[UPCKat] Winning, yet appealing: can a successful party feel crossed? Cross-appeals and Rule 236.2 RoP

The UPCKat at the appeal crossroads 

Anyone who knows this Kat, knows that she has a particular interest in procedural law.  Procedural law often shapes the substantive case law and legal developments.  Indeed, the UPCKat  - in the form of Portugese Kat friends  - Beatriz Lima and Sara Nazaré, founding partners of NLP - poses such a question as it relates to appeals in the UPC and the development of the UPC case law.  

Over to Beatriz and Sara:  

"Background and question

The Unified Patent Court (UPC) appellate framework appears to rest on a simple premise: generally speaking, only a party that has lost, in whole or in part, may appeal. Yet, in practice, UPC litigation increasingly reveals more difficult questions, of which the following is an example: what happens where a party wins the operative part of the decision, but loses important legal findings along the way? Can a so-considered successful party still be “adversely affected” for the purposes of Article 73 of the Agreement on a Unified Patent Court (UPCA) (Article 73 – Appeal) and Rule 220 of the Rules of Procedure (RoP) (Rule 220 – Appealable decisions | IP-PorTal)??

The question is not unique to the UPC. European Union (EU) and the European Patent Office (EPO) procedural law has long grappled with the extent to which a party may challenge unfavorable findings, despite a favorable operative outcome, generally adopting a restrictive understanding of adverse effect linked to the operative part rather than the grounds.

So the question is posed: can a party that has obtained the result it sought at first instance nonetheless seek to overturn, before the Court of Appeal (CoA) the findings of the Court of First Instance?

Normative framework: unsuccessful submissions and adverse effect

Article 73.2 UPCA provides that an appeal against an order of the Court of First Instance may be brought “by any party which has been unsuccessful, in whole or in part, in its submissions”. The RoP transpose this idea using a different wording: that of a “party adversely affected”. Rule 220.1 RoP states that only such a party may lodge an appeal, a requirement which the CoA has already reaffirmed in its case law.

In Belkin v. Philips, the CoA (Order, paragraphs 27-28)held that Philips' cross‑appeal was admissible because Philips' request had only been partially granted and Philips was thus adversely affected within the meaning of Article 73.2 UPCA and Rule 220.1 RoP.  Notably, without having been directly confronted on whether “unsuccessful submissions” and “adverse effect” constitute distinct requirements, the Court ultimately suggested that the two are somewhat interchangeable).

This structure indicates that appeals are primarily conceived with an economical concern at heart, as remedies for fundamental losing parties – not as vehicles for parties successful in the operative outcome to seek to improve their overall position by trying to overturn the findings of the decision or the order.

This is not so different for cross‑appeals. They are foreseen in Rule 237 RoP (Rule 237), which defines a specific regime in what concerns the timing and conditions for the filing. But they remain embedded in the same conceptual framework as independent appeals: they presuppose that the appeal respondent is, in some respect, unsuccessful in the outcome of the case.

Rule 236.2 RoP as an alternative to cross‑appeals

Despite this apparent coincidence in regimes (for the appeal and the cross-appeal), the RoP offer an alternative route for appeal respondents: Rule 236.2 RoP allows the respondent to support the outcome of the contested decision or order on any ground, not being bound by the grounds given in the first‑instance decision or order or even by the arguments advanced in the main appeal. In other words, the respondent may defend the outcome by invoking additional or different reasons without needing to attack the operative part of the decision or order.

However, this solution is not without cost. Take, for example, a defensive plea that is expressly rejected at first instance, but the operative part of the decision is ultimately favorable to the defendant (because the claim/request is dismissed on other grounds) – Rule 236.2 RoP does not provide a vehicle to challenge that rejection in its own right (appeal or cross appeal). Under Rule 236.2 RoP, the respondent may, in the statement of response (to the appeal), reiterate the rejected plea as an alternative basis for upholding the result (the operative part) in the first instance. 

