[UPCKat] Revisiting lessons from the first ex parte UPC preliminary injunction in myStromer v Revolt

The UPCKat on its way to enforce
some orders...

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, again visiting the Düsseldorf Local Division last year in two decisions (22 June and 18 October) in Mystromer v. Revolt Zycling, UPC_CFI_177/2023.  Although "old" in a the UPC sense, now the dust has slowly begun to settle on the early case law, this decision is well worth a re-visit.  

Over to Agathe, Hiske and Laura to explain:  

"This is an early UPC case which cannot be absent in this IPKat series on UPC PI’s. In these proceedings the patent holder, myStromer has been on the winning side. It obtained the first UPC ex parte injunction (see the English translation here) against Revolt Zycling, followed by the first UPC penalty payment (see here) for not complying with that injunction.

The patent in suit (EP 2 546 134 B1, which can be found here and is co-owned by Fairly Bike) protects a “combination structure of bicycle frame and motor hub”. No opposition was filed, and no national nullity proceedings had been initiated against the patent.

Order for an ex parte injunction - 22 June

Revolt Zycling’s presented their E-bikes of the “OPIUM” series at the Eurobike 2023 trade fair in Frankfurt am Main on 21 June 2023 where they were available for test rides and an order form was available online (delivery was already announced online for April but had not taken place yet according myStromer).

myStromer applied for an injunction against Revolt Zycling’s e-bikes the day after they became available, on 22 June. On that same day, the Düsseldorf Local Division (LD) granted an injunction for Germany, the Netherlands, France and Italy covering combination structures consisting of a bicycle frame and motor hub, under a penalty payment of up to 250,00.00 EUR for each contravention. myStomer tried to include Austria in the injunction too by way of a rectification of the order but this request was dismissed on 30 June 2023.

The Düsseldorf LD granted the injunction as it considered it appropriate and justified for the following reasons:

• The application was well founded. myStromer’s submission that the contested e-bikes are directly and literally infringing the patent was not substantially contested by Revolt Zycling in its protective letter;
• There was no exhaustion of myStromers’ rights under article 29 UPCA which Revolt Zycling had argued there to exist based on a license agreement (in its protective letter again);
• There was urgency under Rule 209.2(b) RoP because Eurobike 2023, which is a leading European trade fair, had already started; and
• The validity of the patent was sufficiently certain given that no opposition was filed and no national nullity proceedings had been initiated against the patent and because Revolt Zycling had not brought forward any relevant prior art in its protective letter.

The Düsseldorf LD exercised its discretion under Rule 212 RoP to grant the injunction ex parte without hearing Revolt Zycling first. Rule 212.1 reads (insofar relevant):

“The Court may order provisional measures without the defendant having been heard, in particular where any delay is likely to cause irreparable harm to the applicant (…)”

The likelihood of any delay causing irreparable harm was found to be sufficiently demonstrated, taking into account the importance of the Eurobike 2023 fair in the industry:

"The Court has issued the provisional measures without prior hearing of the Respondent. The Applicant has credibly demonstrated that any delay is likely to cause irreparable harm to them (R. 212.1 RoP). "Eurobike 2023" is an important leading trade fair that has considerable relevance for the entire industry. It enables the Respondent to make contact with potential customers and thus establish its own market presence. It is obvious that the exhibition of the contested embodiment at this trade fair can lead to a loss of sales or market share for the Applicant that can hardly be reversed. The products of both parties are substitutable, directly competing products."

This case provides useful insight as to the circumstances in which the UPC considers there is basis to grant an ex parte injunction. On the other hand, this decision was one of the very first UPC decisions and it was not appealed; therefore, there is no guidance of the Court of Appeal on whether this decision represents established principles of the UPC.

These UPCKats understand the allure of presenting a new product at an important trade fair with many potential customers, but in light of this decision, would however recommend to use caution where there is a considerable likelihood that the product is deemed to be infringing a (sufficiently valid) patent, as the fair may not deliver the intended results!

The Court made the injunction subject to the provision of security by MyStromer, as is in principle required under rule 211(5) RoP in ex parte proceedings, for an amount of 500,00.00 EUR.

Interestingly enough, Revolt Zycling had earlier filed a protective letter on 19 June 2023 having received a warning letter before the ex parte PI was applied for (in accordance with German national practice).  However, the Court was not convinced by the arguments made in the protective letter, commenting that infringement was not sufficiently denied in the protective letter.   On protective letters in the UPC, see this IPKat post).

Order for penalty payment – 18 October 2023

However, the saga continued. On 18 October 2023, the Düsseldorf LD ordered Revolt Zycling to pay myStromer 26,500 EUR for breach of the Order.

