Context: Over the course of the last decade, the European Court of Justice (ECJ) adjudicated preliminary references in Huawei v. ZTE (FRAND defense to standard-essential patent injunctions) and Phoenix v. Harting (validity assessment in preliminary injunction proceedings). Those cases, as well as earlier patent cases such as GAT v. LuK, were each decided by a regular chamber (five judges).
What’s new: For the first time in history or at least in a long time, the Grand Chamber (15 judges, with the President of the Court presiding personally) of the ECJ has assigned to itself a preliminary reference in a patent infringement action that was already heard last year by a regular chamber and with respect to which Advocate General . On May 14, 2024, the Grand Chamber will hear BSH Hausgeräte GmbH ./. AB Electrolux (BSH stands for Bosch Siemens household appliances) (case C-339/22), a matter referred to the ECJ by a Swedish appeals court (Svea Hovrätt) on appeal from the Stockholm-based Patents & Markets Court (Patent- och marknadsöverdomstol). The key question relates to the subject-matter jurisdiction of a court in an EU member state over foreign patent rights when the defendant (over whom the court otherwise has cross-border personal jurisdiction by virtue of its legal domicile) raises invalidity arguments. In the case at hand, BSH is seeking damages for past infringement against the parent company of the Electrolux group, in the latter’s home country of Sweden, with respect to “vacuum cleaner” patent EP1434512 not only for infringements committed in Sweden but also in nine other countries where the patent-in-suit is registered. Electrolux disputes jurisdiction under Art. 24(4) of the Brussels Ia Regulation based on exclusive local jurisdiction over validity questions.
Direct impact: The patent-in-suit expired in 2022 and has been confirmed as valid by the two most important validity fora in Europe (by a Board of Appeal of the European Patent Office (EPO) and by the Federal Court of Justice of Germany), but the damages claim presumably poses no fundamental threat to Electrolux.
Wider ramifications: The case now has transcedental importance as the ECJ appears poised to seize this opportunity to clarify the question discussed above. Patents can be enforced in multiple EU member states by asserting them in the Unified Patent Court (UPC), but only with respect to its contracting states. With Spain, the UK and Turkey, the case at hand involves three non-UPC countries, for instance. The general question of how to deal with prerequisites (here, the validity of the patent-in-suit) in a case that has cross-border implications has ramifications beyond patent law. For instance, a real estate matter may involve a dispute over whether someone is the rightful owner of a property.
Question of statutory interpretation
At this stage of proceeding, the focus is not so much on whether a patent holder can, in principle, assert foreign patent rights against an EU-based infringer in the latter’s domestic jurisdiction. In the case at hand, those foreign patent rights are nine non-Swedish parts (registered in Austria, Germany, Spain, France, the United Kingdom, Greece, Italy, the Netherlands and Turkey) of a patent granted by the EPO. In other cases, patentees might also sue over foreign national patents, potentially even U.S. patents. In BSH v. Electrolux, a multi-country patent damages complaint was brought in 2020 under Art. 4(1) of the Brussels Ibis Regulation, according to which “persons domiciled in a Member State shall, whatever their nationality, be sued in the courts of that Member State.”
The statute that is referenced more than any other at this juncture is Art. 24(4) of the Brussels Ia Regulation (Regulation (EU) No. 1215/2012 on jurisdiction
and the recognition and enforcement of judgments in civil and commercial
matters):
Article 24
The following courts of a Member State shall have exclusive jurisdiction, regardless of the domicile of the parties:
[…]
(4) in proceedings concerned with the registration or validity of patents, trade marks, designs, or other similar rights required to be deposited or registered, irrespective of whether the issue is raised by way of an action or as a defence, the courts of the Member State in which the deposit or registration has been applied for, has taken place or is under the terms of an instrument of the Union or an international convention deemed to have taken place.
Without prejudice to the jurisdiction of the European Patent Office under the Convention on the Grant of European Patents, signed at Munich on 5 October 1973, the courts of each Member State shall have exclusive jurisdiction in proceedings concerned with the registration or validity of any European patent granted for that Member State;
The most basic way to describe the core question is this:
- Under the defendant’s broad interpretation, this means that a court in country A loses jurisdiction over an infringement claim concerning country B the moment the alleged infringer raises an invalidity defense. Practically, this means no cross-border cases would work, as someone could always formally raise an invalidity defense, no matter how weak.
- Under another interpretation, which is essentially that of the plaintiff, the exception has the limited effect that if, hypothetically speaking, a court in country A were to declare a patent invalid in country B, that cross-border holding would solely affect the proceedings between the parties at hand. But whatever the infringement court finds would not have any impact on country B’s patent register or on the ability of the patent holder to assert the patent in country B, such as seeking an injunction.
If not for Art. 24(4), the general rule would be that the court in country A, by virtue of having personal jurisdiction over a company that is based there, will adjudicate all defenses (for the purpose of being able to decide the ultimate question, which in this case is one of patent infringement and, as a result, damages). But that wouldn’t be the same as jurisdiction over validity: it’s merely jurisdiction over the validity defense.
