Posts Tagged Article 24(4)

Huawei v Conversant wireless. Reflexive application of patent validity jurisdiction confirmed in principle – but rejected in casu.

In [2019] EWCA Civ 38 Huawei v Conversant Wireless (on appeal from [2018] EWHC 808 (Pat) the Court of Appeal considered whether in the event of 2 defendants being UK based (the others domiciled in China) the UK courts may relinquish jurisdiction reflexively to honour Article 24(4) Brussels Ia’s exclusive jurisdictional rule for the validity of patents.

Neither Article 33’s lis alibi pendens or Article 34’s ‘forum non conveniens’ rule were discussed.

Huawei China and ZTE China have commenced proceedings in China against Conversant, seeking to establish invalidity and (in the case of Huawei China only) non-infringement of Conversant’s Chinese patents. Conversant have inter alia sued Huawei China and ZTE China in Germany for infringement of its German patents.

Following Owusu, jurisdiction for infringement of UK patents against UK incorporated companies must lie and remain with the English courts per Article 4 B1a. As readers will remember from my review of Ferrexpo, the English courts for some time however have noticed with relish that the CJEU in Owusu did not entertain the part of the referral which asked it whether exclusive jurisdictional rules may apply reflexively – holding thereafter in the CJEU’s stead that they might so do (in a discretionary: not a slavish fashion: Floyd J here at 115).

At 95 ff Floyd J discusses the issues after having summarised the various representations made (see a summary of the summary by John de Rohan-Truba here), with much of the discussion turning on English CPR and jurisdictional rules, and reflexive application of Article 24(4) confirmed in principle, but not applied here. Requests to refer to the CJEU were summarily dismissed.

Geert.

(Handbook of ) European Private International Law, 2nd ed. 2016, Chapter 2, Heading 2.2.6.7, Heading 2.2.9.5.

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Ablynx and VUB v Unilever. On Brussels Ia’s protection for choice of court (Article 31(2) and, again, on DNIs and exclusive jurisdiction for patents.

[2019] EWHC 792 (Pat) Ablynx and VUB v Unilver engages similar discussions as Eli Lily v enentech and Chugai v UCB with the additional element of now, under Brussels Ia, the application of Artile 31(2). This Article makes safe the torpedo previously used to gazump choice of court, by giving the courts of the States in whose favour choice of court has been concluded, a first go at discussing the validity and application of the choice of court agreement.

Here: does Article 31(2) mean that the Brussels courts, to whom jurisdiction has been assigned in a licence agreement, get to decide first on the engagement of Article 24(4)’s exclusive jurisdictional rule re the validity of patents?

It is worth quoting Hacon J in full: at 17 ff

’17. Ms Lane (for the defendants, GAVC) submitted that the position is clear: art.31(2) is engaged and therefore these proceedings must be stayed. Art.24 could never make a difference in this court because it cannot override art.31(2). That is because art.31(2) is expressly stated to be without prejudice to art.26 but not art.24. The consequence is that all issues arising in these proceedings must be ceded to the Brussels courts, including the question whether art.24(4) is engaged and if so, what should be done about it. It is not the concern of this court.

18. I disagree. To my mind art.25(4) explains why there is no mention of art.24 in art.31(2). Art.31(2) is necessarily without prejudice to art.24 since an agreement relied on for a stay under art.31(2) can carry no legal force if it purports to exclude the courts having exclusive jurisdiction under art.24. Even on the assumptions I have stated, art.31(2) cannot apply if art.24(4) is engaged. Art.24(4)’s engagement depends on whether these proceedings are ‘concerned with’ the validity of the Patents UK within the meaning of art.24(4). I must resolve this last question before I can decide whether the (assumed) agreement carries legal force and therefore whether art.31(2) is engaged.

19. I also note that art.26 is itself made subject to art.24. This reinforces my view that the recasting of Brussels I has not altered the hierarchy of provisions awarding jurisdiction, with art.24 at the top. Arts.24 and 25 both speak of ‘exclusive jurisdiction’, but that conferred by art.24 is the more exclusive.’

Having held that Article 31(2) is not engaged, the Court still has to assess whether the claim is essentially a decleration of non-infringrement or rather ‘concerns’ the validity of the patents. Defendants argue that the validity of the Patents UK would form only an incidental part of this action, since it is really a dispute about the scope of defendant’s licence.

Here, Hacon J discussed CJEU authority at length (GAT v LUK, BVG, Gasser etc.) and summarises at 53

(1) When a stay is sought under art.31(2), if an argument is raised that the court before which the stay is sought has exclusive jurisdiction under art.24, that court must decide whether the argument is correct.

