Posts Tagged Declaration of non-infringement

DNIs, patents, exhaustion and jurisdiction under Lugano: Parainen Pearl v Jebsen Skipsrederi.

A case title which sounds a bit like a Scandinavian crimi – that’s because it almost is. In [2017] EWHC 2570 (Pat) Parainen Pearl et al v Jebsen Skipsrederi et al the facts amounted to claimants, who had purchased a vessel containing a pneumatic cement system patented by defendant (a company domiciled in Norway), seeking a declaration of non-infringement (DNI) of said patent. The purchase was somewhat downstream for the vessel had been sold a number of times before.

Claimants suggested jurisdiction for the UK courts for DNIs relating effectively to the whole of the EEA (at least under their reasoning; the specific countries sought were Sweden and Finland). For the English (and Welsh side of things jurisdiction is established without discussion under Article 5(3) Lugano, forum delicti. Reference was made to Wintersteiger and to Folien Fischer.

Claimants suggested that by the first sale to the original owner, defendants had ‘exhausted’ their intellectual property thus rendering the vessel into a good free to sold across the EEA. Should the court agree with that view, that finding of exhaustion would have to be accepted, still the argument went, across the EEA. Hence, an initial finding of exhaustion, given the need to apply EEA law the same in all EEA Member States, would have to be accepted by all other States and conversely this would give the English courts jurisdiction for pan-EEA DNIs.

Arnold J refers to among others Roche, Actavis v Eli Lilly, Marzillier. He holds that a potential finding by an English court of exhaustion may not necessarily be recognised and enforced by other courts in the EU or indeed EEA: it is not for the UK courts to presume that this will be so (despite their being little room for others in the EEA to refuse to enforce): ‘(Counsel for claimant) argued that.., on a proper application of European law, there could only be one answer as to whether or not the Defendants’ rights under the Patent in respect of the Vessel had been exhausted. In my view, however, it does not follow that it would be proper for this Court to exercise jurisdiction over matters that, under the scheme of the Lugano Convention, lie within the province of the courts of other Contracting States.’

Article 5(3) which works for UK jurisdiction, can then as it were not be used as a joinder-type (Article 6(1) Lugano; Article 8(1) Brussels I Recast) bridgehead for jurisdiction on further claims.

Conclusion: UK courts have no jurisdiction in so far as the DNIs extend beyond the UK designation of the Patent.

Geert.

(Handbook of) EU Private international law, 2nd ed. 2016, Chapter 2, Heading 2.2.11.2.4, Heading 2.2.12.1.

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More on intellectual property jurisdiction. Community designs in BMW v Acacia.

C-433/16 BMW v Acacia follows a similar pattern as yesterday’s post on the Trademark Regulation. In Community designs, too, intellectual-property specific secondary law varies the overall jurisdictional regime of Brussels I (Recast), here: Regulation 6/2002 on Community designs. Reference is best made to the judgment itself for readers to appreciate how exactly the general regime is part-incorporated.

In general, the jurisdictional rule for Community designs incorporates less of the general regime of the Brussels I (Recast) than its Trademark Regulation. (Current) Article 24(4)’s exclusive jurisdictional rule for instance is made inapplicable for designs. So too is (now) Article 7(2)’s rule on tort.

Acacia brought a proactive action against BMW before the Tribunale di Napoli (District Court of Naples (Italy)) seeking a declaration of non-infringement of Community designs, of which BMW is the proprietor, for alloy rims for automobile wheels, as well as a declaration of abuse of a dominant market position and unfair competition by BMW. The action clearly anticipated counter action by BMW. Acacia also sought an injunction to prevent BMW from taking any action hindering the marketing of the replica rims. (Of note generally is that not all Member States allow for actions in non-infringement. See here for a review of the implications of same).

Regulation 6/2002 however provides that actions for declaration of non-infringement (Article 81(b) of that regulation) may be brought, where the defendant is domiciled in an EU Member State, before the Community design courts of that Member State alone. These courts are specifically assigned by the Member States. Article 7(2)’s rule on tort as noted does not apply and the CJEU does not take long to hold exactly that. Declaration of abuse of a dominant position and of unfair competition that are connected to actions for declaration of non-infringement of Community design, likewise cannot be based on Article 7(2) Brussels I Recast.

