UPCOMING CHANGES FOR LOCAL DIVISION MUNICH

Since the establishment of the UPC in 2023, the Local Division Munich has proven to be the most popular division with nearly as many cases as the next four divisions combined (Mannheim, Paris, Düsseldorf and Hamburg). Because of its high workload, the Local Division Munich judges recently announced that the division will be receiving the following additional resources:

• Presiding Judge of the Local Division Munich Dr. Matthias Zigann will transition to a full-time UPC judge from his current part-time role in which he splits his time equally between the UPC and Germany’s Higher Regional Court of Munich.
• The Local Division Munich will receive two new legally qualified judges. Each judge will split their time equally between the UPC and their current national courts. The names of the appointed judges remain confidential, but they are current judges from German national courts.
• With the appointment of additional judges, the Local Division Munich will establish a second panel of judges.

These changes will likely take effect June 1, 2024, to combat the Local Division Munich’s increasing workload and share of patent litigation in Europe.

NOTABLE CASE & POTENTIAL IMPACT

PANASONIC HOLDINGS CORPORATION V XIAOMI TECHNOLOGY GERMANY GMBH

Topics: proper service of process on non-European defendants

Rule 274 of the UPC Rules of Procedure (RoP) governs service of process on non-European entities, requiring it be done through EU regulation (Regulation (EU) 2020/1784), through the Hague Convention or through diplomatic or consular channels. If that cannot be done, Rule 275 of the RoP permits the UPC to approve an “alternative” service of process.

Last year, Panasonic Holdings Corporation filed a patent infringement action with the Local Division Mannheim against Xiaomi Technology Germany GmbH (Xiaomi Germany) and other affiliates over 4G technology. In December 2023, the UPC rejected Panasonic’s request that its attempts in serving four foreign defendants constituted an alternative service of process and ordered Panasonic to send the requisite documents for service.

Panasonic argued that by serving process on Xiaomi Germany at its German business address, it thereby effectively served three China-based Xiaomi affiliates and a fourth Xiaomi affiliate based in Hong Kong. In Panasonic’s view, the defendants operated as a unit and thus Xiaomi’s affiliates outside of Europe had actual knowledge of the suit and could therefore be considered served along with Xiaomi Germany. Specifically, one of the China-based affiliates had led negotiations on standard-essential patents for the entire group of defendants, and the other three foreign affiliates were aware of the UPC suit from parallel proceedings before the High Court of Justice in London. Rule 275 had previously been interpreted by the Local Division Munich to mean that service is proper if the defendant has necessary knowledge of the suit and can be attributed to a foreign defendant if there is a legal relationship between the two defendants or other specific circumstances that support the conclusion.

The Local Division Mannheim rejected the Local Division Munich’s approach, instead determining that Rule 275 mandates that service must first be attempted in accordance with Rules 270 to 274 before permitting an alternative service. Accordingly, service on the China- and Hong Kong-based defendants must have been attempted under the Hague Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters (Hague Service Convention), to which China and Hong Kong are signatories. Because such service had not been attempted, the UPC rejected Panasonic’s application for an alternative service under Rule 275 and ordered Panasonic to send the required documents for service.

The Local Division Mannheim’s decision aligns with a more recent decision by the Local Division Munich: that Rule 275 first requires an attempt at formal service before requesting approval to use an alternative service means. However, because formal service may result in substantial delays, the UPC may consider “reasoned request(s)” for an alternative service over a short period (e.g., a few weeks) after the service of process is received by a designated central authority in a foreign country.

TAKEAWAYS:

• Requesting an alternative service of process under Rule 275 requires service first be attempted under Rules 270 to 274. A defendant’s actual knowledge of the suit is secondary to the procedural rules governing formal service of process.
• A reasoned request for an alternative service on a foreign defendant may be made shortly after the service of process is received by the designated central authority in the defendant’s country.
• The UPC’s strict approach to service of process on foreign defendants may vary from other jurisdictions. For example, Germany permits service by publication, at least as a last resort and if it’s not possible to serve the documents abroad or if such service is unlikely to be successful. In the US, federal courts are given broad discretion to authorize an alternative service under Federal Rule of Civil Procedure 4(f) without requiring an attempt to effectuate formal service under the Hague Service Convention.

EMERGING LEGAL ISSUES

PARALLEL PROCEEDINGS IN THE UPC (I.E., BIFURCATION)

The jurisdictional treatment of parallel proceedings (i.e., the filing of an infringement action and a revocation action for the same patent) has been debated amongst the EU Member States. It was also addressed during the development of the UPC to determine whether the Central or Local Division should have jurisdiction to rule on revocation or infringement proceedings. The resulting structure in the UPC is a compromise, drawing on various legal traditions in Europe.

