ECJ rules on forum for validity and cross-border patent enforcement

The Domicile Principle

On 1 March 2002, Council Regulation 44/2001 (the “Regulation”) came into force across Europe, replacing the Brussels Convention (the “Convention”) for determining the jurisdiction of the courts in relation to litigation across most of the EU (subject to certain limited exceptions). Although the Regulation has effectively replaced the Convention, the provisions as between the two are identical in many respects, and cases on the effect and interpretation of the Convention are of great assistance in the application of either regime.

Both the Regulation (and its predecessor, the Convention) are based upon the “domicile principle”, a general rule that all persons (natural and legal) domiciled in a Member State shall, regardless of nationality, be sued in the courts of that State. Although this general rule does allow for a number of specific exceptions, it was understood that any derogation from the domicile principle would be construed narrowly.

Two recent cases from the ECJ have considered the application of two of these exceptions in the context of patent infringement.

Exception for Connected Defendants

An accepted derogation from the domicile principle is contained in Article 6(1) of the Convention, which provides that in a case where there is more than one defendant, all defendants may be tried in a Contracting State where one of the defendants is domiciled. In Case 189/97 Kalfelis the ECJ considered the application of this rule, and held that for this jurisdiction to apply there must be a real connection between the different defendants, such that it would be expedient to determine these actions together to avoid irreconcilable judgments in separate proceedings.

Roche Nederland BV v Primus

The referral to the ECJ in Roche involved a determination of the exception for connected defendants in the context of pan-European patent infringement. In particular, it considered whether a patentee could bring infringement proceedings against connected defendants across the European Union by suing all parties in a single territory. This claim to jurisdiction over a group of defendants by the manufacturing, or other lead party at the centre of infringement is often referred to as the “spider in the web” theory, which has particular application in the Dutch courts.

The Claimants in Roche (Drs Primus and Goldenberg) were US citizens and proprietors of a European patent for immuno-assay kits. They brought an action in the Netherlands for infringement of the Dutch designation of the patent against the locally incorporated lead Defendant, Roche Nederland BV, together with eight other companies in the Roche group established in USA, Belgium, Germany, France, United Kingdom, Switzerland, Austria and Sweden (‘Roche and Others’). The claim for infringement against the additional parties was for infringement carried out in the various European (and other) territories in which those companies were incorporated. In their defence, the Defendants contested the jurisdiction of the Dutch courts, but also claimed in the alternative that the patent was not infringed, and in any event invalid.

At first instance the Dutch court accepted jurisdiction but declined to grant any relief in respect of the patent. However, on appeal the Regional Court of Appeal set aside the judgment and granted injunctive relief, prohibiting all of the Roche defendants from infringing the patent in any of the designated territories in which the European Patent was granted.

On further appeal the Dutch Supreme Court stayed the proceedings and made a reference to the European Court of Justice as to whether Article 6(1) of the Brussels Convention should be interpreted to apply to European patent infringement proceedings involving a number of companies established in various Contracting States for acts of infringement committed in such States. In particular the ECJ was asked to consider whether there is a sufficient connection between the defendants for the purposes of Article 6(1) where those companies, which belong to the same group, have acted in an identical or similar manner in accordance with a common policy conceived by one of them.

ECJ Judgment (Roche v Primus)

The ECJ concluded that for the purposes of Article 6(1), and in the context of European patent infringement, the national courts of a Contracting State do not have jurisdiction over other group company defendants in those circumstances. In particular, the derogation from the domicile principle in Article 6(1) was to be construed narrowly. In any event, since a European patent takes effect nationally on grant in the different contracting states, and the various acts complained of differed between the respective defendants, there was no real basis for establishing identical facts, the adjudication of which might cause irreconcilable judgments in different territories.

Although the ECJ did note that there might be some advantages in the consolidation of related actions before one court, that might encourage forum shopping, one of the tactics which the Brussels Convention was designed to avoid. Further, even if a single court accepted jurisdiction there was a real risk of the fragmentation of proceedings where the validity of the patent was put in issue, since that would inevitably result in a transfer of those proceedings to the state of registration of the patent (following the ECJ ruling in GAT v LuK below).

