No shortcuts in service on foreign companies says UPC Court of Appeal

One of the known challenges in litigation against defendants domiciled outside the EU is effecting service. In some instances, this can take a very long time, due to the formal requirements and slowness of the respective national systems. Plaintiffs in the Unified Patent Court (UPC) face the same issues where effective service and thus the beginning of the deadlines for a defence may take around 18 months in some cases. Plaintiffs and courts have thus become creative in assessing different ways to consider effective service. The Munich District Court, for example, considers that service in China is either regularly denied by the authorities or at least significantly delayed, which is why an effective service via public notification at the courthouse is allowed.¹

The question was recently addressed by the UPC Court of Appeal in two cases concerning service of SoC on defendants in China, Hong Kong SAR, and Taiwan. In NEC v TCL, NEC brought infringement actions before the Munich Local Division against European and Asian TCL subsidiaries (including in China and Hong Kong SAR) and requested that service of the Statement of Claim (SoC) on the Asian subsidiaries be made by email to the Chief Intellectual Property Officer of TCL. In Daedalus v Xiaomi & MediaTek, Daedalus brought infringement actions before the Hamburg Local Division against European and Asian Xiaomi subsidiaries (including in China) and against MediaTek (in Taiwan) and requested that service of SoC on the Asian defendants be made through their German subsidiaries, Xiaomi Technology Germany GmbH and MediaTek Germany GmbH.

In both cases, the Court of Appeal denied the request, confirming the first instance orders. 

Applicable rules

Service of SoC outside a UPC Member State is governed by Rule 274 of the Rules of Procedure (RoP), which provides for different methods of service depending on whether there is an applicable convention or agreement between the UPC and its Member States on the one hand and the State where service is to be effected on the other. 

The methods of service allowed by this rule include any method provided by Regulation (EU) 2020/1784² (for intracommunity service) or by the Hague Service Convention³ (for service in a non-EU member state that has ratified this treaty). Service in a non-EU member state that has not ratified the Hague Service Convention is to be effected through diplomatic or consular channels. 

Service of SoC in China, Hong Kong SAR and Taiwan

In these recent orders of the UPC Court of Appeal, the court clarified that where the case involved defendants in China and Hong Kong SAR, service must be first attempted according to the Hague Service Convention. This International treaty, widely ratified (including by China), establishes a system of central authorities for the transmission and execution of requests for service of documents between contracting states. 

In contrast, Taiwan has not ratified the Hague Service Convention, so that service of SoC in this country shall be effected through diplomatic or consular channels from the UPC Member State in which the subregistry of the UPC Division seized of the case is established—in this case, from Germany. 

Alternative means or places of service are not available before a first attempt

According to Rules 274.1(b) and 275 RoP, an attempt shall be made to serve SoC by the methods provided for by Rule 274.1(a) RoP before the Court can authorise any alternative means or places of service. 

In NEC v TCL, the request that service be made by email to Mr. X, Chief Intellectual Property Officer of TCL, could thus not be granted: although the Hague Service Convention applies in China and Honk Kong SAR, China has notified some reservations, and in particular allows service by email only with prior consent of the recipient. This prior consent of Mr. X was not obtained, even though he was cc’d in emails between TCL and NEC discussing the content of the SoC and a possible cross-licensing agreement. The UPC Court of Appeals ruled that the fact that Mr. X was allegedly aware of the SoC does not constitute a consent to be served nor an authorisation to receive service on behalf of TCL. 

In Daedalus v Xiaomi & MediaTek, the request that service on the Asian defendants be made through their German subsidiaries could also not be granted: Daedalus brought no evidence that the Asian defendants had their statutory seat, central administration or principal place of business within a UPC Member State, as required by Rule 271.5 RoP. Additionally, the principle of corporate separation would prevent the imputation of knowledge of the SoC to the Asian defendants if they were served through their German subsidiary. 

Takeaways

These two orders of the UPC Court of Appeal underscore the necessity for claimants to exhaust the applicable means of service provided for by Rule 274.1 RoP when serving SoC on defendants having their place of business outside a UPC Member State, before resorting to any alternative means or places of service under Rules 274.1(b) and 275 RoP. They highlight the importance of adhering to international conventions and agreements, to ensure proper service of documents and safeguard defendants’ rights in cross-border patent disputes before the UPC. 

However, service might not endlessly be delayed by unsuccessful attempts of service. In a recent ruling by the Mannheim Local Division⁴, the Chinese authorities had denied service i.e. because the SoC referred to the address of the defendant as “Hong Kong” instead of “Hong Kong SAR, China”. The Mannheim Local Division found that the court shall not, at the request of the central authority of the state in which service is requested, censor or edit the content of the submissions filed by the parties before the UPC. It stated that it is not necessary to make a further attempt to serve the SoC using an alternative method or at a different location in accordance with Rule 275.1 RoP once all the options for service under Rules 270-274 of the Rules of Procedure have been exhausted and the central authority of the requested state with jurisdiction seriously and definitively refuses service because and as long as the designation by the plaintiff of the place of business of the defendant party does not meet with its political expectations. In this case, the court thus recognized the steps already taken to bring the statement of claim to the defendant's attention as a valid service according to Rule 275.2 RoP. 

It will be interesting to see whether the UPC Court of Appeals will uphold this order, too.

Footnotes

1 Munich District Court I, judgment of 25 February 2021, 7 O 14276/20, margin no. 33

2 Regulation (EU) 2020/1784 of the European Parliament and of the Council of 25 November 2020 on the service in the Member States of judicial and extrajudicial documents in civil or commercial matters (service of documents) (recast)

3 Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters of 15 November 1965

4 UPC_CFI_332/2024 (Mannheim LD), order of 31 July 2024, App_43962/2024, ORD_44597/2024 (Panasonic v Xiaomi)