Under German law, patent litigation relies on a bifurcated (or double track) system. Infringement proceedings are heard by regional courts (which is composed of nontechnical judges), nullity actions are handled by the Federal Patent Court (which is composed of technically qualified and legally qualified judges) and oppositions are handled by the German or European Patent Office (EPO) (with divisions composed of technically qualified judges). Unlike the bifurcated system under German law, invalidity and infringement under French or Italian patent law are assessed by the same unique court in the same proceeding, with invalidity being assessed first. As a result, if a patent is invalidated by a court under French or Italian patent law, it cannot be found to be infringed. A German infringement court, however, may only stay its proceedings in view of parallel nullity or opposition proceedings.

Under Article 32 of the Agreement on a Unified Patent Court (UPCA), UPC proceedings rely on a system similar to the UK and France, where the court has jurisdiction over both the infringement and revocation actions. Nevertheless, in some scenarios, revocation and infringement may be dealt with by different UPC bodies.

If a counterclaim for revocation is introduced by the defendant after the filing of an infringement action:

Pursuant to Article 33(3) of the UPCA, when confronted with a counterclaim for revocation, the Local or Regional Division before which the infringement action is pending has the discretion to proceed in one of three ways:

1. Proceed with both the infringement action and revocation counterclaim
2. Refer the revocation counterclaim to the Central Division
3. Refer the entire case to the Central Division with the parties’ agreement.

If the Local or Regional Division decides on the second option, it must then choose whether to stay the infringement action pending the Central Division decision or proceed with the infringement action in parallel. If the latter, the UPC could rule on the infringement of a patent that may later be revoked.

If an infringement action is introduced while a standalone revocation action is pending between the same parties:

According to Article 33(4) of the UPCA, a standalone revocation action must be brought before the Central Division. While such an action is pending, the defendant in the revocation action (e.g., the patent holder) has several options for asserting infringement against the plaintiff to the revocation action (accused infringer):

1. File a counterclaim for infringement in the revocation action before the Central Division (Rule 49.2 (b) of the RoP)
2. Bring a separate infringement action before any competent Local or Regional Division (Article 33(5) of the UPCA)
3. Bring a separate infringement action before the Central Division (Article 33(5) of the UPCA).

If infringement is asserted under the first option, the Central Division will rule on both revocation and infringement. However, under the second option, the infringement and revocation actions may proceed in parallel. To unify the two actions, the accused infringer may introduce a revocation counterclaim in the infringement action. Under Rule 75.3 of the RoP, the revocation action before the Central Division must be stayed unless otherwise agreed by the parties, pending a decision by the Local or Regional Division on how to proceed under Article 33(3) of the UPCA. Finally, under the third option, the two actions before the Central Division may proceed in parallel, unless one court stays the infringement proceeding at the joint request of the parties or for the proper administration of justice or if different panels of the Central Division join the proceedings (Rules 295 (d), 295 (m) and 340 of the RoP).

If an infringement or revocation action is introduced at the UPC while an opposition, limitation or revocation action is pending before the EPO or a national court:

Bifurcation can also arise whenever an opposition or a request for limitation is filed at the EPO, or a revocation action is brought before a national court challenging the validity of a national part of a European patent and, in parallel, a revocation or infringement action is filed at the UPC.

For instance, a party may file a revocation or infringement action at the UPC for a patent subject to a pending opposition or limitation request before the EPO (Article 33(10) of the UPCA). Similarly, a party may file an infringement action at the UPC for a patent subject to a pending revocation action before a national court. However, such a national revocation action will have priority over any revocation action at the UPC with respect to the corresponding national part of the European patent. Thus, the UPC will stay its proceedings if the same cause of action between the same parties is involved (See Articles 71c, 29 of Reg. (EU) No. 1215/2012 Brussels I Recast).

Additionally, the UPC may stay proceedings when a rapid decision is expected from the EPO (Article 33(10) of the UPCA) or whenever the proper administration of justice so requires (Rule 295 of the RoP). Discretion to stay proceedings to ensure the proper administration of justice applies when there is a risk of contradictory rulings between two UPC divisions on the same issue (e.g., patent revocation or patent infringement). Under Rule 295 (m) of the RoP, the UPC may stay proceedings (i) ex officio or (ii) by a party’s request to avoid the adverse consequences of bifurcation. This rule showcases one of the procedural tools offered under the UPC that protects parties against inconsistent decisions.

TWO RECENT EXAMPLES OF BIFURCATED PROCEEDINGS AT THE UPC

Two recent examples of bifurcated proceedings in which the Central and Local Division courts are hearing parallel revocation and infringement proceedings shed light on the procedural wrinkles that may occur in such scenarios.

