Introduction
Two recent decisions handed down by the Unified Patent Court’s (UPC) Court of First Instance have ruled in Tesla’s favour in their ongoing legal battle with the global technology giant, Avago (Broadcom). The cases, brought before the Hamburg and Munich Local Divisions, respectively, centre around electronics patents held by Avago, with the Divisions hearing infringement actions brought by Avago against Tesla, as well as respective counterclaims for revocation. The decisions highlight how the Court’s procedural and interpretive strategies may diverge from the approach at the EPO, and provide early insights into what appears to be a pragmatic and nuanced approach adopted by the Court. In particular, both decisions illustrate the Court’s evolving approach to claim interpretation and patent validity, referencing, in particular, the Nanostring/10x Genomics decision of the UPC Court of Appeal (UPC CoA 335/2023) for guidance.
Context
The first of the two cases (UPC CFI 54/2023), heard by the Hamburg Local Division (Hamburg LD), concerns European patent, EP1612910B1 (EP910), claiming a power control system and an associated method of controlling power, while the second case (UPC CFI 52/2023), heard by the Munich Local Division (Munich LD), concerns European patent, EP1838002B1 (EP002), claiming a programmable hybrid transmitter and a corresponding method of use.
In each case, Avago brought forward infringement (both direct and indirect) actions against Tesla, asserting that some of Tesla’s vehicles, as manufactured and sold in Germany, utilise, without authorisation, the patented technology. In both cases, Tesla, in response, contested the claims of infringement and also counterclaimed for revocation of each patent.
The procedure of the Court, of course, permits a reply to a counterclaim, to which, for each case, Avago filed several auxiliary requests, limiting the respective claims with the objective of maintaining the patents, albeit with a narrower scope of protection. As a result of the counterclaims, the infringement actions were halted, and the questions of validity considered.
Ultimately, in view of prior art introduced into proceedings by Tesla, the Court found, in the case heard before the Hamburg LD, an auxiliary request and, by extension, the patent, EP910, to be partially valid, but found that the now limited patent was not infringed by Tesla. In the case heard before the Munich LD, the patent, EP002, was revoked in its entirety and the infringement action was dismissed due to the invalidity of the patent.
Again, while certain conclusions of patentability may equally have been drawn by the EPO had the facts been presented to it, the manner in which the conclusions were derived by the Court offers food for thought. In the following sections, we will consider some of the key areas of discussion from the decisions.
A Pragmatic Approach from the UPC
As a preliminary matter, Tesla challenged, in the case heard by the Hamburg LD:
- Avago’s ownership of EP910, asserting that an assignment of the patent from Broadcom to Avago constituted an inadmissible “self-dealing” since the same person had signed on behalf of both entities, thereby rendering the transfer invalid; and
- the admissibility of the auxiliary requests filed by Avago in reply to the revocation counterclaim, asserting that the requests were not filed using the correct forms via the UPC’s Case Management System (CMS).
Notwithstanding that the relevant law to be applied for assessing the validity of the assignment in this case is Singaporean and Californian law (as these are the jurisdictions for the respective headquarters of the parties involved in the assignment) and not German law, as Tesla had argued, the Court addressed this challenge by applying Rule 8.5 RoP, which establishes a “rebuttable presumption” that the proprietor listed in the national patent register and in the European Patent Register is entitled to be registered as proprietor. This ruling by the Court confirms, as would be expected based on the approach adopted at the EPO, that the listed owner of a patent on the patent register is considered valid unless proven otherwise. For the transfer of a European patent to be valid, it must be signed on the part of both the assignor and assignee. Tesla had argued that the assignment from Broadcom to Avago was deficient as an inadmissible “self-dealing” because the same person had signed on behalf of both entities. The Court confirmed that there is nothing objectionable for the same (natural) person to execute an assignment of rights on behalf of both parties to the agreement, so long as they are authorised to act on behalf of both of the parties. This is common practice for the transfer of patent rights between entities in a corporate group, and so the Court confirming the acceptability of this practice will be welcomed by many users of the European patent system.
