Legal Lens on the UPC

Overview

The Unified Patent Court (UPC) is revolutionizing the way patents are enforced in Europe, and McDermott’s intellectual property team is here to help you navigate this dynamic landscape. Our Legal Lens on the Unified Patent Court newsletter is designed to keep patent holders and legal departments well-informed. And with an on-the-ground team in Germany, France, the United Kingdom and the United States, we offer a unique cross-border perspective.

JUST IN

CENTRAL DIVISION MILAN OPENS; ROMANIA JOINS THE UPC

The Central Division Milan opened its doors on June 26, 2024. Under last year’s amendment to the Agreement on a Unified Patent Court (UPCA), the Central Division Milan will handle cases related to human necessities (e.g., agriculture, food, clothing, pharmaceutical and medical devices, sports and gaming), which were previously distributed to the Central Division Paris.

Later this year, Romania is set to join the UPC on September 1, making it the 18th EU Member State to ratify the UPCA.

NOTABLE CASE & POTENTIAL IMPACT

10X GENOMICS, INC. V. CURIO BIOSCIENCE INC.

Topics: preliminary injunction; security for costs; knowledge of infringement

On April 30, 2024, in another decision involving 10x Genomics, Inc., the UPC’s Local Division Düsseldorf granted a preliminary injunction requested by 10x Genomics against its competitor, Curio Bioscience Inc., enjoining Curio from offering, marketing, using or possessing its Seeker Spatial Mapping Kits for localized detection of nucleic acids in tissue samples in France, Germany and Sweden. The asserted patent included both a method claim (method of detection) and an apparatus claim. In interpreting the claims, the Local Division rejected Curio’s attempt to apply file wrapper estoppel. Under Article 54 of the UPCA and Article 69 of the European Patent Convention, statements made by an applicant during examination may indicate how a person skilled in the art would understand a relevant feature but are not generally considered in claim interpretation.

The Local Division issued a split decision, granting the preliminary injunction with regard to the apparatus claim but not the method claim. The Local Division found that Curio’s infringement of the asserted apparatus claim was “more likely than not,” in part because the claim covered a product, irrespective of whether it satisfied the intended use recited in the claim. Instead, the claim defines the spatial-physical features of the covered product, which must be designed to be useful for the intended use, but there is no requirement to show that the intended use of the covered product actually occurred. For the method claim, however, the Local Division found 10x Genomics failed to show that infringement was “more likely than not.”

Regarding validity, the Local Division found that Curio failed to show that the apparatus claim was more likely invalid than not, despite 10x Genomics submitting claim amendments (known as “auxiliary requests”) in response to Curio’s invalidity arguments. The Local Division also addressed the impact of adversarial validity proceedings upon a request for provisional measures. Although the UPC must consider whether a patent has been upheld in such proceedings, which would provide a strong indication of validity, the fact that 10x Genomics’ patent did not yet survive any such proceedings did not prevent a determination that the patent’s validity was sufficiently certain for granting provisional measures.

Given each party’s partial success, the Local Division ordered each one to provisionally reimburse the other party’s costs in the amount of €100,000. Further, to ensure Curio’s compliance with the injunction, the Local Division ordered that Curio must pay a daily penalty of up to €100,000 if it violates the Local Division’s order.

The UPC also required 10x Genomics to provide a security before enforcing the injunction against Curio. Pursuant to Rule 211.5 of the UPC Rules of Procedure (RoP), the UPC may order an applicant seeking a preliminary injunction to provide an adequate security in the event the UPC later revokes the injunction. According to Rule 352.1 of the RoP, this security is intended to cover the other party’s legal costs and other costs related to enforcement, as well as compensate the other party for any damage it incurred or will likely incur. Although the UPC determined it was difficult to provide an accurate estimate of damages likely to be incurred by Curio, the established value of the dispute provided a sufficient indication. Thus, the UPC set the security amount at €2 million.

