2024 Week 51
Great – the UPC has just decided that your patent is valid and infringed. You get an injunction against the infringer. But they are dragging their heels and trying not to comply. Now what?
One interesting thing about the UPC system is that it is a court that is common to the UPC member states and is regarded as part of the judicial systems of those states. When push comes to shove, how do you enforce a decision of the UPC on the losing party? The UPC Agreement (Article 82 UPCA) simply says that the decisions and orders of the court are enforceable in the UPC member states and the enforcement procedure is governed by the law of the member state where enforcement takes place. Where the losing party is located in a UPC member state, enforcement can be carried out as for a decision of a court of that country, using the local law enforcement authorities.
But Article 82 UPCA also has a mechanism for imposing penalty payments on a party who has not complied with the terms of an order. Those penalty payments are payable to the court, rather than to the winning party. As we will see, the UPC divisions are ready and willing to use this stick, in order to show the parties that they mean business.
Belkin get hit by more than just an injunction
Philips v Belkin is a decision of the UPC Local Division Munich, following on from the earlier decision in which the court decided that the patent was valid and infringed, and which we reviewed here. In that earlier decision, the Munich Local Division set out various orders, in favour of Philips, including:
- An injunction
- Belkin to provide information on: the origin and distribution channels of the infringing products; the quantity of infringement and prices; and the identities of parties involved in distribution
- A provisional award for damages (€ 119,000)
- Penalty payments, of up to € 100,000 per day for breach of the injunction, and up to € 50,000 per day for violation of the order to provide information
Philips enforce their rights
At the UPC, once the decision on the merits is given, the winning party needs to decide which parts of the orders of the court they intend to enforce. Here, Philips said that they would enforce the decision in full. The decision on the merits was issued on 13 September 2024 and the way that the case worked out, Belkin should have complied by 7 October 2024, but at the latest by 30 October 2024.
On 11 November 2024, Philips filed an application for the imposition of a penalty payment against Belkin, and the following day 17 boxes of paper with some of the requested information appeared from Belkin.
Philips complained that the information was unusable in paper form and that some of the requested information (e.g. purchase pricing) had not been provided. They therefore requested that the court impose a penalty payment of € 20,000 for each day of non-compliance.
Court imposes a penalty payment
The court decided that it was OK for Belkin to provide the information on paper – there was nothing in the order that said the information should be provided electronically (practitioners take note). But the court decided that it was not OK for Belkin to delay and to fail to provide some of the requested information, even when prompted.
The view of the court was that a penalty payment should have the effect of penalising non-compliance in the past and the effect of promoting actual compliance with the order now.
How much?
The court had to decide on the level of the penalty payment. They acknowledged that the failure by Belkin was not as serious as a breach of an injunction would be and the level of the penalty should be proportionate. But they commented that a penalty should be imposed because it is not up to a party to decide whether and when to comply with a court order.
In the end, the court decided on a penalty of € 500 per day for the period up to 25 November 2024 and then an increased penalty of € 1500 per day for the period 26 November 2024 to 17 December 2024 for still not providing the complete information.
All told, the penalty payment due to the court is € 46,000. This is significant, bearing in mind the scale of the provisional award for damages.
Have we seen other penalty payments?
In other cases such as MyStromer v Revolt Zycling (October 2023), the UPC Local Division Düsseldorf imposed a preliminary injunction and were then asked to award a penalty payment for the defendant’s breaches of the preliminary injunction. The court ordered a penalty payment of € 26,500.
In 10x Genomics v NanoString (December 2023), the UPC Local Division Munich imposed a penalty payment of € 100,000 against NanoString for breaches of a preliminary injunction. However, it is interesting to the note that the UPC Court of Appeal revoked the preliminary injunction and decided on 10 December 2024 that this has retroactive effect so that the penalty payment need not be made.
… pour encourager les autres
Coming back to the Philips v Belkin case, the court noted that the total amount of the penalty payment is at the lower end of the range threatened in the original decision, mainly due to the relative lack of importance of the order that was being ignored. However, the court is explicitly sending a message to all parties in UPC litigation that violations of any court orders will not be tolerated and that they can impose meaningful penalties to bring the parties into line.
