Context: The Unified Patent Court (UPC) is quickly building a significant body of case law (e.g. May 27, 2024 ip fray article).
What’s new: Today the second panel of the UPC’s Court of Appeal published two unrelated decisions. In Neo Wireless v. Toyota, it was clarified that an opt-out of a patent from the UPC (so as to shield it from a revocation action in the UPC) is valid only if the owners of all national parts of the relevant European patent lodged a valid opt-out application (PDF). In Daedalus Prime v. Xiaomi, the appellate panel determined that certain appellees had a legitimate interest in remaining parties to an appeal, and therefore denied a partial withdrawal with respect to those appellees, leaving for an other day the question of whether a partial withdrawal with respect to select appellees (as opposed to a partial withdrawal concerning the issues raised) is allowed at all (PDF).
Direct impact & wider ramifications: Both decisions are at a procedural stage where it is not yet certain that they will make a practical difference. But the clarifications provided by the Court of Appeal will be appreciated by the UPC litigation community at large.
Each decisions will be discussed below a separate subhead now. The panel was the same: Presiding Judge Rian Kalden and (legally qualified) Judges Ingeborg Simonsson and Patricia Rombach. The judge-rapporteur differs between the cases.
Opt-out: all or nothing (Neo Wireless v. Toyota)
Neo Wireless has lawsuits pending against automakers in different jurisdictions. It is not an Avanci licensor.
Toyota is challenging Neo’s EP3876490 (title: “methods and apparatus for overlaying multi-carrier and direct sequence spread spectrum signals in a broadband wireless communication system”) in the UPC’s Paris Central Division. The UPC part of the dispute between Neo and Toyota has previously reached the UPC’s Court of Appeal (April 15, 2024 LinkedIn post by ip fray), where the issue was about filing deadlines for an appeal.
What happened with this relatively young patent (granted in May 2023) is that a U.S. legal entity of the Neo Wireless group used to own the patent with respect to all designated European countries, but shortly before grant assigned the German part to a German legal entity. A few weeks later, the U.S. entity opted out the patent for “all EPC states” without the German legal entity being involved.
Judge Professor Maximilian Haedicke, as judge-rapporteur of the Paris Central Division in this matter, declined to recognize Neo’s opt-out, given that Rule 5.1(a) of the UPC’s Rules of Procedure requires the proprietors of all national parts of a European patent to request an opt-out.
The Court of Appeal has now affirmed that decision, but not without giving the legal question at hand significant thought.
The decision explains that the relevant wordings in the UPC Agreement and the UPC’s Rules of Procedure are not 100% clear. They potentially lend themselves to different interpretations with respect to an all-or-nothing requirement for opt-outs.
What ultimately decided the matter is legislative intent. The idea is for the UPC, at least after the transitional period, to have exclusive jurisdiction over certain types of cases. The opt-out regime is only a temporary derogation from what will at some point be the general rule.
According to Neo, it should be obvious that no patent holder has an interest in a patent being subjected to UPC revocation proceedings, so even if one Neo entity had not participated in the opt-out process, the opt-out should be considered valid. But the UPC’s Court of Appeal rejected that notion.
The decision reflects the panel’s awareness of the fact that no matter how it would have decided, there would always have been situations where this meant some kind of hardship on parties. In the case at hand, there’s the U.S. entity that owned all national parts except the German one, but the German entity’s failure to participate has made the opt-out attempt fail. Otherwise there could be situations where the owner of one or more national parts of the patent wants to opt out, and all other owners would be affected, potentially against their will.
Presiding Judge Kalden was the judge-rapporteur. Neo is represented by Cohausz & Florack’s Dr. Christoph Walke, Matthias Waters and Dr. Martin Ruetten (“Rütten” in German). Toyota Motor Europe is represented by DLA Piper’s Dr. Constanze Krenz and David Kless (“Kleß” in German).
Withdrawal of appeal with respect to select appellees may not be admissible, and was denied at any rate in Daedalus Prime v. Xiaomi
This here is a meta-appeal in the sense that the actual issue on appeal has not been decided yet: its about the Hamburg Local Division’s denial of a request to service the complaint on three defendants via their German branch offices. But along the way, Daedalus wanted to drop three appellees from its appeal of that particular service-of-process order. Shortly after two Xiaomi entities filed their responsive brief (May 21, 2024), Daedalus sought leave to drop those two entities (a German one and a Dutch one) from the appellate proceedings, while still seeking to pursue the appeal against to other Xiaomi entities and Mediatek, and also while still suing all five entities over the alleged patent infringement.
It appears that Daedalus particularly wanted the Court of Appeal to disregard the responsive filings by the Dutch and German Xiaomi entities. But those companies said they absolutely wanted to remain parties to this appeal.
Daedalus argued that the Dutch and German entities had no legitimate interest in participating int he appellate proceedings as the service-of-process issue concerning the other defendants is not relevant to them (as they are EU-based).
In principle, the UPC’s rules allow partial withdrawals (Rule 265 RoP in connection with Rule 263.3 RoP), but it’s up to the court to determine whether the other party or parties would still have a legitimate interest in obtaining a decision.
Today’s decision “[l]eav[es] aside the question whether R.305 RoP would allow a withdrawal of an appeal against one or more but not all defendants in the proceedings before the Court of First Instance in a case such as the one at hand.” There is nothing in the Rules of Procedure that literally allows that. But the question is left for another day because, in any event, the court identified various reasons for which the Dutch and German Xiaomi entities “have an interest in the present case in defending themselves in relation to the request for service under appeal” and the UPC’s Court of Appeal did not want to “deprive Xiaomi DE and Xiaomi NL of their rights to be heard.”
This appellate decision was authored by judge-rapporteur Simonsson. The Xiaomi entities were successfully represented by Bardehle Pagenberg’s Professor Tilman Mueller-Stoy (“Müller-Stoy” in German). Daedalus Prime was represented by Peterreins Schley’s Dr. Marc Grunwald.