Is the UPC a leading forum for global tech disputes?

The Netherlands is a recognised technology hub, home to a diverse eco-system of companies from global players to tech start-ups.  This made the beautifully unique city of Amsterdam – and the charmingly innovative De Kas restaurant – the ideal venue for Pinsent Masons and JUVE Patent to host a dinner on 29 January 2025, at which a group of pioneering technology leaders and Pinsent Masons’ European patent litigation experts came together to discuss the evolving SEP and FRAND landscape.  It was hosted by JUVE Patent’s Mathieu Klos, who expertly guided the debate around whether the UPC is now a leading forum for technology disputes.

Overall, the attendees agreed that the UPC is an important tool in the box of tricks technology businesses may deploy for resolving SEP and FRAND disputes.  All welcomed the court’s ambition to forge its own path, but agreed that, despite the recent flurry of headlines, the fact that the UPC has only issued two FRAND decisions to date means that it is far too early to determine any trends in favour of SEP holders or implementers, and whether, or to what extent, the UPC will be influenced by decisions of national courts, including future UK rulings.  While in time, the court’s approach will of course become clear, at this point the group considered that the UPC judiciary must continue to demonstrate clear and robust reasoning in all their decisions to encourage litigants to use the court.

FRAND actions before the UPC 

 

The evening opened with a discussion about the UPC’s approach to SEP and FRAND disputes so far, and the UPC’s first three substantive decisions involving SEPs – Philips v Belkin, Panasonic v Oppo (in which Pinsent Masons acted for Oppo in the parallel UK proceedings) and Huawei v NETGEAR.  The court found in favour of the SEP holders in all three decisions, and demonstrated a willingness to grant injunctions.  This prompted a debate over whether this was likely to mean that SEP holders would be more inclined to litigate before the UPC in the future.

The group agreed that SEP holders would likely be buoyed by the fact that, through the narrow lens of these initial decisions, they have prevailed.  However, all considered that while based on these decisions, some may be more inclined to bring proceedings before the UPC, and implementers may currently feel less confident about the likelihood of success (particularly as other jurisdictions are fairly unwilling to grant injunctions), it is far too early to identify any trends.  Indeed, the attendees were of the view that the medium to long term reality would see UPC successes to be far more balanced between SEP holders and innovators.

More generally, there were acknowledgements that, despite the early expectations that the UPC would largely be a pro-patentee forum, the position is far more nuanced, with the court not being afraid to revoke patents.  Outside the SEP/FRAND world, the group referred to disputes in the life sciences space, including Sanofi v Amgen, in which Amgen’s evolocumab/PCSK9 antibody patent was revoked by the Munich Local Division, and Dexcom v Abbott, in which one of Dexcom’s continuous glucose monitoring patents was revoked by the Paris Local Division.  There are, of course, some suggestions that perhaps in some such cases litigants decided against bringing their strongest patents before the UPC, preferring to risk weaker patents to test the water, and some wondered whether in future, trends may move towards a system that is more favourable to patentees, and therefore to SEP holders.  Recent pro-patentee decisions, including the Court of Appeal decisions in Fives v REEL and AIM Sport v Supponer, were cited in support of this view.  All things considered, the attendees felt that, at the moment, attempting to identify any such trends will need to wait for the UPC to issue more fully reasoned decisions, highlighting the preference for the judges continue to show their reasoning to encourage parties to bring actions before it.

Will The Hague Local Division become a UPC technology hub?

 

One question put to this group was why – given the reputation of The Netherlands as a technological hub – The Hague Local Division has only had one SEP case, KPN v Oppo, before it, with the remainder continuing the overall trend for UPC cases of being brought before the German Local Divisions (where, at the time of writing, over two thirds of all UPC cases had been issued).

There was no clear answer to this.  Most were unsurprised at the popularity of the German Local Divisions, given the role German patent experts had in developing the UPC RoP and greater number of German national judges before the court.  That said, all acknowledged that, in their respective roles, there was no real leaning towards Germany as a favourable jurisdiction.  Instead, most gave the impression that they are paying far less attention to the statistics than many commentators, with the decision to bring proceedings before the German Local Divisions being – more often than not – simply practical.  Their focus was less on Germany itself, and more about the need for legal teams being able to offer flexibility and creative solutions without borders.  Indeed, a willingness to look outside Germany – an in particular to The Netherlands – for future UPC matters was clear.

Adopting the German national approach to FRAND?

To date, the three SEP/FRAND decisions on the merits so far have all been before a German Local Division.  In all (Philips v Belkin (Munich LD), Panasonic v Oppo (Mannheim LD) and Huawei Technologies v. NETGEAR (Munich LD)), the SEP holder prevailed.

While no FRAND defence was raised in the UPC’s first SEP decision, Philips v Belkin, in the two later decisions in which it was raised (Panasonic v Oppo and Huawei Technologies v. NETGEAR), the UPC has taken a similar approach to the German national courts.  In Panasonic, for example, the Mannheim LD took an SEP-holder friendly position to the interpretation of the CJEU decision Huawei v ZTE, similar to that taken by the German Federal Court of Justice in Sisvel v Haier.  The group were not surprised by this, given the identity of the judges involved, and their previous involvement in determining FRAND cases in Germany.

While the question of how non-German divisions, and ultimately the Court of Appeal, may decide the FRAND disputes was of some interest, the interplay between the UPC and the UK courts was seen as far more relevant from a commercial perspective.

