Context: Here’s another Unified Patent Court (UPC) case law update. The last one was just yesterday (June 6, 2024 ip fray article).
What’s new: The UPC’s Hamburg Local Division (LD) has now published a discovery order dated June 4, 2024 (PDF (in German)). Tesla raised a self-dealing question and prevailed on three of its four requests for documents referenced in two powers of attorney presented by Avago in connection with the assignment of the patent-in-suit from Broadcom (a company Avago acquired).
Direct impact: It is impossible to know from the outside whether Tesla’s suspicion of unauthorized self-dealing by a corporate officer is correct and, if so, whether Avago may still surmount the relatively low hurdle for standing under European patent law (as compared to U.S. law).
Wider ramifications: Those asserting patents in the UPC must be prepared for the possibility of having to answer more questions concerning their standing to sue than they would in German national court.
It is a general rule in many jurisdictions that self-dealing by a corporate officer must be explicitly permitted. A general power of attorney or other authorization to act on an entity’s behalf does not necessarily involve the right to enter into contracts with oneself, such as a CEO granting himself a loan or hiring a consulting firm he runs.
In Avago v. Tesla, two UPC hearings are scheduled for this month. On June 19, the Hamburg LD will hear one case (as ip fray reported on LinkedIn), and on June 25, the Munich LD will hear another. And Avago keeps upping the pressure on Tesla to settle. As ip fray reported on LinkedIn last week, another infringement action in this dispute has recently been filed with the Munich LD.
In the Hamburg case, Tesla requested (on May 15, 2024) four documents referenced by powers of attorney that Avago presented in connection with the transfer of the patent-in-suit from Broadcom to the acquirer of that company, Avago. With respect to to each of two powers of attorney, Tesla wanted to see board resolutions concerning the grant of power of attorney as well as the transfer of the patent-in-suit.
Avago opposed the request, arguing that Tesla was no longer concerned about the authorization of self-dealing, but wanted to know more about the company-internal decision-making process, despite there being no doubt about the fact that the company made a certain decision. Moreover, Avago argued that the transfer of many Broadcom patents to Avago has been “practiced” for a number of years, and in any event, the beneficiary of the transaction did not require board authorization.
Judge-rapporteur Dr. Stefan Schilling single-handedly decided on this procedural question and granted three of of the four document requests. Citing to the European Patent Convention as well as jurisprudence by the Federal Court of Justice of Germany, Judge Dr. Schilling recalls that the listing of an owner in the patent register is an important indicium of ownership. He then finds that Tesla was not able to present any “manifest” indicia for a lack of standing, but goes on to order (within a week. thus certainly in time for this month’s trial) the production of certain documents related to self-dealing because Avago itself presented documents (the powers of attorney) that explicitly referenced those other documents.
Self-dealing is mentioned in this context. It is unsurprising that a parent company and a wholly-owned subsidiary have an overlap with respect to one or more corporate officers. Apparently Tesla hopes to identify a formal error that might prove the patent transfer invalid and thereby deprive the plaintiff of standing.
With respect to the only document request he denied, Judge Dr. Schilling makes a distinction between “transfer” and “assignment” of a patent. ip fray believes, based on the context, that he means no special authorization of a patent transfer was required on the side of the receiving entity.
Tesla is represented by Quinn Emanuel’s Dr. Marcus Grosch and Avago (Broadcom) by EIP’s Florian Schmidt-Bogatzky.