UPC – Penalty for breach of PI ordered

First published in EPLAW Patent Blog, [November, 2023].

myStromer AG v. Revolt Zycling AG, Local Division UPC, Dusseldorf, ex parte proceedings, 18 October 2023, Case No. UPC_CFI_177/2023

The Dusseldorf Local Division has ordered the payment of penalties for non-compliance with a PI

Background

The present decision relates to an order for the payment of penalties following non-compliance with a preliminary injunction decision. By way of background, on 22 June 2023, myStromer applied for and was granted a preliminary injunction against Revolt, based on myStromer’s patent (EP 2 546 134). The patent relates to a bicycle frame and motor hub combination structure. Revolt’s product was being displayed at a trade show which had opened the day before. The Court issued the injunction on the same day that it was sought, requiring, inter alia, that Revolt stop sales of its Opium e-bikes in countries including the Netherlands, Germany, France, and Italy, and deliver to a bailiff the infringing products (see previous post here).

The PI decision was served on Revolt at the trade fair at 3 pm on 23 June 2023.

On 21 July 2023, myStromer applied to the Court for a penalty order for breach of the PI. The myStromer argued that the Revolt breached the PI order in the following ways:

1. It continued to advertise the infringing bike at the trade fair as its stand remained open until 6 pm that day – the myStromer argued that it didn’t absolve Revolt of liability by removing a particular component from the e-bikes on display since they were not roadworthy without those parts;
2. It delayed the removal of Instagram promotional posts (which gave the public the possibility of booking test drives on the e-bikes) until the following day;
3. The provision of an infringing e-bike to a company which then exhibited it (unmodified) at a sales event in Germany the day after the PI was served; and
4. 5 days after the injunction was issued, the Revolt sent a letter to its Belgian dealers stating that selling the infringing product on site in Belgium to end customers from the relevant countries (including the Netherlands, Germany, France, and Italy) remained permitted.

Penalty decision

The Dusseldorf Local Division’s penalty decision of 18 October 2023 has now become available (currently only in German, a machine translation has thus been used for the basis of this summary). The Court agreed that the above acts infringed the PI order, except for act #4. The Court noted that “offer” under Art. 25 of the UPCA includes any act that makes a product available in an outwardly perceptible manner for acquisition, like displaying goods at a trade fair. Such a display, even without all features of the patent claim being evident, could constitute an offer if, objectively it would be assumed that the product corresponds to the patent claim. Here, trade fair attendees would have assumed that Revolt was offering functional (and hence infringing) e-bikes.

Given the purpose of Art. 25 UPCA is to secure all the economic advantages which may result from use of the patented invention for the patentee, it was also held that an act may still constitute an offer within the meaning of the agreement even if the offer doesn’t fulfil the requirements of a legally effective and binding contractual offer. The decisive factor is whether the act creates a demand for the infringing product. Accordingly, “offer” in this respect includes preparatory acts which are intended to enable or promote the conclusion of a later transaction. An exhibition stand at a trade fair – having this very effect – was sufficient to engage Art. 25. Deletion of the Instagram account the next day was not prompt enough – the Court’s decision suggests that this should have been done immediately after service of the order. Meanwhile, the letter to Belgian dealers did not infringe because it only related to customers being from the countries caught by the PI order. This was permissible so long as the Belgian dealers only sell and deliver e-bikes locally.

MyStromer sought to rely on a point of German law (the so-called “Funkuhr” case law) by which a company based outside Germany can infringe a patent by supplying an infringing product to a person outside of Germany, where it knows or should have known from concrete indications (such as due to the vast quantity of purchased products) that the customer intends to bring the product into Germany. The Court left open the question of whether this case law applies before the UPC – it did not have to determine this question given the absence of concrete indications in this case that the products were being supplied to a country covered by the injunction.

The Court held that in determining the amount of the penalty payment, it should consider the significance of the order that has not been complied with, and the patentee’s interest in its enforcement (such as by distributing patented products). The court should also consider the infringer’s previous behaviour – repeated violations thus warranting a higher penalty. The court noted that the penalty payment serves as: (i) a deterrent to the infringer against future infringement, and (ii) a sanction for violation of the prohibition. Accordingly, it should be assessed primarily by reference to the infringer’s behaviour.

Based on these principles, the Court ordered a penalty payment of €26,500. This comprised:

(1) €1,000 for the continued operation of the trade fair stand – here, the Court took into account that the duration was only a few hours and that the infringer tried to comply with the order by removing part of the e-bike,

(2) €500 for the delayed deletion of the Instagram account – in relation to this, the Court considered that the account had a significantly lower advertising impact than the trade fair stand. However it also considered the lack of explanation for why Revolt did not remove the account sooner; and

(3) €25,000 for the German sales event – the Court considered this larger amount was justified given the deliberate disregard for the injunction demonstrated.

This total amount is interesting in view of the fact that when the PI was granted, the Court threatened Revolt with a penalty payment of up to €250,000 for each case of non-compliance with the order. MyStromer had also provided €500,000 by way of security.