(2) If the court has exclusive jurisdiction under art.24, art.31(2) is not engaged. There will be no stay.

(3) If the court does not have exclusive jurisdiction under art.24, it must decide whether at least prima facie there is an agreement which satisfies art.25 and which confers exclusive jurisdiction on courts of another Member State. If so, provided the defendant has not entered an appearance in a manner which satisfies art.26, there must be a stay of the proceedings.

EPLaw helpfully summarise the lenghty review of testimony and pleadings as follows: taking into account the usual practice in relation to patent validity proceedings in the UK, and the arguments which are typically run, the Court concluded that there was no real doubt that if the proceedings progress to trial they will be concerned with the validity of the Patents within the meaning of art.24(4). Art.24(4) was therefore engaged.

The case raises again the interesting issue of the degree to which the court may rely on parties’ submissions in particulars of claim when examining jurisdiction, or alternatively need to look beyond these stated arguments into what might and will be argued.

Leave to Appeal has been granted and a further order has already dealt with service issues.

Geert.

(Handbook of ) European Private International Law, 2nd ed. 2016, Chapter 2, Heading 2.2.6.7, Heading 2.2.9.5.

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Eli Lilly v Genentech: When does a patent infringement case turn into questions of validity? – and its impact on cost findings.

I explained the issue in [2017] EWHC 3104 (Pat) Eli Lily v Genentech in my posting on Chugai v UCB. A defendant in a patent infringement case often tries to make the case that the suit is about patent invalidity really: for this obliges the court per GAT v Luk to refer (only the) invalidity issue to the court with exclusive jurisdiction under Article 24(4) Brussels I Recast.

Here, Eli Lily seek a declaration of non infringement of a bundle of European patents held by Genentech, a US-incorporated firm.

Birss J in the case summarises all relevant precedent, including Chugai, to reach the conclusion that the suit can stay in the UK.

Of note is his holding on costs. The English courts do not just review whether the case is currently about validity but also what the likelihood is that it will become one on validity. For if it does later on, Birss J suggests ‘this entire exercise will have been something of a charade‘ (at 84). (Which is not quite the case: even if the validity issue needs to be temporarily outsourced to different courts, the infringement issue may later return to the courts of England).

On this point, Eli Lilly refuse to disclose whether they may seek a ruling on the validity of the patents: they would rather wait to see Genentech’s defence. Not an unacceptable position, but one, High Court does warn, which will have an impact on costs. At 87: ‘I am satisfied that these unusual circumstances mean that it would not be fair to pre-empt what each party may decide to do. There are sufficient uncertainties that the right thing to do is wait and see what happens. However in my firm but necessarily provisional view that wait should be at Lilly’s risk as to costs. If Genentech does counterclaim for infringement, and validity of the non-UK patents is put in issue (here or abroad) in response, then it is very likely that Lilly should bear the whole costs of this application even if they win it in its form today.

That latter point is interesting. It’s twice now this week that judgments come to my attention where jurisdictional considerations are clothed in costs implications.

Geert.

(Handbook of ) European Private International Law, 2nd ed. 2016, Chapter 2, Heading 2.2.6.7.

 

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Hanssen: CJEU confirms narrow reading of exclusive jurisdictional rules.

The precise application of the Brussels I Recast’s exclusive jurisdictional rules, remains a balancing exercise. Being an exception to the Regulation’s’ overall preference for the domicile of the defendant, they have to be given a narrow reading. On the other hand, they serve what the Regulation sees as being important purposes of preference of one particular jurisdiction over another, hence the exception cannot be so narrowly construed as to lose purpose. In C-341/16 Hanssen, the CJEU held last week and confirmed Saugmansgaard ØE AG’s Opinion of the summer.

Does an action seeking an order requiring the person formally registered as proprietor of a Benelux mark to make a declaration to the OBPI that she has no entitlement to the mark and that she waives registration as the proprietor of that mark, fall within the scope of Article 24(4) of Brussels I Recast? No, it does not:  the main proceedings in this case do not relate to the validity, existence or lapse of the trade mark or an alleged right of priority by reason of an earlier deposit. They are solely concerned with whether the proprietor of the contested mark is Ms Prast-Knipping or Hanssen Beleggingen, which must be determined on the basis of the legal relationship existing between the parties concerned: Hanssen Beleggingen submits that, as a result of a chain of transfers of the contested mark, it has become the actual proprietor of the rights to the contested mark. Existence etc. of the trademark is not at issue.

The question of the individual estate to which an intellectual property right belongs is not, generally, closely linked in fact and law to the place where that right has been registered (at 37): hence the raison d’être of Article 24(4) is not engaged.

