EU-based manufacturers and distributors wise to consider PI strategies in light of CJEU’s judgment

In a recent judgment (case C-44/21 (28 April 2022)), the Court of Justice of the EU issued a (fairly rare) ruling on the interpretation of the IP Enforcement Directive (2004/48), following a referral from the Landgericht München I (Regional Court, Munich I).

The approach that had been developed in the case law of the Higher Regional Court of Munich was only to award a preliminary injunction (“PI“) where the validity of the patent asserted had previously been tested in invalidity or opposition proceedings. (The practice was also established in some other key patent courts in Germany). In Munich, the Lower Regional Court decided to side-step its appellate court. It referred to the CJEU the following question:

“‘Is it compatible with Article 9(1) of [Directive 2004/48] if German higher regional courts (Oberlandesgerichte), which have jurisdiction at last instance in proceedings for interim relief, refuse, in principle, to grant interim measures for patent infringement if the validity of the patent in dispute has not been confirmed in opposition or invalidity proceedings at first instance?’”

The CJEU ruled that Article 9(1) of the IP Enforcement Directive (2004/48) must be interpreted as precluding national case-law under which applications for interim relief for patent infringement must, in principle, be dismissed where the validity of the patent in question has not been confirmed, at the very least, by a decision given at first instance in opposition or invalidity proceedings. Further, the requirement to interpret national law in conformity with EU law entails the obligation for national courts to change their established case-law, where necessary, if it is based on an interpretation of national law that is incompatible with the objectives of a directive.

Therefore the barrier to the award of preliminary injunctive relief in the form of a case-law introduced requirement that the validity of the patent had previously been tested in national validity proceedings or an opposition, must fall away. By removing the barrier of previous validity stress-testing, PIs may now more readily be granted in Germany – and the barrier to PI relief which has been operating in Germany will not be incorporated into UPC case law.

However, this does not mean there will necessarily now be a PI free-for-all, particularly outside Germany in countries which have not been employing such a bar to PI relief. The CJEU noted in its reasoning (but did not explore) the provisions of the general obligation of article 3 of the Directive, which state:

‘1.      Member States shall provide for the measures, procedures and remedies necessary to ensure the enforcement of the intellectual property rights covered by this Directive. Those measures, procedures and remedies shall be fair and equitable and shall not be unnecessarily complicated or costly, or entail unreasonable time limits or unwarranted delays.

2.      Those measures, procedures and remedies shall also be effective, proportionate and dissuasive and shall be applied in such a manner as to avoid the creation of barriers to legitimate trade and to provide for safeguards against their abuse.’

These principles are supposed to be considered and applied by any court in the EU deciding whether to award PI relief or final relief to restrain patent infringement. In the UK, they are applied in the context of the ‘American Cyanamid’ test which governs the assessment of whether preliminary or interim injunctive relief should be awarded. The principles are also applied when consideration is given as to whether to grant final injunctive relief, although an injunction remains the normal form of relief following a finding of infringement (on which see Evalve v Edwards [2020] EWHC 513 (Pat)).

The UPC rules are an amalgam originating in the laws of many countries, including Germany. If the UPC in Germany (central division, local divisions) adopts the traditional German approach, but with the bar of prior validity stress-testing removed, the ready access to PIs and final injunctive relief across the UPC’s jurisdictional reach will make it an attractive venue for patentees, particularly if they can bifurcate out (and slow down) the invalidity case. The UPC courts in Germany will be able to award injunctive relief across the UPC states. For PIs at least, there is also an argument that, in view of the CJEU’s ruling in Solvay v. Honeywell (Case C-616/10, 12 July 2012) on the interpretation of Regulation 44/2001, the UPC could potentially award relief on a wider basis, encompassing non-UPC EU states. (On the other hand, the UK is no longer within the regime of Regulation 1215/20012 governing issues of jurisdiction and infringement as between the courts of different EU member states, nor its predecessor the Brussels Convention, nor the Lugano Conventions).

Manufacturers and distributors based in Germany, and in other UPC countries, will be particularly vulnerable to PIs being awarded by the UPC without validity issues being considered. Any potential defendant facing such a situation would be well-advised to consider:

• all options available to protect against PIs being awarded, for example by filing protective letters; indeed EU-based manufacturers should consider doing so with the UPC at the outset of the new court opening;
• if made the subject of an application for a PI, seeking speedy referral to the CJEU on what is required for compliance with the ‘fair and equitable’ and ‘proportionate’ requirements;
• seeking speedy testing of the validity of the patent in the UPC and of any equivalent patent (or designation) in the UK, by commencing revocation proceedings in the UK – e.g. under the Shorter Trial Scheme, by applying for listing immediately following service of the proceedings, and if there is commercial uncertainty about supply in the UK then by making an application for expedition of the trial.

The UK courts are well-used to adapting timetables to accommodate the time-critical determination of patent infringement and/or validity disputes, an example being the Patents Court’s decision in Advanced Bionics v Med-El Elektromedizinische Gerate [2021] EWHC 2415 (Pat). The courts’ detailed reasoned judgments on issues concerning the award of interim relief, as well as issues of substantive patent law (and relief following a finding of infringement), contribute to the wider body of case law on the implementation of the principles laid down by the IP Enforcement Directive, including on the requirements that any interim or final relief awarded be fair and equitable and proportionate, in the circumstances of any particular case.