Tandem Diabetes Care v Roche Diabetes Care, UPC Court of First Instance, Paris (FR) Central Division, 10 May 2024, Case no. UPC_CFI_589997/2023
In the latest order by the UPC’s Paris Central Division, the interplay between UPC jurisdiction and contractual agreements was clarified. The Court ruled that the UPC’s jurisdiction was not excluded by a standstill agreement, despite the complainant’s breach of said agreement.
The order was issued on 10 May 2024 and concerned the Preliminary Objection (No. App_3514/2024) that was lodged in the revocation action of Tandem Diabetes Care v. Roche Diabetes Care (UPC_CFI_589997/2023), concerning the patent EP 2 196 231 (‘EP 231’).
Background of the case
The parties had entered into a standstill agreement, requiring a notice of any “proceedings arising from or relating to a dispute over intellectual property”, 90 days before the lawsuit is filed.
In 2023, Tandem brought a revocation action against Roche’s patent EP 231. In response, Roche lodged a preliminary objection pursuant to Rules 19(1)(b) and 48 of the UPC Rules of Procedure (RoP), based on the grounds that the Courts currently have no jurisdiction to decide this matter, due to aforementioned standstill agreement between the parties. It assumes that Tandem failed to comply with the 90-day notice period.
The hearing was held remotely on 16 April 2024, at which both parties represented their arguments (see No. app_3516/2024 UPC_CFI_455/2023 for the relative file).
Arguments
Tandem (claimant in the revocation action; responded in the preliminary objection) argued that:
i) The standstill agreement does not affect the jurisdiction of this court;
ii) They did not breach the agreement, as it relates only to the use of confidential information received from the other party;
iii) They complied with the 90-day notice period, as Roche’s notice started the clock for both parties;
iv) Roche failed to identify any damages or harm that resulted from Tandems’ filing.
Roche (the applicant in the preliminary objection) argued that:
i) The agreement did concern court jurisdiction;
ii) Neither damages nor harm is necessary;
iii) Its notice did not start the clock for both parties, and, in any case, 90 days from that notice had not passed when Tandem filed their action.
Tandem replied emphasising that the jurisdiction of the Court cannot be excluded by a standstill agreement and that they did not file the action prior to the period elapsed.
The Court’s analysis
The Court first discussed the content and scope of the standstill clause. This agreement concerned the protection of certain confidential information. The Court was not convinced by Tandem’s arguments that the clause only applies to proceedings using the other party’s confidential information, as this contrasts with the wording as well as the scope of the contractual provision.
Furthermore, the Court rejected the claimant’s argument that the clause would be contrary to the fundamental rights to court access and fair trial. The Court recognises that the rights enshrined in Article 6 and 13 European Convention on Human Rights (ECHR), as well as 47 and 48 Chater of Fundamental Rights of the European Union (CFREU), are not absolute. They may be restricted in circumstances where there is i) a legitimate purpose ii) this is proportionate, and iii) does not undermine the very essence of the right, as is developed in the ECJ case law.
Applying this test to the clause, the Court held that the clause at issue appears legitimate as it:
i) Has legitimate purpose, as it is aimed at giving the parties a ‘cooling-off’ period in order to enhance and enable an out-of-court settlement;
ii) Is proportionate, as it is limited in time and appropriate to verify if an out-of-court settlement is possible; and
iii) Does not undermine the rights of the parties (and the claimants, in particular), as the wait for the lapse of the 90 days period does not appear to be detrimental to its interest and no allegation has been made by the claimants on that point.
This lead to the question of whether the violation of a standstill clause can be a possible ground for lack of jurisdiction. Although the provisions do not offer a definition of ‘jurisdiction’, the Court defined it as being generally referred to as “the ability of a specific court to hear and issue a decision on one or more specific disputes”.
The Court then made a distinction between ‘relative’ lack of jurisdiction and ‘absolute’ lack of jurisdiction. The first occurring when a different court or a different body (e.g. an arbitrative board) which is part of a different judicial system have the power the address a dispute, the latter when the situation brought to courts is not even abstractly configurable as a protectable right, pertaining to the administrative or legislative power.
Since no other court or judicial body is indicated as the one to have jurisdiction on the proceedings (relative lack of jurisdiction), and as the objection raised by the defendant concerns the inexistence of the concrete conditions for the court to address the claim and not the abstract power of the Court to decide the case (absolute lack of jurisdiction), none of these situations are at hand.
Roche argued that the non-compliance of the 90 days prior notice obligation determines a lack of jurisdiction of the Court. Displaying willingness to hear the Roche’s arguments, the Court followed the presented train of thoughts. This would lead to two conclusions.
The first conclusion is that a court may lack only temporary, as it would (re)gain it once the notice has been given and the period elapsed. The second is that a court may lack jurisdiction only if the claim is filed by one of the parties, which did not comply with the prior notice obligation. The Court finds these conclusions are not acceptable, as this would lead to a situation in which the definition of ‘jurisdiction’ would vary depending on the time of the filing of a claim or on the identity of the claimant. Jurisdiction should respond to objective criteria.
Conclusion
The key take-away from this Order is that a standstill clause cannot be a ground for lack of jurisdiction at the UPC. Disappointingly, the Court found it unnecessary to address the remaining arguments that were raised by the parties. They recognise that it would ‘benefit the future development of the proceedings’, as this would clarify the relevant issues. However, the Court found it more appropriate to postpone the discussion until after the parties have completed exchanging written pleadings, as they may submit more evidence in support of their arguments. To be continued…
