Despite much of Europe being a common market, genuine transnational patent litigation (ie, proceedings with cross-border effect) has traditionally been the exception. Although the European Patent Office grants European patents, these take effect merely as a bundle of national patents. Enforcing patents has been the exclusive preserve of the national courts. Although recent developments have improved the prospects of cross-border litigation and the implementation of the Unified Patent Court (UPC) promises to transform the patent litigation landscape, choice of forum remains as important as ever.
Developments in cross-border litigation
It is possible to seek an injunction in a national court with effect in all EU countries where the European bundle patent has been validated (ie, a cross-border injunction), provided that the defendant is domiciled in the European Union (for non-EU companies, national jurisdictional rules apply). The basis for this comes from the EU Brussels I Regulation (1215/2012, as amended).
If a single company commits an EU-wide patent infringement, it is possible to sue that company for all of those EU-wide acts of infringement under Article 4 of the Brussels I Regulation. Previously, where EU-wide infringement of a European patent was carried out as part of a common strategy by a different company in each different country, the Dutch courts would grant cross-border injunctions against all infringers based on the fact that one of them was based in the Netherlands (so-called ‘spider in the web’ litigation). The Dutch courts held that the claims against the different companies were closely connected by the fact that different national parts of the same European patent were infringed under a common strategy. They thus considered it “expedient to hear and determine them together to avoid the risk of irreconcilable judgments resulting from separate proceedings” (Article 8(1) of the Brussels I Regulation).
However, the European Court of Justice (ECJ) put a damper on cross-border patent infringement litigation in 2006 with its decisions in GAT v LuK (C-4/03) and Roche v Primus (C-539/03).
GAT v LuK dealt with the reservation in Article 24(4) of the Brussels I Regulation that for actions “with regard to the validity of [patents and other registered rights]”, the national court where the right is in force has exclusive jurisdiction. The ECJ held that this provision covers not only separate revocation actions, but also invalidity defences raised in an infringement action. Accordingly, as soon as the defendant raises such defence with regard to a foreign patent, no cross-border injunction may be granted before the issue of validity is decided by the competent national court (and in most countries, the issues of validity and infringement will be decided together in the national court).
In Roche v Primus, the ECJ held that different national parts of the same European bundle patent are separate rights, so there cannot be a danger of irreconcilable judgments under a ‘spider in the web’ scenario, even if the different national courts decide differently on infringement of the patent. The judgments may be inconsistent, but can be reconciled since each will cover a separate national part of the patent.
These two decisions basically put an end to ‘spider in the web’ tactics for a while. However, two recent cases have again encouraged cross-border litigation.
In 2012 the ECJ held in Solvay v Honeywell (C-616/10) that if different defendants domiciled in different countries infringe the same national part of a European patent relating to one product, all of those parties can be injuncted by the court in the domicile of one of the defendants under Article 8(1) of the Brussels I Regulation. This is particularly relevant if several companies of a group act together so closely that they indeed act jointly, as in this case they can be sued together in one member state. Further, the ECJ held that Article 24(4) of the Brussels I Regulation (which affords exclusive competence with regard to validity to the national courts of the country where the patent is in force) does not apply to actions relating to provisional measures, such as preliminary injunctions (Article 35 of the Brussels I Regulation). This is because the decision on provisional measures involves merely an assessment of the chance of success of revocation before the competent court; but it does not itself constitute a prejudicial decision on validity. In other words, as long as the patent in suit cannot actually be revoked in preliminary injunction proceedings, such action cannot be blocked by an invalidity defence under Article 24(4).
The second decision derives from the Actavis v Lilly saga in the UK courts relating to pemetrexed (2012 EWHC 3316 (Pat) and 2014 EWHC 1511 (Pat); 2013 EWCA Civ 517 and 2015 EWCA Civ 555). This case concerned, among other things, a cross-border declaration of non-infringement regarding France, Italy and Spain. Such negative declaratory actions (known as ‘torpedo actions’) have traditionally been used by potential infringers in slower-moving jurisdictions than the United Kingdom with the aim of delaying the grant of an injunction on the basis that, under the Brussels I Regulation, such action blocks a later-filed action in a faster-moving jurisdiction involving the same cause of action and the same parties.
Actavis v Lilly in the United Kingdom was not concerned with the Brussels I Regulation, which deals only with EU defendants, since Lilly is a US company. However, the decision dealt with another issue that is relevant to the practice of cross-border declarations of non-infringement. The question of whether the Actavis product infringed each bundle patent was a matter of the substantive patent law of the country in which the bundle patent was in force. However, the issue arose as to whether the admissibility of such negative declaratory action was a matter of procedural law to be judged under the law of the country where the action was brought (the United Kingdom); or a matter of substantive law to be judged under the law of the country to which the cause of action related (France, Italy and Spain).