Amgen Inc. v. Sanofi

In Amgen Inc. v. Sanofi, three Sanofi affiliates filed a revocation action in June 2023 at the UPC’s Central Division Munich and oppositions with the EPO seeking to invalidate Amgen’s European Patent 3666797. A few weeks later, Amgen filed its own infringement action in the Local Division Munich against the three Sanofi affiliates and Regeneron Pharmaceuticals Inc. alleging that their drug Praluent infringed Amgen’s ’797 patent. Approximately five months later, Regeneron filed a revocation counterclaim in the Local Division Munich, but the three Sanofi affiliates failed to file their own counterclaims.

In accordance with Article 33(3) of the UPCA, the Local Division had to decide whether to hear the infringement action and Regeneron’s revocation counterclaim together or refer the counterclaim to the Central Division. With all parties in agreement that the counterclaim should be heard by the Central Division, the Local Division ruled it should be referred to that court. In doing so, the Local Division noted that generally the parties’ unanimous preference for referral should be respected unless there are strong counterarguments “requir[ing] a different decision.”

The Local Division also determined whether to stay the infringement action pending a final decision by the Central Division in the revocation proceedings in accordance with Rule 37.4 of the RoP, which requires a stay “where there is a high likelihood that the relevant claims of the patent will be held to be invalid.” Here, the Local Division did not stay the infringement action because there was no decision by the Central Division regarding validity, but it considered postponing the interim conference in the infringement action by six weeks until after an expected first instance decision on validity.

According to the Local Division, if the three Sanofi affiliates only wanted the Local Division to decide validity, they should have filed their own revocation counterclaims in the Local Division. Under Rule 75 (3) of the RoP, the Central Division would have stayed the validity proceeding pending a decision by the Local Division under Article 33(3) of the UPCA. Presumably, the Local Division would have decided to proceed with both the infringement action and the revocation counterclaims.

Meril v. Edwards Lifesciences Corporation

Unlike the first-filed revocation action in Amgen, the proceedings in Meril v. Edwards Lifesciences Corporation started with Edwards filing an infringement action against two Meril affiliates – Meril Life Sciences Pvt. Ltd. and Meril GmbH – in the Local Division Munich. A few months later, a third Meril affiliate – Meril Italy srl – filed a revocation action in the Central Division Paris, and the two Meril affiliates in the infringement action filed revocation counterclaims.

In both proceedings, Edwards applied to amend its patent in defense of the revocation actions. However, the scope and deadlines differed between the two revocation actions. As a result, Edwards sought to harmonize its claim amendments and respective requests between the proceedings by seeking leave to further amend its application before the Central Division.

The Central Division rejected Edwards’ application for leave to amend. Under Rule 30 (2) of the RoP, the UPC has discretion to determine whether to allow an application to amend a patent after the defence to the counterclaim is filed. The Central Division emphasized that such discretionary powers should be exercised on the principles of “proportionality, flexibility, fairness and equity mentioned in the preamble 2 and 4 of the [RoP].” Although the Central Division acknowledged that the UPC was created, in part, for the purpose of facilitating uniformity and consistency in decision making, the UPCA and the RoP explicitly tolerate such inconsistencies in parallel proceedings.

Against this backdrop, the Central Division found that allowing a patent owner to maintain the same application to amend between proceedings involving different revocation actions would not serve the purpose of ensuring consistent decisions because the proceedings did not involve the same subject matter. According to the Central Division, the UPC’s procedures and rules governing stays and referrals between the Local and Regional Division courts and the Central Division courts, such as Article 33(3) of the UPCA and Rule 295 (m) of the RoP, sufficiently safeguard against inconsistent decisions within the UPC. Further, the Central Division explained that its decision does not preclude the parties from agreeing on a new set of amendments.

Amending a patent during litigation is very limited in the US. Claims can be amended in certain situations during post-grant proceedings before the US Patent & Trademark Office but typically not in litigation (See e.g., 35 U.S.C. §§ 305, 316 and 326).

In view of the UPCA, RoP and the Amgen and Meril decisions, careful consideration of the UPC’s procedural wrinkles is required to have a desired forum consider either or both infringement and validity issues and when attempting to amend a patent during a UPC action.

RECENT FILINGS

This section reflects data that entered the UPC’s register as of April 18, 2024.

NUMBER OF CASES ON UPC REGISTER BY TYPE

*The number of counterclaims for revocation cases does not necessarily reflect the UPC’s true case load because the UPC’s Case Management System required several defendants in infringement proceedings to launch their own counterclaim for revocation, even if the substance of the counterclaims was fully identical across the parties. This inflates the number.

NUMBER OF CASES ON UPC REGISTER PER DIVISION

LANGUAGE OF UPC PROCEEDINGS

FIRST INSTANCES OF CASES PER MONTH IN 2023 AND 2024

INFRINGEMENT CASE VALUES