Geert.

(Handbook of) EU private international law, 2nd ed. 2016, Chapter 2, Heading 2.2.6, Heading 2.2.6.7

 

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Chugai v UCB: When does one litigate not just the scope but also the validity of a patent?

Update 31 August 2018 the merits of the case were subsequently held in August 2018,  [2018] EWHC 2264 (Pat).

End of exam season (sadly not yet of marking marathon). In the next few weeks I shall be posting on judgments issued a little or longer while ago, which I was pondering to use in exams. (I did for some of them).

In [2017] EWHC 1216 (Pat) Chugai Pharmaceutical v UCB the issue at stake was to what degree a suit seeking to establish absence of liability under a patent license, in reality provokes argument on the validity of the patent. Carr J has excellent review of precedent, much of which has passed in one way or another on this blog. Please do refer to judgment for proper reading.

Claimant (“Chugai”) seeks a declaration against the Defendants (collectively “UCB”) that it is not obliged to continue to pay royalties under a patent licence (“the Licence”) granted by the First Defendant (“UCB Pharma”).  UCB Pharma is a Belgian company with an English branch which entered into the Licence with Chugai in respect of a portfolio of patents. Chugai claims that its products, which are, in part, manufactured and sold in the USA, fall outside the scope of the claims of the Patent concerned. Accordingly, Chugai seeks a declaration that it owes no royalties for the manufacture and sale of these drugs manufactured after a certain date.

UCB alleges that, although framed as a claim for a declaration relating to a contract, a part of these proceedings, in substance, concerns not only the scope but also the validity of the Patent. UCB submits that the validity of a US patent is non-justiciable, since the English court has no power to determine the validity of a foreign patent. Accordingly, it submits that those parts of Chugai’s pleading which are said to raise issues of invalidity fall outside the subject matter jurisdiction of the English court.

European private international law as readers will know lays greats emphasis on exclusive jurisdiction in the case of validity of patents. The CJEU’s holding in C-4/03 Gat v Luk that nullity actions against a national part of a certain European patent can only be conducted in the jurisdiction for which that patent was registered, regardless of whether the nullity argument is raised in the suit or by way of defence, is now included verbatim in Article 24(4) Brussels I Recast. The EU’s take is rooted in the idea that the grant of a national patent is “an exercise of national sovereignty” (Jenard Report on the Brussels Convention (OJ 1979 C59, pp 1, 36)). The rule therefore engages the Act of State doctrine, and suggests that comity requires the courts of States other than the State of issue, to keep their hands off the case.

Particularly in cases where defendant is accused of having infringed a patent, this rule gives it a great possibility to stall proceedings. Where the action is ‘passive’, with plaintiff aiming to establish no infringement, the argument that the suit really involves validity of patent is less easily made.

The possibility of ‘torpedo’ abuse, coupled with less deference to the jurisdictional consequences of the Act of State doctrine [particularly its contested extension to intellectual property rights], means the English courts in particular are becoming less impressed with the exclusivity. (Albeit Carr J on balance decides per curiam (at 73-74) that direct challenges to the validity of foreign patents should not be justiciable in the English courts). Where the EU Regulation applies, they do not have much choice. Carr J refers to [2016] EWHC 1722 (Pat) Anan where claimant sought to carve out issues of validity by seeking a declaration that the defendant’s acts infringed a German patent “if the German designation is invalid (which is to be determined by the German courts)“.  EU law meant this attempt could not be honoured. Carr J however suggests that EU rules have no direct application in the present case because the Patent at stake is a United States patent. That is spot on, on the facts of the case: choice of court having been made in favour of the English courts, the case does not fall under the amended lis alibi pendens rule of the Brussels I Recast. In Article 33 juncto recital 24, reflexive effect is suggested for the Regulation’s exclusive jurisdictional rules, leaving a Member State court in a position (not: under an obligation) to give way to pending litigation in third countries, if its own jurisdiction is based on a non-exlusive jurisdictional rule (Articles 4, 7, 8 or 9) and not within the context of the protected categories.

Allow me to lean on 20 Essex Street’s conclusion in their review of the case: Carr J held that the case before him was not a direct challenge to validity. He accepted Chugai’s submissions that its claim was contractual. Disputed parts of the patent were incidental to the essential nature of its claim, which was a claim for determination of its royalty obligations. In his view, this claim fell within the exclusive jurisdiction clause, in favour of the English courts, which parties had agreed.

Essential reading for IP litigators.

Geert.

(Handbook of) EU Private international law, 2nd ed. 2016, Chapter 2, Heading 2.2.6.7.

 

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