UPC Report 10|24

The Unified Patent Court (UPC) has fast established itself as a favourite venue in Europe. Gleiss Lutz’s UPC Report provides a regular overview of the UPC case law that is most significant for the development of the new uniform patent law and procedural law in Europe. 

The UPC has issued its first two main decisions in infringement proceedings, while the UPC Court of Appeal has confirmed a preliminary injunction for the first time. Numerous procedural orders have also been issued, including on the language of proceedings, the protection of confidential information and the production of evidence. 

Our October 2024 UPC Report covers the following topics: 

• Managing director's liability for patent infringement
• Urgency in preliminary injunction proceedings
• Invalidity defence in preliminary injunction proceedings 
• Indirect patent infringement
• Right of prior use
• Rendering of accounts in infringement proceedings
• Recall and removal from distribution channels
• Imminent patent infringement
• Construction of patent claims 
• Assessment of inventive step

Managing director's liability for patent infringement

According to the Munich Local Division, the UPC can issue an injunction against the members of a company’s management as a company generally uses the “services” of its management to commit patent-infringing acts of use (order of 13 September 2024 – UPC_CFI_390/2023):

Managing directors are not to be considered to qualify as patent infringers by virtue of their position as managing directors of a patent infringing company. The term “infringer” – which is not defined in the UPCA – is to be interpreted to mean only persons who themselves actually “use” a patent without the consent of the patent proprietor. According to ECJ case law, such use involves active behaviour and direct or indirect control of the act constituting the use.

However, an injunction can be issued against a member of the management of a patent infringing company as an “intermediary” within the meaning of Article 63(1), sentence 2 UPCA. The intermediary is liable for injunctive relief, but not for damages. The liability theory assumed by the Munich Local Division is not a case of D&O liability for legal persons known from national legal systems, which usually only applies in cases of breach of duties of care.

Rather, the Munich Local Division suggests that it is sufficient that (i) the managing director of the company provides a “service” that is used by the company to infringe a patent and (ii) the managing director can influence the act of infringement. That is – as the Munich Local Division must be understood – regularly to be assumed for managing directors. In principle, that applies to all members of the management, including those whose primary area of responsibility is not the manufacture or sale of infringing products, but rather, for example, finance or human resources. This is because – according to the Munich Local Division – those members of a multi-person management board generally also provide services to the patent-infringing company that cannot be ignored without the specific patent-infringing acts ceasing to exist.

With this decision, the Munich Local Division has expanded the already strict liability for injunctive relief that members of the management bear under German case law by also assuming that managing directors whose area of responsibility does not concern the manufacture and/or distribution of patent-infringing products also bear liability. While it remains to be seen whether the UPC Court of Appeal will adopt the view of the Munich Local Division that members of the management of a patent-infringing company are to be regarded as intermediaries within the meaning of Article 63(1), sentence 2 UPCA, this seems to be rather unlikely.

Urgency in preliminary injunction proceedings

A temporal urgency requirement applies in preliminary injunction proceedings before the UPC. The UPC must consider whether the applicant has waited an unreasonably long time to file the application (Rule 211.4 RoP). According to the Court of Appeal, the relevant time period of waiting commences on the date on which the applicant is or should have been aware of the infringement to such an extent that it is in a position to file an application for interim measures with the prospect of success (order of 25 September 2024 – UPC_CoA_182/2024). This is the case once the applicant has the necessary facts and evidence (Rule 206.2d RoP) or should have had them with due diligence.

The Court of Appeal has so far left open the maximum amount of time the applicant has from this point in time to submit its request for an injunction to the UPC. Whether an unreasonably long delay within the meaning of Rule 211.4 RoP must be assumed depends on the circumstances of the individual case. The case law of the local divisions of the UPC is inconsistent on this issue: 

The Düsseldorf Local Division and Hamburg Local Division require the applicant to file its application for a preliminary injunction within one month (order of 9 April 2024 – UPC_CFI_452/2023; order of 30 April 2024 – UPC_CFI_463/2023; order of 3 June 2024 – UPC_CFI_151/2024). The Munich Local Division allows the applicant two months (order of 27 August 2024 – UPC_CFI_74/2024; previously: order of 21 May 2024 – UPC_CFI_443/2023). In contrast, the Hague Local Division found in a special case that even the lapse of almost eleven months between becoming aware of the patent infringement and filing the application for an injunction was not prejudicial to urgency (order of 31 July 2024 – UPC_CFI_195/2024). However, the case-specific statements of the Hague Local Division are not likely to become generally applicable. Until otherwise stated by the Court of Appeal, applicants should endeavour to file injunction applications within one month of becoming aware of the case.

