Is the UPC trending towards bifurcation, but with a twist?

The twist is that this is not bifurcation as we traditionally encounter it in European patent proceedings – e.g. between the German Federal and civil courts with their distinct jurisdictions between validity and infringement and a significant risk of an ‘injunction gap’. In the UPC context, bifurcation arises between different divisions of a common court that have jurisdiction over both validity and infringement. As a result, bifurcation at the UPC is manifesting itself in litigation involving a single patent but where the same issue (validity) is introduced into parallel proceedings in different divisions (almost simultaneously, within weeks) and potentially without such a significant risk of an injunction gap.

Furthermore, these cases suggest how defendants might seek to exploit this ‘UPC twist’ and turn it against a patentee by pursuing not only bifurcation (thereby steering validity from the local division chosen by the patentee to the central division), but also a stay of infringement proceedings (whether commenced before or after the revocation action).

In this way, these cases are highlighting the flexibilities within the UPC procedure. And we are seeing potentially pragmatic approaches and outcomes as to the admissibility and management of parallel/bifurcated proceedings between the central and local/regional divisions.

We discuss the two cases in question below, which each revolve around a single patent but differ (significantly) in the parties.

Racing for bifurcation

The first case and potential trendsetter was Amgen v Sanofi/Regeneron. The first aspect of the bifurcation trend was detected via a dispute about who won a Day 1 race to sue first. With hard copies in play (permissible due to the CMS being inoperative), the parties (perhaps unknowingly at the time) raced to the UPC’s Registries. Amgen filed a preliminary objection to the admissibility of Sanofi’s central revocation action. Following an interim dispute and hearing, the Munich central division held that Sanofi had won the race and sued Amgen first by a mere 19 minutes. This firmly grounded validity in the UPC’s central division (and has not been appealed).

Amgen therefore came in second place, commencing infringement proceedings in the Munich local division against Sanofi (and, notably, also Regeneron, which was not a party in Sanofi’s earlier central revocation action). Given the powers granted to patentees in the UPC, Amgen was in any event entitled to enforce its patent in a local/regional division. And so infringement started with a grounding in the Munich local division, and that is where it remains.

Following extensions to deadlines and interim disputes about service (including the first appeal hearing at the UPC), the Defence in the local infringement action was filed last month. Notably, a counterclaim for revocation was also lodged. That counterclaim was made only by Regeneron, and not any of the Sanofi defendants (i.e. thereby not bringing revocation into the local division between exactly the same parties as the central revocation action). This seemed to be part of a deliberate strategy by Sanofi/Regeneron (who filed a joint Defence) to preserve the central revocation action.

As well as ensuring that these cases remained bifurcated between divisions, Sanofi/Regeneron requested a stay of the local infringement proceedings on multiple grounds, including pending the outcome of the central revocation action. The determination of this application remains to be seen, as does the inevitably hotly contested progress of these parallel proceedings towards further case management.

Bifurcation via multiple proceedings

While the interim applications were playing out in Amgen v Sanofi, another case was starting on multiple fronts between Edwards v Meril.

On the patent in question, Edwards sued Meril (specifically, Indian and German group companies) for infringement in the Munich local division. This time, there was no race, but instead, Meril quickly filed a revocation action in a different division (Paris central) via a different (Italian) group company. This appeared to be a deliberate strategy seeking to obfuscate the requirement that the “same parties”, having been sued for infringement in a local/regional division, must bring any revocation action in the same division.

Edwards objected that Meril could pivot between group entities and argued that its infringement action constrained the whole case against Meril (on both infringement and validity) to the Munich local division. The hearing of this preliminary objection (along with other applications) became the subject of the first oral hearing before the Paris central division (on 26 Oct).

The most interesting part of that hearing concerned whether or not Meril Italy was the “same party” as Meril India (or Germany) such that it was entitled to (and in fact, must) commence a separate revocation action via the central division.

As to the facts, Meril Italy was incorporated in March 2023, with overlap in directors and employees to Meril India (its ultimate parent), with no trading or business activity, a €10,000 share cap and an accountancy firm as its registered address.

The UPC found on multiple grounds that Meril Italy was not the “same party”, and dismissed Edwards’ objections, including under literal interpretation (based on applicable Italian law) and distinguishing the application of the concept of lis pendens/related actions in the Brussels Regulation, which it held was distinguishable on the basis that litigating in UPC divisions is materially different to doing so in different Member State courts (again, arguably a sort of ‘UPC twist’).

Most interestingly perhaps, the decision emphasises that parallel/bifurcated proceedings are contemplated within the core of the UPC’s structure and by its Rules of Procedure (RoP), which provide case management powers to control them. So the decision considered that it was not abusive by Meril per se to exploit these rules and for parallel proceedings to ensue.

Arguably, this outcome favours the direction of bifurcation, notwithstanding that it technically spans multiple proceedings in this case. More interestingly still is the suggestion in the decision that it is for the local division (here, Munich) to have its turn next on what to do; because, just like any counterclaim for revocation filed locally (as now done by the Meril India and German parties), the local division may decide to transfer validity to the central division (or even the whole case, but only if the parties consent).

However, when faced with this discretion (and subject to the circumstances in question), it has generally been expected that a local division (in particular in popular locations like in Germany) would keep both validity and infringement. Indeed, this is what has recently been decided in an Order of the Düsseldorf local division in the myStromer case, which decided early on to keep infringement and revocation in the local division, in line with general guiding principles that: (i) that it makes sense for efficiency alone; (ii) it ensure a uniform construction for both infringement and validity; and (iii) it is even more likely in technologically complex cases. Significantly in that case, neither party objected to this outcome.

So in the Meril case, all eyes will now be on the Munich local division – will it keep both the infringement claim and revocation counterclaim too, and throw the decision back to the Paris central division (e.g. if Edwards might seek a stay under the broad case management powers)? Or will it bifurcate and send its revocation action to Paris (enjoining or running it alongside Meril Italy’s admissible revocation action)? And will it even stay infringement, and if so when? By choosing a related Meril entity, an application to stay seems likely to be part of Meril’s strategy (as has similarly been requested in Amgen v Sanofi).

Comment

Common to both of these cases, and sometimes contrary to traditional thinking, is that the defendant / alleged infringer is driving a bifurcated outcome. The outcome achieved by Meril in parallel with the trajectory of the Amgen v Sanofi case are examples of how the conduct of the parties and/or the pragmatism of the UPC might circumnavigate some of the more automatic prohibitions or obligations governing UPC litigation, resulting in the admissibility of parallel actions on the same patent in different divisions.  Again, the key drivers seem to be having validity heard centrally and an ultimate goal of staying infringement.

This inevitably raises questions of whether bifurcation might become more common. And the consequence of this flexibility shifts the focus to how parties and/or the UPC divisions will use the UPC’s broad case management powers to manage parallel litigations, in particular to prevent inconsistent outcomes on validity.

Overall, these cases remain avid viewing for UPC litigation strategy, including as to whether excessive forum shopping will arise, and if a trend towards bifurcation might continue. Indeed, as the UPC gets busier, questions about availability of judges and speed are already starting to arise at certain local divisions, just like they do in the current national framework of European patent litigation.