[UPCKat] Preliminary injunctions in the UPC: Edwards Lifesciences v Meril

UPCKat keeping warm on a stack of UPC
awarded costs

As part of our UPCKat reporting on the latest UPC developments, the IPKat continues its series of reports that analyze the development of preliminary injunction case law from the UPC. With our guest UPCKat team in the form of guest UPCKats Agathe Michel-de Cazotte, Hiske Roos and Laura Mikkelsen and members from the team at Carpmaels we continue the journey, this time visiting the Munich Local Division back in December 2013 on the issue of costs.

Over to the team to report on Edwards Lifesciences v Meril GmbH and Meril Life Sciences (UPC_CFI_249/2023:

"The Edwards Lifesciences v Meril preliminary injunction (PI) proceedings at the UPC on EP 3 763 331 protecting a “Prosthetic valve crimping device” (see here) started with a bang (or should this UPCKat say, crimp?) but ended with little in the way of preliminary injunction outcomes and a lot in the way of costs. After Meril had made a declaration to cease and desist, the parties settled and agreed that the proceedings were concluded and applied for discontinuance of the proceedings under Rule 360 Rules of Procedure (RoP), but disagreed on who should bear the costs of the proceedings. The Munich Local Division issued an order on 19 December 2023 awarding costs in favour of Edwards Lifesciences because of Meril’s (procedural) conduct in the PI proceedings (see DE order here).

Case background: application for provisional measures settled

After some (unsuccessful) pre-litigation discussions between the parties, Edwards Lifesciences applied for provisional measures against Meril on 18 July 2023. A procedural order allowing alternative service (see the DE procedural order here) confirmed successful service of the application under Rule 271.1(c) and 275.2 Rules of Procedure (RoP) and proceedings were then underway.

Meril and Edwards Lifesciences filed their respective objection and reply on 25 August and 11 September 2023 and the Court had set an oral hearing date for 10 October 2023. All this happened before Meril submitted a cease and desist declaration on 25 September 2023 (Declaration). This was within two weeks after Edwards Lifesciences had filed its response and two weeks before the date of the oral hearing. Edwards Lifesciences accepted Meril’s Declaration on 29 September 2023 and both parties agreed that the proceedings had been concluded. As a result, Edwards Lifesciences applied for termination of the proceedings under rule 360 RoP but the parties (and this UPCKat) were left wondering – who would bear the costs of the proceedings?

The key issues the Court decided were whether Rule 360 of the RoP also applies in PI proceedings and how costs would be determined under Article 69 of the Unified Patent Court Agreement (UPCA) and Rule 118.5 RoP in light of the circumstances of these proceedings.

Rule 360 RoP applies mutatis mutandis in PI proceedings

Rule 360 RoP determines the following:

Rule 360 – No need to adjudicate

If the Court finds that an action has become devoid of purpose and that there is no longer any need to adjudicate on it, it may at any time, on the application of a party or of its own motion, after giving the parties an opportunity to be heard, dispose of the action by way of order.

After some translation musings commenting on differences between the German, French and English versions of the Rules of Procedure, the Court stated that the intention of Rule 360 RoP was to provide the possibility of bringing proceedings to a conclusion without a decision on the merits, where that decision is no longer required. It also stated that this provision applies mutatis mutandis to summary proceedings as there is a hole in the Rules: there is no rule on the consequences of a settlement of PI proceedings.

The Court ordered disposal of the action without further comments now that both parties agreed that the requirements of Rule 360 RoP had been met.

Meril to pay all costs due to procedural behaviour which caused unnecessary costs

Article 69 UPCA sets out the basics on costs and determines that reasonable and proportionate legal costs will generally be borne by the unsuccessful party. Rule 118.5 RoP determines that the Court shall in principle decide which party's obligation it is to bear the legal costs and that the Court may order the parties to submit an estimate of the costs they seek to recover. This rule applies to costs in a decision on the merits but because there is no such provision for PI proceedings, it must also be applied to such proceedings, according to the Court.

The Court held that the settlement of the legal dispute, in this case due to Meril’s Declaration and its acceptance by Edwards Lifesciences, constituted exceptional circumstances. The Court stated that these exceptional circumstances meant it would be unfair to order Edwards Lifesciences to pay the costs incurred, despite the fact that Meril issued its Declaration without recognising any legal liability. The Court pointed to the circumstances that Meril had placed themselves in and the timing of the Declaration. In particular, the Court considered the following behaviour of Meril relevant:

1. Meril could have submitted its Declaration in a more cost-effective manner by submitting it shortly before the expiry of the last pre-litigation deadline set by Edwards Lifesciences on 13 July 2023 and Meril had not sufficiently explained why they did not do so;
2. If they had done so, the costs made in the PI proceedings would not have been made because the Court found it likely that Edwards Lifesciences would have accepted the declaration so that Meril had caused Edwards Lifesciences unnecessary costs; and
3. Meril submitted a very extensive objection (107 pages and 49 exhibits) to which Edwards Lifesciences had to respond (which it had done with 69 pages and 5 exhibits) and the date for the oral hearing had been set and simultaneous translators were organised, so the Declaration on 25 September had come as a complete surprise. The Court commented that considerable preparation work had already been done for the oral hearing and that the Court and Edwards Lifesciences had incurred considerable costs.

The above factors contributed to the Court’s finding that Meril caused Edwards Lifesciences unnecessary costs and that it would be equitable to order Meril to pay all the costs, irrespective of the prospects of success of the application for provisional measures.

The Court set costs at the upper ceiling of 200,000 EUR as the amount in dispute was set at 1,500,000 EUR (as per Art. 1 of the decision of the Administrative Committee of 24 April 2023 on the table of upper limits for reimbursable costs – see here). The parties were ordered to initiate separate cost assessment proceedings under Rule 151 RoP within one month of the decision or to alternatively reach an out of Court agreement.

Final thoughts

The Court seems to have taken a pragmatic approach to the rules and Article 69 UPCA considering the underlying circumstances of these proceedings which shows that the behaviour of the party can have a significant impact on the decision on costs. Something to keep in mind, especially when parties are considering a settlement and, when so doing, don't forget costs!"