Choice of Forum - Ablynx NV and Another v Vhsquared Ltd and Others

Photo: Myrabella / Wikimedia Commons / CC BY-SA 3.0

Jane Lambert

Patents Court (HH Judge Hacon) Ablynx NV and another  v Vhsquared Ltd and others [2019] EWHC 792 (Pat) (29 March 2019)

In Litigating in London after Halloween 26 July 2019 NIPC Brexit, I discussed the likely consequences of the intended repeal 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 OJ L 351, 20.12.2012, p. 1–32 if the Johnson administration withdraws the United Kingdom from the European Union without a withdrawal agreement in accordance with art 50 (2) of the Treaty of European Union.  One Richard de Vere wrote:

"I almost feel silly asking, I read the blog twice and it’s not through a lack of trying... but can you simplify this and give some examples of how it will impact smaller businesses?"

I replied:

"You have asked for a simple example. Art 36 (1) of reg 1215/2012 provides: "A judgment given in a Member State shall be recognised in the other Member States without any special procedure." Thus if you get a judgment from a court in London against a Frenchman before 31 Oct you can enforce it in France as though it had been granted by a court in Paris. That will cease to be the case after 23:00 on 31 Oct."

Mr de Vere seemed happy with that reply and thanked me for it.   I said that I was glad to be of service and that I was working on a case note on Ablynx NV and Another v Vhsquared Ltd and Others which would show how Regulation 1214/2012 works and its advantages.

In Ablynx, the exclusive licensee of various European patents in relation to certain medical uses sued the defendants for infringing those patents in the UK. The third defendant, Unilever Nederland Holding BV had an exclusive licence in respect of a sector known as "the Reserved Field". The other defendants were its licensees.  The defendants challenged the court's jurisdiction and applied for a stay pending the outcome of proceedings in Belgium.

The defendants argued that the first defendant's licence agreement contained a clause conferring exclusive jurisdiction on the Court of Brussels to determine any dispute relating to the agreement,  They relied on art 25 (1) of Reg 1215/2012 which provides:

"If the parties, regardless of their domicile, have agreed that a court or the courts of a Member State are to have jurisdiction to settle any disputes which have arisen or which may arise in connection with a particular legal relationship, that court or those courts shall have jurisdiction, unless the agreement is null and void as to its substantive validity under the law of that Member State. Such jurisdiction shall be exclusive unless the parties have agreed otherwise. The agreement conferring jurisdiction shall be either:
(a) in writing or evidenced in writing;
(b) in a form which accords with practices which the parties have established between themselves; or
(c) in international trade or commerce, in a form which accords with a usage of which the parties are or ought to have been aware and which in such trade or commerce is widely known to, and regularly observed by, parties to contracts of the type involved in the particular trade or commerce concerned."

As for the stay, they referred to art 31 (2):

"Without prejudice to Article 26, where a court of a Member State on which an agreement as referred to in Article 25 confers exclusive jurisdiction is seised, any court of another Member State shall stay the proceedings until such time as the court seised on the basis of the agreement declares that it has no jurisdiction under the agreement."

The claimant resisted the application relying on art  24 (4):

"The following courts of a Member State shall have exclusive jurisdiction, regardless of the domicile of the parties:

..............................................................................
(4)  in proceedings concerned with the registration or validity of patents, trade marks, designs, or other similar rights required to be deposited or registered, irrespective of whether the issue is raised by way of an action or as a defence, the courts of the Member State in which the deposit or registration has been applied for, has taken place or is under the terms of an instrument of the Union or an international convention deemed to have taken place.

Without prejudice to the jurisdiction of the European Patent Office under the Convention on the Grant of European Patents, signed at Munich on 5 October 1973, 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..."

Judge Hacon's starting point was to consider the relative significance of the likely issues at trial in these proceedings, should there be a trial. He decided to assess that issue on the evidence available and the balance of probabilities. The specific question was whether these proceedings will be concerned with the validity of the patents within the meaning of art.24 (4).  In his first witness statement in support of the application, Mr Ian Karet who had the conduct of the case on behalf of the defendants said at paragraph [85] of his first witness statement:

"Should this application not succeed and the UK Claim continue the Defendants would intend to raise a number of defences. These include limitation under the Limitation Act 1980; invalidity of the patents in suit; lack of infringement due to activities complained of being experimental and covered by the [Unilever] Licence and in particular because V565 is not an antibody to a 'specific pathogen'; and absence of any common design."

His lordship pounced on that at paragraph [83] of his judgment:

"Validity will be an issue at trial if the action goes ahead. At this point there are no Particulars of Invalidity, but it would be an unusual action in the Patents Court if there were not well-developed arguments on lack of novelty and/or inventive step over several citations of prior art, probably disputes over the common general knowledge and possibly detailed allegations of insufficiency and/or added matter. This is the norm. If the defendants wished the court to believe that the present action would differ from the norm, it was incumbent on them to explain why. There was nothing."

At paragraph [46] the judge said that art 31 (2) of Ref 1215/2012 was a new provision and its purpose was to avoid Belgian or Italian torpedoes:

"Art.31(2) is new: it did not exist in the predecessors to Brussels I recast. Before Brussels I recast entered into force, litigants who favoured delay could bring proceedings before the courts of a Member State in which delay was conveniently a reliable characteristic. This worked even if the parties had chosen the courts of another Member State to resolve disputes. In Erich Gasser GmbH v MISAT Srl, C-116/02, EU:C:2003:657; [2003] ECR I-14693 the Court of Justice ruled that a court in favour of which the parties had made an exclusive jurisdiction agreement, but which had been seised second, had no jurisdiction to hear the case while the same dispute between the same parties was pending before the court first seised, even if the latter had been seised in breach of contract. Such a manoeuvre was sometimes styled 'the Italian torpedo'."

At paragraph [53] the learned judge summarized the interaction between arts.24 and 31(2):

"(1) When a stay is sought under art.31(2), if an argument is raised that the court before which the stay is sought has exclusive jurisdiction under art.24, that court must decide whether the argument is correct.
(2) If the court has exclusive jurisdiction under art.24, art.31(2) is not engaged. There will be no stay.
(3) If the court does not have exclusive jurisdiction under art.24, it must decide whether at least prima facie there is an agreement which satisfies art.25 and which confers exclusive jurisdiction on courts of another Member State. If so, provided the defendant has not entered an appearance in a manner which satisfies art.26, there must be a stay of the proceedings."

He concluded at [87] that if the proceedings before him progressed to trial, they would be concerned with the validity of the patents within the meaning of art.24 (4). That was enough to engage art.24 (4).  It followed that the Patents Court had exclusive jurisdiction and that the exclusive jurisdiction had no effect because it purported it oust the jurisdiction of the court.   He, therefore, dismissed the defendants' application. 

The defendants had raised further arguments based on issue estoppel which were put to one side upon the claimant's undertaking not to claim for infringement of the patents in the UK in the Dutch proceedings.

Anyone wishing to discuss this case or Red 1215/2012 generally should call me on 020 7404 5252 during office hours or send me a message through my contact form.