Posts Tagged IP

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

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.

 

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Jurisdiction for libel over the internet. Ontario’s view in Goldhar v Haaretz.

The exam season is over, otherwise Goldhar v Haaretz would have made a great case for comparative analysis. Instead this can now feed into class materials. This is an interlocutory judgment on the basis of lack of jurisdiction and /or abuse of process. Plaintiff lives in Toronto.  He is a billionaire who owns i.a. Maccabi Tel Aviv. (Chelsea’s first opponent in the Champions League. But that’s obviously an aside). Mr Goldhar visits Israel about five or six times per year. Defendant is Haaretz Daily Newspaper Ltd. which publishes Haaretz, Israel’s oldest daily newspaper (market share about 7%).   It also publishes an English language print edition.  Haaretz is published online in both English and Hebrew.

Haaretz published a very critical article on Mr Goldhar in November 2011. The print version was not published in Canada, in either English or Hebrew. However, Haaretz was made available internationally on its website in Israel in both Hebrew and English – the judgment does not say so specifically however I assume this was both on the .co.il site – even if currently Haaretz’ EN site is available via a .com site.

Information provided by the defendants reveals that there were 216 unique visits to the Article in its online form in Canada. Testimony further showed that indeed a number of people in Canada read the article – this was sufficient for Faieta J to hold that a tort was committed in Ontario and thus a presumptive connecting factor exists. Presumably this means that the court (and /or Canadian /Ontario law with which I am not au fait) view the locus delicti commissi (‘a tort was committed’) as Canada – a conclusion not all that obvious to me (I would have assumed Canada is locus damni only). Per precedent, the absence of a substantial publication of the defamatory material in Canada was not found to be enough to rebut the finding of jurisdiction.

Forum non conveniens was dismissed on a variety of grounds, including applicable law being the law of Ontario (again Ontario is identified as the locus delicti commissi: at 48). Plaintiff will have to cover costs for the appearance, in Canada, of defendants’ witnesses. Importantly, plaintiff will also only be able to seek damages for reputational harm suffered within Canada.

I can see this case (and the follow-up in substance) doing the rounds of conflicts classes.

Geert.

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ECJ broadly confirms Szpunar AG in Diageo: narrow window for refusal of recognition and enforcement.

As reported when Szpunar AG issued his Opinion, key question in Diageo, Case C-681/13 is whether the fact that a judgment given in the State of origin is contrary to EU law (in the case at issue; trademark law) justifies that judgment’s not being recognised in the State in which recognition is sought, on the grounds that it infringes public policy (‘ordre public’) in that Member State. Precedent for Diageo did not look good and indeed the ECJ on Thursday confirmed the views of its AG.

Where the breach concerns infringement of EU law, the ECJ formulates the test as follows: ‘the public-policy clause would apply only where that error of law means that the recognition of the judgment concerned in the State in which recognition is sought would result in the manifest breach of an essential rule of law in the EU legal order and therefore in the legal order of that Member State’ (at 50). The relevant breach of EU trademark law is simply not in that league (at 51).

The Court does (at 54) seem to suggest – although one has to infer that a contrario – that if one were to show that Member State courts deliberately infringe EU law, even if that EU law is not in the ‘essential’ category, such pattern of national precedent (imposed by the higher courts), could lead to refusal of recognition. However this was not the suggestion made in the case at issue.

Geert.

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Szpunar AG in Diageo confirms narrow window for refusal of recognition and enforcement

Key question in Diageo, Case C-681/13 is whether the fact that a judgment given in the State of origin is contrary to EU law (in the case at issue; trademark law)  justifies that judgment’s not being recognised in the State in which recognition is sought, on the grounds that it infringes public policy (‘ordre public’) in that Member State. Precedent for Diageo did not look good.

‘Public policy in the Member State in which recognition is sought’, is by its very nature a matter for the courts of that Member State to define, however the ECJ has held that the nature of the JR necessarily implies that the ECJ has to exercise a degree of control. It has held that the clause on public policy may be relied on only in exceptional cases. The possibility that the court of the State of origin erred in applying certain rules of EU law, including free movement of goods and competition law, does not qualify as such: per  Case C-126/07 Eco Swiss and Case C-38/98 Renault, that these rules concern Union as opposed to national law, does not as such have an impact on the application of the recognition and enforcement title: Union law needs to be looked at just the same as national or indeed international law.

Szpunar AG refers of course to these judgments, distinguishes them where necessary, and concludes that an error in the application of EU trademark law does not suffice to justify a refusal of recognition. All that is left to Diageo is an action in damages against Bulgaria.

Geert.

 

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Hejduk: Copyright infringement and jurisdiction. The ECJ entertains much less than its AG.

I have reviewed the AG’s opinion in Hejduk here. The AG’s Opinion was exciting for it cited, even if only in a specific (IP; more specifically copyright) context, the difficulty in identifying locus damni. This, I suggested (realistically optimistic) flagged an obvious concern with the ECJ’s ruling in Bier. However the ECJ in its judgment, issued yesterday,  was not having any of this. It applied relevant precedent (all recalled in my earlier posting), did not at all entertain the AG’s concerns with the locus damni assessment, and held that in the event of an allegation of infringement of copyright and rights related to copyright guaranteed by the Member State of the court seised, that court has jurisdiction, on the basis of the place where the damage occurred, to hear an action for damages in respect of an infringement of those rights resulting from the placing of protected photographs online on a website accessible in its territorial jurisdiction. That court has jurisdiction only to rule on the damage caused in the Member State within which the court is situated.

