Paris Local Division confirms Unified Patent Court as venue for cross-border litigation in Europe and beyond

The Court of Justice of the EU (CJEU) recently gave a landmark judgment in BSH v Electrolux that reopens European cross-border patent litigation and may allow claimants to enforce a global patent litigation strategy in a single forum.

In a swift move, the Unified Patent Court (UPC) Paris Local Division (LD) applied the CJEU's reasoning to determine that it has jurisdiction to rule on an infringement claim relating to non-UPC and non-EU European Patent (EP) designations, in a dispute between Mul-T-Lock and IMC Créations. It seems to go further than Electrolux in finding that it is territorially competent over a Swiss company in respect of those infringement claims.

In line with Electrolux, the Paris LD also held that the UPC is competent to complete a validity assessment of a patent designated in the UK (a non-UPC, non-EU country) in the context of a defence to the infringement claim. Although the Paris LD confirmed that it cannot nullify the patent and its validity decision would only have inter partes effect.

The CJEU's decision marks the return of cross-border patent infringement disputes in both the EU national courts and the UPC irrespective of whether invalidity has been raised as a defence. Crucially, this opens the door to cross-border injunctions.

The UPC appears to have gone even further and claimed jurisdiction over alleged infringements of EP designations without unitary effect by a defendant not domiciled in a UPC member state or anywhere in the EU. These decisions, if left unchallenged and not watered down, have the potential to alter global patent litigation strategies and could prompt a slew of anti-suit injunction applications in non-EU courts in response.

The CJEU decision

BSH had brought proceedings in Sweden on the basis of article 4(1) recast Brussels Regulation (the country of domicile) claiming that Electrolux had infringed national designations of an EP validated in Austria, France, Germany, Greece, Italy, the Netherlands, Spain, Sweden, the UK and Turkey.

Electrolux argued that under article 24(4) recast Brussels Regulation, the Swedish court lacked jurisdiction to determine the infringement claims relating to foreign designations of the EP because the validity of those patents had been challenged. A referral to the CJEU sought to clarify:

• The intra-EU question – do courts of an EU Member State have jurisdiction over a cross-border patent infringement claim concerning patents registered in other EU Member States when the defendant raises invalidity arguments and disputes the court's jurisdiction under article 24(4)?
• The third state question – do courts of an EU Member State have jurisdiction to hear proceedings concerning patents designated in third countries (that is, where no bilateral agreement (for example, the Lugano Convention) exists between the Member State and the third country) when invalidity is raised as a defence. Do the rules of the recast Brussels Regulation apply to third states as they do to intra-EU conflicts of jurisdiction?

The intra-EU question

The CJEU confirmed that a patent holder may bring an infringement action in the court of the EU Member State in which a defendant is domiciled under article 4(1), even if the patent was granted in another Member State.

If the defendant challenges the validity of the patent as a defence to infringement, the infringement court cannot rule on the patent's validity as this is the exclusive jurisdiction of the courts of the Member State where the patent is granted (under article 24(4)).

However, the infringement court retains jurisdiction to proceed with the infringement action notwithstanding the invalidity defence. In the event that the infringement court considers there to be a "reasonable, non-negligible chance" of the patent being declared invalid by the courts of the granting Member State, the infringement court may stay the infringement proceedings.

The third state question

The CJEU stated that article 24(4) applies to EU Member States only and therefore does not confer jurisdiction to courts of third countries regarding validity (exclusive or otherwise).

As with the intra-EU position, an EU Member State court has jurisdiction to determine infringement of a patent granted in a third country even where invalidity arguments are raised. However, the CJEU said that in this case, where invalidity arguments are raised by way of defence, the infringement court has jurisdiction to consider the patent's validity, though any determination on validity will only have inter partes effect and again will not affect the existence or contents of the patent or the patent register in the third state.

