As the launch of the UPC draws ever closer, one of the topics that potential litigants should consider is what jurisdictional opportunities or risks the new Court could pose. In this article, we take a look at three of the key areas where jurisdiction could influence proceedings in a post-UPC world.

1. Torpedoes: national actions in EU courts

Unless a European patent has been opted out of the UPC, the national courts and the UPC will share jurisdiction for patent infringement and revocation actions during the transitional period.[1]

Following its amendment in 2014, the Brussels Recast Regulation[2] recognises the UPC as a “common court to several Member States”.[3] Articles 29-32 of the Brussels Recast Regulation, which define how courts of the EU member states should deal with proceedings involving the same or related causes of action, apply to the UPC.[4] In short, article 29 provides that where proceedings that involve the same cause of action and the same parties are brought in more than one member state, any court other than the court first seised shall of its own motion stay its proceedings until jurisdiction of the court first seised is established. Where the jurisdiction of the court first seised is established, the other courts shall decline jurisdiction in favour of that court. Article 30 provides that where related actions are pending in the courts of different member states, any court other than the court first seised may stay its proceedings to avoid the risk of irreconcilable judgments from separate proceedings. Notably, article 29 is a mandatory provision whereas article 30 is discretionary.

Relevant to the assessment of jurisdiction and related actions is article 34 of the UPC Agreement (UPCA) which states that decisions of the UPC, in the case of a European patent, shall cover those Contracting Member States for which that European patent has effect. While that would appear to limit the Court’s jurisdiction to European patents in Contracting Member States[5], it is not clear whether this means that (1) the UPC’s decision must apply to all such designations of the European patent or (2) whether a party could voluntarily restrict relief to specific Contracting Member State designations of the European patent.

By way of example, assume that a patentee has sent a letter before action to an alleged infringer. If interpretation (1) applies, the alleged infringer could torpedo a UPC infringement action by filing a national action in a Contracting Member State seeking a declaration of non-infringement. However, under the second interpretation, the patentee could negate a torpedo by carving out the Contracting Member States in which the national action is pending from its UPC claim. It also remains to be tested as to whether the UPC would discretionarily stay an infringement action pending a national action for a declaration of non-infringement, as per article 30 of the Brussels Recast Regulation.

How should a patentee avoid being torpedoed in circumstances where the operation of the UPCA is untested? One option could be to opt its patent(s) out of the UPC until the patentee is ready to file its UPC infringement action, upon which time it can withdraw the opt out (provided that the alleged infringer has not already issued national proceedings)[6]. Looking at the other side of the coin, pending clarification from the CJEU, alleged infringers may wish to exploit the use of such torpedoes if they expect that they will be the subject of a UPC infringement action.

2. The UK courts: back to the common law

Whilst the position vis-à-vis related actions in national courts of EU Member States and the UPC is untested, it is governed by the Brussels Recast Regulation. Following the UK’s exit from the EU, the same cannot be said for actions in the UK courts. Not only does this mean that articles 29-34 concerning related actions do not apply, but the legislative bar to considering questions concerning the validity of patents of other Member States ostensibly has been removed[7]. In addition to this, for the present certainly, it does not appear that the Lugano Convention[8] will apply to UK actions. As a result, the English common law rules on jurisdiction will apply to foreign intellectual property disputes.

Regardless of the Brussels Recast Regulation position, English case law has long recognised that the validity of a foreign national patent is properly within the exclusive jurisdiction of the courts of the state which has granted the patent under the Mozambique principle. However, where validity is not in issue, the UK courts have held that cases concerning infringement and enforcement of foreign intellectual property rights are justiciable. In Lucasfilm[9], when ruling that the UK courts have jurisdiction to decide whether US copyright is infringed, the Supreme Court observed that “the modern trend is in favour of the enforcement of foreign intellectual property rights“.

More recently, the English Patents Court has shown a willingness, if not to rule upon, but at least consider arguments concerning the validity of foreign patents insofar as that consideration is necessary to resolve other issues in dispute before it. In Chugai Pharmaceutical Co Ltd[10], Chugai sought a declaration that it was not obliged to pay royalties under a licence to a US patent. The validity of that US patent was pivotal to the licence dispute and the Patents Court held that it had jurisdiction over the dispute on the basis that the validity of the patent itself was not in issue per se (i.e. Chugai did not seek a declaration of invalidity or to revoke the US patent). Similarly, in Otsuka Pharmaceutical Co., Ltd, another case where the validity of foreign patents may be relevant to the main licence dispute, the Judge accepted jurisdiction and in doing so noted that “Not every case in which a party raises an argument about patent validity should necessarily cause this court to decline jurisdiction. That will depend on how that argument features in the case.”[11]

Despite this trend of opining on validity (and perhaps reassuringly for patentees), in Chugai the Judge indicated in obiter that had Chugai directly challenged the validity of the US patent, there were powerful arguments in favour of such a claim not being justiciable in the UK courts.

So where does this leave disputes concerning European patents and the UPC? Given the UK courts’ willingness to opine on the proper extent of foreign rights, and in view of the fact that there is no bar from doing so under the Brussels Recast Regulation, it is feasible that the UK courts will consider questions concerning the ambit of foreign designated European patents and possibly even unitary patents. However, how far it is prepared to go remains to be seen and, should the UK court seise jurisdiction, whether the UPC would stay concurrent proceedings pending the resolution of the UK proceedings.

