This series is masterminded by Alan Johnson and Alexandria Palamountain and the first two reports are "A test-drive for the Unified Patent Court" (June 2014, here) and "A test-drive for the Unified Patent Court: Part II" (October 2014, here). And now ...
The story so far
Following fairly typical pre-action correspondence with the patentee threatening infringement proceedings, the action kicked off in April last year with a pre-emptive application by the potential defendant to revoke the patent in the London branch of the Central Division. In response, the patentee made an objection under Rule 19.1(a) of the 17th edition of the Draft Rules, that is a preliminary objection to the jurisdiction and competence of the Court. While the application looked “ambitious”, Judge-Rapporteur Rieu (a Solicitor and Member of the Paris Bar working at Bristows) did not simply dismiss the application, but used her case management powers to order the claimant to produce evidence to it had implicitly referred so that the defendant could know the full case it had to meet before serving its defence, and extended time for service of the defence commensurately. This was something of a surprise to the claimant (and probably the defendant too), but when one looks closely at the case management powers in the UPC Rules, they are incredibly wide.Next steps
The claimant was given a reasonably tight deadline to provide its further evidence, and as so often happens in real life, one fact witness who had seemed helpful decided not to cooperate and refused to sign a witness statement. However, it served an expert report and one of the two witness statements required by Judge Rieu’s order. As a result of the further investigation with the witnesses (and the gap caused by the uncooperative witness) the claimant also modified its Statement of Case. Neither the defendant nor the Court (so far at least) has taken any objection to this, and the defendant then duly filed its defence within the revised time limit. One might have expected it also to have counterclaimed for infringement, but it did not. Instead, it allowed the defence, reply and rejoinder to be served before bringing a separate action for infringement in the London local division, adding a second patent into suit.
This move by the patentee is perfectly permissible under Article 33 of the Unified Patent Court Agreement (UPCA) which specifically permits patentee defendants to central division UPC actions to being local (or regional) division infringement proceedings instead of counterclaiming for infringement in the central division. However, what could be the motivation? For reasons not immediately apparent, the patentee seemed to want de facto bifurcated proceedings, even though (in contrast to the German experience) the validity hearing would be before the infringement hearing. Might the patentee have been concerned to construe its claims narrowly to secure a finding of validity? Or did it have in mind some tactic to do with Rule 70 which then comes into play? This requires that the President of the Court of First Instance is informed of the existence of the two sets of proceedings and that, if a counterclaim for revocation is included in the infringement action, the central division action must stay its revocation proceedings pending a decision by the local division as to how to proceed.
Too much bifurcation
can take a heavy toll ...
This would suggest that the progress of the action would lie in the hands of the infringer. If it pleaded invalidity as a defence (which requires it to counterclaim for revocation) its revocation action would be stayed and the trial date lost. Against that, if it did not plead invalidity, but only non-infringement as a defence, this would avoid postponement of the revocation case in the central division but create a second set of proceedings and further expense and uncertainty.
However, instead of letting matters take their course, the Court took the initiative. It invoked its powers under r.340 and summoned the parties to discuss joinder of the two actions. The hearing took place on 16 February, involving the judicial panels of both divisions.
At the hearing all was revealed as to why the patentee had not counterclaimed for infringement, but had instead brought its separate local division action. It said that it believed that the central division did not have jurisdiction to hear an infringement action concerning the second patent which had been infringed only in the UK and was not the subject of the revocation action; and. since it had wanted the two infringement cases heard together, it considered it had no choice but to start the local division action -- although this did not explain the delay in bringing its local division action which it attributed to the time taken to collect the necessary evidence.
The court decided that it had the power under R.340 to join actions together at any time when they concerned the same patent (as here), albeit another patent in addition. It noted that the only requirement was that the actions were both "pending". It considered the option of allowing two sets of related proceedings to continue in parallel to be undesirable, especially given that the central division proceedings would mandatorily have to be stayed if there was a counterclaim for revocation in the local division action.
Implicitly criticising rule 70, it reasoned that it need not wait to see what happened, knowing that there could then be a significant delay. It equally thought that the only way delay could be avoided without joinder was to permit the two actions to continue in parallel which it thought a waste of court resources, as well as dragging out the dispute as a whole. It did not think respecting Article 33 required it to wait to see if Rules 37 and.70.3 needed to be applied.
In view of this, the court decided to conjoin the proceedings and set a timetable which meant that the dates proposed for the interim conference and oral hearing could maintained. To do so, it abridged the court time limits for pleadings in the new conjoined action, and permitted the alleged infringer as much time as possible for its steps (primarily to serve its defence), leaving the patentee with a very tight time limit (just one week) for its reply and defence to counterclaim.
The court decided that the requirement to respect Article 33 would be met by having the local division hear the conjoined action. It reasoned that the object of Article 33 was to give primacy to local and regional divisions at the expense of the central division.In the light of this, the shape of the action is now a traditional action for infringement with revocation counterclaim, despite the previous procedural manoeuvres of the parties. Whether in the real system the court would be as proactive as this -- particularly as this involves different court divisions cooperating -- remains to be seen. Also, the timings only just permitted the court to take this course.
So, under R.340, did these judges make the right decision? Does the power under the rule permit joinder at any time? Does it include a power to join actions which involve the same patent, but also a different patent? And what does respecting Article 33 really mean? But perhaps the most interesting aspect of this latest instalment is to highlight an uncertainty as to the scope of R.49.2(b) (“The defence to revocation [actions in the central division] may include ... a Counterclaim for infringement”). Is a patentee sued for revocation in the central division limited to a counterclaim for infringement of just that patent, or can it include another patent in its counterclaim if it wishes? This would certainly be the most efficient use of party and court resources, but do the rules permit it? On this the Bristows court took the diplomatic course of ducking the question ...
There was no available artwork for
"ducking the question", but we found
this one for "questioning the duck"
The next stage is the interim conference scheduled for 14 April. The Kats' friends at Bristows have promised to keep us all posted.
At this stage it does all seem very daunting, partly because of the unfamiliarity of the proposed new system and partly because of the wide range of options that appear to result from its remarkable flexibility. For litigants and their professional representatives this will mean careful planning, a mastery of game theory and, at least initially, some labour-intensive thinking, says Merpel.