Exception for Registered IPRs

Another exception to the domicile principle (Article 16(4) of the Convention) provides that any proceedings concerned with the registration or validity of such rights would be reserved exclusively to the courts of the jurisdiction of registration. However, Article 16(4) does not on its face prevent a party from suing on a foreign registered patent in the courts of another Member State, provided validity is not in issue.

Previously, there had been some concern at a potentially inconsistent approach of the courts across the various Member States as to when validity of a registered intellectual property right was technically “in issue” for the purposes Article 16(4). In particular, it was unclear whether Article 16(4) applied only where the proceedings were principally concerned with validity, such as a claim for revocation or invalidity, or whenever validity was in question. The latter would include scenarios where a claim of invalidity was ancillary to a declaration of non-infringement, or was raised by way of a counterclaim to an allegation of infringement.

GAT v LuK

The referral to the ECJ in GAT v LuK demonstrates the tension that may arise between the domicile principle and the IPR exception under the Convention.

Gesellschaft für Antriebstechnik mbH & Co. KG (“GAT”) had responded to a tender from the German subsidiary of the Ford motor company to supply shock absorbers. A major competitor, Lamellen und Kupplungsbau Beteiligungs KG (“LuK”) contended that the goods under contract infringed a number of French patents held by them. In response, GAT sought a declaration of non-infringement in the German courts, citing the invalidity of the patents as one of the grounds for non-infringement. Since both parties were German companies, an action in the German courts would be consistent with the Convention (and the Regulation). However, any determination by the German court over the validity of French patents might contravene Article 16(4) of the Convention.

At first instance, the German trial court in Dusseldorf held the French patents to be valid. The court determined that the exclusive jurisdiction provisions under Article 16(4) were applicable only where validity was the “central issue”, such as in an action for revocation, and would not be a bar to hearing the claim where the action was for a declaration of non-infringement (as in this case), or when validity had been raised by way of counterclaim. When GAT appealed, the appellate court stayed proceedings and made a referral to the ECJ on the interpretation of Article 16(4).

ECJ Judgment (GAT v LuK)

Following the recommendations made by Advocate General Geelhoed in his Opinion of September 2004, the ECJ has confirmed that Article 16(4) is to be interpreted as providing exclusive jurisdiction to the courts of the territory of registration in all matters concerning the validity of a patent, irrespective of how such issue is raised. The Court concluded that to rule otherwise would allow the courts of the Member States to rule indirectly on matters of validity, which would undermine the predictability of jurisdiction that the Regulation intends to achieve, and allow for a multiplicity of proceedings with potentially different results.

Comment and Consequences

In its two judgments in Roche and GAT the ECJ has provided guidance and certainty for patent owners as to both the extent of enforcement, and the forum for all determination of patent validity.

Forum for Validity

In the UK, guidance on the IPR exception in the Brussels Convention had been provided by Mr. Justice Laddie (as he then was) in Coin Controls (see Coin Controls v. Suzo Int. [1997] F.S.R. 660). In his judgment, Laddie J. considered that although a claim for infringement of a foreign patent could be brought in the English courts, as soon as a defendant raised a counterclaim for invalidity the validity of the patent would be in issue before the court and the English court should immediately decline jurisdiction.

Following the ECJ’s decision in GAT v LuK the position is now clear across the Contracting States. The national courts of the state of registration of the patent have exclusive jurisdiction over all proceedings relating to the validity of that patent. Although a patentee may still choose to sue a defendant in their domiciled territory, subject to the defendant agreeing not to raise invalidity in any defence, such proceedings will almost inevitably have to be transferred to the territory of grant.

It is likely that many patentees will welcome this decision, which will ensure that only the courts of the Member State granting the right may consider its ultimate validity. As far as defendants are concerned, it seems almost inevitable that they may find themselves defending an action for infringement in the local courts for the patent, regardless of where they are domiciled.

Forum for Infringement

Perhaps less welcome for patent owners is the decision of the ECJ in Roche, which effectively ends the possibility of any national court granting cross-border injunctive relief for infringement of a European patent, even against related companies acting in concert. Since the “spider in the web” theory has now been effectively discarded, patent owners facing pan-European infringement issues must continue to bring infringement proceedings in each jurisdiction. Whilst this is both costly and potentially frustrating for patentees, it is perhaps an inevitable consequence of the fact that a European patent is no more than a bundle of national patents pursuant to a single application. Until a true community patent becomes a reality it seems likely that true community enforcement will continue to elude patent owners.