The decision of the European Court of Justice (CJEU) in BSH v Electrolux marks a significant shift in the interpretation of the Brussels Regulation (recast) (Regulation) in so far as it allocates jurisdiction in disputes involving registered intellectual property rights. The ruling has implications for how patent infringement cases are handled across EU member states, particularly when the validity of the patent is challenged. The decision allows EU member state courts to retain jurisdiction over infringement claims concerning patents granted in other countries, even if validity is challenged. This may lead to more bifurcation, forum shopping and applications for anti-suit injunctions. This shift may also impact the role of the UPC in multi-jurisdiction proceedings. Patentee claimants may favour national courts in certain situations.
Article 4 of the Regulation gives the courts of each EU member state jurisdiction to resolve claims made against a defendant domiciled in that member state, even if the claim involves infringement of patents granted in other member states. However, Article 24(4) grants exclusive jurisdiction to the courts of the member state over issues concerning the registration or validity of the patent.
Traditionally, this has meant that if a defendant to an infringement action brought in an EU member state court concerning a patent granted in another member state challenged the validity of that patent, the court would decline jurisdiction over the issue of whether or not it was valid or infringed.
This understanding was reinforced by previous CJEU decisions such as GAT v LuK (C-4/03). Solvay v Honeywell (C-616/10) emphasised a broad interpretation of Article 24(4) was required in order to align the Regulation with the Brussels Convention.
However, according to the CJEU in Electrolux Article 24(4) must now be given a narrow interpretation, allowing the court of the member state in which the defendant is sued to retain jurisdiction over the infringement claim, even if the defendant challenges validity. The court will not be required to relinquish jurisdiction, although it may choose to stay the infringement claim so it may consider a decision on validity made by the court of the member state in which the patent was granted. The CJEU considered that its new approach brought greater certainty to the rules on jurisdiction, and was unconcerned about the potential bifurcation of infringement and invalidity claims.
Importantly, the decision also addresses whether courts of EU member states have jurisdiction to rule on infringement and validity of patents granted in countries outside the EU, such as the UK, Turkey, the USA, or China. The CJEU ruled that Article 24(4) of the Regulation does not apply to such patents, meaning that member state courts retain jurisdiction to make inter partes rulings on both infringement and validity. This could lead to situations where a court in an EU member state hears a claim for infringement of a non-member state patent, including arguments about why the patent is not infringed or is invalid under the laws of the country in which it was granted. However, the CJEU acknowledged that the court could not require the relevant foreign patent office to amend its register of patents to give effect to its ruling.
This aspect of the decision raises several potential issues. For instance, a German court could hear a claim for infringement of a US patent, including arguments about the application of US law, for example relating to file wrapper estoppel or inequitable conduct, but without the procedural tools typically available in US courts (such as disclosure). It could also lead to applications in non-member state courts for anti-suit injunctions to prevent such claims from being pursued in EU member states.
The implications of the CJEU's decision for patent enforcement strategies are significant:
- The increased likelihood of bifurcation between infringement and validity proceedings could lead to complications, such as the "injunction gap" seen in Germany, where an injunction can be granted before the validity of the patent is determined. This could result in complex questions about whether infringement proceedings should be stayed and, if so, which territorial portions of such proceedings should be affected.
- The CJEU's view that member state courts have jurisdiction to decide on the validity of non-member states patents raises questions about respect for customary international law principles based on comity and reciprocity. On the one hand the CJEU accepts that Article 24(4) stipulates that only the court of an EU member state in which a patent is granted can rule on its validity. On the other hand, it has decided that member state courts can also rule on the validity or invalidity of patents granted in countries outside the EU.
- The decision may also affect the management of interim relief applications. Article 24(4) has never derogated from the ability of member state courts to make interim protective orders under Article 35, as considered in Solvay v Honeywell. However, the knowledge that jurisdiction over issues of infringement and validity might be temporary has traditionally demanded a cautious approach to granting such relief. The absence of this benchmark may impact how applications for interim relief are managed, the circumstances in which interim injunctions are granted, and their territorial and temporal scope. National law tests for granting interim injunctions will not be uniform across member states, incentivising forum shopping.
- The UPC has greater jurisdiction over non-EPC patents than its judges probably thought it had before the CJEU's decision. As noted in our most recent UPC update, the UPC courts are already starting to apply the CJEU's decision. However, the CJEU's decision may also inadvertently undermine the role of the UPC. With more member state courts now having unassailable jurisdiction over multi-country infringement proceedings, patentees may choose to issue proceedings in national courts rather than the UPC. Indeed, patentees may consider that bifurcation of infringement and validity issues suit them. This is particularly likely if a national court offers a more lenient test for granting interim relief compared to the UPC's relatively strict test.
Multi-country patent enforcement strategies devised before the CJEU's decision must be revisited. The decision increases the prospect of more interlocutory skirmishes, not less, as the likelihood of forum shopping and applications for anti-suit injunctions rises.