
On the 13th September 2024, the UPC issued its first injunction in connection with a Standard Essential Patent (SEP) in the case of Philips v. Belkin. The case concerned the infringement and validity of EP2867997B1, which has been declared by the patent holder (Philips) to be an SEP for the Qi wireless charging standard. While FRAND and other SEP issues were not directly considered by the Court, the decision, issued by the Munich Local Division, addresses how embodiments in the description should be used to interpret the claims, the extent to which directors are considered to be intermediaries with respect to Art. 63(1) UPCA and the application of res judicata in light of prior national court decisions.
Background
The patent, granted to Philips on 28th December 2016, provides several improvements on versions 1.0 and 1.1 of the Qi wireless charging standards (the versions used at the date of priority). In August 2019, Philips had brought an infringement action in the German courts against Belkin GmbH (a German entity) and Belkin Limited (a UK entity) for infringement of the German part of the patent. The German court subsequently dismissed the infringement action on the basis of the accused product not falling within the scope of the asserted claim. The subsequent appeal in Germany was dismissed as inadmissible on formal grounds and so this decision was final. In March 2022, Belkin GmbH filed an action for revocation in Germany which was dismissed in July 2024 shortly after the hearing on the present UPC case. However, the revocation judgment is still open to appeal in Germany.
Key takeaways
- Where an appeal has not yet been filed against a decision made in a national court, the outcome of the appeal is not “expected to be given rapidly” within the meaning of R. 295(1) of the UPC Rules of Procedure. Furthermore, a stay of proceedings in light of national proceedings may not be appropriate in light of the wider territorial scope of a decision from the UPC.
- Claims should be interpreted in a manner that covers the embodiments in the description.
- Prosecution history can be used to understand the purpose of amendments made during prosecution, but the claims must nevertheless be interpreted to be consistent with the content of the description of the patent as granted.
- Directors of entities found to infringe can be considered to be intermediaries and can therefore be the subject of injunctive relief in line with Art. 63(1) UPCA.
- Res judicata can be applied to carve out the effect of the UPC judgment in jurisdictions where parties have already been the subject of a final national court decision.
Requests of the parties
At the UPC, in addition to Belkin GmbH and Belkin Limited, Philips named Belkin International Inc., a managing director of Belkin GmbH and two directors of Belkin Limited as defendants. Philips alleged that the directors had individual liability because, “despite knowledge of the infringing acts… they deliberately failed to use the possibilities available to them… to prevent infringements of third-party property rights” (Decision, Facts of the case).
The allegation made by Philips, as in the equivalent German cases, is that Belkin’s products infringed claim 20 of the patent on the basis that they implemented the Qi wireless standard version 1.2.4. Philips requested an injunction against the defendants, a recall of infringing products from distribution in the appropriate UPC contracting states and payment of damages suffered as a result of the infringing acts.
In response, Belkin requested a stay of proceedings on the basis that the possibility of appeal in the German nullity proceedings meant that there was a risk of contradictory decisions between the German national case and the UPC. R. 295(1) of the UPC Rules of Procedure (RoP) outlines how the court may stay proceedings “of an action relating to a patent which is also the subject of opposition proceedings or limitation proceedings… before… a national authority where such a decision in such proceedings may be expected to be given rapidly”.
Belkin also requested that the patent be declared invalid with effect in the appropriate contracting states and that the infringement action be dismissed. Notably, Belkin did not bring forward a FRAND defence (as it had in the proceedings in Germany).
Stay of proceedings
The Local Division rejected Belkin’s request for the proceedings to be stayed. With respect to invalidity, according to Art. 32 UPCA, the UPC has jurisdiction for actions of invalidity and decisions of the UPC apply to the territory of all contracting member states for which the patent has effect, whereas the non-final German revocation action only has effect on the German part of the European patent. An appeal had not been filed at the date of the hearing and the Local Division concluded that any appeals of the German revocation action would not be expected to be decided in the short term (i.e. “expected to be given rapidly”, R. 295(1) RoP).
As for infringement, there were no longer any infringement proceedings pending in Germany since the appeal in the German national case had been dismissed on formal grounds.
Thus, the Local Division decided not to stay either the infringement claim, nor the counterclaim for revocation and proceeded to decide on both validity and infringement of the patent.
