NOTABLE CASES & POTENTIAL IMPACT
CURIO BIOSCIENCE INC. V. 10X GENOMICS, INC.
Topics: language of proceedings; change of language of proceedings
The language of proceedings at the UPC has been vigorously disputed in many actions. In an apparent effort to reduce such disputes, the UPC Court of Appeal (CoA) changed the language of the proceedings for the first time in Curio Bioscience Inc. v. 10x Genomics, Inc. and provided much needed clarity on the relevant considerations.
In February 2024, the President of the Court of First Instance rejected Curio’s application to change the language of proceedings brought by 10x Genomics before the Local Division Düsseldorf from German to English. Despite the president having considerable discretion in assessing the fairness of the proceedings’ language, the CoA reversed on April 17, 2024, finding the Local Division’s rejection “based on an incorrect reading of what constitutes fairness and what circumstances are relevant.” Under Article 49(5) of the Agreement on a Unified Patent Court (UPCA), the UPC must consider the interests of both the plaintiff and the defendant, with the defendant’s position being the decisive factor if the parties’ interests are equally balanced.
Several factors favored Curio’s application, including:
- The asserted patent was granted in English.
- Both parties are US companies.
- The infringement evidence, underlying field of technology and majority of evidence for Curio’s defense (including the prior art) was in English.
- Germany designated English as one of the languages for its UPC divisions.
- Curio is a much smaller company than 10x Genomics and thus bears a heavier burden from the language of the proceedings being different than the company’s language.
The CoA also clarified that several factors carried little to no weight, such as:
- Any delay due to the Court of First Instance providing certified translations of orders or decisions
- Whether the defendant is active in the European market, including in the contracting member state of the Court of First Instance
- The portion of EU citizens who speak a particular language
- The language qualifications of the parties’ representatives
- The nationality of the judges hearing the case
- Whether the Court of First Instance held the last oral hearing in the underlying proceedings.
TAKEAWAYS:
- The UPC looks carefully at the relative circumstances of the plaintiff and the defendant when weighing whether to change the language of proceedings. Fairness is the key consideration with the UPC favoring the defendant if the parties’ interests are equally balanced between two languages.
- The language in which the patent was granted is one of the most important considerations. It’s usually fair to the plaintiff to conduct proceedings in the language of the patent if the plaintiff was the one who chose the language of the patent. It’s not surprising that English is now the predominant language of UPC proceedings given that most unitary patents in Europe are granted in English.
PANASONIC HOLDINGS CORPORATION V. XIAOMI TECHNOLOGY GERMANY GMBH
Topics: comparable license agreements; FRAND; SEP
On April 30, 2024, the Local Division Mannheim issued three orders directing Panasonic Holdings Corporation to produce specific existing license agreements that allegedly support that Panasonic’s license offer to Chinese electronics company Xiaomi Technology Germany GmbH was fair, reasonable and non-discriminatory (FRAND). Due to confidentiality clauses in the agreements, Panasonic requested that the UPC order disclosure to avoid any risk of a contractual breach.
These first standard essential patent (SEP)-specific orders from the UPC generally align with SEP case law from German courts, which highlight the importance of transparency and existing license agreements as benchmarks in FRAND licensing negotiations.
For instance, the UPC emphasized that it must respect the primacy of European law (See Articles 20, 21 and 24(a) of the UPCA), which provides the essential competition law framework for enforcement of an SEP (See Articles 101 and 102 of the Treaty on the Functioning of the European Union (TFEU)). In particular, the Court of Justice of the European Union (CJEU) developed and clarified European competition law in Huawei Technologies Co. Ltd. v. ZTE Corp., which established a FRAND negotiation program outlining the steps for SEP holders and implementers. Among those steps, the parties are required to reference license agreements in the relevant industrial sector, which serve as a benchmark for comparing and assessing offers by SEP holders and counteroffers by SEP implementers.
The UPC orders also confirm that under European competition law, SEP holders have a legal obligation to be transparent in FRAND negotiations and thus must provide access to their relevant license agreements. Accordingly, SEP holders at the UPC must substantiate why their license offer is FRAND, whereas SEP implementers must substantiate why the offer is not FRAND. In either case, the party will often refer to relevant license agreements. However, such agreements are often subject to confidentiality provisions that only permit disclosure with consent of the contracting party or via a court order.
