the question of infringement for all parts of a European patent – including the parts of that European patent that apply in EU countries that are not participants in the UPC system, in countries that are members of the Lugano Convention, as well in so-called third countries.

The case before the Paris LD concerns claims made by IMC Créations that Mul-T-Lock Franc and its Swiss subsidiary, Mul-T-Lock Suisse, are responsible for infringing one of its European patents.

Mul-T-Lock argued before the Paris LD that the court did not have jurisdiction to rule on infringement in relation to the Spanish, Swiss and UK parts of the patent in question – since those countries are not participants in the UPC system. However, the Paris LD dismissed those arguments, choosing instead to apply the case law the CJEU established in the BSH and Electrolux case.

Specifically, the Paris LD found that it is competent to hear infringement in respect of the Spanish part of the patent – i.e. the part of a European patent applicable in a non-UPC EU country – and does not need to pause doing so to allow the question of the patent’s validity to be determined, since Mul-T-Lock has not yet challenged the validity of that part of the patent – nor the Swiss or UK parts of the patent either.

The Paris LD further decided it is competent to determine alleged infringement in Switzerland by Mul-T-Lock Suisse, despite this company not being based in an EU member state. Switzerland is a signatory to the Lugano Convention, an international treaty regarding jurisdictional matters, which the Paris LD considered is equivalent to the EU’s Brussels Recast Regulation and should therefore be interpreted in the same way.

The Paris LD also found that, following the CJEU ruling in the BSH and Electrolux case, it is competent to give binding decisions on infringement regarding the parts of European patents applicable in third countries – in this case, the UK. Again, applying the CJEU’s recently developed case law, it further determined that it can reach so-called inter partes decisions on the validity of those patents.

Inter partes decisions are decisions that have effect between the parties only. In this context, it means that it is open to the national court of a third country where the patent applies to issue its own ruling on validity, potentially in conflict with what the UPC court finds.

The Paris LD said its findings would enable patent rights holders “to concentrate all [their] infringement claims in the event of infringement disputes in several Member States of the European Union and obtain global compensation before a single forum and avoid the risk of divergent decisions”. It added: “In order to ensure legal certainty and predictability of the rules of jurisdiction, the jurisdiction of the defendant's court to rule on an infringement action must not be subordinated to the defendant's procedural strategy.” 

Gareth Morgan of Pinsent Masons said: “Rulings such as this one, if followed by other UPC courts and endorsed by the UPC Court of Appeal, is likely to spur non-EU countries that are members of the European Patent Convention (EPC) and not participants in the UPC system, to consider how to escape the long-arm jurisdiction of the UPC by restructuring their membership of the EPC.”

“While this would involve significant administrative work, in theory it is possible to envisage that a non-EU group of EPC members would be able to distinguish themselves from the EU grouping, avoid being bound by EU law and the effects of EU rulings, and that two new categories of European patents – those which are restricted to countries in the EU and those restricted to countries in the new grouping that are neither EU member states nor signatories of the Lugano Convention – are established,” he said.

In another recent UPC ruling that was issued before the CJEU’s judgment was handed down in the BSH v Electrolux case, the Mannheim LD ordered (67-page / 1.57MB PDF) a separation in proceedings concerning issues pertaining to designations of a European patent in UPC participating states to issues relating to designations of the same patent applicable in non-UPC states – in that case, Poland, Turkey and the US. The Mannheim LD ruled the two proceedings to be separated to prevent a delay arising in the court determining the issues in respect of the designations in UPC countries.

Sarah Taylor of Pinsent Masons said it seems likely that more jurisdictional issues will arise in UPC proceedings in other cases in future.

“It will be interesting to see whether a UPC division will go further than the Paris LD did in this case in the future in situations where, for example, the defendants are domiciled outside the EU, or in respect of third countries not covered by a European patent, like the US or China, and whether an increasing number of anti-suit injunction (ASI) applications are seen,” Taylor said.

“Further, perhaps we may see an increase in pre-emptive national invalidity actions or actions for declarations of non-infringement by patent implementers in a bid to seise jurisdiction and prevent the UPC issuing decisions which extend to third countries such as the UK,” she added.