The UPC decision

The UPC Agreement and the recast Brussels Regulation deem the UPC to be an EU Member State court subject, which means that the UPC must apply the recast Brussels Regulation and European law as interpreted by the CJEU. The UPC Paris LD has now applied the CJEU's reasoning in ruling on a preliminary objection concerning its jurisdiction to determine an infringement claim relating to patents designated in countries outside of the UPC, namely: Spain (non-UPC, EU state), Switzerland (non-UPC, non-EU, Lugano state), and the UK (non-UPC, non-EU state).

The claimant, IMC Créations, alleged infringements of a patent granted with unitary effect and the Spanish, Swiss and British designations by a company domiciled in a UPC member state (France) and a company domiciled in a non-UPC, non-EU member state (Switzerland). The defendants, Mul-T-Lock France and Mul-T-Lock Switzerland contested the UPC's jurisdiction to hear the action for infringement of the British, Spanish and Swiss designations and its territorial reach over the Swiss defendant.

The Paris LD held that the CJEU decision straightforwardly applied to the Spanish and UK designations and was transposable to the Swiss designation because Switzerland is a Lugano Convention signatory (which establishes similar principles of jurisdiction as the recast Brussels Regulation).

As such, the Paris LD held that it has jurisdiction to hear the infringement actions relating to the Spanish and Swiss designations, with the possibility of staying the proceedings if the national courts are seised in validity actions and there is a reasonable, non-negligible risk the patents will be declared invalid.

With respect to the UK designation, the Paris LD held that it is competent to hear the infringement proceedings and make a decision on validity if raised by way of defence, provided that the validity decision only has inter partes effect.

However, the Paris LD went further than Electrolux by deciding that it has territorial competence over a Swiss domiciled defendant "due to the domicile of one of the defendants in France". This means that, for the first time, the UPC has held that it is competent to determine the alleged infringement of non-UP patents by a defendant not domiciled in the UPC or an EU Member State. This has potentially wide-reaching consequences.

Osborne Clarke comment

The CJEU's decision itself is likely to have ramifications for decades, assuming it is not reversed or watered down by a subsequent decision. Its importance has already been evidenced by the UPC swiftly implementing the CJEU's reasoning and staking its position regarding EPs designated in non-UPC countries and its territorial reach over non-UPC, non-EU domiciled defendants by virtue of what appears to be a UPC "anchor defendant".

Given that many multi-jurisdictional litigations involve non-UPC patents, it will be interesting to see how the UPC’s approach will affect forum shopping of parties to patent litigation proceedings.

It is unclear whether courts will be more or less likely to grant a stay in infringement proceedings concerning EU designations or designations from third states. The CJEU's judgment clearly gives courts discretion to stay infringement proceedings in intra-EU situations where there is a "reasonable, non-negligible chance" that the patent will be held invalid, but similar wording was not included in the CJEU judgment with respect to third state situations.

It is also unclear at this stage whether courts will consider local law when deciding on the scope of any injunction awarded with respect to a third state patent.

It is possible that the CJEU's decision, and indeed the UPC's apparent extension of it, will have an impact on the approach of the courts in the UK. Historically, English courts have followed the CJEU's decision in GAT v LuK, holding that they have jurisdiction to rule on infringement of foreign designations of EPs but only insofar as validity was not put in issue. English courts could maintain this status quo and issue anti-suit injunctions to protect their jurisdiction or mirror the CJEU's approach. The flexible common law approach of English courts suggests the latter is possible.

Claimants will celebrate this landmark CJEU decision as it revives cross-border patent litigation and may allow them to enforce a global patent litigation strategy in a single forum. It might also enable enforcement of patents in territories where patent litigation has historically been difficult.

Understanding the true practical impact of the CJEU's decision will take time. The UPC has rapidly applied, and extended the decision, but whether its claim of territorial competence over a defendant not domiciled in a UPC contracting state or an EU Member State will go unchallenged remains to be seen.

This analysis is in part based on machine translations of decisions not available in English.