While the Unified Patent Court has started issuing its initial substantive decisions, the litigation of procedural matters continues at both the first-instance courts and the Court of Appeal.
For parties involved in UPC proceedings, establishing the best possible procedural position is important for the further course of the proceedings. This article (the second in a two-part series, part one here) summarizes the present landscape of UPC case law concerning requests for stay of proceedings and confidentiality clubs.
To stay or not to stay
If parallel proceedings are taking place before a national authority or the EPO concerning the same patent, a party involved in UPC proceedings may request a stay of the UPC proceedings.
Under Article 33 (10) of the Unified Patent Court Agreement (UPCA) and rule 295 (a) of the Rules of Procedure (RoP), the court has discretion to stay the proceedings, if a decision in parallel proceedings is expected to be given “rapidly”.
To date, UPC case law indicates a general hesitancy to stay proceedings, with no successful applications for a stay on file. This is influenced by the UPC’s goal to conduct an oral hearing within one year from the filing of the statement of claim.
The CoA set out in its decision of May 28, 2024, in Carrier v Bitzer Electronics that as a general rule, the court will not stay proceedings (UPC_CoA_22/2024).
Although no stays have yet materialized, exceptions to this rule are possible. The CoA emphasized that the mere existence of parallel proceedings at the EPO is however not sufficient.
The principle of avoiding irreconcilable decisions does also not require the UPC to stay proceedings per se, as the latter decision will prevail and can consider the earlier decision. What should be understood as “rapid” depends on the principles and circumstances of the case, such as the stage of the opposition and revocation proceedings (see Carrier v Bitzer Electronics).
The mere fact that parallel proceedings at the EPO are accelerated is not sufficient (see Carrier v Bitzer Electronics). The Munich Central Division clarified a concrete expectation for a decision (so a known date) is required in the near future (Astellas v Healios (UPC_CFI_80/2023)). This does not have to be a final decision, but the date of the decision should be before a decision could be expected from the UPC (see also DexCom v Abbot (UPC_CFI_230/2023).
Even if a decision is issued rapidly, the court still has discretion (‘may’) and will always balance the interests of the parties, taking into account the principles of proportionality, flexibility, fairness, and equity (see Carrier v Bitzer Electronics). Relevant interests of parties that the court will consider are patent expiry (Toyota v Neo Wireless (UPC_CFI-361/2023)), the need to obtain commercial certainty, and the likelihood of an appeal and that an appeal is likely to take considerable time (see Astellas v Healios).
The interest in saving litigation costs will generally not be enough to justify a stay as this is not considered to weigh up against the interest of the other party to pursue an action (see Toyota v Neo Wireless).
Confidentiality clubs
The subject of dealing with confidential information during patent proceedings is a topic that frequently strikes a sensitive chord, especially when the parties involved are in direct competition with one another. Given the varied stances on confidentiality clubs across Europe, there is a keen interest to observe the emerging patterns of confidentiality protocols at the UPC.
The protection of confidential information in UPC proceedings is provided for in Article 58 UPCA and implemented in Rule 262A of the RoP.
A party can make a reasoned application to the court to restrict or prohibit the disclosure of information in its pleadings or evidence, or to restrict access to this information or evidence to designated individuals, in what is called a “confidentiality club”. According to Rule 262A (6) of the RoP, a confidentiality club shall include, at least, “one natural person from each party and the respective lawyers or other representatives of those parties to the proceedings”.
Recent decisions from German local divisions show that the court applies these rules rather strictly, and seems in general not to allow for “attorneys-eyes-only” confidentiality clubs.
In Dish and Sling TV v Aylo, the defendant (Aylo) argued that the three specified individuals of the plaintiffs should not be granted access to certain information (and thus access should be limited to plaintiffs’ counsel only) due to their involvement in strategic decisions in parallel US proceedings (UPC_CFI_471/2023).
The local division in Mannheim deemed the request to limit access unsubstantiated and it weighed the fair trial rights against the protection of confidential information. It concluded that the defendants did not sufficiently demonstrate the unreliability of the designated individuals, and that these individuals needed access to the confidential information for a proper prosecution of the UPC proceedings. As such, the defendants’ request was denied.
On the same day as the order by the Mannheim Local Division, the Düsseldorf Local Division issued an order in proceedings between Dolby and Access Advance v HP (UPC_CFI_457/2023). Access Advance joined the proceedings in support of Dolby after HP sought to protect confidential licensing negotiation details.
The court approved HP's request for a confidentiality club and limited access to confidential business information to selected individuals from each side. However, the court rejected HP’s argument to exclude Access Advance’s employees from the confidentiality club, affirming the intervener's equal rights as the parties’ rights. As a result, employees from Access Advance were also admitted to the confidentiality club.
The Düsseldorf Local Division thus consistently upholds the requirement in Rule 262A (6) of the RoP and confirmed in the cases of 10x Genomics v Curio (UPC_CFI_463/2023) and Fujifilm v Kodak
(UPC_CFI_355/2023), that at least one natural person from each party alongside their lawyer or representative must be included in a confidentiality club.
Some flexibility remains for parties to shape the specifics of these clubs, provided the principles of a fair trial are upheld.
An example is the order of the Paris Local Division on 26 March 2024 in a matter between C-Kore v Novawell (UPC_CFI_397/2023). C-Kore requested a confidentiality club and both parties proposed members. Novawell listed only their UPC representatives and excluded corporate individuals since there was an agreement between the parties on the composition of the confidentiality club. The judge-rapporteur noted that such exclusions are permissible if the principle of a fair trial is not affected.
This is in line with the Hague Local Division’s ruling on 4 March 2024, in the case of Plant-e v Arkyne (UPC_CFI_239/2023) where the court similarly consented to exclude the defendant’s natural persons from a confidentiality club as there was mutual consent from the parties involved in order to prevent competition distortion and potential harm to Plant-e.
Since the composition of the confidentiality club is closely associated with a particular case, this association may change among the same parties depending on the type of proceedings involved. In that light, in the 10x Genomics v Curio case, the Düsseldorf Local Division ordered on August 8, 2024, that the existing confidentiality club that was ordered in summary proceedings did not automatically carry over to the main proceedings, acknowledging that these proceedings may have distinct requirements and circumstances (UPC_CFI_140/2024). As such, the parties were free to request a different composition of the confidentiality club than in the previous summary proceedings.
Conclusion
The case law to date demonstrates that the threshold to obtain a stay of UPC proceedings is high, and the court will generally not stay UPC proceedings. The court is committed to upholding its objective of resolving cases within a one-year timeframe. It is yet to be seen under which circumstances the court will leave more room for a stay.
The case law on confidentiality clubs shows that Rule 262A (6) of the RoP is interpreted rather literally and strictly.
In light of the principle of a fair trial, the court does not allow for “attorneys-eyes-only” confidentiality clubs, unless parties have mutually agreed to such composition.
This article was first published in ManagingIP on August 22, 2024.
