EP 1 740 740 B1 relates to a compact service module which is intended for electrolytic aluminium production plants.
Brief outline of the case
In a decision of the Düsseldorf Regional Court (4c O 1/21), dated 09.08.2022, the defendant was ordered to stop infringement of patent EP 1 740 740 B1 and damages were awarded to its proprietor.
By an application dated 08.08.2023, the proprietor filed an action for the determination of damages before the CFI LD Hamburg
In its order UPC_CFI_559935/2023, dated 17.11.2023, the presiding judge of the LD Hamburg, acting as rapporteur, denied competence for the determination of damages.
On 04.12.2023, the proprietor requested a review of the decision by the entire panel in accordance with RoP 331.1 and 333.4 UPC.
By decision UPC_CFI_559935/2023, dated 25.01.2024, the application for review of the rapporteur’s decision of 17 November 2023 by the 2023 by the panel was rejected as inadmissible. Leave to appeal was granted.
In its decision UPC_CoA_30/2024-APL_4000/2024, the CoA UPC decided that the UPC has jurisdiction to decide on acts of infringement committed before the entry into force of the UPCA on 01.06.2023, as long as the European patent invoked has not yet lapsed at that date.
The order of the CFI LD Hamburg of 17.11.2023
In its order UPC_CFI_559935/2023, the presiding judge, acting as rapporteur, of LD Hamburg came to the following conclusion:
The UPC does not have jurisdiction for actions for the determination of damages on the basis of a legally binding concluded patent infringement proceedings before a national court.
Art. 32(a) UPCA gives the UPC only gives jurisdiction to determine damages after a prior action for patent infringement has been brought before the UPC. Art. 32 (f) UPCA only establishes jurisdiction for actions for damages or compensation based on the provisional protection conferred by a published application for a European patent.
The recognition of a national judgement for the award of damages cannot establish the competence of the UPC for the determination of damages.
The decision of the CFI LD Hamburg of 24.01.2024
The decision can be summarised as follows: an unsuccessful party is not deprived of any right. This is because a an adverse decision may be appealed directly in accordance with RoP 220.1 UPC. The CoA UPC is thus directly authorised to review the correctness of the decision. Nothing else would take place if the entire panel would have made a final decision.
The proprietor’s point of view about the competence of the UPC in appeal
Contrary to the view of the Local Division, the phrase in Art 32(1,a) UPCA “for actual or threatened infringements of patents” refers conceptually and in the normal sense of the word to all actions whose legal basis is the actual or threatened infringement of patents, i.e. whose grounds are based on the infringement of a patent.
The fact that a national judgment has already been issued regarding the parties, in which the patent infringement was established and injunctive relief and damages were awarded, does not change that an action now claiming a specific amount of damages for the patent infringement is also an action for patent infringement and thus falls within the scope of jurisdiction of Art. 32(1,a) UPCA according to its wording.
A “withdrawal” of the UPC’s jurisdiction by a national action cannot be inferred from the UPCA. On the contrary, there is only one provision in the UPCA according to which the jurisdiction of the UPCA is excluded by an act of the patent proprietor, that is Art 83 UPCA relating to the opt-out and the opt-in.
The present proceedings before the UPC are an isolated application to determine the amount of damages pursuant to RoP 125 et seq., for which the UPCA in Art. 32(1) does not provide jurisdiction, but which the RoP UPC only recognize as a dependent procedural step of the patent infringement proceedings pursuant to Art. 32(1,a) UPCA.
The infringer’s point about the competence of the UPC in appeal
The infringer argued that the UPC has no jurisdiction over the request. In the subsidiary, the UPC does not have jurisdiction from a temporal perspective and the request is inadmissible.
Art. 32(1) UPCA enumerates those actions for which the UPC has been granted jurisdiction by the Contracting Member States (CMS). This list is exhaustive. The national courts remain competent for all other actions or applications pursuant to Art. 32 para. 2 UPCA.
