UPC Court of Appeal Issues First Decision, Overturns Preliminary Injunction

Back in September 2023, the Unified Patent Court’s (UPC) Local Division Munich issued a preliminary injunction against the defendant in 10x Genomics, Inc. v. NanoString Technologies, Inc. On February 26, 2024, in a landmark decision, the UPC’s Court of Appeal overturned the preliminary injunction, allowing NanoString to return to most European markets.

The Court of Appeal clarified three key substantive issues in the case: the standard for claim construction, the standard for granting a preliminary injunction and the substantive evaluation of inventive step. Specifically, the Court of Appeal established the following:

1. Regarding the standard for claim construction, the patent claim is not only the starting point but the decisive basis for determining the scope of protection. The interpretation must always use the “description” and the “drawings” as explanatory aids and is not limited to cases where the claims include ambiguities. There will be no protection for what is disclosed only in the description or the drawings but has no basis in the patent claims. The same principles for claim construction will apply when assessing both infringement and validity.
2. Regarding the standard for a preliminary injunction, a proper decision for granting one must be based on it being “more likely than not” that the asserted patent is infringed and “more likely than not” that the patent will be found valid. This creates a balance – the opportunities to present facts and evidence by way of summary proceedings are limited, so the standard of proof must not be set too high. It also cannot be set too low in order to prevent the defendant from being harmed by an order for a provisional measure that is revoked at a later date. A sufficient degree of certainty is therefore needed, both for infringement and validity.
3. In provisional proceedings without hearing the defendant, the burden of proof for all relevant facts, including potential invalidity, lies with the applicant. In contrast, in provisional proceedings in which the defendant is heard, the burden of proof for entitlement and infringement lies with the applicant, while the burden of proof for invalidity lies with the defendant.
4. On the merits, the Court of Appeal held that the Local Division Munich incorrectly evaluated the likelihood that the patent would be found valid. The Court of Appeal determined that while the Local Division correctly concluded that the asserted patent would be found infringed and novel, it incorrectly concluded that the patent would likely be found to have an inventive step.
   1. To reach this determination, the Court of Appeal relied on its own analysis of the prior art and on the opinion of its own technically qualified judges, with only a brief mention of a contrary view from the defendant’s expert.
   2. Additionally, the Court of Appeal applied a “classical” style inventive step analysis, determining and applying the understanding and capability of a skilled person in the art (as reflected in the cited prior art references) rather than strictly applying the “problem/solution” analysis commonly practiced at the European Patent Office. A skilled person in the art would have had a reasonable expectation of success when using the claimed method because, based on their expertise, they would have been able to deal with issues such as “molecular crowding” and “autofluorescence.”

In setting these legal standards, the Court of Appeal has demonstrated that it is committed to actively leading the development of law and practice across the UPC, even if that means reigning in the work of the Local Divisions.