Plaintiff’s difficulties were of no concern to the ECJ. No surprise perhaps given the Brussels I Regulation’s near-exclusive concern for the position of the defendant.

Geert.

 

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Jurisdiction, intellectual property and the internet. Might CRUZ VILLALÓN AG in Pez Hejduk introduce the end of Bier?

Let me answer the question immediately: that is unlikely. It is however an interesting prospect and, who knows, might be a start. CRUZ VILLALÓN AG’s Opinion in Pez Hejduk, case C-441/13 (at the time of writing available in plenty of languages but not in English), provides an excellent tour d’horizon of the application of the special jurisdictional rule of Article 5(3) [following the recast, Article 7(3)] Brussels I, to cases involving infringements of an intellectual property right.

For trademarks, the most recent case is Coty, Case C-360/12, reviewed by Alberto Bellan here. Pez Hejuk concerns copyright: an intellectual property right for which no formality (such as registration) is required for it validly to exist. Pinckney, Wintersteiger, Football Dataco: the application of Article 5(3) [and the delineation with leges specialis in the IP field] is not exactly crystal clear and the need for distinguishing very high. This resulted in this particular case in the Handelsgericht Wien requesting ECJ back-up on the application in the case of Ms Hejduk, a professional photographer, suing EnergieAgentur for unauthorised use on its .de website of photographs which had only been authorised for one-off use during a conference.

In view of Pinckney et al, the AG splendidly and concisely distinguishes the various strands of case-law and the raison d’etre for their consecutive jurisdictional criteria – please refer to the opinion itself for a summary by me would not do it justice. Encouraged in particular by Portugal and the EC, the AG then further distinguishes current case. As noted by Eleonora Rosati here, the AG emphasises that not only would it be difficult for the defendant having potentially to face actions in multiple Member States, but also the plaintiff would have limited benefits from seeking limited damages in more jurisdictions, and would find it difficult to prove such damage given the accessibility of the site.

Which is why the AG suggests that further distinguishing is needed for what he calls cases involving ‘delocalised damages’ involving IP, leading to the suggestion that in such case, only the judges of the Member State in which the causal event occurred should have jurisdiction on the basis of Article 5(3) (general jurisdiction for the domicile of the defendant not withstanding, obviously: per Article 2 JR). In other words: only the locus delicti commissi would be upheld. Not the locus damni.

Now, no reference is made to the case in the AG’s Opinion, however, surely this amounts to no less than a reversal of Bier /Mines de Potasse d’Alsace, case C-21/76. the ECJ’s extension in Bier, away from the literal meaning of Article 5(3) has, as I often have emphasised, triggered a long series of cases in which the ECJ has had to massage the ripple effect of the locus damni rule. If it were (which of course is not at all certain) to take up the AG’s suggestion here, and drop locus damni, might it not eventually have to concede that in many if not all cases, it is difficult for the defendant having potentially to face actions in multiple Member States, and for the plaintiff to have to prove and seek limited damages in more jurisdictions.

On that basis (that however narrowly distinguished, siding with the AG would mean acknowledging the weakness of the locus damni rule), I find it very likely that the ECJ will not run with it. Whence it might either not distinguish Hejduk from Pinckney, or assimilate it with eDate Advertising, or further distinguish and add an alternative, Hejduk rule, in the event of ‘delocalised damages’.

One to look out for!

Geert.

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Rolex v Blomqvist. ECJ confirms irrelevance of ‘focus and target’ or ‘direction’ in intellectual property cases.

After its withholding of mere accessibility of a site as a jurisdictional trigger for copyright infringement in Pinckney, the ECJ has now accepted that the mere acquisition of a good by a person domiciled in an EU Member State, suffices to trigger the application of the EU Customs Regulation’s provisions on counterfeit and pirated goods. It is not necessary, in addition, for the goods at issue to have been the subject, prior to the sale, of an offer for sale or advertising targeting consumers of that State.

In Case C-98/13 Martin Blomqvist v Rolex Mr Blomqvist, a resident of Denmark, ordered a watch described as a Rolex from a Chinese on-line shop. The order was placed and paid for through the English website of the seller. The seller sent the watch from Hong Kong by post. The parcel was inspected by the customs authorities on arrival in Denmark. They suspended the customs clearance of the watch, suspecting that it was a counterfeit version of the original Rolex watch and that there had been a breach of copyright over the model concerned. In accordance with the procedure laid down by the customs regulation, Rolex then requested the continued suspension of customs clearance, having established that the watch was in fact counterfeit, and asked Mr Blomqvist to consent to the destruction of the watch by the customs authorities. Mr Blomqvist refused to consent to the destruction of the watch, contending that he had purchased it legally. Is there in the present case any distribution to the public, within the meaning of the copyright directive, and any use in the course of trade, within the meaning of the trade mark directive and the trade mark regulation?

The ECJ re-iterated earlier case-law (in particular L’Oreal /E-bay) that the mere fact that a website is accessible from the territory covered by the trade mark is not a sufficient basis for concluding that the offers for sale displayed there are targeted at consumers in the EU. However proof that the goods are intended to be put on sale in the European Union, is being provided, inter alia, where it turns out that the goods have been sold to a customer in the European Union, such as clearly in the case at issue.

That sales to the EU have taken place is enough. Proof that EU consumers were actually targeted is not required – at least not with a view to triggering intellectual property protection (cf consumer protection under i.a. the jurisdiction Regulation).

In the view of the EU of course this is not an ‘extraterritorial’ application of EU law: the territorial link is firmly established through the customer’s domicile.

Geert.

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