In the second of his series of pieces on the rules pertaining to Europe’s Unified Patent Court (UPC), which is expected to begin operating some time in the next few years, Bristows partner Alan Johnson looks at how final injunctions and bifurcation are set to be treated (you can see Alan’s first piece on preliminary injunctions here).
The ability to shut a defendant out of a huge market of 500 million people with one decision and to split infringement and validity proceedings are potentially very powerful weapons for plaintiffs of all kinds (including NPEs), and could also have a significant effect on patent values in Europe. As things stand, it seems that there will be no hard and fast rules – much will be left to the discretion of judges.
Here’s what Alan has to say:
The UPC's approach to the grant of final injunctions has been a hotly debated issue. Numerous submissions were made to the Rules Committee during the consultation on the 15th draft, making observations and suggestions about two broad aspects of this topic: bifurcated proceedings and eBay type provisions.
Taking the eBay issue first, the question is essentially whether all patentees should be treated in the same way when considering the grant of a final injunction, or whether those who do not practise their patents should, in effect, have a form of compulsory licence imposed upon them. The 16th draft rules contain nothing to indicate that different patentees should be treated differently, despite lobbying for such provisions. Moreover, there is no great tradition anywhere is Europe for taking such an approach; rather the opposite, in fact: an injunction would almost always be granted as a matter of course. Whilst it would therefore be somewhat surprising if an eBay-type doctrine evolved, there is nothing to prevent that happening. It is entirely possible should the UPC judiciary decide it is appropriate, subject to consideration of any national constitutional constraints which might exist. What would be welcome, therefore, is for the UPC judiciary to discuss its general approach to this matter before the UPC opens for business to see whether a consensus position can be reached, and to publish that position.
On bifurcation, many groups commenting on the 15th draft rules suggested that there be guidance on the circumstances in which cases should be bifurcated, much of it aimed at limiting the scope for it to happen. But this was rejected. However, your author is not as concerned as many about the prevalence and effect of bifurcation in the UPC.
Primarily this is because the UPC system is completely different from the German system where bifurcation is a mandatory part of the legal system. It is therefore wrong to assume that the problems which arise in Germany will necessarily arise also in the UPC. This may not be the case. There are three particular reasons why there may not be such a need for concern:
First, most European patent judges already recognise that it is more efficient to hear both aspects of a case together.
Second, it unlikely that a local or regional division hearing an infringement case would want to “give away” the validity counterclaim which they are perfectly able to decide.
Third, it is not inevitable, even if there is bifurcation, that the validity case will in fact lag behind the infringement case. In Germany two different courts are involved, and the progress in the validity court is generally rather slow as compared to the infringement court; this is why the so-called injunction gap problem arises.In the UPC, if a case is bifurcated, it will already have been fully pleaded by that time and what will need to be organised is an interim conference and an oral hearing.There is no reason why the central division should not conduct its business so as to ensure that the oral hearing of the validity case comes on at much the same time (or even before) the infringement oral hearing.It is true that a provision which appeared in the 14th draft rules requiring the central division to accelerate its bifurcated cases (old rule 40(b)) was deleted from the 15th draft and has not been reinstated in the 16th draft.However, the absence of a requirement does not mean that hearings cannot be fixed to achieve this purpose if that is what the judiciary of the UPC decides is appropriate.
But what if there is bifurcation and the injunction gap problem does arise? The short answer is that this is another of the UPC system’s imponderables. The relevant rule (118) is capable of different interpretations and certainly gives UPC divisions flexibility in approach. There are three broad possibilities.
First just grant an injunction. This would certainly be harsh for defendants.
The second is to grant what would be in effect a provisional injunction enforceable upon providing security, possibly in the form of a bond, much as can be done in Germany at present. This has its attractions for defendants to the extent that it will be a bold claimant that will provide a bond to secure an injunction having pan-European effect if validity is suspect.
The third possibility is simply to suspend an injunction pending the hearing of the validity case. This, for defendants, is obviously the best approach, as it would take the teeth out of bifurcation; and it is this approach which is probably to be favoured generally, at least in cases where the defendant has done all that it can to get the validity case before the court at the earliest possible opportunity.
Cause for concern
Plainly with these uncertainties, potential defendants have a right to be concerned. The lobbying battle on the rules has been fought and lost: they now appear set in stone on these points. But the judges are the ones who will apply the rules, and it is very much to be hoped that the UPC judiciary will consider these matters and agree a common approach on issues such as: When is bifurcation appropriate? Should steps be taken to avoid injunction gaps? What approach should be taken on the grant of an injunction in injunction gap cases? And should there be any eBay-type exceptions to the grant of an injunction? Should that happen or not, though, it looks like we’ll have to wait to find out what kind of regime will emerge.
Next time: Forum shopping in the UPC
IP management, IP litigation, Patents, IP business