Mr Justice Arnold rejects bid to hear infringement of German designation in Rhodia v Molycorp patent jurisdiction tussle

The AmeriKat on  a sleepless summer night
musing on the future of patent litigation

The late night witching hours have begun again for the AmeriKat.  It is during the quiet, warm summer nights without the ding of incoming emails or calls, that she can muse on the state of patent law.  One of the issues that has been preoccupying her time lately has been the future of harmonization for European patent and SPC law, especially in a post-Brexit landscape.  With the ultimate fate of the Unified Patent Court unlikely to be determined any time soon, her attention is returning back to a national court's ability to land grab an other EU Member State's designation for the purposes of patent infringement actions.   The extent of how long the English court's arm is in this respect was a question posed in various guises in last week's interim decision of Mr Justice Arnold in Anan Kasei Co., Ltd & Rhodia Operations S.A.S. v Molycorp Chemicals & Oxides (Europe) [2016] EWHC 1722 .  The IPKat's ever insightful friend, Eibhlin Vardy, picks up the tale:

"Background

Rhodia is the exclusive licensee of the UK and German designations of a European patent entitled "Ceric Oxide and method for production thereof, and catalyst for exhaust gas clarification". Rhodia commenced infringement proceedings in the English High Court alleging that the English domiciled Defendant, Molycorp, had infringed the UK and German designations of the patent.

Molycorp's solicitors filed an acknowledgment of service, indicating that the Defendant intended to defend the claim, but did not intend to challenge jurisdiction. However, on the same day, Molycorp's solicitors wrote to the Claimant giving notice of Molycorp's intention to challenge jurisdiction of the German designation of the patent in Germany, and asserting that in that situation, the English Courts would not have jurisdiction over infringement of the German designation of the patent.

 Rhodia then issued an application for an order for the provision by Molycorp of samples of its ceric oxide products for testing by an independent laboratory instructed on behalf of Rhodia for the purposes of infringement of both the UK and German designations of the patent. Shortly thereafter, Molycorp issued nullity proceedings in the Bundespatentgericht (Federal Patent Court) challenging the validity of the German designation of the patent on the usual grounds (lack of novelty/inventive step, and insufficiency). It was common ground between the parties that the German validity proceedings were due to take approximately two years.

Issues before the Court

There were two issues before the Court:

Ceric Oxide, not to be confused
with cornmeal....

(1) Does the English Patents Court have jurisdiction over the infringement claim in respect of the German designation of the patent?

Rhodia sought to amend its Particulars of Claim and Particulars of Infringement in order to try and bolster its case on jurisdiction in respect of infringement of the German designation of the patent.  The essence of its proposed Amended Particulars of Claim and Particulars of Infringement can be seen from the following excerpts:

"4. The Defendant has infringed the UK and German designations of the Patent as set out in the Particulars of Infringement served herewith. In respect of the German designation of the Patent, if German designation is not invalid (which is to be determined by the German courts) the Defendant's conduct has infringed, and/or would fall within the scope of the claims of, the German designation of the Patent. 

(1) A declaration that each of the UK and German designations of the Patent has been infringed by the Defendant. 

(1A) A declaration that, if German designation is not invalid (which is to be determined by the German courts) the Defendant's conduct has infringed the German designation of the Patent. Alternatively, a declaration that the Defendant's conduct falls within the scope of the claims of the German designation of the Patent (if not found invalid, which is to be determined by the German courts)."

As things stand, the UK remains a member state of the EU, and the issue of jurisdiction falls under Articles 24(4) and 27 of the Recast Brussels I Regulation, which provide as follows:

"Article 24 

The following courts of a Member State shall have exclusive jurisdiction, regardless of the domicile of the parties: 

… 

(4) in proceedings concerned with the registration or validity of patents, trade marks, designs, or other similar rights required to be deposited or registered, irrespective of whether the issue is raised by way of an action or as a defence, the courts of the Member State in which the deposit or registration has been applied for, has taken place or is under the terms of an instrument of the Union or an international convention deemed to have taken place. 

Without prejudice to the jurisdiction of the European Patent Office under the Convention on the Grant of European Patents, signed at Munich on 5 October 1973, the courts of each Member State shall have exclusive jurisdiction in proceedings concerned with the registration or validity of any European patent granted for that Member State; 

Article 27 

Where a court of a Member State is seised of a claim which is principally concerned with a matter over which the courts of another Member State have exclusive jurisdiction by virtue of Article 24, it shall declare of its own motion that it has no jurisdiction." (emphasis added)

It was common ground between the parties that the German Courts have exclusive jurisdiction over the validity of the German designation of the patent. The issue in dispute was whether the reformed allegations of infringement in the proposed Amended Particulars of Claim/Infringement were "concerned with" the validity of the German designation of the patent within Article 24(4), or "principally concerned with" the validity of the German designation within Article 27.

Rhodia contended that they were not, because the claim had been framed to exclude any question on the validity of the German designation. Molycorp contended that they did fall within these provisions of the Recast Brussels I Regulation, because the question of infringement is inseparable from that of validity.

