Will the CJEU referral in BSH/Electrolux (C‑339/22) clean up the jurisdiction to hear infringement actions for foreign patents?

The BSH/Electrolux case (C‑339/22) concerns issues of jurisdiction where a patentee alleges infringement of foreign designations of a European patent (EP) and there is a defence or counterclaim filed by the alleged infringer that those designations are invalid. 

BSH sued Electrolux in Sweden (where Electrolux is registered) for infringement of the national designations of an EP concerning vacuum cleaners that was validated in Austria, France, Germany, Greece, Italy, the Netherlands, Spain, the United Kingdom and Turkey, as well as Sweden. Electrolux responded by arguing that each of these designations was invalid and, furthermore, as a result of its response the Swedish courts lacked jurisdiction to hear the infringement claims relating to the foreign parts of the EP. Electrolux based this argument on Article 24(4) of Regulation (EU) No 1215/2012 (Brussels I bis), which provides an exception to the exclusive jurisdiction bestowed on the Courts of the country in which the defendant is domiciled. Article 24(4) provides that “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 24(4) states that this jurisdiction arises “irrespective of whether the issue is raised by way of an action or as a defence”, a codification of the CJEU’s decision in GAT/LuK C‑4/03. 

BSH’s counter argument was that Article 24(4) is not applicable, since the action brought by BSH is not, in itself, “concerned with the … validity of patents” within the meaning of that provision. Moreover, pursuant to Paragraph 61 of the Swedish Patentlagen, where the defendant pleads in infringement proceedings that the patent is invalid, the court seised must order them to bring a separate invalidity action to that effect before the competent courts. 

The Swedish Patents and Market Court dismissed the infringement action in respect of the foreign parts of the EP on the grounds that at the moment invalidity was raised by Electrolux the Court lost jurisdiction to deal with those aspects of the claim. BSH appealed and the Svea Court of Appeal, Stockholm referred the following questions to the CJEU:

1. Is Article 24(4) of [the Brussels I bis Regulation] to be interpreted as meaning that the expression “proceedings concerned with the registration or validity of patents … irrespective of whether the issue is raised by way of an action or as a defence” implies that a national court, which, pursuant to Article 4(1) of that regulation, has declared that it has jurisdiction to hear a patent infringement dispute, no longer has jurisdiction to consider the issue of infringement if a defence is raised that alleges that the patent at issue is invalid, or is the provision to be interpreted as meaning that the national court only lacks jurisdiction to hear the defence of invalidity?
2. Is the answer to Question 1 affected by whether national law contains provisions, similar to those laid down in the second subparagraph of Paragraph 61 of the [Swedish Patentlagen], which means that, for a defence of invalidity raised in an infringement case to be heard, the defendant must bring a separate action for a declaration of invalidity?
3. Is Article 24(4) of the [Brussels I bis Regulation] to be interpreted as being applicable to a court of a third [State], that is to say, in the present case, as also conferring exclusive jurisdiction on a court in [Turkey] in respect of the part of the European patent which has been validated there?’

Status of the referral

The request for a preliminary ruling was lodged on 24 May 2022, written observations were submitted by BSH, Electrolux, the French Government and the European Commission. An oral hearing took place on 22 June 2023 and an opinion of Advocate General Emiliou (discussed below) was issued on 22 February 2024.

Following the AG opinion, the case was referred to the Grand Chamber, reopening the oral phase of the proceedings. The order scheduling a further oral hearing invited the parties to direct their submissions to the third question and, in that regard, to seven further questions set out by the Grand Chamber relating to the circumstances in which a competent court of a Member State may decline jurisdiction over a dispute in favour of a third country. The further oral hearing was held on 14 May 2024 and the resulting supplementary opinion of AG Emiliou was delivered on 5 September 2024.

How the CJEU deals with this third question is of particular interest in the context of the UPC and whether it could hear an infringement action in relation to an EP in force outside its territory.  Should the Court follow the opinions of AG Emiliou, the answer it seems would be yes, but it would have the discretion to decline jurisdiction and make use of procedural measures to ensure the efficient management of the case. National European courts could, according to AG Emiliou’s interpretation, take into account the validity of patents in the context of infringement proceedings, albeit they would not have the power to influence the registration of such patents.

AG Emiliou’s first opinion – questions 1 and 2

The first opinion starts with a history (and criticism) of the origins of the exclusive jurisdiction of the courts of the State of registration in proceedings concerned with the validity of patents “irrespective of whether the issue is raised by way of an action or as a defence” and the CJEU’s decision in GAT. Accepting that overturning the decision in GAT is not an option, the opinion advises adopting a narrow reading of that provision whereby the courts of the state of registration would have exclusive competence in relation to the validity issue only.  Such reading is based on the following principles:

• the exclusive jurisdiction of the courts of the state of registration is an exception and should be circumscribed accordingly.
• A ‘broad’ reading of the judgment in GAT would compromise the predictability and certainty of jurisdiction since the rules of jurisdiction applicable would depend on whether or not an invalidity defence is raised. Furthermore, jurisdiction would be precarious and could be removed by the late admission of a validity defence.
• In a case of multistate infringement, a patentee would be bound to commence proceedings in multiple jurisdictions.
• The objective of Article 24(4) is to ensure deference to the state of registration. The broad reading would go beyond what is required to meet that objective.

