Landmark CJEU decision for cross-border IP litigation in Europe

Infringement proceedings are brought against a defendant in the EU Member State where they are domiciled. But the validity of the IP right in question is being challenged in another Member State. Does the court hearing the infringement action retain jurisdiction to hear the claim? The CJEU in BSH Hausgeräte GmbH v Electrolux AB confirms it does. 

Background

BSH owns a European patent for an invention related to vacuum cleaners. This patent was validated in Sweden and various other Member States (Austria, France, Germany, Greece, Italy, the Netherlands, and Spain), as well as the UK and Turkey, which resulted in national patents being granted in those countries. 

In February 2020, BSH sued Electrolux in Sweden (that being where Electrolux’s business is headquartered), claiming that Electrolux had infringed the national parts of their European patent. Electrolux argued that the Swedish court should not hear the case for patent infringement in countries other than Sweden, on the basis that the foreign patents were invalid and that the Swedish courts did not have jurisdiction to decide whether they had been infringed in other countries. The Swedish court agreed and said it could only rule on the infringement of the patent validated in Sweden.  

BSH appealed against this decision and the Swedish court referred some questions about these jurisdictional points to the CJEU. 

Key points from the judgment

The CJEU provided the following important clarification:

1. Under Article 24(4) of the Brussels I bis Regulation, only the courts of the Member State that grants a patent have jurisdiction to handle any disputes about the registration or validity of that patent, regardless of whether the issue is raised in a claim or as part of a defence in an infringement action in another Member State. This is because granting patents involves a Member State’s national authorities, and their courts which are experienced in applying national laws are the best placed to judge them.
2. So, where a court in the defendant’s home EU country is hearing an infringement case about a patent granted by another EU country, and the defendant argues that the patent is invalid, the court must say it does not have the authority to rule on the patent's validity because only the courts in the EU country where the patent was granted have the exclusive right to make that decision.
3. However, this exclusive jurisdiction only relates to proceedings “concerned with the registration or validity of patents…”. So, the national courts of EU countries where a defendant is based do have the authority to decide infringement actions relating to patents granted in other EU countries, even if the defendant argues that the patent is invalid as part of their defence.  
4. If the national court hearing the infringement action considers that there is a reasonable possibility that the patent will be declared invalid by the patent authorities or courts of another EU Member State, that national court may, where appropriate, suspend the infringement proceedings so that when reaching a decision on infringement it may take account of whether the patent is in fact declared invalid in that other EU Member State. However, the national court hearing the infringement action is under no obligation to suspend the proceedings, since it is important to ensure legal certainty by making the rules of jurisdiction predictable.  

What about IP rights granted in non-EU Member States?

1. The CJEU confirmed that this rule which gives courts in EU countries the exclusive right to decide on the validity of patents granted in their country does not apply to courts outside the EU.  So EU courts cannot decide on the validity of European patents granted or validated in the UK or Turkey for example. 
2. They can still assess the validity of these foreign patents where a defendant raises it as part of their defence, in order to decide the question of infringement.  However the court’s decision in that regard will not affect the existence or content of that patent in that non-EU country or cause the national register of that country to be amended.

What does this mean for cross-border IP enforcement?

The CJEU’s decision was given in the context of a European patent case but it applies to cross-border litigation for all types of IP rights - including trade marks, designs and copyright. 

It confirms that national courts in the EU have the authority to rule on the infringement of foreign IP rights by an EU-resident defendant, even where the validity of those rights is being challenged in another EU country or in a country outside the EU. Whilst these decisions will not affect the validity of the foreign IP right in question, as the jurisdiction to determine validity remains with the country in which the right was granted/registered, it should make it easier for owners of IP to enforce their rights against EU-domiciled defendants via a single infringement action in one EU Member State. 

This judgment is likely to be significant for IP rights holders seeking to enforce their rights in multiple jurisdictions and creates new opportunities to pursue infringement claims against EU-domiciled defendants, regardless of where in the world the patent, trade mark, design or copyright in issue is granted, registered or protected.  It could also result in the EU becoming a hub for cross-border IP disputes. Rights owners should monitor how the EU courts implement the CJEU’s decision and consider how it might enhance their global brand protection strategy.