Interpreting the claims
The Local Division cited UPC CoA 335/2023 (Nanostring), reaffirming the role of the description and drawings in interpreting the claims for both infringement and validity. In the present case, the Local Division acknowledged the role of the Protocol on Art. 69 EPC noting that “the claim is not only the starting point, but the decisive basis for determining the scope of protection of a European patent”. However, “the description and the drawings must always be taken into account as explanatory aids for the interpretation of the claim and not only be used to resolve any ambiguities in the patent claim” (Decision, section B.II.2)
A crucial point on which this case hinged is whether the claim to a power transmitter, which sends an “accept” or “reject” message during a “negotiation phase”, is infringed by a device that only ever responds with an “accept” message. The relevant features of the claim are as follows:
20.6 means for acknowledging (511) the request to enter a requested negotiation phase by transmitting an acknowledgement to the power receiver (105);
20.6.1 the acknowledgement being indicative of an accept or rejection of the request to enter the requested negotiation phase;
20.8.2 wherein, when in the negotiation phase (513, 515), the power transmitter (101) is arranged to determine the second set of power transfer operating parameters in a number of negotiation cycles, each negotiation cycle comprising the power transmitter (101) receiving from the power receiver (105) a message specifying at least one of the operating parameters and the power transmitter (101) responding with a message accepting or rejecting the at least one operating parameter.
Compared to the Qi standard in use at the priority date (versions 1.0 and 1.1), the “negotiation phase” was a new development.
The key question for claim interpretation in this case was the requirements for this negotiation phase. Specifically, does feature 20.6.1 include the possibility of only sending “accept” messages, or must the transmitter be able to transmit both “accept” and “rejection” messages? Philips argued that the presence of the “or” meant that a device that only accepts would still fall within the scope of the claims. However, Belkin argued that the claim can only cover a device that has the possibility of sending a “rejection” message.
Interestingly, the Court referred to both the pre-grant prosecution history of the patent and the description of the patent as granted in deciding the correct interpretation.
Use of prosecution history to interpret amendments
The Local Division noted, based on letters from the applicant to the EPO during prosecution, that feature 20.6.1 was added during prosecution to clarify that the original “acknowledgement”, was not “merely to confirm receipt of the messages” but to respond to the request for negotiation.
Thus, the Local Division concluded that the prosecution history would suggest that a mere acknowledgement of receipt did not “correspond to the teaching of the patent” (Decision, B.II.2.a.bb.(5)). In other word, based on the prosecution history, one would conclude that Belkin’s interpretation, that the device must also be capable of sending a “rejection” message, was correct.
Use of embodiments to interpret the claims
Philips argued that its interpretation, that only “accept” messages are required, was supported by the description. In particular, Philips noted that paragraph [0046] of the description recites:
“The requested negotiation phase may be an optional phase. Specifically, it need not be supported by all devices as power transfer operation may in many embodiments be possible using only the mandatory configuration phase… Although the negotiation phase will be optional, it may be mandatory that new devices support it. For example, mandatory support by all power transmitters that are compliant with Qi specification versions that include the negotiation phase may be required in order to enable power receivers to enter this phase if requested.”
Philips thus argued that according to the description, in some embodiments of the invention, it was not a requirement that the power transmitters needed to be able to reject a request for a negotiation phase.
Philips also referenced paragraph [0173] of the description:
“Further, if the power receiver does not receive any accept or reject message within a certain time (response time which the transmitter should meet), the receiver may assume that the power transmitter does not support power negotiation and it proceeds to the power transfer phase.”
Philips had argued on the basis of this paragraph that not responding to the request, and thus proceeding to the power transfer phase, would be a rejection of the negotiation phase.
Belkin also relied on paragraph [0173] and argued that this paragraph showed that mere inactivity was not the same as an accept or reject message and that the language of feature 20.6 in the claim must involve an active rejection.
Both parties had apparently provided similar arguments during the infringement proceedings before the German national court, which had sided with Belkin, finding the claim not to be infringed.
In contrast, before the UPC, the Local Division agreed with Philips, confirming that the embodiment described in paragraph [0046] of the patent in suit does not require that the transmitters need to be able to reject a request for a negotiation phase, and that such an embodiment does fall within the scope of the claims.
In reaching its conclusion, the Local Division noted that the claim “must be understood in such a way that there are no contradictions with the statements in the description” (Decision, B.II.2.a.bb.(5)(f)(bb)). Specifically in the case of paragraph [0046], the Local Division noted that an interpretation where an embodiment in the description is not covered by the patent claim “could only be considered if other possible interpretations leading to the inclusion of at least a part of the [embodiment is] necessarily ruled out or if the patent claim provides sufficiently clear indications that something is actually claimed that deviates from the description”. Thus, the Local Division concluded that the language of the claim was sufficiently clear, such that the embodiment described in paragraph [0046] was covered by the claims.