To permit disclosure of the agreement, the SEP holder or implementer ordinarily will first seek consent from the third-party licensee. If the licensee withholds consent, the SEP holder or implementer can provide evidence of its failed efforts and seek a disclosure order from the UPC. Because the duty of transparency, as a result of cogent competition law, supersedes conflicting contractual clauses agreed upon between the parties, the UPC will typically order disclosure of a license agreement when the third party fails to provide or adequately justify its nonconsent.
Furthermore, even when a party (like Panasonic) requests an order against itself, they may still redact passages that are irrelevant to their factual allegations and legal arguments, in accordance with Article 43 of the UPCA. Additionally, the UPC will order a specific framework to protect confidentiality upon a request under Rules 262 and 262A of the UPC Rules of Procedure (RoP).
TAKEAWAYS:
- SEP holders or implementers may request the UPC to order the disclosure of specific comparable license agreements in SEP cases without the requestor breaching a contractual confidentiality clause. The Local Division Mannheim developed this approach by interpreting the CJEU’s decision in Huawei v. ZTE, and it’s likely that other UPC divisions will follow the same interpretation and result.
- To minimize the risk of a contractual breach, the party ordered to disclose a license agreement should redact passages of the agreement that are not referred to in the relevant statement of facts or legal argumentation. Additionally, said party should consider filing a separate application with the court to protect confidential information.
EMERGING LEGAL ISSUES
APPORTIONMENT OF COST FOR APPEALS
The UPCA generally requires an unsuccessful party to bear the successful party’s legal costs and other expenses. However, recent decisions by the UPC have clarified that interim awards of costs, such as for a successful interim appeal concerning a procedural question, may not be available until a decision on the merits. As a result, parties will need to consider the apportionment of costs, particularly in cases involving different successful parties across proceedings.
Additionally, this approach by the UPC differs from some national court systems. For instance, German appellate courts typically handle cost requests separately from the underlying proceedings. Thus, interim cost awards avoid the complexities of apportionment and deferral until the dispute is resolved.
Curio Bioscience Inc. v. 10x Genomics, Inc.
On April 17, 2024, the CoA rejected a request for an interim award in Curio Bioscience Inc. v. 10x Genomics, Inc. Curio successfully requested that the CoA change the language of proceedings from German to English and sought an award of costs.
In rejecting Curio’s request for an interim award, the CoA determined that the final decision (i.e., an order or decision on the merits) is the best stage to assess whether – and to what extent – a party can be considered unsuccessful under Article 69 of the UPCA. Indeed, the UPC’s limitations on recoverable costs, as set forth in Rule 152.2 of the RoP, are based on the value of the proceedings as a whole.
Because changing the language of proceedings did not resolve the underlying dispute, the CoA declined to provide Curio with an interim award pursuant to Rule 150 of the RoP. The CoA clarified, however, that the outcome of Curio’s successful appeal must be considered when determining an award of costs in the final decision. As a result, it’s likely that the parties will need to apportion costs in light of Curio’s successful appeal and its subsequent unsuccessful defense against 10x Genomics’ application for a preliminary injunction, which was granted on April 30, 2024.
Juul Labs International, Inc. v. NJOY Netherlands B.V.
Similarly, the CoA rejected a request for an interim award in Juul Labs International, Inc. v. NJOY Netherlands B.V. NJOY had successfully contested Juul Labs’ appeal to declare NJOY’s revocation actions inadmissible for purportedly not being directed against the patent owner. Despite NJOY being the successful party in the appeal, the CoA declined to provide an interim award of costs at that time because the decision was not final on the merits.
NanoString Technologies, Inc. v. 10x Genomics, Inc.
Although the CoA is unlikely to award costs in many interim appeals, it continues to award costs in appeals from preliminary injunction decisions. For instance, in NanoString Technologies, Inc. v. 10x Genomics, Inc., the CoA reversed a preliminary injunction and ordered 10x Genomics, as the unsuccessful party, to bear the cost of the appeal. Implicit in this decision was a determination that a decision on a preliminary injunction amounts to a decision on the merits, which can support an award of costs.
THIRD-PARTY UPC FILES: EUROPE IS KEEPING ITS FILES CLOSED
Setting the Standard: Ocado Group v. AutoStore Holdings Ltd.
On April 10, 2024, the CoA issued a decision related to the Ocado Group v. AutoStore Holdings Ltd. case, clarifying the standard to make court documents publicly accessible under the hotly contested Rule 262.1(b) of the RoP. The appeal concerned the Nordic-Baltic Regional Division’s decision to grant a nonparty lawyer’s request under Rule 262.1(b) to access Ocado’s statement of claim before it had been served on all the defendants.