As a vocal objector to tentacles ::shudder::, the AmeriKat is pleased
that the English court's long arm is cut short by
Recast Brussels I Regulation ...

Following a review of relevant case law (including GAT v LuK  and Solvay v Honeywell), Arnold J concluded that Rhodia's claim fell under article 24(4), or was at least "principally concerned with" the validity of the German designation of the patent under Article 27. The proposed amendments to Rhodia's Particulars of Claim did not assist - the matter in dispute was simply whether "Molycorp has infringed a valid claim" of the patent, and Rhodia could not separate the inseparable through some careful drafting. The reasoning of the CJEU in GAT v LuK was equally applicable here.  Mr Justice Arnold held that:

"First, Rhodia's amendments are a transparent attempt "simply by the way it formulates its claims, to circumvent the mandatory nature of the rule of jurisdiction laid down in that article". Secondly, to allow Rhodia's claim to proceed "would have the effect of multiplying the heads of jurisdiction and would be liable to undermine the predictability of the rules of jurisdiction laid down by the Convention". Thirdly, it would "multiply the risk of conflicting decisions which the Convention seeks specifically to avoid".

Arnold J elaborated on the third point, by reiterating that the same claim construction must be used for both infringement and validity. If Courts in different jurisdictions adjudicate these issues separately, this would allow litigants to overcome the pressure of an infringement/validity squeeze, and could result in conflicting decisions on claim construction (the judge noted that a similar potential issue raised by a bifurcated claim in Germany is avoided because only one claim construction will be adopted by the Court on appeal for both infringement and validity).

In response to an issue raised by counsel for Rhodia, Arnold J noted that the fact that Rhodia had not challenged jurisdiction in the usual way under Part 11 of the Civil Procedure Rules (CPR) was misconceived for at least three reasons: First, the CPR cannot override the mandatory effect of a Regulation, and the timing of the challenge to validity in the German Courts was irrelevant. Secondly, CPR Part 11 does not apply where it is triggered by the defence to the claim, and Molycorp's solicitor's letter giving notice of intention to challenge jurisdiction in Germany was sufficient to raise the issue. Thirdly, Article 27 requires the Patents Court to decline jurisdiction of its own motion, regardless of Molycorp's omission to issue a formal jurisdiction challenge under CPR Part 11.

In summary, this issue of jurisdiction was a matter of substance, not form, and the Patents Court had no jurisdiction over Rhodia's infringement claim in respect of the German designation of the patent.

(2) Should an order be made by the English Court for the provision of samples in aid of a claim by Rhodia in the German Courts?

Mr Justice Arnold  - "principally
concerned  with" being a Patents Judge
or just "concerned with"?

Rhodia undertook to bring an infringement claim in Germany in the event that jurisdiction was declined by the English Court. On this basis, Rhodia maintained its application for an order for the provision of Molycorp's samples for testing for the purposes of the German infringement claim. Molycorp opposed the application on the basis that the Court has no jurisdiction to make the order, and that it would be inexpedient to do so.

Section 25 of the Civil Jurisdiction and Judgments Act 1982 provides as follows:

"(1) The High Court in England and Wales or Northern Ireland shall have power to grant interim relief where –

(a) proceedings have been or are to be commenced in … a Regulation State other than the United Kingdom …; 

…

(2) On an application for any interim relief under subsection (1) the court may refuse to grant that relief if, in the opinion of the court, the fact that the court has no jurisdiction apart from this section in relation to the subject matter of the proceedings in question makes it inexpedient for the court to grant it. 

... 

(7) In this section 'interim relief', in relation to the High Court in England and Wales or Northern Ireland, means interim relief of any kind which that court has power to grant in proceedings relating to matters within its jurisdiction, other than— 

… 

(b) provision for obtaining evidence."

Arnold J sided with Molycorp. Rhodia's application was for the sole purpose of obtaining evidence to support its infringement claim in Germany, and therefore fell under the exclusion identified in s25 (7) (b) above. It was common ground that this exclusion was included because the proper means for obtaining evidence in aid of proceedings in the EU is now governed by Council Regulation No 1206/2001/EC. Rhodia also submitted that the Court alternatively had jurisdiction to make the order through its general power of injunctive relief under s37(1) of the Senior Courts Act 1981. The Court again disagreed - to rely upon this general provision for interim relief would circumvent the specific restriction which Parliament has placed upon s25 of the 1982 Act.

Comment

Let go and be free....a lesson of Rhodia v Molycorp

In previous cases, the English Court has not shied away from adjudicating on patent infringement actions involving designations of a patent from another EU Member State, where the validity of those designations has not been challenged (see for example the Actavis v Lilly saga, reported previously on the IPKat here -  with one chapter of the saga pending before the Supreme Court). In the present case, Rhodia attempted to further extend the reach of the English Patents Court, by slicing and dicing the issues of infringement and validity of the German designation of the patent in its pleadings. However, the issue of jurisdiction over such patent infringement actions is ultimately a matter of substance, not form. By analogy, an alleged infringer wishing to establish jurisdiction for a declaration of non-infringement of a European designation of a patent in the English Courts must relinquish a challenge to validity of that designation to maintain jurisdiction in the English Courts."