Fujifilm v Kodak, the epilogue: BSH Hausgeräte v Electrolux – a cold towel read

After all the 'hot takes', 'fallout' and 'STOP PRESS', we take a cold towel read of BSH and its implications.

This decision is really an epilogue to the UPC decision in Fujifilm v Kodak – see our article on that here. We will start from the beginning, but will be making references to that article as it contains more background.

In BSH, the CJEU was asked three questions relating to long-arm jurisdiction of all courts of EU Member States ("MS courts"), not just the UPC, but it's only the first and third that count.¹

Regarding the first question, aka the "should I stay or should I go" dilemma in the intra-EU actions

The first question was:

whether Article 24(4) of the Brussels I bis Regulation must be interpreted as meaning that a court of the Member State of domicile of the defendant seised, pursuant to Article 4(1) of that regulation, of an action alleging infringement of a patent granted in another Member State, still has jurisdiction to hear that action where, in the context of that action, that defendant challenges, as its defence, the validity of that patent

In fewer words, does Article 24(4) of the Brussels Regulation 1215/2012 (recast) ("Brussels Regulation") mean that an MS court seised of an infringement action can still hear it for all designations, even if the defendant raises validity as a defence?

The answer is in paragraph 41 of the BSH judgment:

41. […] the exclusive jurisdiction rule laid down in Article 24(4) of the Brussels I bis Regulation concerns only the part of the dispute relating to the validity of the patent. Accordingly, a court of the Member State in which the defendant is domiciled, which has jurisdiction, under Article 4(1) of the Brussels I bis Regulation, in an action alleging infringement of a patent granted in another Member State, does not lose that jurisdiction merely because, as its defence, that defendant challenges the validity of that patent.

To be honest, we knew this much already, though it's helpful to have this clarified by the CJEU. As discussed in our Fujifilm article, the real question is what the MS court seised of the infringement action does next. Helpfully, here the CJEU has finally provided some guidance in paragraph 51:

51. […]. If it considers it justified, in particular where it takes the view that there is a reasonable, non-negligible possibility of that patent being declared invalid by the court of that other Member State that has jurisdiction (see, by analogy, judgment of 12 July 2012, Solvay, C-616/10, EU:C:2012:445, paragraph 49), the court seised of the infringement action may, where appropriate, stay the proceedings, which allows it to take account, for the purpose of ruling on the infringement action, of a decision given by the court seised of the action seeking a declaration of invalidity.

So the CJEU leaves it open for the MS courts to decide whether they stay the infringement action in respect of foreign designations pending outcome of the invalidity challenge, or go ahead with the infringement action without waiting for the foreign courts to confirm validity of the relevant designations. However, the CJEU follows the AG Emiliou's suggestion that whether a stay is granted should depend on seriousness of the invalidity challenge, to prevent 'torpedo' invalidity defences.

If no stay is granted, it implies that the MS court decided that the foreign designation is likely to survive the validity challenge – but the CJEU seems fine with such an implication, presumably because this 'decision' would only be made impliedly and summarily. If you ask us, that makes it look an awful lot like raising an invalidity challenge in a German infringement action, where a stay is only granted if there is a credible challenge to validity.

The CJEU also did not stipulate that there must be a deadline for starting the national invalidity action, but it seems likely that's what patentee's lawyers will argue for as a condition of a stay.

Regarding the third question, Turkey, UK and everyone else

The third question was:

whether Article 24(4) of the Brussels I bis Regulation must be interpreted as meaning that it applies to a court of a third State and, consequently, as conferring exclusive jurisdiction on that court as regards the assessment of the validity of a patent granted or validated in that State.

Here, as predicted, the CJEU concludes that Article 24(4) applies only as between MS courts. It also did not buy the reflexive theory proposed by AG Emiliou.

Instead, the CJEU falls back on the fundamental principle of the Brussels Regulation, i.e., Article 4(1): you can sue a defendant in the country of their domicile:

61. […] under the general rule laid down in Article 4(1) of the Brussels I bis Regulation, the courts of the Member State in which the defendant is domiciled have, in principle, jurisdiction in an infringement action brought against that defendant by the holder of a patent granted or validated in a third State which is domiciled in another Member State. In addition, the jurisdiction of the court of the Member State thus seised does, in principle, by virtue of that general rule, extend to the question of the validity of that patent raised as a defence in the context of that infringement action.

When it comes to third states, the CJEU is not constrained by the caselaw in GAT v LuK and Article 24(4) of the Brussels Regulation.

