IP Expert Talk: The jurisdiction of the UPC

Show notes

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We are steadily approaching the take off for the UPC system, hence, it is worth taking a closer look at a topic that is, admittedly, not the most tangible one, but indeed very important. We are talking about the international jurisdiction of the Unified Patent Court, the UPC. Especially at the beginning of the new system you will either want to try out the new system or you will be dragged into proceedings before that new court. The decisive question will be, however, whether the UPC is allowed to hear that case. This question is determined by the international jurisdiction.

What is important to mention for our audience is that the international jurisdiction does not determine which division of the UPC can hear a case. That question is governed by the internal competence of the UPC which is regulated in the Agreement on a Unified Patent Court, the UPCA.

That is a very good point, Anita, and we will most certainly dedicate a separate episode to the internal competence of the UPC. Coming back to international jurisdiction, we have to look into EU Regulation No. 1215/2012 in its current version, which was amended to include the UPC in the system of courts for EU members and to which the UPCA refers. During this podcast we will simply use the term “Brussels Regulation”. In some cases, determining international jurisdiction is simple. However, especially if the parties have their domicile or seat in different countries this can be a complex issue. A bundle of regulations are applicable and countries fall into different categories when determining the international jurisdiction. For example, there are Member States of the European Union participating in the UPC system, EU Member States which are not UPCA contracting member states, contracting states to the Lugano Convention and third states that may or may not be contracting states to the EPC. We will try to explain in a simplified way which circumstances may establish the international jurisdiction of the UPC, of course without claiming to cover every individual case. To say it in advance, the UPC framework provides for a number of roads leading to the UPC, but whether “all roads really lead to Rome”, as the proverb has it, remains to be seen.

The first road that may lead to the jurisdiction of the UPC can be the domicile of a person, or, in case of companies, their company seat. If a defendant is domiciled or seated in Germany or France, for example, that is in countries that are both Member States of the EU and UPCA Member States, it is a clear case. Here, the Brussels Regulation states that the UPC has jurisdiction where the courts of the EU Member State would have jurisdiction. A company seated in Germany or France can therefore be sued before the UPC, because the UPC as a so called “common court” is considered to be a national court of that Member State. Nadine, what about defendants domiciled or seated in states that are EU Member States but that are not UPCA Member States, such as Spain or Poland, or that are domiciled or seated in a Lugano member state, such as Switzerland and Norway?

To those countries we cannot apply the new section of the Brussels Regulation, therefore the international jurisdiction of the UPC cannot be derived from the domicile or seat of a party in those countries. But this is not the end of the story. Because, besides the general jurisdiction previously mentioned, the Brussels Regulation, or the Lugano Convention respectively, provides for several grounds of special jurisdiction.   In my opinion the special jurisdictions will be the most used grounds for international jurisdiction of the UPC. The most important one in patent infringement cases probably is the place where the harmful event occurred. If the place of damage or the place of action is within a UPCA Member State, the potential infringer can be sued before the UPC, regardless of where that party is domiciled. Thus, the ground of the place where the harmful event occurred will most likely cover any infringement of a Unitary Patent and/or European Patent and allow the UPC to be internationally competent to hear and decide a case.

There are, however, also other grounds of special jurisdiction worth mentioning which increase the attraction of the new system for plaintiffs. For example, multiple defendants can be sued before the UPC where only one of them, the so-called “anchor defendant”, is domiciled or seated within a UPCA Member State. The prerequisite is that the claims are so closely connected that it is expedient to hear them together to avoid the risk of irreconcilable judgements. In other words – if the same infringing act is at stake, it is sensible to hear those claims together. It is worthwhile to note that this special jurisdiction is mirrored in the internal competence of the UPC – however with a slightly different wording. For a local division of the UPC to hear a case with multiple defendants, it is mandatory that a commercial relationship exists between the defendants. It remains to be seen whether and to what extent this linguistic difference may lead to different interpretations. The UPC can also have jurisdiction for disputes arising out of the operation of a branch, subsidiary or other establishment. Another benefit of the new system is that for preliminary measures the question of international jurisdiction can be put aside. That may entail a rise of preliminary injunction requests covering cases for which the UPC would otherwise not be competent.   Now that we have mainly talked about the international jurisdiction of the UPC with a special perspective on patent infringements, let’s have a look at the validity side. According to the Brussels Regulation, the UPC will have exclusive jurisdiction to determine the validity of a Unitary Patent and, once the transitional period has ended, also of any European Patent that has not been opted-out. But there is, of course, also a limitation. The UPC may not decide about the validity of the European Patent insofar as it has been validated in an EPC Member State not being a UPCA Member State, such as Poland. However, that rather is a question of the territorial scope of a decision of the UPC. But Nadine didn’t we save a special and quite intriguing topic until last?

Yes, indeed, and I have to admit that I am quite curious to test this in upcoming disputes. There is a further special aspect referred to as “long-arm jurisdiction” with regard to damages. Under certain conditions, the UPC has the discretion in patent infringement cases to exercise jurisdiction in relation to damages arising outside the European Union.
First of all, the UPC must have jurisdiction, for example where a defendant has infringed a European Patent in the territory of the UPCA. Plus, that defendant must have property in the territory of the UPCA. Such property must match the damages outside the territory of the EU or exceed it. Finally, the dispute must have sufficient connection to the state where the property is located. Even though this may sound easy, the main challenge will be the defence against such a claim. Such defences may include Anti-Suit-Injunctions and of course the question of whether such a decision can be enforced in a non-EU Member State (for instance the UK).

Looking back, we really covered a lot in this episode of our podcast. So, let’s briefly summarize the key take aways:

International jurisdiction of the UPC is easily constituted if the defendant is domiciled or has its seat within the territory of the UPCA.

If the harmful act occurs within the territory of the UPCA, the UPC is also internationally competent.

Closely connected claims can be used to constitute the international jurisdiction of the UPC.

For preliminary injunction proceedings, we do not need to pay attention to the question which court is really competent for the main proceedings.

The UPC will be exclusively competent for the validity of a Unitary Patent and in due course all European Patents.

The long arm jurisdiction may lead to claims covering damages outside the EU territory.