The net effect of infringement being adjudged in one country and validity ultimately being determined in a second country would be bifurcation, comparable to the situation in Germany where infringment courts merely decide whether to stay a case pending a parallel invalidity action, but nullity lawsuits must be brought in a separate court (the Federal Patent Court), or just-granted patents can be challenged by means of an opposition filing with the relevant patent office.
Comity
What makes this case so important that the ECJ’s Grand Chamber decided to take over, while the EU’s seminal FRAND/SEP case (Huawei v. ZTE) was left to a regular chamber?
In U.S. and UK litigation, the keyword would be “comity”: it’s a matter of how jurisdictions co-exist besides, and treat, each other. This is about how courts in one EU member state address questions under the laws of other member states and, beyond that, even with respect to countries such as the UK and Turkey that are not members of the European Economic Area (EEA).
The ECJ has already advised the parties that the discussion at the hearing will, beyond EU law per se, also involve international law, including customary international law.
Furthermore, the court would like to know more about the legislative intent behind the Brussels Ia Regulation with respect to conflicts of jurisdiction between the courts of EU member states and the courts of third countries.
The distinction between EU member states and third countries is necessary as the exclusive validity jurisdiction under the statute invoked by the defendant does not relate to third countries.
It would go too far to try to infer from the limited information available at this point what the ECJ’s inclination may be. One thing is certain: this matters is considered extremely important.
Judges and attorneys
Advocate General Nicholas Emiliou rendered an opinion this year, further to last year’s hearing by a regular chamber, and yesterday (April 11, 2024), the ECJ gave notice that the ECJ, by order of April 9, 2024 (Tuesday), referred the case to its Grand Chamber. Barring the unforeseeable, the Grand Chamber will be composed of the following judges: K. Lenaerts (the President of the Court), L. Bay Larsen, C. Lycourgos, E. Regan, K. Jürimäe, O. Spineanu-Matei, S. Rodin, I. Jarukaitis, N. Jääskinen, A. Kumin, M. Ilešič, Z. Csehi, T. von Danwitz, M. Gavalec, M.L. Arastey Sahún, and Rapporteur O. Spineanu-Matei.
BSH’s in-house counsel in charge of this case is patent attorney Dr. Ernst-Peter Heilein. The external mastermind of this cross-border litigation strategy and the preliminary reference to the ECJ is German attorney-at-law Dr. Roman Sedlmaier of IPCGS. He’s a seasoned patent litigator who built a lot of cross-jurisdictional patent litigation expertise while working for the law firm that coordinated all of IPCom’s litigations at the time (meanwhile, ownership and leadership at IPCom have changed). He was in no way responsible for IPCom’s controversial litigiousness at the time, but coordinated a huge number of cases around the globe.
His partner at IPCGS, patent attorney Jan Gigerich, joined him in the successful German appeal of a first-instance invalidity ruling.
In the originating Swedish proceedings, BSH is represented by the Gulliksson firm (Magnus Dahlman and Therese Grennard).
Electrolux’ counsel is from the Westerberg firm: name partner Jonas Westerberg as well as Björn Rundblom Andersson and Petter Larsson. At last year’s ECJ hearing, they were joined by Bird & Bird’s Christian Harmsen. Mr. Harmsen did not speak at the hearing, but he was Huawei’s counsel in the ZTE case that also reached the ECJ.
The European Commission and the French government also shared their views with the ECJ.
Background: the specific dispute
The ECJ will now have to make a decision that works for an entire spectrum of cases. In this particular case, however, it’s easy to see that the defendant doesn’t have a serious invalidity defense. The patent-in-suit was temporarily narrowed by an opposition panel of the EPO, but affirmed by a Board of Appeal. In Germany, the Federal Patent Court deemed it invalid, but the Federal Court of Justice reversed. It appears that Electrolux does not have any groundbreaking new invalidity contentions. They just seek to avoid jurisdiction and slow things down for possibly another decade.
The dispute started in 2008, but the back-and-forth concerning validity resulted in various stays. Initially, BSH was also asserting a German utility model, but the focus then shifted to the EPO-granted patent after its confirmation by a Board of Appeal.
With the patent’s expiration in sight, BSH filed the Swedish action in 2020 to seek damages with respect to ten countries. Relative to what’s at stake in this vacuum cleaner dispute, the cost of litigating damages questions in ten jurisdictions would be high, if not prohibitive.
If the case comes back from the ECJ on a basis that lets the Swedish judiciary retain jurisdiction over damages for all ten countries in which the patent-in-suit is registered, then it will be difficult for Electrolux to persuade the court of a stay pending any foreign invalidity actions. The final decisions made by an EPO Board of Appeal and by the Federal Court of Justice of Germany weigh strongly against an assessment according to which a rehash of basically the same invalidity contentions in other jurisdictions would be likely to bring about a different outcome. Anything can happen, but there comes a point at which the patent holder would then be entitled to a damages award.
The next step is now the Luxemburg hearing before the Grand Chamber on May 14.