Invalidity defence in preliminary injunction proceedings

According to the case law of the UPC Court of Appeal, for a preliminary injunction to be issued, the UPC must not consider it to be more likely than not that the patent is invalid (order of 26 February 2024 – UPC_CoA_335/2023). The Munich Local Division is of the opinion that it is not possible for the UPC to fully examine all invalidity arguments in preliminary injunction proceedings. The number of invalidity arguments submitted by the defendant should therefore generally be reduced to the three arguments which are the most promising ones from the defendant’s point of view (order of 27 August 2024 – UPC_CFI_74/2024; previously: order of 21 May 2024 – UPC_CFI_443/2023).

In contrast, the UPC Court of Appeal recently examined a total of nine invalidity arguments (order of 25 September 2024 – UPC_CoA_182/2024), which suggests that it will not confirm the case law of the Munich Local Division according to which the defendant is supposed to submit only a limited number of invalidity arguments in preliminary injunction proceedings. The view of the Local Division is likely to violate the defendant’s right to be heard if and to the extent that the court disregards specific invalidity arguments. The deliberate restriction of the defendant’s legal defence is not justified, not least in view of the summary nature of the preliminary injunction proceedings: Either an argument raised against the validity of the asserted patent is prima facie irrelevant – in which case it should be possible to quickly identify it as irrelevant even in the case of only summary examination – or it is prima facie relevant, in which case the UPC may not ignore the invalidity argument. 

Until the UPC Court of Appeal has expressly overruled the case law of the Munich Local Division, defendants in preliminary injunction proceedings before the Munich Local Division must be advised not only to submit three nullity arguments, but to put forward all invalidity arguments they consider promising. To be on the safe side, they should determine the invalidity arguments and their “ranking” with particular care, however.

Indirect patent infringement

The Munich Local Division has established the following principles on indirect patent infringement under Article 26 UPCA (order of 27 August 2024 – UPC CFI 74/2024):

In the case of an injunction for indirect patent infringement, it must always be considered whether only a relative injunction (e.g. the prohibition of distribution without warnings) should be issued instead of an absolute injunction if the means offered or supplied can also be used for non-patented purposes.

When weighing whether to grant an absolute or a relative injunction, account must be taken not only of the possibility of patent-free use by the customer, but also of the possibility of and the effort to redesign the means in such a way that customers are prevented from using them in a way that infringes the patent. If the relevant means can be redesigned without great effort, an absolute injunction against the indirect patent infringer is, according to the Local Division, more reasonable than burdening the patent owner with monitoring the conduct of the indirect infringer’s customers by issuing a relative injunction.

Direct infringement of a device claim can also be assumed even if the third party does not realise all claim features itself, but adopts the acts of its customers in its role as an extended workbench and it would be “inequitable” to hold the third party liable only for indirect patent infringement. This may be the case, for example, if “a specifically outlined completion of the patent-compliant device is to be expected with certainty” (for example, the delivery of a kit which, in order to be functional at all, must be assembled by the customer to form a patent infringing device).

Right of prior use

The scope of a right of prior use is governed by national law (Article 28 UPCA). The user of a claimed technology can only invoke a right of prior use to the extent the national regulations of the respective contracting member state grant it that right (decision of 3 July 2024 – UPC_CFI_7/2023). In proceedings before the UPC, defendants must establish the existence of a right of prior use for each of the protected contracting states both in fact and in law, i.e. submit both the legal requirements for a right of prior use under the respective national legal system and the facts that fulfil these legal requirements.