Interplay with the UK

As with all discussions involving patent experts from UPC member states as well as the UK, Brexit was given its inevitable mention.  This led to a lively discussion about the commercial impact of UK decisions.  This is particularly pertinent following the English Court of Appeal’s recent decision in Panasonic v Xiaomi, in which the court declared that willing parties in the circumstances would enter into an interim licence prior to the FRAND determination.  Public sources report on the parallel UPC FRAND hearing being called off at the last minute, with a global settlement ultimately following.

This prompted a discussion about the scope of both UK and UPC decisions, particularly as the dinner took place the day after the UPC’s decision in Fujifilm v Kodak in which the Düsseldorf Local Division found that where a defendant is based in a UPC contracting member state, the UPC can determine claims of infringement of European patents in every country in which those patents apply – including the UK.  Future UK and UPC rulings, and how the courts interact with each other, will be monitored closely.

Global rate setting

The English Court of Appeal’s decision in Panasonic v Xiaomi is, of course, not the first bold decision in the technology space to be made by UK judges.  Readers will be aware that while the UK courts are willing to set FRAND rates (e.g. Unwired Planet v Huawei), the German courts are less keen, and have consistently declined to set global FRAND rates, focusing instead on the willingness of both parties to commit to a licence.  The discussion around recent UK decisions unsurprisingly led the group to consider whether the UPC would be willing to set a global FRAND rate.  It is fair to say that the group failed to come to a consensus, but all are eager to see how things develop in the next 12-18 months.  On one hand the fact that the majority of SEP proceedings pending before the UPC are pending before the German LDs, and the judges in the German LDs are the same judges who have resisted setting FRAND rates in national proceedings and have, so far, in Panasonic v Oppo and Huawei v NETGEAR, aligned themselves with, for example, the German approach to the interpretation of Huawei v ZTE, may suggest that the UPC is unlikely to set a global FRAND rate.  On the other hand, after hearing some of the UPC judges speak at recent conferences, some of the group shared their sense that the UPC judges intend to do things differently compared with national courts.  This, combined with comments made within and the overall impression given by the decision in Panasonic v Oppo, indicated to some of the group that UPC judges would be willing to set a global FRAND rate in appropriate circumstances.

Assuming the UPC does decide to set a global FRAND rate, clarification of how it would do so would naturally be of great interest to the group, with some suggesting a perception – again from judicial commentary – that the UPC would take a pragmatic and commercial approach, with comparable licences inevitably playing a key role.

 

Is the UPC really more cost effective?

 

Taking a more practical tone, the group engaged in an animated discussion about the costs of SEP/FRAND proceedings, and in particular a comparison between the costs of UPC proceedings and UK actions.  As expected, there were passionate advocates of both systems.  The consensus was that despite initial impressions that UPC FRAND proceedings would be far cheaper than UK proceedings, the reality is that the costs are far more balanced, particularly given that English judges now favour hearing the FRAND trial first, and the fact that the proceedings are not as front loaded (compared with UPC actions) which enables litigants to demonstrate their intent by engaging on a serious platform without the significant financial investment in court costs at an early stage.  Further, given the UPC’s commitment to reaching a decision within 12-14 months, some speculated that perhaps the UPC procedure is not, in reality, equipped to undertake rate setting which takes time.  This may perhaps mean that it would be no surprise if ultimately the UPC does adopt a German-style approach to FRAND licensing.

 

Is speed all it is cracked up to be?

 

That led to a discussion about the (likely) speed of UPC decisions, and timeframe for obtaining some degree of commercial certainty, and whether the attendees felt that this would have an impact on whether SEP/FRAND disputes will be brought before the UPC.

The court aims to hand down first instance decisions within 12 to 14 months of proceedings being initiated, which it has achieved with some of its early substantive decisions.  Despite efforts to increase judicial capacity at the German Local Divisions, most considered that, given the court’s current workload, maintaining this speed would be very challenging.

Highlighting the importance of expediency to enable commercial certainty, the group viewed the UK’s move more towards hearing FRAND trials before technical trials as positive.  As expediency is one of the overall aims of the UPC, it was suggested in the medium to long term, the UPC may be minded to do the same.  Whether this will make it more or less attractive to litigants is up for debate.

Value of ADR

 

A final topic for the group to consider was one that has flown largely under the radar, and that is the role of ADR in UPC FRAND disputes.  Although the UPC Patent, Mediation and Arbitration Centre (PMAC) is not yet operational (although plans are now taking shape), the group discussed their experiences that ADR already plays an important role in UPC proceedings, with the possibility of ADR frequently explored by UPC judges at interim conferences.

However, from a commercial perspective, ADR was viewed with some scepticism.  While mediation has value in improving party relations, some noting that, in reality, ADR makes no difference to the outcome of a dispute, and may delay parties in reaching a resolution, with the time pressures of litigation continuing in parallel highlighted as being a useful tool in moving towards settlement.

Conclusion

 

As the evening drew to a close, the experts agreed that the UPC has undoubtedly changed the face of global FRAND disputes.    However, at this stage its overall role in resolving global disputes in the technology space remains uncertain, with many hoping to see a greater number of decisions and hence more clarity, from a range of divisions, to determine whether it offers advantages (or, indeed, disadvantages) compared with well-established forums such as the UK and China which are willing to set a global FRAND rate.  For now, the UPC provides another tool in the armoury of patent litigants, and all agreed that its role will become clearer in due course.

Pinsent Masons and JUVE Patent will be co-hosting another dinner in London on 30 April 2025.

If you would like to join us, or explore the opportunities or risks the UPC may bring to your business please contact the Pinsent Masons UPC team at sarah.taylor@pinsentmasons.com.