Wednesday 30 October 2024

CJEU to pass impactful judgment on cross-border patent litigation

"It is clear that it will remain impossible for the patent holder to completely consolidate a multi-state infringement action of a European patent with invalidity counterclaims before one single national court."

In a significant case before the European Court of Justice, BSH Hausgeräte GmbH v. Electrolux AB (C-339/22), the Advocate General recently issued two interesting opinions on jurisdictional issues in cross-border patent disputes. The case centres around patent infringement and validity challenges across multiple EU member states at a time where the “European” UPC patent proceedings are taking off.

 

Background:

BSH Hausgeräte GmbH, a German company originating from a joint venture between Bosch and Siemens, holds a European patent related to vacuum cleaners, validated in several countries including EU Member States such as Austria, The Netherlands, France, Germany and Sweden, as well as non-EU Member States such as Turkey.

On 3 February 2020, BSH brought a patent infringement action in Sweden against Electrolux AB, a Swedish company, claiming that Electrolux violated its European patent in the various countries in which the European patent is validated.

In defence, Electrolux raised patent invalidity. In light of this defence, Electrolux further argued that the Swedish courts have no jurisdiction to hear the infringement proceedings as far as “foreign” (= non-Swedish) patents are concerned. Electrolux based its argument on article 24(4) of the Brussels Ibis Regulation governing these issues within the EU,[1] that provides that the courts of the member state where a patent is registered have exclusive jurisdiction for proceedings concerned with the registration or validity of patents, regardless of the domicile of the parties.

In response, BSH submitted that the Swedish courts have jurisdiction to hear the infringement proceedings, also for the “foreign” patents, since Electrolux is domiciled in Sweden.[2] In doing so, BSH seeks to consolidate all its infringement claims on its European patent before one single court to obtain relief at once for all countries where the European patent had been validated.

Torn between the universal jurisdiction of the defendant’s domicile (BSH’s position) and the exclusive jurisdiction regarding patent validity (Electrolux’ position), the Swedish court referred some questions for a preliminary ruling to the European Court of Justice (CJEU) , which – given the importance of the case – attributed the case to its Grand Chambre. The referral meanwhile led to two opinions of the Advocate General (AG) Emiliou; one on 22 February 2024, and an additional very recent one on 5 September 2024.

 

The opinions of AG Emiliou

In his much lengthier first opinion, AG Emiliou first analyses the question whether a national court can rule on infringement of a European patent validated in another EU member state, while an invalidity defence is raised by the alleged infringer. After having carefully reviewed the history of the applicable provisions of the Brussels Ibis Regulation (including the impact of the established case-law in GAT v. LUK), the AG weighed the pros and cons of different possible readings. He then advocates a “middle road”, whereby a national court can adjudicate the cross-border infringement claim and rule on the validity of the patent validated in the country of its seat, but cannot to adjudicate the validity of the patent validated in other EU Member States. This means – in the case at hand – that although the Swedish court can address cross-border infringement (including e.g. infringement in Germany), it cannot rule on the validity of patents registered outside Sweden (such as e.g. validity of a German validation of the European patent).

The AG is aware that this solution may result in parties being confronted with different proceedings before different courts at the same time and therefore addresses some practical issues:

  • In the AG’s view, when different proceedings are pending in different courts at the same time, the “infringement court” should stay the infringement proceedings if the invalidity defence is “serious”. Indeed, when deciding on a stay, the “infringement court” should balance the requirements of efficiency of procedure and the right to effective remedies for the patent holder on the one hand, with the sound administration of justice and the rights of defence of the alleged infringer on the other hand.
  • However, for the duration of such stay, nothing prevents the “infringement court” from ordering provisional measures, including protective ones, such as an interlocutory injunction prohibiting the continuation of the potentially infringing acts and depending on the seriousness of the validity challenge.

According to the second opinion of the AG, the situation is different for patents registered in a third state outside the EU (Turkey in casu), since the Brussels Ibis Regulation is an EU Regulation that only covers registration of the patents in EU Member States. The AG once again suggests a “middle road”, whereby the “infringement court” – if it has universal jurisdiction based upon the defendant’s domicile – can choose not to exercise that jurisdiction in order to respect the third state’s national sovereignty to rule on the validity of its patents.

 

Conclusion

Even if the AG’s opinions offer a more progressive solution than what is generally applied in recent cross-border infringement cases, it is clear that it will remain impossible for the patent holder to completely consolidate a multi-state infringement action of a European patent with invalidity counterclaims before one single national court.

The opinions have this merit in that the AG proposes a system of how an invalidity counterclaim should not always automatically annihilate a cross-border infringement case, as is often applied. On the other hand, the AG’s opinions show how fragile cross-border infringement cases are based on a European Patent.

The only solution to the latter problem today is litigation on a Unified Patent before the Unified Patent Court, the European patent being subject to a transitional period of at least 7 years during which fragmented litigation remains in principle possible.

It is now waiting for the decision of the CJEU, such decision most probably not to be expected before the Spring of 2025. Companies operating across multiple EU member states and involved with European patents are advised to follow up on this case to define their patent litigation strategy. CAPE IP will monitor this, so keep an eye out for our upcoming newsletters and feel free to contact us with all your related queries.

 

CAPE IP

30 October 2024

Picture: https://www.epo.org/en/about-us/foundation

[1] Regulation (EU) No 1215/2012 of the European Parliament and of the Council of 12 December 2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (recast).

[2] Article 4(1).