Context: In Seoul Viosys v. Laser Components, the Unified Patent Court’s (UPC) Paris Local Division (LD) decided a couple of months ago that an intervenor (Photon Wave) was not allowed to bring a revocation counterclaim because the defendant had not done so (May 6, 2024 ip fray article).
What’s new: A new order by the Paris LD in the same litigation (PDF (in French)) denies a motion to stay the infringement proceedings pending the resolution of a stand-alone revocation claim that the intervenor filed with the Paris Central Division (CD). The LD held that, regardless of the revocation claimant being only an intervenor in the infringement case, there is an identity of parties and that the procedurally proper way to seek the invalidation of the patent-in-suit would have been a revocation counterclaim, which would then obviously have had to be adjudicated by the LD. Therefore, the LD predicts that the CD will determine that it does not have jurisdiction. In light of that as well as the delay that a stay would cause, the motion for a stay was denied without assessing the revocation claim’s merits.
Direct impact: The denial of the motion to stay is at least justifiable and there may be dilatory tactics in play. But the plaintiff may now be able to win an infringement ruling not only prior to a validity determination by the UPC, but even without the defendant and the intervenor having any chance left to challenge the patent’s validity. And invalidity is often the strongest defense to a patent infringement claim.
Wider ramifications: The biggest problem here is the net effect (which does not necessarily mean that the Paris LD committed legal error, as it could also be attributable to a structural flaw, or a “bug” as software developers would call it). The upshot of the Paris LD’s two decisions in this case would be that an intervenor has no opportunity at all to challenge a patent-in-suit in the UPC, for no fault of its own, only because the defendant (whom the intervenor presumably does not control) fails to bring a revocation counterclaim. This begs appellate clarification. Practitioners will now have to be careful: if an intevenor wishes to seek the revocation of a patent-in-suit, a defendant must also bring a revocation counterclaim to be on the safe side.
The previous decision concerning the intervenor’s desire to challenge the validity of the patent-in-suit was at least debatable. The Paris LD held in early May that an intervenor’s procedural positions must be consistent with those of the party it is supporting. But the defendant’s failure to challenge the validity of the patent-in-suit does not result in an inconsistency. If the intervenor’s revocation counterclaim had been brought and if it had then succeeded, that would not have resulted in anything happening that is not undoubtedly also what the defendant wants: the bottom line would be the failure of the infringement action.
Subsequently to that controversial decision, the intervenor (Photon Wave) filed a stand-alone revocation complaint with the Paris CD targeting the patent-in-suit (EP3404726). According to yesterday’s order by the LD, all that has happened so far in that action is that the complaint has been served on the patentee.
If that standalone revocation claim is allowed, it’s obviously true that the resolution of the infringement action would be delayed very considerably (if not massively) by awaiting the outcome of the revocation claim. The UPC seeks to avoid divergent rulings in bifurcation situations, but it also prioritizes speedy proeedings, which is why the denial of the motion to stay is not the issue here.
What wouldn’t raise concerns as long as it is viewed in isolation is the court’s holding that a revocation claim by an intervenor (as opposed to one by a defendant) results in an identity of parties between the infringement action and the revocation action. The court says that what matters is the identity of parties, not their function. At the same, the order says Photon Wave pointed to the fact that even a subsidiary and its parent company were considered different parties for the purposes of UPC proceedings. As the court rightly notes, that is a non-issue here: the parties are Photon Wave (intervenor and revocation claimant) and Seoul Viosys (patentee and revocation defendant). There is, however, no involvement of the defendant (Laser Components) in the revocation action.
The problem is ultimately in the following passage (first the French original, then ip fray‘s unofficial translation) if viewed in the context of the early-May decision:
Au vu de tous ces éléments, la Cour considère que, même en présence d’une identité partielle des parties, il est fortement probable que la Division Centrale ne retienne pas sa compétence pour statuer sur la demande en révocation. Dans ce cas, une telle demande en nullité du brevet qui fonde l’action en contrefaçon ne pourrait être formée devant la Division Locale que dans le cadre d’une demande reconventionnelle.
Translation:
In light of all these facts, and even if there is only a partial identity of the parties, the Court considers it highly probable that the Central Division will not retain its jurisdiction over the revocation claim. In that case, such a request to invalidate the patent-in-suit in the infringement action could only be made before the Local Division in the form of a counterclaim.
The Paris CD is not bound by what the LD says here. But if the CD agreed that it does not have jurisdiction and the revocation matter belongs in the LD, it would be too late now for a revocation counterclaim and the May 6 decision even ruled it out while it would have been timely, just because the defendant did not seek revocation.
Practically, this means Photon Wave could challenge the patent (which is well beyond the opposition period) only in national courts, country by country.
That just doesn’t seem right. But it’s another question whether there is a legal error somewhere in the Paris LD’s reasoning (if so, the May 6 decision would be more likely to be reversible than yesterday’s denial of a stay) or whether the ultimate effect here is attributable to a structural flaw in the UPC’s governing rules, a flaw that may simply be due to the decision makers not having thought of the scenario that this dispute now puts on display.
Whether this case will result in clarification is also questionable. If the patentee gets decisive leverage at a point before an appeal has been decided, or if the procedural questions here are not outcome-determinative, the Court of Appeal may never have to decide.
In the meantime, practitioners advising and/or representing intervenors should make sure that the defendant brings a revocation counterclaim or the door may also be closed to any kind of UPC revocation action by an intervenor.
The judicial panel consists of Camille Lignières (Presiding Judge and Judge-Rapporteur), Judge Carine Gillet and a German judge (who is primarily the Presiding Judge of the Mannheim Local Division): Judge Dr. Peter Tochtermann.
Linklaters’s Pauline Debré represents the plaintiff. The defendant is represented by GSKH’s Helge von Hirschhausen, and the intervenor by Dr. Dorothea Hofer of German IP boutique Prüfer.