A declaration of non-infringement under Article 81(b) of the Community design Regulation must, when the defendant is domiciled in an EU Member State, be brought before the Community design courts of that Member State, except where there is choice of court or voluntary appearance (Article 25 cq 26 of the Recast), or within the rules of lis pendens and related actions. As for Article 26, voluntary appearance cannot be deduced from the fact that the defendant appears to contest jurisdiction, even if at the same time they also argue to the merits: this is held again by the CJEU in line with earlier case-law.

The Court’s judgment is neither shocking nor surprising. It is good however to be reminded of the jurisdictional rules on intellectual property.

Geert.

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‘Establishment’, jurisdiction and the EU Trademark Regulation: Hummel v Nike.

Jurisdiction in intellectual property cases is notoriously complex and frankly opaque, in the case of the EU exacerbated by the impact of secondary law. My colleague Marie-Christine Janssens has a great overview in the Belgian reports at the Congress of Washington of the International Academy of Comparative Law. Brussels: Bruylant, 611-652.

At stake in C-617/15 Hummel v Nike was Regulation 207/2009, in the meantime superseded by Regulation 2015/2424.  Article 94 of the former, entitled ‘Application of Regulation … No 44/2001’, contains rules on jurisdiction and procedure in legal actions relating to EU trade marks. It states that ‘Unless otherwise specified in this Regulation, Regulation … No 44/2001 shall apply to proceedings relating to [EU] trade marks and applications for [EU] trade marks, as well as to proceedings relating to simultaneous and successive actions on the basis of [EU] trade marks and national trade marks.’ Article 94 essentially varies, to some degree, the jurisdictional rules of the Brussels I (now Recast) Regulation.

Now, what needed specific interpretation was Article 97’s

‘1.      Subject to the provisions of this Regulation as well as to any provisions of Regulation … No 44/2001 applicable by virtue of Article 94, proceedings in respect of the actions and claims referred to in Article 96 shall be brought in the courts of the Member State in which the defendant is domiciled or, if he is not domiciled in any of the Member States, in which he has an establishment. 

2.       If the defendant is neither domiciled nor has an establishment in any of the Member States, such proceedings shall be brought in the courts of the Member State in which the plaintiff is domiciled or, if he is not domiciled in any of the Member States, in which he has an establishment.

3.      If neither the defendant nor the plaintiff is so domiciled or has such an establishment, such proceedings shall be brought in the courts of the Member State where [EUIPO] has its seat.

More specifically, the notion of ‘establishment’: Under which circumstances is a legally distinct second-tier subsidiary, with its seat in an EU Member State, of an undertaking that itself has no seat in the EU to be considered as an “establishment” of that undertaking.

Nike, which has its seat in the US, is the ultimate holding company of the Nike Group, which sells sports goods across the world. Nike Retail, which has its seat in the Netherlands, also belongs to that group. Nike Retail operates the website on which Nike goods are advertised and offered for sale, in Germany in particular. In addition to online sales on that website, Nike goods are sold in Germany through independent dealers supplied by Nike Retail. Wholesale or retail sales in Germany are not directly conducted by the companies in the Nike Group.

Nike Deutschland GmbH, which has its seat in Frankfurt am Main and is not a party to the main proceedings, is a subsidiary of Nike Retail. Nike Deutschland does not have its own website and does not sell goods to end consumers or intermediaries. However, it negotiates contracts between intermediaries and Nike Retail, and supports Nike Retail in connection with advertising and the performance of contracts. Nike Deutschland also provides aftersales service for end consumers.  Hummel Holding claims that some Nike products, in particular basketball shorts, infringe its trade mark and that most of the infringements took place in Germany. It brought an action against Nike and Nike Retail before the Landgericht Düsseldorf (Regional Court, Düsseldorf, Germany), which ruled that it had jurisdiction on the ground that Nike Deutschland was an establishment of Nike, but dismissed the action on the merits. This judgment is now being appealed.

