Mala Technologies Limited v. Nokia Technology GmbH, UPC Court of Appeal, 17 September 2024, Case no. 227/2024
The Unified Patent Court (UPC) Court of Appeal has overturned an earlier decision of the Paris Central Division (Paris CD) that had refused a request to decline jurisdiction or to stay proceedings on the basis of the lis pendens rules in Articles 29-32 of the Brussels I Recast Regulation. The Court of Appeal stayed UPC revocation proceedings pending the outcome of proceedings concerning the same patent that are ongoing in Germany.
Background
Mala Technologies Limited (Mala) is the proprietor of EP 2 044 709 B1 (the Patent), which is valid only in Germany. On 29 April 2021, Nokia Solutions and Networks Co. KG (Nokia Solutions) filed a revocation action against the Patent with the German Federal Patent Court. The German Federal Patent Court dismissed this revocation action upholding the validity of the Patent in its entirety. Nokia Solutions filed an appeal at the German Federal Court of Justice on 15 January 2024 (the German Appeal). The German Appeal is pending and a date for the hearing has not yet been assigned.
Meanwhile, on 15 December 2023, Nokia Technology GmbH (Nokia Technology) filed a revocation action in respect of the Patent before the Paris CD.
Mala lodged a preliminary objection in the UPC revocation action under Rules 19.1(a) and 48 of the UPC Rules of Procedure (RoP), challenging the UPC’s competence based on the prior revocation action filed at the German Federal Patent Court. Mala requested, among other things, that the Court decline its jurisdiction for the revocation action or alternatively stay the UPC proceedings until a final decision has been issued in the German Appeal by the German Federal Court.
By order dated 2 May 2023, the Paris CD rejected all of Mala’s requests, including in relation to jurisdiction and staying the UPC proceedings. In summary, the Paris CD held that Articles 29-32 of Regulation (EU) No. 1215/2012 (the Brussels I Recast Regulation) which govern cases of lis pendens are not directly applicable to the UPC and the scope of those articles is determined by Article 71a-71d of the Brussels I Recast Regulation.
The Paris CD took a literal approach to Article 71c(2) which states that “Articles 29 to 32 shall apply where, during the transitional period referred to in Article 83 of the UPC Agreement, proceedings are brought in the Unified Patent Court and in a court of a Member State party to the UPC Agreement.”. The Paris CD held that because the German revocation proceedings were brought before the transition period commenced, rather than during the transition period, Articles 29-32 do not apply.
A detailed analysis of this decision can be found here.
Arguments on Appeal
Mala appealed the order of the Paris CD to the Court of Appeal of the UPC. By its appeal Mala requested that the Court of Appeal, inter alia, overturn the Paris CD judgment, allow the preliminary objection, decline jurisdiction to hear the revocation action or stay the revocation proceedings pending a final decision in the German Appeal, stay the first instance decision in the UPC revocation proceedings until the preliminary objection was resolved or make a reference to the Court of Justice of the European Union (CJEU).
The Court of Appeal judgment summarises the arguments put forward by Mala in support of its appeal. Mala argued the Paris CD was incorrect in its interpretation of Articles 71a to 71c and that it wrongly concluded that Articles 29-32 did not apply to proceedings issued before the start of the UPC transitional period. It argued that the UPC must decline jurisdiction in favour of the German court according to Article 31 as both the German national court and the UPC have exclusive jurisdiction and Article 31(1) does not require that the parties be the same.
Mala also argued that Article 29 applied as the German and UPC proceedings involve the same course of action and the parties are the same. Mala argued that both claimants are part of Nokia Corp. and thus fall under the same legal and economic interests. Further, Mala submitted that if the Court of Appeal held that Article 29 did not apply, then the Court of Appeal should stay the proceedings pursuant to Article 30 as there was a risk of irreconcilable judgments.
In response, Nokia Technologies argued, inter alia, that the Paris CD was correct in finding that Articles 29-32 do not apply as the requirements of Article 71c(2) are not met where the German revocation proceedings were issued before the start of the transitional period. It submitted that Article 31 did not apply as there was no parallel exclusive jurisdiction during the transitional period and that the requirements of same cause of action and the same parties in Article 29 also apply in respect of Article 31.
Nokia Technologies further argued that Article 29 does not apply as the actions do not concern the same cause of actions since the UPC action encompasses other national parts of the patent at issue, even if those parts have lapsed and there are additional grounds for revocation in the UPC action and auxiliary requests. It argued that the German and UPC actions did not involve the same parties and a mere group affiliation is not sufficient to consider two companies a single party within the meaning of Article 29.
