2024 Week 37
Let’s say that you are a company based outside Europe and intend to launch a new product globally. Being IP-aware, you do your due diligence and freedom-to-operate assessments. You find a potential problem: a competitor has a European patent that may pose a realistic infringement risk. What are your options?
To be fair, some companies may decide to take a calculated risk and plough on with the product launch. Others may take the more cautious approach and try to clear the way. Assuming that the EPO opposition period has ended, you will need to try to revoke the patent in the countries of interest. The UPC provides a convenient jurisdiction to do this across a large number of significant European countries.
But the basic structure of the UPC means that you may be caught unexpectedly in a bifurcation trap. The UPC Court of Appeal has recently confirmed that there is no way out of this – meaning that you will have infringement decided by one UPC panel and revocation decided by a different UPC panel (different judges), possibly using a different language, leading to the risk of differential claim interpretation for infringement and validity.
Recap - MED-EL v. Advanced Bionics
In our UPC Weekly 2024 Week 28 blog, we explained the basic structure of the UPC system of competence for its Local/Regional Divisions and the Central Division. Simply put, Local/Regional Divisions have responsibility for infringement matters and the Central Division takes charge of revocation matters.
But of course the details turn out to be not so simple.
In MED-EL v. Advanced Bionics, Advanced Bionics were the first to file at the UPC – they started a revocation action at the UPC Central Division, using English (the language of the patent). In response to this, the patent proprietor did have the option to bring an infringement action at the same Central Division. However, instead, the proprietor then started infringement proceedings against three defendants including Advanced Bionics at the UPC Local Division Mannheim, in German. Those defendants then filed a counterclaim for revocation (also in the Mannheim Local Division).
The Local Division then (slightly reluctantly) referred the counterclaim for revocation to the Central Division (imposing a change in the language to English for that), but kept hold of the infringement action without a stay and still in German.
Advanced Bionics were keen for the infringement action to be heard together with the revocation action, and asked the court to make a connection joinder in order to hear these different actions together. This is provided for in the Rules of Procedure, and intended to be for when there is more than one action concerning the same patent (whether or not between the same parties) before different parts of the UPC, in order to avoid the risk of inconsistent decisions. The Local Division refused the request and Advanced Bionics appealed.
UPC Court of Appeal weighs in on connection joinders …
The UPC Court of Appeal came down hard against the use of a connection joinder in this case. They said that it would only be possible for the infringement action to be referred to the Central Division with the agreement of both sides – MED-EL had objected to the referral. Although the Rules of Procedure provide for the possibility of a connection joinder, this cannot trump the competence regime set out in the UPC Agreement itself, which makes it clear that any referral of an infringement case from the Local/Regional Division to the Central Division requires both parties to agree. Assuming that the parties in a dispute are unlikely to agree on the need for a connection joinder, it is starting to look as though they may not be usable in practice.
The Court of Appeal also commented on the main apparent worry for the defendant, that there would be different claim interpretations used by the Local Division compared to the Central Division, leading to unfairness. The Court of Appeal commented that in fact Advanced Bionics had not shown that MED-EL was advancing different interpretations before the different Divisions. In any case, the Court of Appeal was satisfied that it would be expected that the different Divisions would consider the other’s claim interpretation and adapt as needed.
While the decision of the Court of Appeal is not surprising, it confirms that a company seeking to clear the way can find itself in a difficult position. Being proactive and starting a UPC revocation action can hand a procedural advantage to the patentee, who is then free to launch infringement proceedings in a UPC Local or Regional Division of their choosing. Trying to defend against that with a counterclaim for revocation will lead to the counterclaim being referred to the Central Division, but not the infringement action. Then it is necessary to make sure that the revocation action proceeds at pace, and that the patentee is watched closely to ensure that the same claim interpretation is applied for infringement as for validity.
Although the UPC Court of Appeal thinks that this is not necessarily a concern, the reality is that there will be different judges assessing the scope of protection of the patent using reasoning in a different language. With an issue so nuanced as claim interpretation, it seems fair to say that there is a risk that in a difficult case there will be materially different claim interpretations in the two proceedings.
… and also on change of language of proceedings
Advanced Bionics had also filed an appeal against the refusal at first instance to change the language of proceedings of the infringement action from German to English. We reported on the first instance decision here. The UPC Court of Appeal also decided not to change the language of proceedings and refused the appeal.
There were two decisive factors. There are three defendants, two of which are domiciled in countries with German as an official language. Also, MED-EL is smaller than the Advanced Bionics group of companies, meaning that discretion on the language of proceedings should be exercised more in the favour of the side with fewer resources.
Recent stats on language of proceedings
While we’re on the topic, there are recent figures from the UPC showing the distribution of language of proceedings up to the end of August 2024. English is now the language of proceedings in a clear majority of cases at the UPC.