The limitations of this mechanism become apparent when one considers the Legal standing requirement. If, as suggested in Belkin v Philips, the requirement of being “unsuccessful in whole or in part in its submissions” or “adversely affected” is read primarily with reference to the operative outcome, in this scenario we have been using a defendant/respondent that has obtained the dismissal of the action will struggle to demonstrate that it is adversely affected by the rejection of particular defensive plea within the reasoning.

This gives rise to a systemic tension: negative judicial determinations that are not the subject of the operative part may remain insulated from appellate scrutiny merely because the party has “won” overall, even though those determinations might carry persuasive weight or de facto implications.

This tension prompts the question whether the concepts of “unsuccessful submissions” and “adverse effect” in Article 73.1 and 73.2 UPCA and Rule 220.1 RoP should be read more broadly. A stricter, outcome‑focused interpretation would confine appealability to situations where the operative part does not grant the relief sought, thereby treating the rejection of particular issues or pleas as irrelevant so long as the party ultimately “wins” the case. Conversely, a broader, reasoning-focused interpretation would allow appeals not only where the operative part fails to grant the relief sought, but also where the decision rejects specific pleas advanced by the successful party, recognizing a legitimate interest in challenging adverse (procedurally or substantively relevant) findings or pleas despite a favorable overall outcome.

The emerging case law does not yet squarely address this point, leaving open whether the current framework should be understood as deliberately sacrificing issue‑specific review in favor of procedural economy, or whether there is room to conceptualize “submissions unsuccess” or “adverse effect” at the level of pleas as well as at the level of the operative part.

Cross‑appeals and litigation strategy: case framing?

From a practical perspective, this uncertainty raises questions about pleading strategy in a court that has consistently stressed the front‑loaded nature of its procedure and the need to set out the full case at an early stage.

The answers to the questions raised above are not only pertinent on their own, they also bear on other fronts. For example, the admissibility of an appeal against the final decision or order is important for determining the admissibility of an appeal against the so-called “other orders” of that Court.

Indeed, Article 73.2(b) UPCA and Rule 220.2 RoP introduce an additional appealability filter for these orders: they must either be challenged together with the appeal against the final decision or final order, or be the subject of a timely application for leave to appeal, which the Court of First Instance must grant. In this context, it would seem that a successful party that lacks standing to bring an appeal or cross-appeal is likewise unable to challenge such “other orders” by relying on, or in conjunction with, that non-admissible appeal (or cross appeal).

This raises a series of strategic questions:  

1. Is the leave to appeal, subject to being granted by the Court of First Instance, therefore the only appropriate mechanism left for the respondent in such circumstances?
2. So subject to being admissible claims/requests/reliefs under Article 32 UPCA, should parties be encouraged to formulate those active or defensive pleas as specific, independent and autonomous (possible declaratory?) prayers from the outset, in the statement of claim and the statement of defense, in order to preserve at least the argument that they were “unsuccessful” on those submissions?
3. Even if a party cannot obtain a distinct operative part of the final decision or order on those pleas, could it induce the Court of First Instance to issue an “interlocutory” order that would qualify an “other order” and thus at least be capable of becoming the subject of a leave to appeal?
4. Alternatively, could a generous interpretation of the “extension of the scope of the appeal” admissible under Rule 236 RoP provide an alternative viable way for the respondent to have such a plea reviewed, even if only on a subsidiary basis?
5. Or finally: should it instead be accepted that, within an outcome‑oriented appellate model, parties must live with unfavorable reasoning on those pleas whenever they obtain a favorable operative part, managing any spill‑over risk in subsequent cases through careful case selection and argument rather than through cross‑appeals?
6. The answer to these questions will not only determine the contours of admissible cross‑appeals, but will also shape drafting practices and litigation tactics before the UPC. As UPC jurisprudence matures, it will impact on the degree to which first-instance reasoning acquires de facto precedential gravity within the new European patent judiciary."

What do readers think?