Context: In the summer, the Unified Patent Court’s (UPC) Dusseldorf Local Division (LD) entered the new judiciary’s first-ever permanent injunction (July 3, 2024 ip fray article).
What’s new: Today, the Dusseldorf LD handed down a permanent injunction in Seoul Viosys v. expert e-Commerce GmbH & expert klein GmbH (PDF (in German)). The defendants are resellers and the accused technology is a light-emitting diode (LED) found on the backside of certain Android smartphones made by Emporia, whose primary target audience are the elderly (thus, they come with large buttons and simplified user interfaces). The panel threw out various defenses, including proportionality; did not make the enforcement of the injunction during an appeal subject to the provision of collateral; and seized this opportunity to clarify what would happen in a situation where a patent is revoked but not all defendants bring a revocation counterclaim.
Direct impact: It appears likely that, barring a settlement, the defendants will appeal various aspects of the decision. What is difficult to tell is whether it would be an option for Emporia to incorporate non-infringing LEDs into its smartphones. Also, with expert being only one reseller, the products could still be sold in the countries in which the injunction applies through other channels unless and until the patentee obtains injunctive relief against them as well or successfully petitions for customs seizures.
Wider ramifications: The ruling is thoughtful and contains some significant obiter dicta. The failure of the proportionality defense to injunctive relief shows that the UPC is unlikely to adopt anything like the eBay v. MercExchange standard of U.S. patent law, under which there would have been some interesting arguments (infringing component is small part of overall product, patentee either just wants royalties or could otherwise have sued the supplier, not a lot of alternatives in the market for smartphones for the elderly, etc.).
The patent-in-suit is EP3926698 (“light-emitting diode”). The injunction covers Austria, Belgium, France, Germany, Luxembourg, the Netherlands and Sweden.
Intuitively, one would have expected Emporia or its LED supplier to intervene on the defendants’ behalf. But the sole intervenor (Seoul Semiconductor Co., Ltd.) is represented by the same lawyers as the plaintiff.
The first defendant runs the expert group’s online store, and the second defendant runs 25 consumer electronics stores from the expert group (expert is not a chain, but a purchasing alliance of a low triple-digit number of mostly Central European electronics stores with a common branding that always combines the expert brand with the name of the particular operator.
The defendants’ non-infringement arguments and invalidity contentions (impermissible addition of subject matter, obviousness) failed. The patent claim was upheld in its entirety, and deemed infringed.
Only the second defendant brought a revocation counterclaim. The judgment clarifies in its headnotes that a defendant who (like the first defendant in this case) fails to bring its own revocation counterclaim can’t benefit from someone else’s successful invalidity defense. In this case, it didn’t make a difference for either of two independent reasons:
- the revocation counterclaim failed, and
- the court did not sever the claims against the two defendants but kept everything together in a single proceeding.
With the greatest respect, ip fray has doubts as to whether a party could seriously be enjoined over a patent held invalid by the UPC in a parallel proceeding, and would not be surprised in the slightest to see other UPC panels resolve that legal question differently. But this case is not a suitable vehicle for appellate clarification of the doctrine in question, for the two reasons stated above.
Two other aspects of the decision could give rise not only to further discussion but also to appellate clarification:
- The defendants’ proportionality defense to injunctive relief failed despite them arguing that the accused LEDs are run-of-the-mill components sold at 70-80 cent per unit and representing only a minor part of the value of the accused phones. Also, they said (plausibly) that those LEDs are not a driver of demand for those phones. The judgment simply brushed those arguments aside as unavailing and essentially unsubstantiated. The panel did not consider it irreparable harm to the formal defendants if they are barred from distributing one particular mobile phone.
- The defendants, pointing to but not relying exclusively on proportionality, requested security (as a requirement for provisional enforcement of the injunction, which by the way also involves the destruction of infringing goods) to the amount of 5 million euros (ten times the value of the dispute for the purpose of determining fees). The judgment says that the defendants have the initial burden of proof if they seek to convince the court that they might not be able to recover wrongful-enforcement damages from the plaintiff. Given that the plaintiff is a non-EU (in this case, Korean) company, it may be difficult for the defendants to perform the necessary research to build a case for recovery risks. ip fray has previously voiced concern over the burden being too high for small and medium-sized enterprises (September 17, 2024 ip fray article). This here is not an SME case by the narrow EU definition, but the defendants aren’t large corporations either-
The decision comes across as very plaintiff-friendly, making some adjustments, at least with respect to enforcement security, a possibility.
Panel: Presiding Judge (and here, judge-rapporteur) Ronny Thomas, Judge Dr. Bérénice Thom, Judge Mojca Mlakar (Ljubljana, Slovenia) and Technically Qualified Judge Alessandra Sani.
Counsel for plaintiff and intervenor: Linklaters’s Dr. Bolko Ehlgen and Dr. Julia Schoenbohm (“Schönbohm” in German) with patent attorney Dr. Olaf Isfort of Schneiders & Behrendt (for plaintiff only).
Counsel for defendants: Krieger Mes’s Dr. Dirk Jestaedt and patent attorney Bernhard Ganahl of HGF (Harrison Goddard Foode).