Nevertheless, the CJEU recognises that there are "special rules" listed in Articles 33-34 and 73 of the Brussels Regulation that will limit MS courts' jurisdiction. However, that helps neither in Turkey nor in the UK. Articles 33 and 34 relate to lis pendens – to engage them you'd need to seise the third state courts first. Article 73 contains a closed list of agreements which are not affected by the Brussels Regulation: the Lugano Convention, the New York Convention and bilateral conventions and agreements concluded before the first Brussels Regulation (44/2001) came into force.

The CJEU also recognises "general international law", including the principle of non-interference, according to which a State may not interfere in cases which essentially come within the national jurisdiction of another State. It goes on to say that "the grant of a national patent is an exercise of national sovereignty" and "only the courts of the third State in which a patent is granted or validated have jurisdiction to declare that patent invalid by a decision that may cause the national register of that State to be amended as regards the existence or content of that patent".

This is where the CJEU uses the pre-GAT German caselaw suggested in the AG Emiliou's opinion. A ruling on validity of a third state patent by an MS court can only have inter partes effect and therefore will not affect the status of the patent in the third state:

75. […] where the issue of the validity of a patent granted in a third State is raised as a defence in an action alleging infringement of that patent before a court of a Member State, that defence seeks only to have that action dismissed, and does not seek to obtain a decision that will cause that patent to be annulled entirely or in part.²  In particular, under no circumstances can that decision include a direction to the administrative authority responsible for maintaining the national register of the third State concerned.

It concludes:

76. If a court of a Member State is seised, on the basis of Article 4(1) of that regulation, of an action alleging infringement of a patent granted or validated in a third State in which the question of the validity of that patent is raised, as a defence, that court has jurisdiction, pursuant to Article 4(1), to rule on that defence, its decision in that regard not being such as to affect the existence or content of that patent in that third State or to cause the national register of that State to be amended.

So in fact, CJEU drives a bit of hardline here: it essentially concludes that if there is nothing in writing, MS courts may rule on validity of your third-state patents (if asserted). But don't worry, it will only have an inter partes effect.

The CJEU aims to prevent conflicting decisions by consolidating infringement claims into a single procedure. However, this approach may, at least temporarily, result in divergent rulings – an MS court may decide that a third state designation is valid (for the purposes of assessing infringement), only for it to be invalidated in that third state. Evidently, these inconsistencies are acceptable, as it's only the third state court that has the power to revoke its own designation – and if it happens, the defendant will no doubt apply to have any injunction lifted in the relevant Member State.

Implications: am I going to be injuncted in the US?! – stay tuned for the sequel

A lot of snap analysis has been circulating on social media about this judgment, in particular whether this creates a risk of being injuncted in the US³  by an EU court.

In theory, BSH suggests it is possible – the MS courts' jurisdiction under Article 4(1) is universal: if you live here, you are subject to our jurisdiction.

But there are a few buts.

Both Fujifilm and BSH are cases about European Patents and really result from the lack of complete overlap between state parties to the European Convention on the Grant of European Patents (the "EPC") (most European countries), those bound by the Brussels Regulation (only EU Member States), and contracting Member States to the Agreement on Unified Patent Court (only some EU Member States).

A European Patent is a bundle of national rights but that is only because back in the 70s when the EPC was signed, many countries were not willing to give up their prerogative to decide who has monopoly on their territory. In practice, EPs have the same description and claims. It is therefore convenient to sue for infringement of an EP on all designations in one forum – the fact pattern is often identical and the applicable laws very similar, because they are all based on the EPC. That is not the case for US patents which are not just built differently (long claim sets) but subject to different caselaw.

Just imagine being an MS court faced with a request to consider infringement of a US patent on the basis of a defendant's domicile. Would the MS court then have to apply US law for the assessment of infringement of the US patent? It would be a real headache. Nevertheless, it does not mean there won't be anyone willing to inflict it.

Those who do, even if they get the case off the ground, and even if they win, will likely be confronted with anti-suit injunctions and/or an uphill battle with enforcement. How much weight do you think a US court would give to a judgment from an MS state on infringement of a US patent, let alone consider the matter res judicata?

And, who knows, maybe there are some pre-2002 agreements with the US to that will come out of the woodwork?

¹ The second question was whether national law can affect interpretation of the Brussels Regulation, which, of course, it doesn’t. That was the point of Owusu

² If we were to criticize this judgment that would be it: From the UPC and UK perspective, an invalidity defence is raised not just to neutralize infringement, but to revoke it.

³ Of course, the same applies for other third states including China, Japan, Korea, India, Brazil, Australia!