The Paris Central Division of the Unified Patent Court (UPC) issued its first revocation decision recently in which it upheld Edwards Lifesciences Corporation’s European patent 3,646,825 (EP’825) in amended form.
This decision provides insights into the UPC’s approach to the ‘same party’, and thus parties’ filing strategies for actions before the UPC. The decision also reinforces important requirements for filing requests for amendment during revocation proceedings.
Summary
The decision provides two areas of insight for UPC litigants.
Firstly, for the purposes of UPC revocation actions, a wholly owned subsidiary may not be considered to be the same party as its parent company. Thus, where an infringement action has been brought against a parent company, it is permissible for a wholly owned subsidiary to file a separate revocation action against the asserted patent in another division. This may have tactical advantages in respect of where to file actions, as discussed below.
Secondly, for patentees filing amendments in UPC revocation actions, the decision provides some guidance on the requirements needed for the filing of an initial request for amending the patent in order for subsequent amendment requests to be allowed into the proceedings.
Background of the Case
Edwards’ patent EP’825 relates to a prosthetic valve and delivery catheter system. On 1st June 2023, Edwards brought an infringement action against Meril Life Sciences Pvt Ltd (“Meril India”) and Meril GmbH (“Meril Germany”) based on EP’825 at the Munich Local Division. On 4th August 2023, a different Meril entity, Meril Italy Srl (“Meril Italy”), filed a revocation action in respect of the same patent at the Paris Central Division.
Therefore, there were three revocation actions in play against EP’825 (two counterclaims and one standalone revocation claim) brought by three different entities of Meril.
The Paris Central Division considered both the standalone revocation claim, which was brought at the Central Division, and the two counterclaims, which were brought at the Munich Local Division, in a single oral hearing, pursuant to Rule 302 Rules of Procedure of the UPC (RoP UPC).
During the revocation proceedings, Edwards filed three separate requests for amendment of the patent. The third request was filed after closure of the written procedure and following the interim conference but was admitted into proceedings.
In its decision, the Paris Central Division rejected all three revocation actions brought by the Meril entities and maintained Edwards’ patent according to an auxiliary request in Edwards’ third request for amendment.
Following this decision, the Munich Local Division can now continue the infringement case brought by Edwards. However, Meril may appeal the Paris Central Division’s decision which would then delay the continuation of the infringement case.
Interpretation of Same Party
According to Article 33(4) of the Unified Patent Court Agreement (UPCA), revocation actions shall be brought before the Central Division, unless an action for infringement between the same parties relating to the same patent has been brought before a Local Division. In this case the revocation action must also be brought before the same Local Division.
Article 33(4) UPCA thus prevented either of Meril India or Meril Germany from bringing a revocation action at the Paris Central Division. However, a narrow interpretation of Article 33(4) UPCA such that Meril Italy, Meril India and Meril Germany were not considered to be the ‘same parties’ would allow Meril Italy to bring a revocation action in respect of EP’825 at the Paris Central Division.
Unsurprisingly, on 14th September 2023, Edwards lodged a preliminary objection challenging the competence of Paris Central Division for deciding on the revocation action given that an infringement action between Edwards and Meril India and Meril Germany was pending in respect of the same patent at the Munich Local Division. Notably, Meril Italy was registered as a new company shortly before the standalone revocation action was brought at the Paris Central Division, and in this regard, Edwards had argued that Meril Italy was a ‘straw company’ which should not be considered a separate legal entity.
Interestingly, the preliminary objection was rejected and the Court adopted a narrow interpretation of “same party”, ruling that Meril India and wholly owned subsidiary Meril Italy were not the same party. This decision was not appealed.
The Court’s interpretation of the term ‘same parties’ is significant and opens the door for a more tactical based approach to the filing of actions at the UPC. As UPC case law develops, it is expected that certain divisions will develop reputations for approaching issues in particular ways. We are already seeing indications that some divisions are more ‘pro-patentee’, whereas other divisions are more likely to give credence to invalidity arguments. Of course, these differences can be leveraged to a party’s benefit. Thus, being able to use different subsidiaries of the same company to bring simultaneous actions before different UPC divisions is likely to be a useful strategy for parties as they seek to use the UPC to their advantage in patent disputes.
