Kodak v FujiFilm: the Court of Appeal confirms UPC’s long-arm jurisdiction

For further background, read our summary of the Mannheim Local Division’s decision and the UPC Court of Appeal’s judgment.

Note that this is the first of two decisions to be rendered by the Court of Appeal in the dispute between FujiFilm and Kodak. The decision also addresses several other substantive issues (including claim construction and prior use defences), but this article focuses solely on jurisdiction.

The Court of Appeal overturned the first-instance decision, meaning the UK and German infringement claim failed. However, it did so due to a lack of evidence of infringement rather than on jurisdictional grounds. In fact, the decision expressly preserved the Court’s jurisdiction to decide cases in respect of European patents designated in non-UPC territories, with the Court of Appeal setting out in detail the principles and guidance to be followed by the UPC.

An interesting and practically important part of the judgment is the careful distinction drawn between accepting jurisdiction and deciding whether, and to what extent, that jurisdiction should actually be exercised.

In summary, it clarified that:

• Article 34 of the UPC Agreement does not limit the UPC’s jurisdiction to the UPC territory only; rather, UPC decisions cover all Contracting Member States in respect of which a European patent has effect (unless a more limited scope is requested). In accordance with Article 3(c) UPCA, the Court found that European patents validated in territories outside the UPC territory are ‘matter governed by the UPCA’.
• The key pre-requisite for the UPC’s long-arm jurisdiction is the defendant being domiciled in a UPC territory. Consistent with the CJEU’s decision in BSH v Electrolux, if the UPC has jurisdiction in a non-UPC territory due to the defendant’s domicile (under Art. 4 Br I bis), it cannot decline jurisdiction in that territory on the basis that a court of a non-UPC territory would be a more appropriate forum for hearing the claim.

Taken together, these two points led the Court to reject a narrow, UPC-territory-only limitation on its jurisdiction.

In exercising its jurisdiction, the Court of Appeal made clear that the UPC must apply both the applicable national law for the patent in question and international principles such as “comity”.

A significant aspect of its decision was the framework outlined for handling various scenarios, particularly with regard to invalidity arguments:

• In respect of designations in EU member state territories and signatories to the Lugano Convention (which the court refers to as ‘EU/LC EPs’, covering e.g. Spain and Switzerland), the UPC shall not determine validity, but may still decide infringement, of such patents.
• In respect of designations in territories of non-EU and non-LC states (‘non-EU/LC EPs’, e.g. the UK), the UPC may consider the validity of the patent on an inter partes basis only and the Court may then go on to decide the infringement action in respect of the same patent.
• In either case, the UPC does not have jurisdiction for determining isolated revocation actions against European patents beyond the UPC territory, in accordance with CJEU jurisprudence.

It then addressed two more complicated scenarios:

1. An infringement action which is also based on EU/LC EPs and/or non-EU/LC EPs, where the patent in the UPC territory is considered invalid but the product or process would infringe if valid.

Here, the UPC should first offer the patentee the opportunity to withdraw the extra-territorial aspect of the infringement claim.

• For EU/LC EPs, if the patentee proceeds with the claim, the defendant should be given an opportunity to launch revocation proceedings before the competent national court, and the UPC should use its discretion and/or case management powers to stay the infringement proceedings if such revocation proceedings are pending. If the defendant does not bring a national revocation action within a given time period, the UPC is then to assume that the patent is valid and proceed to determine infringement.
• For non-EU/LC EPs, if the patentee does not withdraw the infringement claim, the infringement action should be dismissed except in specific circumstances (for example, if the extra-territorial claims are different and may be considered valid).

2. An infringement action which is also based on EU/LC EPs and/or non-EU/LC EPs, where the patent in force in the UPC territory is considered valid and infringed in the UPC territory

In this scenario, the Court may, where appropriate and to avoid undue delay, proceed on the basis that there is a ‘reasonable, non-negligible possibility’ that the patent will be upheld by the competent national court, and may therefore issue relief subject to a condition subsequent that the competent national court rules in favour of the patentee – in which scenario the UPC injunction will become permanent. If, however, the competent national court rules that the patent is invalid, then the UPC decision will effectively become void, and the patentee may seek a stay of the proceedings until a final decision (e.g. on appeal) is rendered by the competent national court.

Comments

This authority ought to provide patentees with confidence that a single UPC claim can potentially provide relief across other important markets such as the UK, Spain, Poland and Switzerland. However, the UPC’s expanded jurisdiction has been carefully qualified, and we expect the focus in future cross-border disputes to be whether it should exercise that jurisdiction in any given case, by reference to the nuanced framework set out by the Court.

Whilst the Court of Appeal has no doubt provided clarity to UPC practitioners and businesses when devising multi-jurisdictional European enforcement strategies, the decision is not without its complexities. It equally highlights the importance of seeking detailed advice to assess whether a court is likely to grant relief beyond the UPC territories in a given scenario and the associated risks (particularly where there may be parallel national proceedings), including ensuring due consideration of local and international law.

Such an assessment is likely to become easier once the UPC divisions start to apply the framework. It will be particularly interesting to see how divisions use their case management powers to manage extra-territorial claims.