The UPC PI Annual – issue 2

It has been a little over two years since the UPC issued its first order for provisional measures on 22 June 2023. The first year saw six preliminary injunctions (PIs) granted (two ex parte) out of the 13 determined, and two appeals (one upholding, the other overturning the first instance decision). My analysis back then (linked here) concluded that the courts were undertaking a real in-depth analysis of validity and infringement on the balance of probabilities, but were perhaps less interested than some national courts in the balance of convenience. These early PI decisions indicated that the UPC may appoint technical experts, limit the number of invalidity allegations, apply a somewhat strict approach to urgency, and be willing to order security for damages even in inter partes cases (security is mandatory in ex parte proceedings). While penalties for non-compliance with PI orders were likely, they varied in scale, and some of the initial decisions on protective letters really questioned their utility – particularly because they can set-out the entirety of a potential defendant’s defence. So where do we stand now? 

Patents still face scrutiny at the interim phase

Validity still plays a significant role and is often the first step in the UPC’s analysis of whether to grant provisional measures. We have now had some time to see PI cases progressing through to the Court of Appeal, and even main validity decisions considering the same patents. The outcomes issued by the courts of the UPC lack complete consistency between validity assessments at the provisional stage and in main actions. In some instances, this may be an expected result of the lower standard applied to the validity assessment, the limited disclosure and restrictions on the invalidity arguments that may be raised at the preliminary stage. Many of these early cases have consequently seen some impact of ironing out of the UPC’s approach to provisional measures. With such low numbers of PI decisions still available, it is difficult to draw many meaningful conclusions on the robustness of provisional validity findings at this stage.

What has become clear is that the court is unwilling to entertain patent claim amendments or auxiliary requests in PI proceedings, which may prove troubling for patentees faced with invalidity claims at such an early stage, and which may not have been given as much credence in national actions.

Urgency

There have been more decisions confirming that cases for provisional measures should be brought with urgency. While there remains no fixed rule, applicants must act diligently to seek relief after becoming aware of infringement. This standard is a sliding scale. Actions may need to be brought within 1-3 months as we saw in the early cases, but it equally can mean much longer periods where delay is not unreasonable or time is considered necessary for gathering evidence. Importantly, applicants should be mindful that if they do not share the exact date of their awareness of infringement, they may face dismissal of their application for provisional measures. Without this information the Court may be unable to objectively conclude that urgency exists.

Early relief is available

A significant development this year concerns the interpretation of what constitutes “imminent infringement” under Article 62(1) and (4) UPCA, with the UPC providing some clarity on how it will view pre-launch requests for injunctive relief. 

The Court of Appeal in Boehringer Ingelheim v Zentiva confirmed that the alleged infringer has to “set the stage” for the infringement for there to be imminent infringement, andhas clarified what this term (established in Celltrion v Novartis & Genentech) means in the pharmaceutical sector. The Court of Appeal found that a mere marketing authorisation grant was not enough to support a claim for imminent infringement, but the national regulatory and legislative context should be considered to determine whether the alleged infringer had completed the procedures necessary for launch. This may include steps such as obtaining pricing and reimbursement. 

The Court of Appeal further confirmed that on the specific facts before it in Boehringer, the stage had been set for imminent infringement even though further steps were necessary. Those steps were within the control of the alleged infringer and could take place quickly and without transparency to the patentee. The Court of Appeal acknowledged that ‘self-restraint’ was all that was preventing the alleged infringer’s launch. This decision reflects the approach taken by many national courts. It also reversed the decision of the lower court in the same case, which had set an arguably inappropriately high-bar: suggesting that there had to be a positive obligation on the alleged infringer to launch in the circumstances for there to be an imminent threat of infringement. It remains to be seen how differing national regulations and legislation will impact the ‘trigger’ for PIs before the UPC, and whether they result in any divergence between divisions. 

Another line of cases has confirmed, perhaps not unexpectedly, that applications for provisional measures are unlikely to be stayed due to parallel national revocation and infringement actions, as doing so would be incompatible with the urgent need for provisional measures. 

All in, this direction of travel is likely to be one that will be welcomed by patentees.

