2024 Week 28
This week we look at how the UPC is handling requests to split substantive consideration of patent validity from patent infringement.
Background
You can look at the Unified Patent Court system from two reasonable perspectives. On the one hand, it is a single court system that covers many European countries (17, soon to be 18), with its own unified set of procedural rules and substantive law. On the other hand, it is a court system that also derives from many countries and has its many Divisions actually located in individual countries, each country bringing to the system, via its UPC judges, its own flavour of national legal traditions.
When the system was set up, the grand bargain was that there would be two types of first instance court, with different primary responsibilities. The Local (and Regional) Divisions would be in charge of patent infringement actions. The Central Division would look after patent revocation actions. To the casual observer, this mirrors the German national system, in which infringement and validity of patents are dealt with in different courts. This is the so-called bifurcation of infringement and validity.
Why might bifurcation matter?
Bifurcation in the German national system presents advantages to the patent proprietor. In principle, the proprietor can try to advance different arguments for the scope of protection of the patent in an infringement action compared with during an invalidity action brought by the defendant. However, a bigger advantage perhaps comes from the relative speed of the separated actions in the German national system, with infringement sometimes being decided many months or even years before a decision on validity. This can give rise to an injunction gap – a period of time in which the infringement court has already awarded an injunction to prevent infringement, but the invalidity action has not yet been decided.
Bifurcation is allowed at the UPC, but …
Mindful of potential unfairness, the UPC was set up to permit bifurcation of infringement and validity but with safeguards. The safeguards include the timing of the decision on bifurcation – this is expected to be taken at the end of the written procedure, so that the parties’ basic claimant interpretations should be relatively fixed at the point of which the substantive issues are separated. Also in respect of timing, the different Divisions of the UPC aim to reach their substantive decisions on the merits at about the same time, within about a year. Additionally, the UPC system gives the courts discretion to keep these two issues together.
The mechanics
In a typical case, a patent proprietor will sue a defendant for patent infringement at a Local/Regional Division. If the defendant chooses to defend against the infringement action using a counterclaim for revocation, this must be brought before the same Local/Regional Division. The Local/Regional Division can then decide to:
- proceed with the infringement action and the counterclaim for revocation together
- or refer just the counterclaim for revocation to the Central Division, and
- stay the infringement action or
- proceed with the infringement action
- or refer the entire case (i.e. infringement and revocation) to the Central Division, but only with the agreement of the parties
A party can bring a standalone action for revocation of the patent directly to the Central Division. But not if an infringement action has already started at a Local/Regional Division.
If a revocation action has already started, then the patent proprietor can either:
- bring an action for infringement at the Central Division, or
- bring an action for infringement before a Local/Regional Division
Rounding off this array of choices, where there is more than one action concerning the same patent (whether or not between the same parties) before different parts of the UPC, then the UPC can decide to make a connection joinder in order to hear these different actions together.
Experience of decisions on bifurcation
So, how has this all been working in practice?
During the first year of operation of the UPC there have been several decisions from Local/Regional Divisions not to bifurcate infringement and validity. For example, the UPC Local Division Düsseldorf in myStromer vs. Revolt Zycling decided not to bifurcate. The same Local Division in Kaldewei vs. Bette (see our discussion of this case in UPC Weekly 2024 Week 27), Nutricia vs. Nestlé, and Ortovox vs. Mammut, decided against bifurcation. Getting with the programme, the UPC Local Division The Hague also decided not to bifurcate Plant-e v Arkyne. In all of these cases, the courts decided that at least for reasons of efficiency it was best for the issues of validity and infringement to be heard together. The courts also noted the benefit that this would provide in terms of the uniform interpretation of the scope of protection of the patent by the same panel of judges. Some of these decisions have been taken well before the end of the written procedure, but since the decisions were not to bifurcate, there is no additional safeguard needed.
For balance, note that the UPC Local Division Munich were asked by both sides in Amgen vs. Regeneron to bifurcate by referring a counterclaim for revocation to the Central Division. There was a pending revocation action at the Central Division.
New decision on bifurcation
This background of relatively uncontroversial, or non-contested, decisions on non-bifurcation is brought into contrast by a recent decision (10 July 2024) of the UPC Local Division Mannheim in MED-EL vs. Advanced Bionics. The circumstances of this case are a little different to the cases discussed above.
One of the defendants started proceedings by launching a revocation action against the patent at the Central Division in September 2023. In response to this, the patent proprietor did have the option to bring an infringement action at the same Central Division. However, the use of that forum is not obligatory. In this case, instead, the proprietor started patent infringement proceedings against three defendants at the UPC Local Division Mannheim in November 2023.
Probably fearing disadvantageous differential claim interpretations between the revocation and infringement proceedings, the defendants first asked the Local Division to refer the infringement proceedings to the Central Division already handling the revocation action (using the connection joinder approach mentioned above), or in the alternative, for the Local Division to stay the infringement action. In February 2024, the Local Division issued its decision refusing these requests. This refusal is currently under appeal and we understand that the UPC Court of Appeal hearing is set for 17 July 2024, which will be one to watch out for.
Subsequently, the defendants filed a counterclaim for revocation in response to the infringement proceedings at the Local Division. The court was therefore then faced with this question: should the counterclaim for revocation be heard by the Local Division along with the infringement action, i.e. no bifurcation? This would be consistent with the case law discussed above. But the fly in the ointment was the pending Central Division revocation action and the lack of agreement between the parties.
The Local Division acknowledged that in normal circumstances it would be their preference not to bifurcate. However, in the circumstances of this case, the arguments in the counterclaim for revocation were essentially identical to those already being considered at the Central Division. As a defence to the counterclaim for revocation, the patent proprietor had also proposed amendments to the patent. Because the Central Division revocation action was further along than the counterclaim for revocation in the Local Division, the Local Division decided that it would be best to refer the counterclaim for revocation and the amendments to the patent to the Central Division.
Interestingly, because the Central Division revocation action is in English and the Local Division proceedings are in German, the language of proceedings of the counterclaim for revocation referred from the Local Division to the Central Division will need to switch to English. The Local Division considered this and decided it was fine.
Key points
The bifurcation decision in MED-EL vs. Advanced Bionics turned on the circumstances of that case, but they may not be particularly unusual. It is interesting that the defendants did not want bifurcation, i.e. did not want the counterclaim for revocation to be referred to the Central Division. Their key wish was to have infringement and validity considered by the same panel, presumably to avoid an overgenerous claim interpretation when considering infringement alone.
The preponderance of the case law to date is still that the Local Divisions want to keep the infringement action and the counterclaim for revocation together. They tend to agree that it is important to avoid the risk of differential claim interpretation. And it is surely right that it is more efficient to have the issues heard together. But the lesson here is that if UPC proceedings start with a Central Division revocation action, then the patent proprietor can probably force bifurcation of the proceedings if they see benefit in this.