Rendering of accounts in infringement proceedings

In addition to the information specified in Article 67(1) UPCA, the submission of supporting documents for the information pursuant to Article 67(1) UPCA may also be requested in infringement proceedings – namely invoices or, if these are not available, delivery notes. Information on the cost factors that the defendant uses to calculate its profits may also be requested, as well as information the plaintiff requires to be able to verify the information and to obtain indications for its calculation of damages. The legal basis for this can be found in Article 68(3)(a), (b) UPCA in conjunction with Rule 191, sentence 1, second alternative RoP. In the opinion of the Düsseldorf Local Division, this is not a request for an order to lay open books (Article 68 UPCA in conjunction with Rule 131.1 (c) and Rule 141 RoP), which cannot be filed in the infringement proceedings, but only in the subsequent proceedings on the amount of damages (decision of 3 July 2024 – UPC_CFI_7/2023).

Recall and removal from distribution channels

The final removal from distribution channels is a measure that is separate from recall. Only those removal measures can be ordered that the infringer has the legal and actual ability to perform. According to the Düsseldorf Local Division, the plaintiff must specify concrete and sufficiently specific removal measures in its application (decision of 3 July 2024 – UPC_CFI_7/2023). For example, the defendant may be required to request that its commercial customers cancel orders for the infringing embodiment. However, the request to assert and enforce any contractual recovery claims is not sufficiently specific, as it leaves open the manner in which the defendant should enforce the contractual recovery claims and when that enforcement should be considered completed.

Imminent patent infringement

Imminent infringement within the meaning of Article 62(1) UPCA presupposes that there are concrete indications that, even though a patent infringement has not yet taken place, the potential infringer has already created the conditions for the patent infringement to occur. According to the Düsseldorf Local Division, the preparations for the patent infringement must already be fully completed and the patent infringement must only be a question of starting the infringing act (order of 6 September 2024 – UPC_CFI_166/2024). Whether these circumstances exist must be assessed case-by-case. The burden of proof lies with the applicant. 

In the case of the imminent launch of a generic product, the granting of marketing authorisation under pharmaceutical law is not sufficient. As long as the generics manufacturer does not participate in discount contract tenders, has not started price negotiations in a UPCA contracting member state and has not otherwise undertaken any offer activities, there is no imminent patent infringement.

Construction of patent claims

The Munich Central Division has decided – evidently based on German supreme court case law – that the principles of patent construction include the following (decision of 16 July 2024 – UPC_CFI_14/2023): The skilled person does not apply a philological understanding when interpreting the patent claims; rather, he or she determines the technical meaning of the terms used with the aid of the description and the drawings of the patent specification. It must be deduced from the function of the individual features in the context of the patent claim as a whole which technical function those features have individually and as a whole. This can lead to a different understanding of the terms in a patent claim than that suggested by the common or technical understanding of the terms. In this respect, the patent specification is its own lexicon. When applying these principles, the patent owner’s interest in adequate protection and third parties’ interests in sufficient legal certainty must be taken into account.

Assessment of inventive step

The principles established by the Court of Appeal (order of 26 February 2023 – UPC_CoA_335/2023) for the assessment of an invention’s inventive step under Article 56 EPC were further clarified by the Munich Central Division as follows (decision of 16 July 2024 – UPC_CFI_14/2023):

An objective approach should be taken when assessing inventive step. It is thus relevant what the claimed invention actually contributes to the prior art, whereas criteria such as the subjective ideas of the applicant or inventor and the question of whether the invention was obtained by chance or by a systematic approach and/or at great expense are irrelevant.

Inventive step is to be assessed from the point of view of the person skilled in the art on the basis of the prior art as a whole, including common general knowledge. The skilled person will take a realistic starting point in the prior art, whereby there may be several realistic starting points and it is not necessary to identify the most promising starting point. A starting point is realistic if it would have been of interest to a person skilled in the art at the priority date in that skilled person’s development of a product or process similar to the product or process disclosed in the prior art, i.e. it is based on a similar technical problem.

Inventive step is to be denied if it was obvious for the skilled person to arrive at the claimed solution when starting from the realistic starting point in view of the underlying technical problem. In general, a solution is obvious if, starting from the realistic starting point, the skilled person would have been motivated to consider the claimed solution and to implement it as the next step in developing the prior art. In this context, it may be relevant whether the skilled person would have expected particular difficulties in implementing the next steps.

However, the absence of reasonable expectation of success does not result from the mere fact that other ways of solving the underlying problem are also suggested in the prior art. A technical effect or an advantage achieved by the claimed subject-matter compared to the prior art may be an indication of inventive step. A feature that was arbitrarily selected from several possibilities can generally not contribute to inventive step.