The CoA began by explaining the provisions of the UPCA and RoP regarding access to the register and case files:
- Article 10(1) of the UPCA provides that “the register kept by the Registry shall be public.”
- Article 45 of the UPCA provides that the “proceedings shall be open to the public unless the Court decides to make them confidential … in the interest of one of the parties or other affected persons, or in the general interest of justice or public order.”
- Rule 262.1(b) of the RoP, which was designed to ensure General Data Protection Regulation compliance for personal data, adds that “written pleadings and evidence, lodged at the Court and recorded in the Registry, shall be made available to the public upon reasoned request to the Registry.”
As the CoA explained, a request for access under Rule 262.1(b) requires the UPC to weigh the interests of the member of the public seeking access against the interests in protecting confidential information and personal data, as well as the general interests in justice and the integrity of proceedings. Accordingly, a request for access must:
- Identify which pleadings and evidence the applicant seeks to obtain
- Specify the purpose of the request
- Explain why access to the identified pleadings and evidence is necessary for the specified purpose.
The CoA also recognized that the public generally has an interest in accessing written pleadings and evidence to better understand and scrutinize the UPC’s decisions (in addition to other scientific and educational purposes). However, this general interest only arises after the UPC issues a decision. Before such a decision, there is a strong countervailing interest in protecting the integrity of the proceedings from influence and interference by external parties. Balancing these interests, the CoA reasoned that it’s usually appropriate to grant access to written pleadings and evidence after the proceedings have ended – either by a final decision or through a settlement.
However, a member of the public may also have a specific interest in the written pleadings and evidence of a particular case. For example, a competitor, licensee or accused infringer may have an interest in the validity of the patent at issue or in the technical subject matter of the proceeding. Unlike the general interest discussed above, this specific interest often arises before the proceedings end. Weighing this specific interest against the general concern with protecting the integrity of proceedings, the CoA determined in Ocado that the balance will generally favor granting immediate access to the pleadings and evidence, though the UPC may impose certain confidentiality obligations when granting access before the proceedings have ended.
Applying these principles to the nonparty request for Ocado’s statement of claim, the CoA found that the balance of interests favored granting access to the materials because the request specified a general interest and was made after the proceedings had ended via settlement.
Post-Ocado Application
As the UPC is still defining its framework, decisions like the one issued by the CoA in Ocado are critical for establishing consistent interpretations of the UPCA and the RoP. The practical application of Rule 262.1(b) is particularly important because third-party access to case files is vital for strengthening transparency and confidence in the UPC. Before the decision in Ocado, the UPC imposed strict requirements for third-party access, taking a restrictive view of what is a “reasoned request.” For example, the Central Division Munich denied two applications for access because of the lack of a concrete and verifiable, legitimate reason for access, determining the applications were based on personal and professional curiosity and an interest in education and training.
However, UPC decisions applying Ocado appear to follow a more flexible approach. For instance, on April 24, 2024, the Central Division Paris issued a decision regarding public access to court documents based on a specific interest in the proceedings. There, the applicant requested access to current revocation files and future pleadings because they had a parallel opposition proceeding pending before the European Patent Office (EPO). The UPC granted immediate access to the current files but denied access to future pleadings. Finding that there was nothing confidential in the current files, the UPC determined the applicant’s direct, legitimate interest in obtaining access to the current files for its EPO proceeding outweighed the general interest in the integrity of the UPC proceedings. However, it was impossible to prospectively balance interests for future pleadings without knowing what materials will be submitted. Thus, the UPC denied access to future pleadings.
Importantly, the UPC determined there is no legal basis for accessing court-generated documents, such as notifications, acknowledgements, transcripts and case schedules, which are not decisions and orders under Rule 262.1(a), and for accessing documents not yet published in the Case Management System.
It remains to be seen how the UPC will weigh the various interests in the future and whether it will grant broader public access to case files following the CoA’s latest decision in Ocado.
RECENT FILINGS
This section reflects data that entered the UPC’s register as of May 14, 2024.
NUMBER OF CASES ON UPC REGISTER BY TYPE
*The number of counterclaims for revocation cases does not necessarily reflect the UPC’s true case load because the UPC’s Case Management System required several defendants in infringement proceedings to launch their own counterclaim for revocation, even if the substance of the counterclaims was fully identical across the parties. This inflates the number.
NUMBER OF CASES ON UPC REGISTER PER DIVISION
LANGUAGE OF UPC PROCEEDINGS
FIRST INSTANCES OF CASES PER MONTH IN 2023 AND 2024
INFRINGEMENT CASE VALUES
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