Against this background, jurisdiction pursuant to Art. 32(1) UPCA must be interpreted with caution.
The proprietor’s action does not constitute an action for infringement of patents pursuant to Art 32(1,a) UPCA. It is directed in isolation to the determination of the amount of damages, but does not make the patent infringement and the obligation to pay damages in principle a subject of the decision of the UPC.
If the patent proprietor has had the liability for damages assessed on the merits by a national court (during the transitional period), it is appropriate to adhere to this decision in favour of national legal proceedings for the assessment of the amount of damages.
It follows from the unambiguous wording of Art 32(1,a) UPCA that an action for patent infringement must include infringement as its subject-matter. The UPC can only in a second step make use of its power to order damages.
An isolated application for the determination of damages is therefore not in substance an action pursuant to Art 32(1,a) UPCA because it does not – and cannot – have the question of patent infringement as its subject-matter. The absence of jurisdiction of the UPC pursuant to Art 32(1,a) UPCA is confirmed by the RoP, which in RoP. 125 UPC et seq. only provides for proceedings to determine damages as a dependent part of the patent infringement proceedings.
The proceedings pursuant to RoP.125 UPC et seq. are merely a separate procedural stage of a normal action for patent infringement, which the RoP UPC has “outsourced” procedurally for reasons of procedural economy.
If the UPC is to determine the amount of damages in this case in accordance with the law of the UPCA, this would lead to different sub questions of the same legal dispute being adjudicated by different courts, i.e. determination of the patent infringement and the legal consequences in principle by the national court on the one hand, and, on the other hand, the amount of damages by the UPC.
Patent proprietors could also engage in abusive “law shopping” for the different sub-questions of one and the same legal dispute.
The decision of the CoA
The wording of Art. 32(1,a) UPCA, “actions for actual or threatened infringements of patents” does not exclude that separate actions for damages, such as the one in the present proceedings, are encompassed by the UPC jurisdiction. Neither does it prescribe such jurisdiction explicitly.
The CoA UPC observed that the wording of Art 32(1,a) UPCA is inconclusive, and that Arts 56, 68 and 83 UPCA are not determinative as interpretative tools since they all come into play only when the UPC has jurisdiction, while, on the other hand, the rationale behind Art. 32(1,f) UPCA speaks in favour of jurisdiction of the UPC for separate damages actions, when the infringement has been established by a national court.
The CoA UPC held that the Brussels Ia Regulation is not relevant to the question of interpretation of Art 32(1,a) UPCA, which concerns the division of jurisdiction between the UPC and the national courts of the CMS.
Referring to a judgment of the Court of Justice of 05.09.2019 in Case C-172/18, AMS Neve and Others, ECLI:EU:C:2019:674, at para 63, the CoA UPC added that need to ensure that only one law is applicable does not exist in the context of rules concerning which court has jurisdiction.
The requirement to apply national patent law pursuant to Art 64(3) EPC has been replaced by the UPCA at least insofar as proceedings before the UPC are concerned.
The CoA UPC referred to Art 24(1) UPCA, and further noted that the UPC has its own substantive law on patent infringements, cf. Art 25-30 UPCA.
The CoA UPC came to the conclusion that there is good reason to revisit Art 68 UPCA on damages. This provision forms substantive law on the consequences of a patent infringement applicable to the UPC. Through Art. 68 UPCA, the UPC has its own damages provisions.
If an action is lodged with the UPC, within its jurisdiction and encompassing a damages request, there is by consequence a complete set of substantive rules applicable insofar as the European patents of the CMSs are concerned. They are subject to uniform substantive law and procedural rules.
The CoA UPC held that, provided that a patent infringement is established in first proceedings, the patent proprietor can subsequently bring proceedings against the infringer for the quantification of damages.
he patent infringement and the obligation to pay damages has been established in the first proceedings, i.e. in the German court, and will not be re-litigated. The subsequent damages proceedings can focus entirely on the damages calculation. This creates procedural efficiency.
