Under the spotlight: parallel revocation actions allowed; invalid opt-out ignored
Within its framework, the Unified Patent Court offers various options for initiating proceedings to challenge patents, whether as standalone claims or counterclaims. Some of these options may at first glance appear surprising.
Summary
Two cases at the Paris Central Division ("Paris CD") provide options for those seeking to challenge patents and show the UPC's willingness to take on cases and manage proceedings efficiently.
In the first case, the Paris CD held that a revocation action can still be brought at the UPC if earlier national revocation proceedings were brought against the same patent before the Unified Patent Court Agreement ("UPCA") entered into force. This enables a party to have a second attempt at attacking a patent if previous national proceedings were unsuccessful or are still ongoing.
In the second case, the Paris CD held that a revocation action can be brought at the Central Division by a company related to another company (for example, another group company) that has been sued for infringement at a Local or Regional Division. This gives a further strategic option to a defendant in infringement proceedings at the UPC.
In a third case, the Vienna Local Division ruled that an opt-out registered after interim measures had been sought is invalid and that the Court therefore had jurisdiction to hear the application for interim measures.
UPC revocation action despite earlier German national proceedings
In a dispute between Nokia and Mala Technologies Ltd (UPC_CFI-484/2023), the Paris Central Division had to decide whether it had jurisdiction to hear Nokia's revocation action against Mala's patent (EP2044709) given that Nokia had brought earlier revocation proceedings at the German national court against the German part of the same European patent. Interestingly, the Paris CD held that Nokia could indeed bring revocation proceedings at the UPC despite the earlier German national proceedings.
In April 2021, Nokia brought revocation proceedings at the German Federal Patent Court ("BPatG") against the German part of EP2044709. In July 2023, the BPatG dismissed the revocation action and upheld the patent. The full written decision was then served on the parties on 13 and 14 December 2023. On 15 January 2024, Nokia lodged an appeal against the decision of the BPatG with the German Federal Court of Justice ("BGH"). Meanwhile, on 15 December 2023, Nokia also filed an action for revocation of EP2044709 at the Paris CD of the UPC.
The Paris CD reviewed the UPCA and the Brussels Regulation, Brussels I Reg recast ("Brussels I"). Arts. 29-31 of Brussels I govern civil proceedings which are related to each other and are pending simultaneously before courts in different EU member states. The regulation aims to avoid parallel proceedings in different countries and irreconcilable decisions being issued by those courts. Under Art. 29 of Brussels I, the court first seised of an action has jurisdiction to hear that action, in preference to other courts at which the same cause of action is brought later1.
Relying on Art. 71c(2)2 of Brussels I, the Paris CD held that Art. 29 of Brussels I is applicable only if an action is brought at both the UPC and a national court during the transitional period set out in Art. 83 UPCA3. The Paris CD then held Brussels I not to be applicable in this case, because the revocation action at the German court had been brought before the transitional period had started. The Paris CD refused to extend the scope of Art. 71c(2) of Brussels I beyond its literal wording because it could not see that the legislator had left an "unintended gap" in either Brussels I or the UPCA.
This decision by the Paris CD opens the door for parties who have been unsuccessful in national revocation proceedings brought before 1 June 2023 to now bring a revocation action at the UPC (unless the patent has been opted-out).
In view of its finding that the UPC can still hear a revocation action if a national revocation action was brought before 1 June 2023, the Paris CD did not need to consider other issues raised by the parties, such as the degree of similarity between the grounds for revocation in the two revocation actions and the fact that the German and UPC revocation proceedings were brought by different Nokia entities.
Defendants using parallel revocation actions at the Central and Local Divisions
The choice of forum at the UPC generally lies with the patentee, who selects the Local or Regional Division in which to bring infringement proceedings. Any counterclaim for revocation by the defendant(s) must then be brought at that same Local or Regional Division. The Local/Regional Division can then hear the infringement action and the counterclaim together, or can bifurcate the proceedings by retaining the infringement action while referring the counterclaim to the Central Division, or, if the parties agree, can refer both the infringement action and the counterclaim to the Central Division. So far, Local/Regional Divisions have been reluctant to bifurcate proceedings, considering it more efficient to hear both the infringement action and the counterclaim together4.
There are however proceedings where the defendants have strategically brought additional revocation proceedings at the Central Division. Meril Life Sciences Pvt. Ltd ("Meril India") and Meril GmbH ("Meril Germany") were sued for infringement of EP3646825 by Edwards Lifesciences Corporation ("Edwards") at the Munich Local Division ("Munich LD"). Meril India and Meril Germany duly filed counterclaims for revocation at the Munich LD. Additionally, and before the counterclaims for revocation were filed, a further Meril entity, Meril Italy srl ("Meril Italy"), filed a standalone claim for revocation at the Paris CD.
