On 11 April 2024, the Paris Local Division handed down an interesting jurisdictional decision in case UPC_CFI_495/2023 between claimant ICPillar LLC and defendants ARM Limited (and others). The decision provides some welcome guidance on how the requirement of a "commercial relationship" between defendants should be interpreted when assessing whether the Court has jurisdiction to hear an infringement action against multiple defendants. The decision also clarifies how the jurisdictional rules apply to defendants that are not based within UPC contracting member states.
In this case, a number of defendants to the infringement action filed a preliminary objection challenging the jurisdiction of the UPC Local Division of Paris. The claimant asked the Court to reject the preliminary objections. The Court explained that as one of the defendants (ARM France SAS) had its domicile in France, Article 33(1)(b) UPCA must be applied (notwithstanding that some of the other defendants were based outside the UPC contracting member states or the EU altogether).
Under Article 33(1)(b) UPCA, an infringement action can brought in the local division where the defendant (or in the case of multiple defendants, one of the defendants) has its residence or place of business. However, an action may be brought against multiple defendants only where (1) the defendants have a commercial relationship, and (2) the action relates to the same alleged infringement.
The Court noted that the requirement of a "commercial relationship" in Article 33(1)(b) implies a "certain quality and intensity". However, to avoid multiple actions regarding the same infringement and the risk of irreconcilable decisions from such separate proceedings, and to comply with the main principle of efficiency within the UPC, the interpretation of the link between the defendants should not be too narrow. It emphasised that belonging to the same group (of legal entities) and having related commercial activities aimed at the same purpose (such as R&D, manufacturing, sale and distribution of the same products) is sufficient to be considered as a "commercial relationship" within the meaning of the Article 33(1)(b) UPCA. The Court observed that such an approach had already been adopted by another local division of the UPC in a similar case between Edwards Lifesciences and Meril (UPC_CFI_15/2023 (LD Munich) Order of 29/09/2023), where the Munich Local Division found itself competent to hear an infringement allegation against a second defendant incorporated in India because it has a "continuous business relationship" concerning the infringing embodiments with the first defendant, Meril Gmbh (incorporated in Germany). The Munich Local Division also highlighted that Meril Gmbh is a wholly owned subsidiary of the second defendant, which contributes to establishing the continuous business relationship.
The Court considered the link between all the defendants sufficient to establish existence of a commercial relationship of a certain quality and intensity. In relation to the second requirement, the Court considered that at this stage of proceedings the claimant had sufficiently demonstrated that its claim concerned the same alleged acts of infringement against all the defendants. The Court rejected the preliminary objections and held that the Paris Local Division had jurisdiction under Article 33(1)(b) UPCA.
Prior to this decision (and the decision by the Munich Local Division in Edwards Lifesciences v Meril), it had been unclear how the term "commercial relationship" would be interpreted by the Courts. The broad interpretation endorsed by the Paris Local Division will come as welcome news to patent holders eager to streamline multijurisdictional infringement claims at the UPC.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.