The UK courts reviewed the rule in the EU Rome II Regulation (864/2007) that the law applicable to non-contractual obligations resulting from an IP infringement is the law of the country for which protection is claimed. They held that this rule does not encompass the question of admissibility of a negative declaratory action. In other words, the UK courts concluded that the admissibility of an action for a cross-border declaration of non-infringement before the English court would be judged under English law, so Actavis did not need to take in the English proceedings the steps which would be required to decide a negative declaratory action in France, Spain or Italy. This decision will make the United Kingdom a procedurally attractive forum for ‘clearing the way’ negative declaratory actions, as the requirements for bringing such actions are lower than those in other EU countries, in terms of both the legal interest and more formal preconditions. For example, there is no requirement for the rights holder to threaten litigation (a requirement in Germany), or for the plaintiff to establish a concrete plan to exploit the patent (a requirement in France).
However, despite these decisions providing some encouragement for cross-border litigants, the bulk of all patent litigation in Europe does not involve proceedings with cross-border effect, but rather actions in carefully selected national courts with effect only in the country in which the action is decided. The choice of forum depends on the national peculiarities of the court systems.
Choice of forum
Traditionally, about 60% of all European patent infringement proceedings are brought before the German courts – in particular, the patent infringement chambers of the courts in Dusseldorf, Munich and Mannheim, which are accordingly very experienced. Germany operates a so-called ‘bifurcated system’, under which infringement and invalidity (revocation) are decided by separate courts. As a consequence, the infringement court will evaluate the chance of success of the separate invalidity action only in a summary fashion and will stay an infringement action pending the outcome of such invalidity action only if revocation appears highly likely. In practice, this happens in fewer than 10% of cases. Thus, an injunction may be granted in less than a year. Preliminary injunctions can be granted within a few months of a hearing – or even within a few days, if a hearing is not granted. Further, court practice has become more friendly to rights holders in recent years, so that (depending on the strength of the invalidity arguments) a preliminary injunction can be achieved even if a separate invalidation action is pending.
Other well-established, experienced jurisdictions are the United Kingdom and the Netherlands. The United Kingdom has been a preferred jurisdiction for ‘clearing the way’ actions brought by potential defendants, because the courts are quick and have previously been less patentee friendly than elsewhere in Europe (although this is changing). The Netherlands, in turn, may be the best bet for cross-border injunctions in preliminary injunction proceedings and offers very quick, well-reasoned decisions under the versnelderegime.
Italy and France have taken measures to improve their competitive position – for example, by concentrating patent litigation in specialised courts. France and Italy also have a long tradition of pre-trial disclosure measures (although the rules differ between France and Italy – the measures are more easily obtained in France).
These examples go to show that both rights holders and potential defendants can use a toolkit of proceedings in various jurisdictions to improve their position.
Unified Patent Court
The European patent litigation landscape will change significantly with the introduction of the unitary patent regime and the UPC. Both will enter into force following ratification by 13 states, including France, Germany and the United Kingdom. This is expected to occur by mid-2017 or possibly even earlier.
The UPC will be a true supranational court system, applicable not only for newly granted unitary patents, but also for traditional European patents (provided that rights holders do not opt out of the UPC system during a transitional period prescribed by the UPC Agreement) and supplementary protection certificates. Both a revocation decision and an injunction granted under the UPC will have effect in all member states.
However, the introduction of the UPC will by no means put an end to the need to select the right forum. Indeed, forum selection will assume even greater importance than before. The UPC will have a central division, but almost all infringement cases will need to be brought in local or regional divisions. There will be a choice of where to start the proceedings: at the court with jurisdiction where the infringement occurs or is threatened, where the defendant resides or – in case of multiple defendants with a commercial relationship and the same alleged infringement – where one of the defendants resides. This means that if a product is launched in multiple countries, the rights holder will have a wide choice of locations in which to bring the action.
All of the above-mentioned pre-eminent patent litigation jurisdictions are expected to host local divisions of the UPC, which will accordingly compete for business. Further, some countries will host multiple local divisions (four in Germany), additionally creating ‘intra-brand’ competition among local divisions.
It is commonly expected that, even though the panels of judges will be multinational (ie, including at least one judge from another member state), and the law to be applied will also be multinational, the local divisions will continue to be influenced by the traditions and case law of the local courts for some time. This means that different divisions may develop different approaches to certain issues (similar to the different approaches of different German courts at present). However, although the UPC Agreement permits bifurcation of infringement and validity claims – a provision inspired by the current German practice – the German local chambers are not expected to continue to bifurcate. Another relevant issue will be the willingness of non-English courts to conduct proceedings in English.
Further, the possibility of bringing actions in the national courts will continue not only for national patents (which will not be subject to the UPC) and European patents that have been opted out of the UPC, but also – for a transitional period of at least seven years – for European patents which have become subject to the UPC. Although it is not completely clear from the UPC Agreement, many understand that earlier-filed national actions – including revocation actions and possibly negative declaratory actions – will block the later-filed UPC action, at least for those member states in which the national actions will take effect.
It is fair to assume that there will continue to be plenty of forum-shopping options to be considered by both rights holders and potential defendants when devising a litigation strategy.
Ina vom Feld
IAM - This article first appeared in IAM magazine. For further information please visit www.iam-magazine.com.