In the present case, the timing of filing of Meril Italy’s standalone revocation action appears to have been strategically motivated. In particular, it would appear that Meril regarded the Paris Central Division as more favourable for bringing revocation actions, and so utilised this in attempt to obtain a decision concerning the validity of EP’825.
Costs
Edwards requested that security for costs be awarded, with their reasoning being that Meril Italy was not active in the market and did not have substantial assets. This request was denied, and in reaching this decision the Court explained that Meril Italy was included in a corporate group and that there was no allegation that the group was in financial difficulties.
As a result, in the context of costs, Meril Italy was deemed to be in the same corporate group including parent company Meril India, as well as Meril Germany. This contrasts with the interpretation of the ‘same party’ issue in respect of bringing actions in different Divisions, where the different entities were deemed to be separate for the purposes of the revocation actions.
The allocation of costs of the Court and parties were borne by the Meril entities jointly in the amount of 60%, and by Edwards in the amount of 40%. This split was decided because Meril Italy’s revocation action was dismissed solely based on Edwards’ late-filed amendment during proceedings. Accordingly, patentees should bear in mind that if their patent survives solely based on amendments, they may be liable for a portion of the costs.
Admissibility of Requests for Amendment
The Central Division’s decision also highlights the importance of filing an admissible first request for amendment of the patent. Notably, an initial request for amendment during UPC proceedings must meet certain requirements for subsequent requests for amendment to be admitted into the proceedings. In the present case, the patent was upheld based on one of these subsequent requests.
By way of background, the defendant (typically the patentee) in a revocation action may make an application to amend the patent as part of the defence. Such an application for amendment must comply with Rules 30 and 50 RoP UPC, including explaining why the amendments comply with Articles 84 and 123(2)(3) EPC (clarity, basis for amendments, and lack of claim broadening), why the amended claims are valid, and whether the amendments are conditional or unconditional. The number of proposed amendments must also be reasonable in the circumstances of the case.
Three separate requests for amendment were filed by Edwards during the proceedings. Meril had argued that the first application to amend was inadmissible, and thus the subsequent amendment requests were accordingly inadmissible. The Paris Central Division noted that a complete lack of explanation of an amendment may render that amendment request inadmissible, but that a mere insufficient explanation of an amendment may not necessarily have this same effect. In the present case, the Division rejected Meril’s objections to the inadmissibility of the first request, ultimately admitting the third amendment request at the court’s discretion, even though this request was filed late in the proceedings. Had Meril succeeded in arguing for inadmissibility of the first amendment request, then it would seemingly not have been possible for Edwards to have filed further amendment requests.
In this regard, the decision highlights the importance of ensuring that an initial request for amendment be justified with an explanation according to the requirements of Rules 30 and 50 RoP UPC (even if the request does not have to be substantiated). In other words, it appears as though it was merely sufficient for Edwards to explain why they believed the requirements were met, even if ultimately this explanation would not in fact have been upheld. Notably, it seems that if an explanation is not provided with the initial amendment request, then the consequences for subsequent amendment requests could be fatal and could likely not be corrected with a later filed explanation to meet Rules 30 and 50 RoP UPC.
Another takeaway from the decision concerns the number of requests. Edwards filed a first request to amend the patent including a conditional application to amend the patent based on nine conditional amendments and 84 auxiliary requests. Meril objected to this submitting that the number of conditional auxiliary requests was not reasonable.
The Central Division rejected Meril’s assertion noting that whilst the number of amendments originally filed was extremely high, potentially hindering the efficiency of the ‘UPC’ proceedings and the goal of delivering expeditious decisions, it was not considered unreasonable considering the circumstances of this case, including complexity, the importance of the patent at issue, and the interrelationship with other proceedings.
It therefore appears that a high number of auxiliary requests may not in and of its itself be a reason to reject an amendment request. However, the admissibility of a high number of auxiliary requests may still depend on the circumstances of the case. Ultimately in this case Edwards did end up filing a more limited number of requests with their third request for amendment, and this was in response to a suggestion made during the interim conference leading up to the main hearing.