The CJEU first of all (at 22 ff) warns for caution in the conjoined application of concepts used in both the Trademark Regulation and the Brussels I (Recast). The Trademark Regulation is, so the Court says specifically, lex specialis and one cannot therefore assume the same words mean the same thing. Readers of this blog are aware that I always give the CJEU thumbs-up when it mentions this (such as in Kainz), however the Court itself very regularly ignores its own instruction when the discussion involves the application of Brussels and Rome.

The point of Article 97, the Court notes (at 37) is to ensure that a court within the EU always has jurisdiction to hear and determine cases concerning the infringement and validity of an EU trade mark. In line with the AG’s suggestion the Court consequently opts for a broad interpretation of the concept, holding that the concept requires (1) a certain real and stable presence, from which commercial activity is pursued, as manifested by the presence of personnel and material equipment. (2) In addition, that establishment must have the appearance of permanency to the outside world, such as the extension of a parent body. However what is not required is for that establishment to have legal personality. Third parties must thus be able to rely on the appearance created by an establishment acting as an extension of the parent body. Furthermore and importantly, it is, in principle, irrelevant for the purposes of Article 97(1) of Regulation No 207/2009 whether the establishment thereby determined has participated in the alleged infringement.

A word of warning evidently: given the Court’s emphasis on the context of Article 97, with a view to its wide application, readers must not be tempted to read the judgment’s view on the concept of ‘establishment’ as applying across the board in EU conflicts law, let alone EU law as a whole.

Geert.

 

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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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Actavis v Eli Lilly in the High Court: Better reach for a tablet when litigating patents.

In [2012] EWHC 3316 (Pat) Actavis v Eli Lilly, the High Court (Patents) upheld jurisdiction for the English courts to hear a case in which applicant seeks a pan-European declaration of non-infringement of a patent. Actavis, a generics manufacturer, sought declaration that it had not infringed Eli Lilly’s patent for Permetrexed, a cancer treatment.

Arnold J, along the lines of  the Supreme Court’s decision in Lucasfilm v Ainsworth, held that forum non conveniens arguments would not sway the Court towards declining jurisdiction for the non-UK parts of the declaration (Germany, France, Italy, Spain).  Arnold J referred to the de facto approximation of patent law in the various EU Member States:

‘As to the different national approaches, I accept that there are differences. In my view, however, the differences are rather less now than they have been in the past. Certainly, in recent years the European patent judiciary have been striving for consistency. I am sceptical that the remaining differences of approach, as opposed to other factors, are responsible for different outcomes in parallel cases. In any event, it seems to me to be manifest that it will reduce the likelihood of inconsistent decisions if one court at first instance and one court on appeal determines all five of Actavis’ claims.

The judgment adds to the layer of complexity in intellectual property litigation. Prima facie the judgment may offer a great means to have pan-European patent infringement cases held in England (the very reference to a number of pending trial dates even in Germany, quietly underline the speed with which the UK can hear cases such as these).

Distinguishing is however of the essence:

– Actavis are headquartered in Switzerland (one will recall that under the Brussels I Regulation, the plaintiff’s domicile or nationality is generally irrelevant). Defendant is domiciled in the State of Indiana, United States. The declarations are not sought against any EU domiciled companies – Brussels I is not applicable. The outcome may be entirely different had the opposite been the case.

– The validity of Lilly’s patent is not sub judice. This too, even outside the Jurisdiction Regulation (where the exclusive ground of Article 22(4) would have trumped English jurisdiction), may have led to a different outcome under forum non conveniens arguments.

– Arnold J’s suggestion of de facto approximation may not hold with the ECJ for actions which do come within the Jurisdiction Regulation. As reported on this blog, even in Solvay, the ECJ  does not drop its insistence per Roche that de lege lata, European patent law remains national.

All of this may lead indeed to the awkward result that patent infringement cases are more swiftly and expertly dealt with in EU courts against non-EU defendants, then against EU defendants.

Geert.

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