The Unified Patent Court ("UPC")'s Düsseldorf Local Division (the "Court") has ruled that the UPC has jurisdiction to order measures covering the UK, based on the UK part of a European Patent Office ("EPO")-granted patent, despite the UK not being part of the UPC system.

Fujifilm Corporation sued Kodak group companies for patent infringement in the UPC (UPC/CFI/355/2023)[1], specifically, the German and the UK designations of European Patent EP 3 594 009B1. The Defendants resisted the international infringement determination sought, contending that the UPC could not or should not determine the claim so far as it concerned the UK. They defended the claim for infringement of the German and the UK designations and applied for the revocation of the German patent.

The UPC found the German designation of the European patent to be invalid. It observed that "the UPC has no jurisdiction to rule on the validity of the UK part of the patent in suit". However, the UPC's reasoning for dismissing the claim for infringement in respect of the UK was that, as the Claimant had not advanced any reasons why the validity of the UK patent should be different from that of the German patent, it must be assumed that the same grounds for invalidity applied and therefore the infringement action could not succeed.

The UPC's reasoning included acceptance of the Claimant's argument that the UPC had jurisdiction to hear an infringement action in respect of the UK part of the European patent in suit, and in that context to consider arguments as to the validity of the UK patent.

UPC holds it has jurisdiction to rule on the question of infringement of a UK Patent, applying Article 4(1) of the Brussels Regulation

The case has attracted interest because the Court determined that, under Article 4(1) of the Brussels Regulation, the UPC has jurisdiction over infringement actions concerning the UK part of the asserted European patent, as each of the Defendants were domiciled in Germany, a UPC Contracting Member State. Article 4(1) provides that "persons domiciled in a Member State shall, whatever their nationality, be sued in the courts of that Member State".

Leading pre-Brexit CJEU case Owusu v Jackson, Case C-281/02 determined that, where a Court of a Member State (in that case the UK) had jurisdiction under the Brussels Regulation because the defendant was domiciled in the UK, that Court could not decline jurisdiction on the basis that a court of another state was more appropriate to hear the case, even if that other state was a non-EU state.

Should the Court Derogate from Article 4(1) of the Brussels Regulation?

However, the Owusu case is not absolute – for example, Article 24(4) of the Brussels Regulation states that the Court of the relevant Member State has exclusive jurisdiction in proceedings "concerned with the validity of patents – regardless of domicile, irrespective of whether the issue is raised by way of an action or as a defence (see also Article 27).

This exclusive jurisdiction provision is provided for to account for the principle of customary law that one State cannot interfere with the operation of other national administrative authorities, such as the issuance of patents. Hence, there is no such exception concerning the determination of infringement.

The upshot is that, if a Court were to have jurisdiction over the parties because of say, domicile, the courts of state A are not competent to adjudicate upon a claim for infringement of a patent granted by state B at least if the validity of that patent is in issue.

The Article 24(4) provision is an exception to the general domicile rule of jurisdiction and has to be construed strictly. The Brussels Regulations is a system of jurisdiction internal to the European Union (including the UPC) aimed at unifying the rules of conflict of jurisdictions and facilitating the sound operation of the internal market. As such, the Brussels Regulation is devoid of any rules on how to determine jurisdiction issues arising in respect of the courts of third States.

Thus, unsurprisingly, Article 24(4) does not in terms apply to validity of patents outside of the EU. However, the Court, seemingly following Owusu, held that Article 4 of the Brussels Regulations (or more precisely, Article 2 of Brussels Convention as it was then) applies to circumstances involving relations between the courts of a single Contracting State and those of a non-Contracting State, not only to the relations between the courts of a number of Contracting States.

However, the CJEU in Owusu was careful to condition its application of Article 4 to the circumstances of the case in hand (which was a breach of contract claim in relation to a property in Jamaica). The present case concerns the validity of a property right in a non-Contracting State, and so requires different considerations, not least comity.

Thus, there is presently a question before the CJEU in the case BSH Hausgeräte GmbH v Electrolux AB (C-339/22)[2] as to whether courts of Member States (including the UPC) therefore have jurisdiction to hear proceedings concerned with the validity of patents registered in third states, or whether Article 24(4) should apply reflexively (meaning by analogy to the rules for Member States' exclusive jurisdiction per Article 24(4)).

Focus on the operation of Article 24(4) also misses the more fundamental point that, as the Advocate General (AG) has explained in the BSH case, the EU is bound to respect international law, including customary law, in the exercise of its powers, and the Brussels Regulation must be interpreted in a manner that is consistent with that.

The AG explained that the location of the defendant’s domicile may not serve as justification for the courts in the state of domicile to interfere in the domestic affairs of a third state: that could be seen as a breach of the principle of sovereign equality, and the Brussels regime must be interpreted consistently with that principle. Thus, an implicit derogation from the mandatory effect of domicile-based jurisdiction must be acknowledged.

However, despite the pending BSH case, which outcome was considered by the Court as not decisive for the present case because the BSH case relates to the jurisdiction of a court to assess the validity of a foreign patent, the Court in this case considered that it had jurisdiction to hear the infringement claim in respect of the UK patent.

Impact

The decision of the Düsseldorf Local Division, while indicative of the UPC's commitment to providing a unified and efficient system for patent enforcement across Europe, raises serious questions about the court's respect for international customary law on jurisdiction.

While the Court ultimately found that the German designation of Fujifilm Corporation's patent was invalid, rendering its reasoning on the jurisdictional reach of the UPC moot, the implications are significant. The reasoning highlights the UPC's asserted jurisdiction, where the defendant is domiciled in the EU, over matters which, according to international customary law, are subject to the jurisdiction courts of foreign states and governed by those third states.

The UK is no longer member of the EU and is no longer within the system of jurisdictional give-and-take operating as between the courts of the states within the Brussels regime (including the UPC). The Düsseldorf Local Division did not consider the international considerations therefore at play, or the relevant reasoning of the AG in two opinions given in the BSH case, in particular the concepts of comity or the sovereignty of foreign states.

In the UK, the Supreme Court has explained that the lack of precisely defined rules in international law as to the limits of legislative jurisdiction makes the observation of comity all the more important[3].

In any event, the present decision of the Düsseldorf Local Division is a clear indication of the UPC's commitment to providing a unified and efficient system for patent enforcement across Europe. The UPC's decision therefore serves as a reminder of the importance of litigants and their advisers understanding the nuances of jurisdiction when forming international litigation strategies. Litigants that have sought to deploy foreign courts' asserted extra-territorial jurisdiction have found themselves the subject of antisuit injunctions and/or litigation in the UK. In international patent disputes, the wiser strategic course avoids navel-gazing into the words contained in the Brussels Regulation.

So while the European Court of Justice's decision in BSH Hausgeräte GmbH v Electrolux AB, will impact the UPC's perception of its jurisdictional boundaries, it will not displace the jurisdiction of foreign courts in respect of patents covering their territory.

For fuller discussion of the EU's jurisdictional architecture and the AG's reasoning in the BSH v Electrolux case, please have a look at our article titled "Beware overreach by EU courts in foreign patent disputes".

Footnotes

1 Decision concerning EP 3 594 009 B1

2 BSH Hausgeräte GmbH v Electrolux AB, Case C-339/22, AG's second opinion paragraph 23

3 R (on the application of KBR, Inc) (Appellant) v Director of the Serious Fraud Office (Respondent) [2021] UKSC 2