Addressing the admissibility of the auxiliary requests filed by Avago, the Court acknowledged that use of the CMS, at least in the “initial phase of the UPC”, posed challenges, and that to apply an “overly strict approach” here, i.e., by not allowing the requests, would be unacceptable in view of the principle of the right to a fair hearing. The Court held, therefore, that since the requests were submitted within the allowed time frame (according to R. 30.1 RoP), the requests were admissible, which highlights, at least in this regard, a flexibility from the Court. Of course, it remains to be seen how long the Court will exercise leniency when it comes to engaging with the mechanics of what is a relatively new legal system but, at the very least, the approach adopted here demonstrates a level of pragmatism from the Court. Indeed, this pragmatic approach appears not only to have been taken for resolving more formal matters but also within the framework of assessing validity, as discussed below.
Claim interpretation
As is becoming a common theme throughout substantive decisions from the UPC, (and in contrast to the approach taken at the EPO, e.g., during oppositions) both decisions dedicated a significant amount time to actively interpreting the claims of the respective patent, referencing the principles established in the UPC’s Court of Appeal order from NanoString/10x Genomics as the guiding framework.
The framework establishes, among other things, that “the interpretation of a patent claim does not depend solely on its exact wording in the linguistic sense. Rather, the description and the drawings as explanatory aids for the interpretation of the patent claim must always be taken into account and not just to resolve any ambiguities in the patent claim”.
Indeed, this notion that patent claims should be interpreted not just based on their literal wording but with reference to the description and drawings was applied meticulously in the case heard before the Hamburg LD, where it was decided by the Court that various features of the power control system of claim 1 (as granted on EP910), for example, were to be interpreted “functionally” as opposed to structurally given that the description did not require of said features specific spatial or physical properties.
Similarly, in the case heard before the Munich LD, the Court applied a “cumulative” interpretation to a list in claim 1 (as granted on EP002), namely, that the baseband processing module is coupled to… convert the outbound data into at least one of: a normalized complex signal, offset information, and transmit property information. This means that the Court considered each of the three features listed as necessarily working together, as opposed to being independent or optional elements – again, an interpretation formed from, as held by the Court, an understanding conveyed to the person skilled in the art by the description and the drawings.
Incidentally, an amendment proposed by Avago in one of their auxiliary requests attempted expressly to make it clear that all three (and not just at least one of the listed features), i.e., the normalized complex signal, offset information and transmission characteristic information, are the result of the conversion of outgoing data. However, in view of the context-driven interpretation applied above by the Court, the interpretation of amended claim 1 according to the auxiliary request did not result in any additional limitation of the claimed scope of protection, and thus the claim was deemed invalid for the same reasons.
Novelty and Inventive Step
Once a claim interpretation was decided on by the Court, the matter of novelty followed conventionally, with the Court confirming, in the case heard before the Munich LD, that “the yardstick for the disclosure content of a publication is what an average person skilled in the relevant field can and may know and understand” (ACT 547520/2023 UPC CFI 233/2023 (LK München), GRUR-RS 2024, 19369).
In assessing inventive step at the Hamburg LD, the Court referenced Art. 56 EPC, and identified that “an invention is considered to involve an inventive step if it is not obvious to a person skilled in the art from the prior art”. For the Court’s actual analysis of inventive step, it did not, however, rely entirely on the case law of the EPO, and its “problem-solution” approach. Instead, the Court seemingly relied principally on its own case law, noting that “an invention exists if it does not result from the usual approach of the person skilled in the art, but requires an additional creative effort on their part” (Düsseldorf LD, decision of July 3, 2024 – UPC CFI 7/2023, GRUR-RS 2024, 17732 para. 93). On this basis, the Court found an amended form of independent system claim 1 of an auxiliary request to be inventive, on the basis that the starting document taught away from the subject-matter of the claim. The Court did then acknowledge the problem-solution approach, stating that such an approach would not have led to a different result.