TAKEAWAYS:

Courts of first instance continue to grant preliminary injunctions, applying the “more likely than not” standard established by the UPC Court of Appeal’s (CoA) decision in NanoString Technologies, Inc. v. 10x Genomics, Inc. However, as expected, the courts’ analyses of infringement and invalidity evidence and arguments have become more detailed.
The UPC may apportion costs for a preliminary injunction request between the parties based on the number of issues favoring each party.
The UPC may order an applicant seeking a preliminary injunction to post a bond (known as a security) equal to the value of the dispute

EMERGING LEGAL ISSUE

ARGUMENTS PERMITTED IN UPC PROCEEDINGS

The UPC is wrestling with how to expeditiously affect preliminary proceedings, issuing two recent decisions that address the question of when and the extent to which the parties are allowed to make arguments on the merits. In these decisions, the Court strictly limited the number of invalidity arguments that can be made during proceedings for provisional measures but also expanded the flexibility for infringement contentions in the early part of any case, imposing a practice not explicitly covered by the UPCA or the RoP.

Dyson Technology Ltd. v. SharkNinja Europe Ltd. et al.

In response to Dyson Technology Ltd.’s request for a preliminary injunction, the Local Division Munich limited the number of invalidity arguments that can be raised by SharkNinja Europe Ltd. Due to the urgency and summary nature of such requests, the UPC concluded that it cannot fully examine all invalidity challenges like it would in a revocation action and reduced the number of arguments it would consider to what SharkNinja believed were its three best. The UPC was ultimately not convinced with the three arguments and granted the injunction.

It is unclear if other courts of first instance will impose similar limits. Although there is no specific legal basis for limiting the number of arguments that can be made by a defendant in a given submission (assuming the submission is permitted under the UPCA and RoP), the Local Division Munich justified its position based on the CoA’s decision in NanoString Technologies v. 10x Genomics, which emphasized the summary nature of the proceedings when deciding on interim measures (cf. Rule 205 of the RoP). It remains to be seen whether the UPC will place limits on other issues or arguments during interim proceedings.

Limitations on the parties’ arguments will be familiar to those who litigate patents in the US. Many US courts have local rules that impose strict page limits on written submissions, limitations on the number of terms for claim construction, limitations on the number of claims that can be taken to trial, and limitations on the number and combinations of prior art references for invalidity. For example, Local Patent Rule 4-1(b) in the US District Court for the Northern District of California requires parties to “jointly identify the 10 terms likely to be most significant to resolving the parties’ dispute, including those terms for which construction may be case or claim dispositive.” Unlike the UPC, however, most of these limitations are intended to streamline the issues for trial instead of limiting parties in preliminary proceedings.

Non-Practicing Entity Infringement Action

In a separate decision, the Local Division Munich agreed with a non-practicing entity, finding that, at an early stage of the proceedings, an exemplary infringement analysis using only one specific device is sufficient. The entity had broadly accused many products (known as infringing embodiments), listing “non-limiting examples” with a total of 27 different products. Despite the defendants challenging the disparity between the entity’s broad set of accused devices and narrow infringement allegation for just one of those products, the UPC found that the entity’s infringement allegation, which included a detailed outline and comparison of the claimed patent features with the features of the accused devices (one infringing embodiment), was sufficient.

In reaching that conclusion, the UPC determined that – at this stage – the patent holder was not required to outline each feature of an infringed patent claim for every single device that was included in the list of infringing embodiments (also known as an infringement read). Instead, at a later stage of the proceedings, it would be sufficient for the patent holder to show that the infringement read applies in the same way to all other devices included in the list. As a result, a plaintiff filing an infringement action at the UPC must show that the accused devices include all the essential features described in the asserted claims of a patent but do not need to exemplify each individual accused device at the outset.

In the UPC, the patent holder has the burden of proof for patent infringement and thus must prove infringement for all accused devices, even when they do not exemplify each individual accused device initially. The burden does not shift at any stage of the proceedings to the alleged patent infringer (See Article 54 of the UPCA).

It remains to be seen if the UPC will apply the principle of “secondary burden of proof,” which is recognized by German law. This principle applies when evidence needed to prove a disputed fact is difficult or impossible to obtain for the party bearing the corresponding burden of proof (usually the plaintiff) while the other party (usually the defendant) can more easily obtain and disclose the evidence. Accordingly, if the plaintiff provides specific technical facts that indicate patent infringement, the defendant cannot merely deny infringement. Instead, the defendant is obliged to give a specific explanation why there is no infringement by, for example, showing how the allegedly infringing device works.