3. Long-arm jurisdiction: just how far does the UPC’s reach extend?

As part of the revision of the Brussels Recast Regulation to accommodate the UPC, a new provision was introduced which some commentators have speculated could give rise to a so-called “long-arm jurisdiction” for the UPC.

Article 71b(2) of the Brussels Recast Regulation says: “(2) where the defendant is not domiciled in a Member State, and this Regulation does not otherwise confer jurisdiction over him, Chapter II[12] shall apply as appropriate regardless of the defendant’s domicile. Application may be made to a common court for provisional, including protective, measures even if the courts of a third State have jurisdiction as to the substance of the matter;”. Some practitioners have interpreted this to mean that the UPC may grant interim relief with respect to foreign patents. As articles 1 and 3 of the UPCA limit the UPC’s powers to unitary patents and European patents not opted-out, it seems unlikely that the UPC will have jurisdiction to grant interim injunctions with respect to, for example, US patents. However, there has been the suggestion that the UPC could grant interim injunctions for European patents in non-EU / EEA territories, such as the UK or Turkey. Others though take the position that the provision simply says to the extent that the UPC has jurisdiction over an alleged infringement (e.g. taking place within a Contracting Member State), the fact that the alleged infringer is domiciled within a third country and subject to their jurisdiction does not preclude the UPC granting preliminary measures to restrain the infringement.

Further, article 71b(3) of the Brussels Recast Regulation goes on the say: “(3) where a common court has jurisdiction over a defendant under point 2 in a dispute relating to an infringement of a European patent giving rise to damage within the Union, that court may also exercise jurisdiction in relation to damage arising outside the Union from such an infringement. Such jurisdiction may only be established if property belonging to the defendant is located in any [Contracting] Member State…”. Again, some observers have read this provision as signalling that the UPC may consider itself to have jurisdiction over non Contracting Member States, not EU, EP designations so long as there is also infringement within the EU and the defendant has assets within the reach of the UPC. A plainer reading, however, of the provision is that it is concerned with damage arising in a third country from the infringement taking place within a Contracting Member State (as indicated by the words ‘from such an infringement‘). It should also be borne in mind that Article 34 of the UPCA says in terms that “Decisions of the Court shall cover, in the case of a European Patent, the territory of those Contracting Member States for which the European Patent has effect.”

Should the UPC decide it can embrace actions concerning non-EU territories, the question will arise as to what law it should apply. Seeking to impose ‘’UPC law’ in relation to acts undertaken in a non-member state territory would seem to strongly invite an anti-suit response from the local court. It is, however, quite unclear how the UPC could apply the local law in question; both in terms of the practicality of such a determination within the constraints of the UPC system and as to the need for the UPC to acknowledge the supremacy of the CJEU which would, of course, have no oversight of or control over the local law in question.

A recipe for Anti (to the power^N) Suits?

Whilst the UPC is in its infancy, patentees are, of course, likely try to test the limits of the UPC’s reach. The initial arbiters of the new Court’s ambit will be the Court itself and likely the CJEU. Seeking to exercise extra-territorial influence over non-participating territories will, however, very likely trigger protective measures being sought in those territories through anti-suit protection, with all the considerations of international comity that entails.

Summary

Questions clearly remain as to application of the Brussels Recast Regulation and the UPCA in the context of the interplay between national actions (both within and outside the EU) and UPC actions. The ultimate arbiter of the interpretation of the legislative instruments will be the CJEU, but post-Brexit the UK court is unlikely to be an entirely passive observer. It is quite likely, therefore, that appeals, referrals and anti-suit actions will be rife during the transitional period of the UPC and litigants and potential defendants would be well advised to keep abreast of the jurisdictional debate as it unfolds.

—————–
[1] Article 83(1) UPCA
[2] Regulation (EU) No 1215/2012, as amended by Regulation (EU) No 542/2014 (the Brussels Recast Regulation)
[3] Article 71a Brussels Recast Regulation
[4] Article 71c(2) of the Brussels Recast Regulation specifies articles 29 to 32 shall apply where, during the transitional period, proceedings are brought in the UPC and in a court of an EU member state party to the UPCA.
[5] Although see below as to the long-arm jurisdiction debate.
[6] Articles 83(3) and (4) UPCA
[7] Article 6(a) Brussels Recast Regulation
[8] The Lugano Convention provides for the recognition and enforcement of a wide range of civil and commercial judgments between the EU and EFTA states.
[9] Lucasfilm Limited and others (Appellants) v Ainsworth and another (Respondents) [2011] UKSC 39
[10] Chugai Pharmaceutical Co Ltd v UCB Pharma SA [2017] EWHC 1216 (Pat)
[11] Otsuka Pharmaceutical Co., Ltd v GW Pharma Limited & GW Pharmaceuticals Limited [2022] EWHC 1012 (Pat).  At the time of writing this article, we understand that permission to appeal has been granted in respect of this decision.
[12] Chapter II grants the court jurisdiction on non-domicile bases.