Context: On October 20, 2023, the Unified Patent Court’s (UPC) Helsinki Local Division (LD) affirmed its prior denial of a preliminary injunction (PI) in AIM v. Supponor and sustained a preliminary objection in the related main proceedings, holding that the opt-out of the patent-in-suit was invalid because the patentee had previously brought litigation over the same patent in national court (PDF). The case is about a digital means of overlaying stadium perimeter advertising so that television audiences in different geographic markets get to see different advertisements.
What’s new: The Court of Appeal’s (CoA) second panel yesterday reversed that particular holding and remanded for further proceedings on the merits (PDF). Its interpretation of Art. 83(4) UPCA is based on narrowing the word “action” to an action filed during the UPC’s transitional period (i.e., at a time when filings could be brought in national court or the UPC) because of the wider context of Art. 83, particularly the meaning of the word “action” in the other subparagraphs. The CoA’s second panel was not persuaded by the argument that the purpose of the rule was to avoid divergent decisions during the transitional period, which are indeed possible in certain circumstances, but merely meant to prevent an abuse of the opt-out system. The appeals court also said that even if Rule 5.8 of the UPC’s Rules of Procedure (RoP) had to be interpreted differently, the UPCA is considered clear enough and would take precedence at any rate.
Direct impact: The parties were in agreement that in the event of a successful appeal, the proceedings on the merits should be resumed by the Helsinki LD, which the parties already briefed on those aspects of the case in last year’s PI proceedings. The CoA declined to refer this question to the full court.
Wider ramifications: While this holding is not as totally uncontroversial as the second panel suggests and could still be overruled by the full appeals court at some point, particularly if another case raising the issue was put before the first panel, it will most likely stand during the relevant period. Its immediate effect is that some similarly-situated patentees who in light of last year’s dismissal refrained from bringing cases in the UPC may now reconsider and file.
It is not unheard of that a court adopts an expansive interpretation of a jurisdictional statute. The court below, however, wisely rejected the PI request, given that the plaintiff wanted an interpretation of Rule 83(4) that runs counter to its plain and ordinary meaning. This is the statute:
Unless an action has already been brought before a national court, proprietors of or applicants for European patents or holders of supplementary protection certificates issued for a product protected by a European patent who made use of the opt-out in accordance with paragraph 3 shall be entitled to withdraw their opt-out at any moment. […]
Given that the term “action” is one of the most basic terms in litigation, it inevitably comes up in many contexts. If it was capitalized, then it would be defined somewhere in the relevant statute, but that is not the case here. Far be it from ip fray to speak out against opening the UPC’s doors to more cases, but the CoA’s second panel approached this like patent claim construction, while for purposes of statutory interpretation, it is highly debatable and arguably inappropriate to narrow the meaning of such a basic (and, again, non-capitalized) term as “action” based on what it means in some other subparagraphs.
Then there is the second panel’s teleological perspective, which can be summed up as saying that
- (a) the idea was to provide patentees with the opportunity to opt out patents first, see how things go at the UPC and then put their patents back under UPC jurisdiction at a point where they are comfortable;
- (b) the avoidance of divergent rulings between the UPC and national courts was not a legislative objective, which is why such divergent decisions are indeed possible in certain scenarios;
- (c) the sole purpose of Art. 83(4) is to prevent abuse in the form of someone opting the patent out from the UPC’s jurisdiction, filing a case in national court (at a time when a filing in the UPC would be an option if not for the opt-out) and then withdrawing the opt-out in order to file in the UPC as well; and
- (d) a broader interpretation of Art. 83(4) might even disallow UPC complaints over patents where litigation in national court was brought many years ago and ended a long time before the UPC opened its doors, only because the patent was temporarily opted out.
Parts (a) and (b) are correct. Part (d) is a reasonable point to make, supported by the fact that the statute merely refers to actions that were filed without distinguishing between pending and concluded ones, and it is on balance stronger than the (still reasonable) argument one could make that someone who previously brought litigation over a patent in national court would then simply have had to refrain from an opt-out in the first place. Part (c), however, is at least debatable:
Opting a patent out from UPC jurisdiction while litigation is pending in one or more national courts deprives the defendant to the infringement action(s) of the ability to bring a revocation action in the UPC. And even if someone withdraws an opt-out at some point, time is of the essence and in practice no one would prepare a UPC revocation action at a time where a patent is not under the UPC’s jurisdiction only because it could be put back there at some point.
Here, the opt-out was made on May 12, 2023, and it was withdrawn on July 5, 2023. That means Supponor was discouraged for almost two months, and formally precluded for more than a month, from bringing a revocation action in the UPC that could also have disposed of any cases in national courts. One or two months can make all the difference if an injunction becomes enforceable, creating a Germany-style “injunction gap.” And the statute would have to work even if someone waited much longer between opt-out and withdrawal.
The CoA’s second panel has substituted its claim construction-like statutory interpretation that narrows the meaning of the term “action” and its narrow teleological view for what Rule 5.8 RoP says:
“In the event that an action has been commenced before a court of a Contracting Member State in a matter over which the Court also has jurisdiction pursuant to Article 32 of the Agreement in respect of a patent or application contained in an Application to withdraw, prior to the entry of the Application to withdraw in the register or any time before the date pursuant to paragraph 5, the Application to withdraw shall be ineffective in respect of the patent or application in question, irrespective of whether the action is pending or has been concluded.”
All in all, ip fray respectfully considers the CoA’s second panel’s decision debatable in key parts and therefore does not consider it impossible that it will be overruled. But the procedural and psychological hurdle for that is high, so patentees who can live with that risk (which they may consider only hypothetical or residual) are definitely encouraged by the decision to withdraw opt-outs over patents previously asserted in national court and file UPC infringement actions.
For the avoidance of doubt, ip fray is not saying that the second panel couldn’t have reached this particular conclusion, but disagrees with the way in which it got there. Given how fundamentally important the question is and that it goes against the plain and ordinary meaning of a sentence of the UPC Agreement as well as against Rule 5.8 RoP, the second panel in ip fray‘s opinion absolutely should have referred this question to the full CoA.
Panel: Presiding Judge Rian Kalden, Judge Ingeborg Simonsson and Judge Patricia Rombach.
Counsel for plaintiff-appellant: Roschier’s Johanna Flythström and Mikael Segercrantz; Powell Gilbert’s Ari Laakkonen and Siddharth Kusumakar; Noerr’s Dr. Ralph Nack and Dr. Niclas Gajeck; and Rospatt Osten Pross’s Maximilian von Rospatt.
Counsel for defendant-appellee: Hogan Lovells’s Dr. Henrik Lehment; Gleiss Lutz’s Dr. Matthias Sonntag; Hannes Snellman’s Panu Siitonen.