For the CoA, there is no obligation for the parties to go to a national court for the determination of the amount of damages. Instead, they can jointly choose out-of-court settlement, mediation or commercial arbitration. If litigation is to take place in court, however, applicable rules on jurisdiction must be observed.
The same approach is foreseen in the RoP UPC, where RoP 118.1 UPC sets out that the UPC may in a decision on the merits, if requested, order the payment of damages or compensation according to Art 68 and 32(1,f) UPCA. The amount of the damages or the compensation may be stated in the order or determined in separate proceedings.
The CoA UPC held that it has jurisdiction to decide on acts of infringement committed before the entry into force of the UPCA on 01.06.2023, as long as the European patent invoked has not yet lapsed at that date.
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Legality of the decision of the CoA
The present decision has once again been taken by 3 LQJ of the CoA in manifest breach with Art 9 UPCA. The legality of this decision can thus be questioned.
The trick by which the UPC claims competence
The UPC claims competence for acts having happened even before it was opened, by arguing that it is enough that a national court in a CMS has decided that an infringement occurred. In the UPC procedure the determination of damages is a separate procedure and for this reason the UPC is competent for damages. This is firstly a rather biased interpretation of Art 68 UPCA. This is secondly, an even more biased of Art 32(1,f) UPCA.
Taking pretext that the UPC is competent to decide upon damages actions for damages or compensation derived from the provisional protection conferred by a published European patent application to be competent for damages decided by a national court in a CMS is going way too far. Once the patent is granted any provisional protection has become irrelevant, as infringement is decided on a version which would have been there at the date of filing.
The patent has been filed as a PCT application, PCT/FR2005/000695, on 22.03.2005, and granted on 02.11.2016, cf. Bulletin 2016/44. The European phase was entered on 18.08.2006. It took the ED until 12.05.2011 to send out a first communication. The proprietor replied on 31.08.2011. It took the ED until 10.06.2016 to send the communication under R 71(3).
The decision of the Düsseldorf court is dated 09.08.2022, and now the proprietor should benefit from a provisional protection by which damages can be retrospectively claimed just because the EPO took over 10 years to grant a patent? I have rarely seen a more flimsy reasoning.
The present decision shows once again that not limiting the period in which an infringement action can be filed before the UPC has drastic consequences. This is however the case in the CMS. For legal certainty the proprietor cannot tolerate infringement for a long time and only then start an action for infringement.
With the present decision we see that the UPC even goes as far as to claim the right to assess damages, as it is sufficient that a court in a CMS has decided that infringement occured, even if this infringement occurred before the entry in force of the UPC!
I am not sure that these consequences have been made clear to the MPs of the parliaments having ratified the UPCA.
The UPCA and the RoP UPC are a disaster
I would further have thought that legal rules can apply in the future but not in the past, as parties to a procedure before a court cannot anticipate future development of the law.
It reinforces the stance I have made that, at the whim of the proprietor, a potential infringer can be submitted to costs and damages which it could not expect. This is exactly what occurs if an opt-out is rescinded by an opt-in
In the present case, the infringer has called this abusive “law shopping”. This applies to the retroactive application of the UPC when a proprietor first opts out and later opts in.
By not presenting the RoP UPC, concocted by a coopted group of lawyers, to the ratifying parliaments, it allows the kind of actions presently engaged.
I can only repeat what I said when presenting the fate of EP 3 594 009 B1 before the LD Düsseldorf in my blog: a referral to the ECJ is badly needed. This is the more so, since there is no revision instance at the UPC, whereas there is one in all the CMS.
The recent decisions of the UPC show at best was lobbyism can achieve.
When there is a dispute between two European companies, the overall damage caused by the UPC can be somehow accepted, but when one remembers that barely 30% of granted European patents are held by companies residing in the CMS, the effect of the UPC on European industry in general, and European SMEs in particular, will be extremely deleterious, but not for the pockets of some law firms who pushed the UPC.
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