The Court considered the requirements for a penalty payment had been made out due to Revolt Zycling keeping its trade stand open at the Eurobike 2023 trade fair after service of the Order (irrespective of the content of specific sales talks and a modification to the e-bikes). However, the quantum of the penalty payment remained to be determined.

The LD judges formulated their own test for determining the quantum of the penalty, relying on discretion granted under UPCA and RoP.

After a quite detailed analysis of the facts relevant for assessing whether there was a violation of the injunction, which includes further analysis on the concept of offering within article 25(a) UPCA (see below), the Court concluded that the Order had been repeatedly violated so that as a next step, a quantum had to be determined.

The Court, considering Art. 82(4) UPCA and Rule 354.4 RoP, stated that penalty payment quantum depends on the significance of the Order and thus ultimately the creditor’s interest in its enforcement. The penalty payment has a dual purpose: a coercive function and a sanction for non-compliance. In particular, the Court noted the importance of the:

1. type, extent and duration of infringement;
2. degree of fault;
3. advantage gained by infringer through infringing act; and
4. the danger of the past and potential future infringing acts for the infringed party.

The following factors were key in determining quantum in this case:

1. the continued operation of the fair stand: the order was served on Revolt Zycling on 23 June 2023 at 3:30pm at the Eurobike 2023, however Revolt Zycling’s stall in the exhibition hall remained open until 6:00pm. The penalty for this was set at 1,000.00 EUR – this is limited given that the infringement only continued for a few hours and amendments (although not sufficient) to the design had been made as the infringing part of the bikes was removed, and there was no sale just offering;
2. the delayed deletion of the debtor’s Instagram account: via this account it was possible to book test rides on the infringing e-bikes and this could still be accessed during the evening from 23 – 24 June 2023. The penalty for this was set at 500.00 EUR as it has a significantly lower advertising effect than a trade fair presence according to the LD; and
3.  Fahrrad Fischer, a company in Germany, presented the infringing e-bike as part of a Sunday sales event on 24 September 2024, which Revolt Zycling had provided for this purpose after the injunction had been imposed and thereby – according to the LD – deliberately disregarding the cease-and-desist order from the LD. The penalty for this was set at 25,000.00 EUR which is significantly higher but necessary to protect myStromer’s business interests.

The Court adopted a broad meaning of “offering” in Article 25(a) UPCA, which captured Revolt Zycling’s offer of its e-bike at the Eurobike 2023.

In particular, the concept of “offering” was further discussed by the LD. Exhibiting goods at a trade fair may be considered “offering” for the purposes of Article 25(a) UPCA. The only decisive factor is “whether the act in question actually arouses a demand for an infringing object, which the offer is intended to satisfy” so that it also includes preparatory acts intended for promotion. Also, for an offer to be made, not all features of the claim have to be shown in the advertising and / or at the fair stand if it has to be assumed that the product shown corresponds in its technical design to the subject matter of the patent.

In particular, the Court pointed out that the obligation to cease and desist from an act that has created a persistent state of disturbance must generally be interpreted as meaning that it not only includes the cessation of such acts, but also the performance of possible and reasonable acts to eliminate the state of disturbance, such as deletion of the Instagram account where test-rides could be booked, which is therefore also considered “offering”. This is especially the case where the non-removal of the infringing situation is tantamount to the continuation of the infringing behaviour.

National enforcement law is superseded by the UPCA for initial penalty orders.

The Court noted that enforcement procedure under Art. 82(3) UPCA provides for enforcement procedure to be governed by the law of the Contracting Member State where the enforcement takes place. However, reading Art. 82(4) UPCA along with Rule 354.3 RoP, the Court stated that if a debtor violates an injunction order of the UPC, penalty payments can be imposed on the debtor irrespective of the provisions of national enforcement law on the basis of the UPCA and the relevant procedural order (as was the case here). National enforcement laws would become relevant if Revolt Zycling did not pay the penalty payment already imposed upon it by the UPC.

Costs awards determined with reference to specific allegedly infringing activities.

Revolt Zycling was ordered to pay 75% of the costs of the enforcement proceedings, with myStromer covering the remaining 25% due to only 3 out of 4 of myStromer’s allegations of infringement being judged as justified by the Court.

Final thoughts

The UPC has shown it is determined to send a clear signal when it comes to enforcement of its orders. All relevant circumstances can be considered, and while justifications may go some way to reducing quantum of the penalty payment, costs may be awarded because an act of infringement has been made out. This was also the approach taken by another LD in penalty proceedings at the end of 2023 (LD Munich in the 10x v NanoString PI proceedings). These UPCKat’s takeaway is to comply and to comply quick, as every minute counts!"