Context: The Unified Patent Court (UPC) has already made many pretrial decisions and adjudicated various preliminary injunction (PI) requests, but before today, there had been no final judgment or permanent injunction yet.
What’s new: In a dispute pitting two relatively small German companies making bathtubs and similar products, the UPC’s Dusseldorf Local Division (LD) today announced and published its final judgment (PDF (in German)), which involves a permanent injunction, the partial revocation of the patent-in-suit and a surprisingly tiny (but non-final) damages estimate of 10,000 euros. What practitioners will find most interesting (also if this decision gets appealed) is the pleading standard for prior use rights, but also what the ruling says about a recall from distribution channels, auditing rights and untimely requests for an extension of time.
Direct impact: Both parties have an incentive to appeal, and there is presumably more at stake than the provisional damages estimate suggests.
Wider ramifications: This case showcases a certain asymmetry in the way the UPC adjudicates infringement allegations and certain affirmative defenses. While patent holders as well as those pursuing the invalidation of patents have easy access to decisions with effect in multiple countries, certain defenses must be substantiated on a country-by-country basis (and some, but not in this case, would even have to be litigated locally, particularly claims to a compulsory license).
In economic terms, Franz Kaldewei GmbH & Co. KG v. Bette GmbH & Co. KG is not a clash of titans. The plaintiff has about 800 employees according to its website, and the defendant about half as many.
Still, one would usually assume that a multi-country UPC case between those parties would be of greater economic significance than the 10,000 (ten thousand!) euros that today’s decision states as a preliminary damages estimate. A single day in a patent court costs a lot more than that. It remains to be seen whether the further proceedings (a subsequent damages case) will result in substantially greater damages.
The court also didn’t order the provision of collateral for the enforcement of the injunction during an appeal, again due to the apparent economic insignificance of the dispute. And even the plaintiff’s prayer for relief stated a damages amount of only 100,000 euros. Those numbers are puzzling.
It’s not just that there may not be much money to be recovered. The plaintiff also lost the broadest claim of the patent-in-suit (and then prevailed on a couple of slightly narrower claims), subject to an appeal. The patent-in-suit is EP3375337 (“sanitation bath tub device”).
The plaintiff carved out Germany (where the parties already litigated previously), which is why today’s permanent injunction by the UPC and the damages estimate relate to Austria, Belgium, Denmark, France, Italy, Luxembourg and the Netherlands.
The revocation claim succeeded in part, but not to the extent that the court would not have identified an infringement anymore.
Several aspects of the decision are relevant with a view to certain other UPC cases:
First, the defendant claimed prior use rights based on an earlier-filed but later-published patent. But the decision clarifies that the UPC Agreement (UPCA) does not create such a thing as a European prior use right: those rights are a country-by-country matter. The defendant has, at best, shown that it has a prior use right in Germany, but that country is not part of the relevant territory in this UPC action. The defendant did not establish prior use rights in the countries that matter here.
The ruling acknowledges that this country-by-country requirement has been criticized in legal literature, but holds that there is no statutory basis to decide this question differently.
Second, the plaintiff sought a recall as well as the definitive removal from all distribution channels of the accused products. The judgment explains that those are complementary remedies. For the removal from the distribution channels, the plaintiff demanded various measures, but the court granted this remedy only with respect to the cancelation of outstanding orders of infringing bathtubs. The court did not want to grant as a removal remedy anything that would effectively come down to an accounting, and it also wanted to be careful about the impact on the German market, which is the defendant’s primary market and not part of the territory to which this UPC action relates.
Third, with a view to an auditing, the remedy reads very much like German patent infringement rulings. The defendant has to provide a list and documents that serve as evidence, but may redact confidential business information. Originally, the plaintiff also sought auditing rights, but withdrew that request, and rightly so as the judgment explains. That claim may be brought (again) in a subsequent damages proceeding.
The panel consisted of Presiding Judge Ronny Thomas, Judge-rapporteur Dr. Bérénice Thom, Judge András Kupecz and Technically Qualified Judge Bernard Ledeboer (an expert in mechanics).
The plaintiff was represented by Arnold Ruess’s Cordula Schumacher and Benjamin Schnaebelin (“Schnäbelin” in German). The defendant was represented by Krieger Mes & Graf v. der Groeben’s Jens Kuenzel (“Künzel” in German).