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22 September 2016PatentsDuncan Ribbons and Maeve Lynch

The post-Brexit world for European patent litigants

A number of recent cases have demonstrated that the English courts can and will determine issues of infringement of foreign intellectual property rights where their validity is not challenged.

This jurisdiction arises under Regulation (EU) No. 1215/2012 (the recast Brussels regulation), which provides a common framework concerning jurisdiction and recognition and enforcement of foreign judgments in all EU member states. Article 24(4) provides that member states have exclusive jurisdiction over issues concerning the validity of patents and other IP rights registered in accordance with their national laws. However, such jurisdictional exclusivity does not apply to infringement.

This framework allows litigants to ask the English High Court to rule on the infringement of patents covering other EU member states (if the other jurisdictional requirements are satisfied). For example, in Actavis Group v Eli Lilly & Company (2012), Actavis sought declarations of non-infringement of the French, German, Italian, Spanish and UK designations of a European patent. Eli Lilly accepted that in these circumstances, where validity was not in issue, the court was not required to decline jurisdiction based on the predecessor to the current article 24(4) of the recast Brussels regulation. Eli Lilly’s jurisdictional challenge based on the English common law doctrine of forum non conveniens (when courts can dismiss a case that another court, or forum, is much better suited to hear) failed.

This case demonstrates that, in principle, there is no reason why pan-European infringement issues cannot be dealt with by the English courts where the validity of the patents is not challenged.

The 2016 case of Anan Kasei and Rhodia Opérations v Molycorp Chemicals & Oxides (Europe) illustrates that the English courts are careful not to stray outside the confines of the recast Brussels regulation. The claimant in this case, Rhodia, commenced proceedings against Molycorp for infringing the UK and German designations of a European patent before the English High Court.

Molycorp subsequently challenged the validity of the German designation of the patent before the Federal Patent Court in Germany. At a preliminary hearing, the English court had to decide whether it had jurisdiction over the claim against the German designation. Rhodia did not dispute that the German court had exclusive jurisdiction over the validity of the German designation. However, it tried to avoid the English court ceding jurisdiction over the infringement issue to the German courts by seeking to make its infringement claim dependent on a finding of validity by the German court

Mr Justice Arnold decided that the issue between the parties was whether Molycorp had infringed a valid claim of the German designation. Despite Rhodia’s attempt to separate the issues of infringement and validity, Arnold decided that those issues were inseparable. Consequently, the
English court had no jurisdiction over Rhodia’s claim against the German designation of the patent.

Post-Brexit framework

The jurisdictional approach in the Anan Kasei and Actavis cases was primarily framed by reference to the recast Brussels regulation. So how would the jurisdictional aspects of these cases play out after the UK has left the EU?

Although the Brussels Convention was largely superseded by Regulation (EC) No. 44/2001 (the 2001 Brussels regulation) and later on by the recast Brussels regulation, the UK and 14 other EU member states are still signatories to it. If the recast regulation ceases to have effect in the UK, and assuming that no alternative plan is adopted by the UK government, the Brussels Convention would apply.

The Brussels Convention provided the foundation for the 2001 regulation and recast regulation and their provisions are largely the same. For this reason, the Anan Kasei and Actavis cases would be unlikely to have proceeded any differently had the jurisdictional issues been determined under the terms of the Brussels Convention.

"Recent developments in English case law provide that the English courts do have jurisdiction to rule on foreign IP disputes except those concerning validity."

While falling back on the Brussels Convention has the attraction of simplicity, it may not be politically acceptable. Although the Convention is not an instrument of EU law, a protocol on its interpretation signed in 1971 gives the Court of Justice of the European Union (CJEU) jurisdiction over its interpretation. Given that sovereignty was a key issue in the UK’s EU referendum, it seems unlikely that the UK electorate would accept CJEU primacy through the back door of the Brussels Convention.