A greater weighing of the parties’ interests

The initial approach the UPC adopted when hearing PI applications placed a strong emphasis on validity of the patent. Other factors seemingly were of little relevance where the court was sufficiently certain a patent was likely to be held infringed and likely not be held to be invalid – see e.g. 10x Genomics v Nanostring, Dyson v SharkNinja. However, there has been a shift more recently towards a greater consideration of the balance of interests. Whilst it did not form part of the assessment in the earliest PI cases, Art. 62(2) UPCA and R. 211.3 RoP have always stated that the Court has the discretion to weigh up the interests of the parties. This includes taking into account the potential harm to either of the parties that may result from the granting or the refusal of a PI. It therefore may come as little surprise that the Court of Appeal has given this test real and considered deliberation (see Ortovox v Mammut, for example), taking into account a number of factors when weighing the parties’ interests. In particular, it considered the possible prejudice that could be caused to one of the parties from the injunction, as opposed to its refusal. 

Many more UPC cases have started to shine greater light on the balance of convenience element of the test. Multiple factors have been held to form part of this assessment, and interested parties would be well advised to read the Insulet v EOFlow decision, which discusses a number of these relevant factors. Put briefly, when considering the balance of convenience, the Court of Appeal confirmed that it must first take into account whether provisional measures are “necessary” and then which of the parties’ interests were more pertinent.

The court made clear that it must consider the following in this assessment: 

1. The “time factor”. Namely whether it is possible to wait for an outcome in the main action.
2. Whether there was irreparable harm to the patentee. The Court confirmed in Ortovox v Mammut that this is not a necessary prerequisite but may be indicative that a PI will be necessary.
3. The status quo, which may include considerations of:
   1. whether there is direct competition between the patentee’s product and the allegedly infringing product, requiring the status quo be maintained until the merits decision, to avoid permanent price reduction (not merely price pressure);
   2. whether the allegedly infringing product was already marketed (in this instance prior to patent grant) in circumstances not limited in time and space (including as a result of a national PI and/or cease-and-desist declarations filed in some markets); and/or 
   3. any lock-in effects.
4. Whether the patentee should have brought proceedings on the merits sooner after the application for provisional measures was filed. This is quite the opposite of the clearing the way doctrine in the UK, which requires merits actions to be commenced in time to invalidate the patent and weighs against generics where there has been a failure to bring pre-emptive litigation! Here, the UPC has expressed that failure to do so in cases where interim measures take a relatively long time “must be taken into account to [the patentee’s] disadvantage when weighing up the interests involved”.
5. The potential extension of the alleged infringer’s market share, the nature of the potential infringer’s business and the importance of the product to them.
6. Patients’ interests, including the availability of an alternative to the allegedly infringing product in all relevant countries and the need for time to allow patient switching to occur (where the product is already marketed). 

A more creative approach

Interestingly, in very special cases, the court has been willing to carve-out certain products from PIs, subject to the provision of security. This was the case in Magna v Valeo, where a third party (BMW, one of Magna’s customers) would suffer damage that would exceed that suffered by Valeo (the patentee) as a result of the infringement. The lack of substitutability of the patentee’s system in BMW’s products also tipped the balance. 

We have also seen that the UPC is willing to order ancillary measures, including for delivery-up of infringing products and requiring written statements from alleged infringers on origin, distribution channels, quantities, prices, and identities of third parties involved. 

Concluding remarks

The UPC is shaping up to be a more useful forum for patentees wishing to prevent an imminent infringement across a broad geographic area, and to obtain information relating to the source and distribution channels of infringing products. In particular, the clarity provided on the standard for imminent infringement (a standard which can be determined contextually based on the relevant market), somewhat balances the challenges that arise from the UPC being a forum that scrutinises the validity of patents in PI actions. 

The UPC is increasingly accepting that the test to successfully obtain a PI is somewhat wider and has a more encompassing scope. A validity assessment is nonetheless still in contemplation by the courts, but with a newfound emphasis on undertaking a considered assessment of the parties’ interests, and exercising discretion to weigh-up a number of factors in this assessment. Insulet v EOFlow exemplifies the court’s shift towards a greater consideration of the balance of interests, and provides a helpful indication of which factors will be relevant when making this assessment.