Edwards objected to the revocation action filed at the Paris CD, arguing it was inadmissible because infringement proceedings were already pending at the Munich LD between the parties, such that only a counterclaim for revocation can be brought and only at the Munich LD. Otherwise, the defendants would get "two shots" at the patent. Edwards further objected that parallel proceedings on revocation of the same patent at different UPC Divisions would be detrimental to procedural efficiency and an abuse of the UPC and its judges.
The Paris CD decided that the revocation action by Meril Italy was admissible and could proceed. In doing so, the Paris CD decided that Meril Italy was not the same party as either Meril Germany or Meril India, despite Meril Italy having been newly formed, being a wholly owned subsidiary of Meril India, having an address which is that of an accounting firm, and its only officers/employees being also employees of Meril India. The Paris CD noted that the term "party" is not defined in the UPCA, but Art. 47 UPCA makes clear that any natural or legal person may be a party to proceedings at the UPC.
Turning then to Italian law, the Paris CD held that Meril Italy is a legal person and maintains its own legal personality distinct from Meril India (and Meril Germany). The Paris CD further distinguished proceedings at the UPC from the case law of the Court of Justice of the European Union ("CJEU") on related companies in the context of competition law, considering the CJEU case law not to negate the separate legal personality of subsidiary and parent companies but rather to expose the parent company to joint liability in the case of illicit conduct. Considering also Arts. 21-22 of Brussels I, the Paris CD held this to be inapplicable because the UPCA "provides for an autonomous set of rules that regulates the situations of parallel proceedings", considering Art. 33 UPCA and Rules 295, 302, 303 and 340 Rules of Procedure ("RoP").
The Paris CD held also that filing the additional revocation claim by Meril Italy at the Central Division was not an abuse of process. The Paris CD noted the UPCA does not exclude that a patent may be attacked by different parties, even if linked entities. On the contrary, the Paris CD held that the UPCA allows such actions to be brought and provides the judges with the tools for handling such actions, for example the possibility to refer an entire case from a Local/Regional Division to the Central Division and the possibility to stay proceedings in one Division pending an outcome in another Division.
The Paris CD therefore permitted the revocation action by Meril Italy to proceed. In subsequent proceedings, the infringement action and the counterclaim for revocation at the Munich LD have now been transferred to the Paris CD also. As a result, the defendants in this case, Meril, have succeeded in changing the forum from the Munich LD to the Paris CD.
For a party sued for infringement at a Local Division, the possibility of filing for revocation at the Central Division through a related company provides a further tactic for responding and for possibly obtaining a change of venue of the infringement action to the Central Division.
Opt-out lodged after interim measures had been sought – opt-out not valid
In our last issue, we reported on the interim injunction application decision by the Vienna Local Division in the Cup&Cino v Alpina Coffee Systems case (UPC_CFI_182/2023). From a jurisdiction perspective, there was an interesting preliminary issue raised in relation to the "opt-out" procedure and the jurisdiction of the UPC. The decision is perhaps unsurprising but does give further clarity around the opt-out process more generally.
Cup&Cino filed their interim injunction application on 27 June 2023 at the UPC concerning patent number EP3,398,487B1 (the ""). On 6 July 2023 Cup&Cino then filed an opt-out in relation to the Patent from the exclusive competence of the UPC pursuant to Rule 5 of the RoP (there followed, at a later date, an application to withdraw the application citing that the opt-out application was made by a patent attorney without authority).
The original opt-out application was a surprising turn of events in light of Rule 5(6) of the RoP which prohibits opting-out once an action (which includes interim measures) has been commenced before the UPC. This is a sensible and practical requirement, as explained in the decision, because it prevents a party from opting out on-going legal proceedings to avoid, for example, a negative decision.
The Vienna court, rightly in our view, held that the opt-out application was not valid and that the UPC had jurisdiction to hear the interim injunction application. In less good news for Cup&Cino ultimately the UPC rejected the interim injunction application on the merits.
Footnotes
1. Art. 29, Brussels I Reg recast: "(1) Without prejudice to Article 31 (2), where proceedings involving the same cause of action and between the same parties are brought in the courts of different Member States, any court other than the court first seised shall of its own motion stay its proceedings until such time as the jurisdiction of the court first seised is established"
2. Art. 71c(2), Brussels 1 Reg recast: "Articles 29 to 32 shall apply where, during the transitional period referred to in Article 83 of the UPC Agreement, proceedings are brought in the Unified Patent Court and in a court of a Member State party to the UPC Agreement".
3. Art. 83(1) UPCA: "1. During a transitional period of seven years after the date of entry into force of this Agreement [1 June 2023]...";
4. E.g. Hague LD, UPC_CFI_239/2023 (16 February 2024): "Such a joint hearing of the infringement action and the counterclaim seems to be appropriate in particular for reasons of procedural expediency and avoids the risk of delay that might be involved with bifurcating. It is also preferable because it allows both issues – validity and infringement – to be decided on the basis of a uniform interpretation of the patent by the same panel composed of the same judges."
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