An alternative is for the UK to sign the 2007 Lugano Convention, a parallel convention to the Brussels Convention which currently governs the relationship between EU member states and three members of the European Free Trade Association (EFTA): Iceland, Norway and Switzerland. However, to do so, the UK would need to either become a member of EFTA or obtain the agreement of the current parties to the 2007 Lugano Convention, both of which would inevitably require the UK to agree to the principle of free movement of people. There may not be much political appetite for this given that immigration was a key driver of the Brexit vote.

Furthermore, article 2 of the second protocol of the 2007 Lugano Convention requires signatories to pay “due account” to decisions of the CJEU and other EU member states which concern the provisions of the Convention and the corresponding European framework. While this falls short of giving the CJEU primacy over the application of the Convention by non-EU member states, it could still be unpalatable from a political perspective.

It is always possible that the UK could enter into an amended form of one of the regimes discussed above or negotiate a new regime with one or more EU member states. But even in this case, it seems unlikely that any new regime would take a drastically different approach.

If all else fails, the UK could fall back on its common law regime. Recent developments in English case law provide that the English courts do have jurisdiction to rule on foreign IP disputes except those concerning validity. On this basis, it appears that applying the English common law rules on jurisdiction to the Anan Kasei and Actavis cases  would effectively produce the same results as the recast Brussels regulation (and the 2007 Lugano Convention and Brussels Convention).

Given that the regimes discussed above adopt a consistent approach to jurisdictional issues, it seems likely that whatever regime the UK adheres to, litigants will continue to be able to obtain declarations of non-infringement of foreign patents after the implementation of Brexit.

Although it is not clear whether the Unified Patent Court (UPC) will progress, assuming it does go ahead without the UK it may be possible for litigants to obtain a declaration of non-infringement of patents over which the UPC has exclusive competence under the UPC Agreement, namely unitary patents and, after the end of the UPC transitional provisions, European patents which have not been opted out. Once the UK leaves the UPC system, the provisions of the UPC Agreement giving the UPC exclusive competence for such matters will not be binding on the English courts.

In theory, this option could be extremely attractive to litigants seeking to clear a path to market for a non-infringing product and wishing to use the more rigorous procedures of the English litigation system.

Recognition of UK judgments abroad

A declaration of non-infringement is of little use unless it is recognised in the European territories that it covers. Currently, the recast Brussels regulation provides for mutual recognition and enforcement of judgments among EU member states. If the UK leaves the EU and signs up to the 2007 Lugano Convention or some form of the current recast Brussels regulation, UK declarations of non-infringement of EU national patents will continue to be recognised in the relevant member states.

If the UK sticks to the default position—reliance on the Brussels Convention—its provisions concerning the mutual recognition and enforcement of judgments will apply only in the other 14 EU member states that are signatories to the Brussels Convention.

In circumstances where the Brussels Convention does not apply, and no other reciprocal arrangement is in place, the question of whether a declaration of non-infringement issued by a UK court in respect of foreign designations of a European patent will depend on the law of the EU member state in which the declaration is sought to be recognised.

The position on declarations of non-infringement of a unitary patent is unclear. The UPC is likely to be reluctant to recognise an English decision making a declaration of non-infringement of a unitary patent. But if the UK remains in the Brussels Convention and the UPC division being asked to recognise the English decision is in a member state which is also a party to the Brussels Convention, then refusing to recognise the English decision might be more difficult.

Post-Brexit, litigants can probably continue to obtain declarations of non-infringement of European national patents from the English courts. However, such declarations will not be fully effective if they are not recognised in the EU member states which they cover. If the UK does not agree reciprocal arrangements with the EU concerning the recognition and enforcement of judgments, it is uncertain whether and how such declarations would be recognised (save for the 14 member states that are party to the Brussels Convention if the UK remains a signatory).

However, even where formal recognition is refused, a well-reasoned decision from a highly regarded court using its quick and rigorous procedures is likely to have substantial persuasive value and promote settlement.

Duncan Ribbons is a partner at  Redd Solicitors. He can be contacted at: duncan@redd.eu

Maeve Lynch is an associate at Redd Solicitors. She can be contacted at: maeve.lynch@redd.eu

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