AG Emiliou acknowledges that Electrolux’ argument that splitting the infringement and validity issues into two sets of proceedings brought in different Member States is questionable in terms of the administration of justice is “not without merit”. However, whilst not ideal, this splitting is not impossible to manage either and, indeed, some Member States adopt such a bifurcation system. Case management and/or procedural measures will sometimes have to be taken to ensure the coordination of the infringement and invalidity proceedings but such consequences are the “lesser evil” when it comes to deciding between the two available interpretations of the judgment in GAT. The procedural tools available will vary from state to state but, in respect of stays, AG Emiliou advised that they should not be granted automatically but will depend on whether it is proportionate and fair to do so, and whether the resulting delays to the infringement proceedings are warranted. AG Emiliou was also of the opinion that Article 24(4) does not preclude the court seised in respect of infringement from undertaking a preliminary assessment of whether the challenge to validity is a serious one.

The third state problem

The third question concerns how jurisdiction should be resolved where the case involves an EU domiciled defendant but the dispute is strongly connected with a third state. In the first opinion, AG Emiliou rejected two “extreme answers” that either the Court would be deprived of jurisdiction since Article 24 or 25 of Brussels I bis would not apply or that the Court would be bound to exercise jurisdiction pursuant to the general rules of the regulation (a view that he maintained in the second opinion). Instead, a middle ground was endorsed for the following reasons.

The courts of the Member State where the defendant is domiciled have jurisdiction over disputes having connections with third states under Article 4(1) of the Brussels I bis Regulation. AG Emiliou recognised that in the judgment in Owusu (C-281/02) the Court took, with respect to the equivalent provision of the Brussels Convention, the strict view that “there can be no derogation from the principle it lays down except in the cases expressly provided for” by the Brussels regime. However, he also considered that to say that the court is then bound to hear the dispute is based on “a simplistic reasoning”. Firstly, the instrument was not designed with disputes with a connection to third states in mind. Secondly, Articles 33 and 34 of Brussels I bis should not be viewed as an exhaustive set of circumstances under which courts are permitted to decline jurisdiction. Thirdly, in Owusu the CJEU refused to answer the question of the referring court which concerned, specifically, whether Member State courts are bound to exercise jurisdiction also when seised of disputes in which the subject matter is closely related to third states, or notwithstanding choice-of-court agreements designating third state courts, because those situations were not at issue in the main proceedings. AG Emiliou referred to the judgments in Coreck Maritime (C‑387/98) and Mahamdia (C‑154/11), which concerned choice-of-court agreements but suggest that the courts of Member States are not bound to hear such disputes. 

In the second opinion, AG Emiliou developed his reasoning on the limits imposed by customary international law on jurisdiction. He noted that “it is clear that the courts of a Member State cannot legitimately rule on claims whose very subject matter (or ‘object’) is the registration or validity of a patent filed or registered in another state (be it a Member State or a third state), given the involvement of one of the latter’s bodies, namely its intellectual property office (IPO), in the grant of that title and the management of the register in which it is entered”; one state cannot interfere with the operation of the public services of another. However, he also noted that it would not be contrary to customary international law to rule on validity of a patent registered in a third state in the context of an infringement action as a preliminary or incidental question, since the existence of a valid title is an essential premiss for the success of such an action. The result is that whilst the courts of Member States cannot deliver a judgment on the validity of the patent in question, in AG Emiliou’s opinion, the validity or invalidity of the patent may form part of the court’s reasoning in resolving the issue of infringement. The second opinion also further addresses arguments, advanced by BSH, the French Government and the Commission, that a universal jurisdiction of the courts of the defendant’s Member State contributes to the sound administration of justice. The counter point is that an invalidity judgment issued by those courts would never be recognised in the third state and would therefore be of no practical effect.  Furthermore, the European Union is bound to respect international law and cannot claim to be universal and at the same time take into account the sovereignty of Member States.

AG Emiliou concludes that the third question should be answered as follows:

“Article 24(4) of Regulation (EU) No 1215/2012 of the European Parliament and of the Council of 12 December 2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters must be interpreted as meaning that that provision does not apply in respect of the validity of a patent registered in a third State. However, the courts of the Member States, where they have jurisdiction under another rule of that regulation, are entitled to not adjudicate on that issue”.

Practical consequences

Turning to what the circumstances in which the court of the Member State could decline jurisdiction would be, the AG suggested in the first opinion that this would be based on national law, with respect for the principle of reflectivity, albeit this principle does not go as far as requiring a Member State court to decline jurisdiction in the manner that Articles 24 or 25 of the regulation require in the cases to which they apply directly. Alternative measures, such as staying proceedings pending a validity judgment in the third state, are also envisaged. AG Emiliou noted this “undeniably pragmatic” solution gives the courts of Member States a degree of flexibility to take into account the circumstances of the case. However this approach may, on the other hand, leave Member States and parties to disputes lacking in guidance as to the limits of when jurisdiction should be declined or a stay granted, where issues relating to the validity of a patent registered in a third state arise. Absent further guidelines, this could leave national courts, and courts of the UPC, considering the merits and procedural efficiency of patent litigation in such third states (including the UK).

A decision from the CJEU can usually be expected within 6 months from the date of the AG opinion and will be much anticipated when it arrives in 2025.