It seems, then, that the Court may seek to establish its own frameworks in which to assess inventive step, acknowledging the EPO’s favoured “problem-solution approach”, if not feeling bound to apply that approach by default.
Partial Validity
Perhaps the most significant outcome of the decisions concerns, in the case heard before the Hamburg LD, the Court’s procedural flexibility in allowing EP910 to be maintained in amended form based on a partially valid auxiliary request, and the divergence of this approach from opposition proceedings at the EPO.
Specifically, in reply to the counterclaim for revocation, Avago filed several auxiliary requests, none of which involved deleting independent method claim 3 which, due to its relative breadth when compared to the corresponding system claim, was deemed invalid throughout proceedings. As noted above, an amended form of system claim 1 provided with an auxiliary request, however, was found to be valid, and the Court, citing Art. 65(3) UPCA, exercised its discretion not to disallow the request in its totality due the perceived invalidity of method claim 3. Moreover, unlike as would be expected upon reaching a similar conclusion during opposition proceedings at the EPO, Avago was not required to file a further auxiliary request, deleting the method claim, as instead the Court modified the request, accordingly, in the decision. This was because the Court held that “such a result was part of the plaintiff’s defence against the action for annulment from the outset”.
It is not yet clear to what extent the flexibility in the Court’s approach in this decision may be extended, particularly in terms of assessing how and whether a proposal constitutes a part of a defence “from the outset”. Nevertheless, the approach taken by the Court is refreshing and, as with other procedural steps taken across the two decisions, points towards early signs of a pragmatic and reasonable UPC.
Of course, in proceedings before the EPO, requests cannot be upheld partially and a request having any invalid claim will not be allowed by the EPO. It will be interesting to see what might happen in the future in parallel proceedings before the UPC and the Board of Appeal of the EPO where, for example, a claims request is partially invalid – in such a situation the EPO might revoke the patent due to the existence of invalid claim scope, despite the UPC upholding the patent on the basis of narrower claim scope which it deemed valid.
Costs
In both cases, the infringement action was dismissed. In the case heard before the Munich LD, the patent was revoked in its entirety and Avago was ordered to pay the costs.
In the case heard before the Hamburg LD, the claims which survived the invalidity attacks from Tesla had been substantially narrowed, and these were found not to be infringed by Tesla’s vehicles. However, owing to the fact that its patent was maintained in an amended form, in response to the revocation counterclaim, the Court held that Tesla had not been entirely successful in all of its requests. As a result, the Court saw that it would not be equitable for Avago to bear the entirety of the costs of proceedings, with the Court instead distributing costs seemingly on the basis what was considered equitable in view of the outcomes, with Avago bearing 85% of the costs, and Tesla 15%.
Reflections
To conclude, these two decisions underscore the UPC’s goal of developing a harmonized body of patent law across its divisions, shedding light on the Court’s pragmatic and nuanced approach to, in particular, claim interpretation and procedural handling. Moreover, the decisions provide early indications of possible divergences from the approaches historically adopted by the EPO.
From the perspective of litigation and patent enforcement in the UPC, the decisions suggest the following:
- care should be taken when drafting to ensure that the intended implications of broader claim features are clear;
- not to assume that in parallel proceedings at the EPO and the UPC that the same strategies can be applied, and will be assessed, equally, and to take account of procedural differences, where identifiable;
- a claim request need not be valid in its entirety, i.e., in respect of each independent claim included, therein, for the Court to maintain a patent in an amended form on the basis of only those independent claims deemed valid for a given request; and
- when asserting actions, both initial and in the alternative, parties should be nuanced and selective in their requests, because unsuccessful requests, even in the face of an aggregate victory, could leave a successful party (partially) liable for costs.
Note: Both decisions issued in German. Quotations from the decisions in this article represent machine translations of the decisions (using ‘DeepL Translate’).
