UPC Weekly - High bar to challenge the jurisdiction of the UPC

2024 Week 19

This week saw the UPC issue two decisions about its own jurisdiction.  Where a defendant wants to challenge the jurisdiction of the UPC to hear a dispute, they must file a preliminary objection within one month of the start of proceedings. 

How do ongoing national proceedings affect the jurisdiction of the UPC?

In the future, the UPC will have exclusive jurisdiction over all European patents (including traditional European patents and Unitary patents) in the countries taking part in the UPC. However, following the opening of the UPC, there is a 7 year transitional period during which the national courts also have jurisdiction over traditional European patents, whether those patents are opted-out or not. 

But this is not a blog about opt-outs. Instead, here we consider the effect of there already being parallel proceedings at a national court when proceedings are started at the UPC.

During the transitional period, the claimant party has the choice of whether to use the UPC or national courts. The patent proprietor can choose where to start infringement proceedings or a competitor can choose where to start revocation proceedings.

The legal framework surrounding the UPC makes it clear that there cannot be parallel proceedings brought between the same parties on the same cause of action at the UPC and at the national courts.  Wherever the proceedings are brought first, that court has jurisdiction. The other court must decline jurisdiction.

So, at first sight it is surprising to see the Paris Central Division of the UPC say that it does have jurisdiction in Nokia v. Mala.  Two years before the UPC opened, patent invalidity proceedings were started in Germany against EP 2044709B1. The first instance court in Germany rejected the invalidity arguments and Nokia have now appealed in Germany. So those German national proceedings are still ongoing.

Between the decision of the first instance court and filing the appeal in Germany, Nokia filed a revocation action at the UPC against the same patent and based on the same substantive grounds.

The question facing the UPC was whether the UPC has jurisdiction for the revocation action, in view of the fact that the German invalidity proceedings were filed before the UPC came into operation and that those national invalidity proceedings were still ongoing at the time when the UPC revocation action was filed.

An interesting side point about the case is that the European patent is only in force in Germany, and so there was no real way for the UPC to carve out its jurisdiction to consider the validity of the patent in other UPC countries.

The court decided that the UPC does have jurisdiction. This was heavily based on the fact that the German invalidity proceedings had been filed at a time when the UPC was not yet operational, and so the parties did not have a choice of where to litigate. Clearly, had the German invalidity proceedings been filed after 1 June 2023 (when the UPC opened), the UPC would not have had jurisdiction.

What we are seeing in general is that where the UPC sees a reasonable argument for having jurisdiction, it will typically run with it. The UPC wants to be adjudicating on cases.

If an appeal is filed, we will be watching the Court of Appeal decision closely, not only to see if it follows the same legal reasoning, but also to see whether the Court of Appeal will feel obliged to refer the issue to the Court of Justice of the European Union (CJEU). The main legal provision being considered here is actually an EU regulation governing jurisdiction of the courts of EU member states, including the UPC. So far, the CJEU has not weighed in on UPC matters, but at some point it will, and it might well be on this issue.

At the same time as rejecting Mala’s arguments about jurisdiction, the Paris Central Division also reinforced the attitude shown by various UPC divisions for strict adherence to UPC time limits. The court decided that the revocation proceedings should not be stayed pending this jurisdictional point, and the court also refused Mala’s request for an extension of time for filing a defence to the revocation action. 

What we are seeing from many early decisions is that the UPC really understands the need to provide high quality and fast decisions – this is after all one of the main intended selling points of the UPC to its customer base of patent proprietors and parties considering filing revocation actions.

Can a standstill agreement between the parties affect the jurisdiction of the UPC?

The Paris Central Division mysteriously redacted the names of the parties in their 10 May 2024 order in another case about UPC jurisdiction, so we will refer to the case as XXX v. YYY

A revocation action was filed at the UPC Central Division by the claimant YYY. However, the defendant XXX filed a preliminary objection to the jurisdiction of the UPC on the grounds that there is a standstill agreement between the parties. In this case, the standstill agreement includes an agreement that each party will give the other 90 days’ notice of their intention to file court proceedings in relation to IP disputes. The court interpreted this as providing a cooling-off period which may facilitate settlement out of court.

The UPC decided that this agreement between the parties could not affect the jurisdiction of the court as a fundamental matter. Therefore, the preliminary objection failed.

The court expressly left it open whether the defendant could successfully challenge the admissibility of the action on the basis of the standstill agreement. Presumably there may also be an argument for breach of contract between the parties, although as a standalone matter this would typically need to be litigated before national courts rather than at the UPC.