Thursday, April 6, 2023

Unified Patent Court presumably can't order anti-antisuit injunctions, but can national courts bar defendants from seeking antisuit injunctions against UPC enforcement?

The ultimate answer to the question I'm discussing here may determine whether the UPC is or is not going to become an important venue for the enforcement of standard-essential patents (SEPs), given that most defendants are Chinese or American implementers (and even Samsung has availed itself of a Chinese antisuit injunction in a dispute with Ericsson).

In recent years, it has become pretty common for SEP owners to seek pre-emptive anti-antisuit (and anti-anti-anti-antisuit) injunctions at or prior to the start of any patent enforcement action. The first AASI in a SEP case was ordered by the Munich I Regional Court in 2019 (Nokia v. Continental) and affirmed by the Munich Higher Regional Court. The Dusseldorf Regional Court is also prepared to grant such injunctions in some circumstances.

I've already raised the question on LinkedIn: how will this work with a view to patent infringement cases filed with the UPC?

The UPC is only a patent court. My reading of the UPC Agreement is that it can order injunctions to stop or prevent the infringement of patents, but that's it.

A patentee preparing the filing of UPC enforcement actions may have a reasonable apprehension that the defendant-to-be is going to seek an antisuit injunction (be it in the United States, China, or elsewhere). But--unless I'm mistaken--the UPC itself can't do anything about that.

The European Commission's draft SEP regulation (initial reaction, table of contents and synopsis, impact on net licensees, lack of appellate options, conflicts with fundamental rights and treaties) imposes all sorts of requirements on patent holders that delay enforcement, but if someone seeks a FRAND determination abroad that encroaches on the EU's Single Market, the patentee is free to sue right away and even to seek customs seizures. However, that still doesn't bar the implementer from seeking an antisuit (or anti-enforcement) injunction abroad; it just creates a potential (but very weak, if not negligible) disincentive.

To obtain anti-antisuit injunctions that protect their UPC cases, SEP holders will still need help from national courts such as the Munich I Regional Court or Dusseldorf Regional Court. Can and will those courts do that?

It's a tricky question if my reading of Article 34 of the UPC Agreement is correct:

Territorial scope of decisions

Decisions of the Court shall cover, in the case of a European patent, the territory of those Contracting Member States for which the European patent has effect.

I understand the above as an all-or-nothing proposition: if you sue in the UPC over an EPO-granted patent, you can't just say "leave out Germany" or "leave out all countries other than Germany." Fragmentation by partial opt-out would defeat the purpose of the UPC.

German AASIs are based on the need to protect property rights (even to the extent of using self-defense as a justification). EPO-granted patents are typically valid in Germany (the largest economy among the UPC's Contracting States), and the existence of a German part of a European patent makes it a property right protected by Art. 1004 of the German Civil Code.

But German AASI decisions also have to respect EU law. That first SEP AASI (Nokia v. Continental) already referenced EU law, arguing that it was possible to take action against a potential U.S. antisuit injunction (which never issued) because non-EU jurisdictions are not covered by EU law, more specifically: the Brussels Regime, the latest iteration of which is Regulation EU No. 1215/2012. According to that one, a principle of mutual trust applies to rulings made by courts of other EU Member States.

The Munich appeals court argued in its December 12, 2019 Nokia v. Continental decision that international law is only part of--and not above--German federal law. It also said that any extraterritorial effects of an AASI are legitimized by the need to defend against a threat of interference with German patent rights.

There has never been a debate that a Munich AASI also bars an implementer from seeking an ASI against proceedings in other venues, such as Dusseldorf or Mannheim. The UPC raises a novel question, however, and that is primarily due to Art. 34 UPCA:

  • There is an argument that a foreign ASI that would enjoin the enforcement of a UPC SEP injunction (based on an EPO-granted patent) violates German federal law because it vitiates German property rights (the German part of the European patent in question), and that it would merely be collateral damage (or, from the patentee's perspective, a collateral benefit) that an enforcement of an EPO-granted patent must be shielded from a potential ASI. The European patent could then be enforced in all countries in which it is valid, as per Art. 34 UPCA.

  • An implementer, however, might argue that a German court can only order an AASI that prevents ASIs affecting German court proceedings, but does not have jurisdiction over the non-German parts of a European patent.

Art. 34 UPCA would be key either way. The patentee will argue that there is no way under Art. 34 UPCA to opt out from enforcement in all other countries, so the AASI will inevitably have some territorial overreach. The implementer will argue that such overreach deprives the German court of jurisdiction.

Now, what if the patentee petitioned for--and actually obtained--AASIs in each and every one of the UPC Contracting States in which the patent is valid? In that case, they would all agree and the UPC enforcement action should go forward. But they can't coordinate. In each country, the decision will have to be made without potentially knowing any (or in most cases one will at least not know all) other countries' decisions. If a German court ordered an AASI, it can't know whether a French court will grant or deny the petition before it. Would the answer be that the patentee has to seek conditional AASIs that say they apply to UPC cases provided that equivalent decisions have been made by the courts of competent jurisdiction in the other relevant Contracting States?

Is there an argument that even if the UPC ordered an injunction relating to all Contracting States in which a SEP is valid, the patentee could still tailor the actual enforcement by telling the infringer in writing that the injunction only has to be respected with a view to one or more--but not all--countries? There could always be national decisions, such as compulsory licenses, that would have that effect anyway.

At what point will we find out how the courts decide?

  • If a patentee seeks an AASI that explicitly references enforcement in the UPC, then the national court will have to decide.

  • If a patentee instead seeks an AASI that focuses on the intellectual property at stake (patent rights in Germany including German patents of EPO-granted patents) without referencing specific courts (or at least not making it sound like UPC enforcement wasn't meant to be covered), the implementer will have to decide whether to take the risk of potentially violating that AASI through the pursuit of a foreign ASI that would target UPC cases.

    At this post-AASI stage the implementer can't seek an ASI against cases before German courts anyway, so if the patentee has enough (and presumably strong) patents available that it can enforce in national courts, the implementer's problem can't really be solved (only reduced) through a UPC-only ASI.

    If the implementer decides to go for a UPC-only ASI anyway, then the patentee will move for contempt sanctions based on the AASI, and the question will have to be resolved.

As a patentee, I would be a little bit concerned that my AASI petition might be put before a judge with the attitude that if you have a problem with your UPC cases, you should ask the UPC for help, and if it can't help, you should file your complaints with national courts. That would not be a legal principle, but a human factor, especially with judges handling cases in national courts knowing how much more money (after taxes) their colleagues sitting on the UPC make and trying to attract as many cases as possible to the national courts in order to potentially get on the prestigious gravy train in the future.

The UPC will create interesting--even exciting--opportunities for patent holders. But there will also be some initial uncertainty about various questions, one of which is the availability of anti-antisuit injunctions.

It won't be easy for the IP chiefs of major SEP holders to convince their CEOs and CFOs of something that results in significant incremental costs, but the way to hedge your bets and to be in the strongest possible position is to engage in double patenting. Does that term make anyone wince? It's admittedly counterintuitive because it appears antithetical to the way the patent system works. But it's not strictly double patenting if the claims are distinguishable, and some national laws (in Germany and France) actually open the door to what practically amounts to double patenting. The best strategy with a view to the UPC is to obtain both European (EPO-granted) patents and national patents, particularly in Germany. I recommend an IP Quick Tip podcast by the Bardehle Pagenberg firm for further information on that topic. The transitional period with opt-outs will end sooner or later, and any patents resulting from the applications you file now are going to be affected during their lifespan.