Nokia Technologies also argued that procedurally, the request for a stay was impermissible as a preliminary objection.
The Decision of the Court of Appeal
The Court of Appeal of the UPC handed down its decision on 17 September 2024, partially upholding the order of the Paris CD. The Court of Appeal found that the Paris CD had correctly declared itself to have competent jurisdiction. However, it held that the Paris CD should have stayed the UPC proceedings until the German proceedings had concluded in light of Article 30 of the Brussels I Recast Regulation.
First, the Court of Appeal considered the applicability of Articles 29-32 to the present dispute. It held that those articles are aimed at minimizing the possibility of parallel proceedings before courts of different Member States and avoiding conflicting decisions. It follows that Article 71c(2) must be interpreted as meaning that Articles 29-32 apply where during the transitional period proceedings are pending before the UPC and a national court, even if the proceedings before the national court were commenced before the transitional period. It held that a different interpretation would mean there was no mechanism for resolving cases of lis pendens. The Court of Appeal found that its interpretation was supported by the heading of Section 9 of the Brussels I Recast Regulation which refers to “lis pendens” i.e. situations in which an action is pending at another court.
The Court of Appeal rejected Nokia Technologies argument that the use of the term “are brought” was deliberate by the legislature as it wished to apply the principle of sovereignty to parallel proceedings and to ensure a clear point in time at which a claimant may lodge an action with the UPC without running the risk that an old case will block a UPC decision.
The Court of Appeal then considered Article 29 which applies to proceedings involving the same cause of action and the same parties brought before different courts. The Court of Appeal noted that in order for Article 29 to apply the parties to the actions must be identical. There was not such a degree of identity between the interest of the two Nokia entities that a judgment delivered against one of them would have the force of res judicata as against the other to allow them to be considered one and the same. As a result, Article 29 did not apply.
While the Court of Appeal noted that the requirement in Article 29 for parties to be identical may lead to irreconcilable judgments, this risk is mitigated by Article 30, which is considered in further detail below.
Turning to Article 31, which provides that where actions come within the exclusive jurisdiction of several courts, any court other than the court first seized shall decline jurisdiction, the Court of Appeal held that there was also a requirement under this article for the parties to be the same. Thus Article 31 did not apply.
The Court of Appeal then moved on to consider Article 30. At the outset it confirmed that Mala’s request for a stay pursuant to Article 30 was to be regarded as a preliminary objection withing the meaning of rule 19 RoP.
Article 30(1) provides that “[w]here related actions are pending in the courts of different Member States, any court other than the court first seised may stay its proceedings” and Article 30(3) states that “actions are deemed to be related where they are so closely connected that it is expedient to hear and determine them together to avoid the risk of irreconcilable judgments resulting from separate proceedings”.
The Court of Appeal held that the UPC revocation proceedings must be stayed pending the determination of the German revocation action. It held that the cause of action of the two proceedings is almost identical. It held that there are only a limited number of additional arguments and auxiliary requests in the UPC action. Further, although the Patent had been validated and valid in a number of Member States other than Germany for a period of time, Nokia Technology did not put forward any interest in a rapid decision on the validity of those parts of the patents and it acknowledged that no claim for damages had been made in respect of those parts of the patents.
The Court of Appeal also held that the Nokia parties in the German and UPC proceedings were closely related. As they are both part of the same group, they were in a position to coordinate the initiation of proceedings and submissions in those proceedings.
Finally, the Court of Appeal noted that the German proceedings were much further advanced than the UPC proceedings. A final determination was awaited in the German proceedings and thus there will not be an excessively long stay.
The Court of Appeal declined to make a reference to the CJEU.
Commentary
The Court of Appeal decision provides welcome clarification on the interpretation of Article 71c(2) and clarifies that UPC proceedings may be stayed in favour of national proceedings where the national proceedings were brought before or during the transitional period.
While the Court of Appeal decision did consider each of Articles 29,30 and 31 on the facts of the case at hand, it went no further than this. The present case concerned proceedings in one Member State only regarding one part of the Patent. Further, the claimants were closely related.
Therefore, the decision does not address, for example, the situation where the patent has been validated and remains valid in more than one Member State and proceedings are only pending before one national court or where more extensive additional arguments on validity are put before the UPC. Thus, there is limited guidance on the applicability of Article 31 to be taken from this decision and whether Article 31 would apply in such instances remains to be seen. It appears that each case will very much be determined on its own facts.
The full order can be found here.