Going further, the Local Division noted its interpretation was consistent with the apparent purpose of the response message, which was to enter into a negotiation phase which can lead to achieving higher performance. In particular, the Local Division highlighted that “There is no apparent reason why a power transmitter must be able to respond to a request with a rejection” (Decision, B.II.2a.bb.(5)(f)(bb)). In contrast, a system that only ever sends “accept” messages, such as those outlined in paragraph [0046] of the patent, would achieve the objective of entering into a negotiation phase and achieving high performance. Should Belkin’s interpretation have been followed, this would have meant that such an “accept” only embodiment, that still achieves the benefits of the claim, “could be used without counter-performance” (Decision, B.II.2a.bb.(5)(f)(bb)). In essence, Belkin’s interpretation would mean “accept” only embodiments would not infringe the patent, while still achieving the benefits of the claimed invention.
Validity
None of Belkin’s arguments on the validity of the claims were convincing to the Local Division, and so no amendments to the patent were needed. Accordingly, none of the auxiliary requests submitted by Philips had to be considered.
Infringement
As a result of the Local Division’s finding that an infringing system need only be able to send an “accept” message, it was found that the accused embodiment did fall within the scope of the claim.
In their arguments, Belkin asserted that Qi standard version 1.2.4 (which was implemented in the allegedly infringing devices), did not require a device to be capable of sending a “reject” message, which Belkin said was a requirement of the claim. It would follow from Belkin’s arguments on this point that it did not believe the claim to be essential to the implementation of the standard (although this was not part of the discussion in the decision). However, because the Local Division had interpreted the claim as not requiring a “reject” message to be sent, it found that sending an “accept” response by the transmitter, as is specified in the Qi standard version 1.2.4, would fall within the scope of the claims, and so rejected Belkin’s arguments on this point.
Notably absent from the decision is any hint that Belkin had relied on a FRAND defence, or attempted to resist the imposition of an injunction, despite the fact that Philips identifies the patent as being essential to the Qi wireless standard.
Individual Defendants
As mentioned in the background, in addition to three corporate Belkin entities, three directors of the German and UK Belkin entities were also named as defendants in the UPC action. Philips asserted that the directors were themselves liable as infringers due to their position, but provided no factual submissions as to how they participated in the infringing acts of the Belkin corporate entities. The Local Division disagreed with this since the directors were not themselves using the patent contrary to Art. 25 and 26 UPCA, further relying on ECJ case law on what is meant by the term “use” (C-148/21, C-184/21 – Christian Louboutin v Amazon Europe Core Sàrl et al.).
Nonetheless, the Local Division found that the directors were intermediaries and could therefore be the subject of an injunction in line with Art. 63(1) UPCA which outlines how “The Court may also grant such injunction against an intermediary whose services are being used by a third party to infringe a patent”.
The Local Division interpreted the fact that, because an intermediary could have an injunction against them under Art. 63(1) UPCA, an intermediary “must be able to influence the infringing event in the first place, or at best be able to terminate its use” (Decision, C.I.2.c.aa).
In addition, for an economic operator to qualify as an “intermediary” within the meaning of Art. 63(1) UPCA, “it must be established that he offers a service which is likely to be used by another person to infringe one or more intellectual property rights, without it being necessary for him to have a special relationship with that person or those persons.” (ECJ, C-494/15 – Tommy Hilfiger Licensing LLC and Others v Delta Centre a. s., on Article 11 of Directive 2004/48/EC)
While other EU regulations (e.g. Digital Services Act, Regulation (EU) 2022/2065) provide specific examples of intermediary services, the Local Division concluded that, in the case of Art. 63(1) UPCA “the only decisive factor is that the service can be used to infringe an intellectual property right” (Decision, C.I.2.c.bb). Further ECJ case law (ECJ, C-47/14 – Holterman Ferho Exploitatie ua/Spies von Büllesheim, on Regulation (EC) No 44/2001) was used to define “service” to mean a party “carries out a specific activity in return for remuneration” and thus the Local Division concluded a director does provide a service “insofar as the characteristic obligation of the managing director is to provide services… in return for remuneration”.
Therefore, “a natural person who acts as managing director of a company that commits acts of use that infringe a patent can be considered an intermediary within the meaning of Art. 11 sentence 3 of Directive 2004/48/EC and Art. 63 para. 1 sentence 2 UPCA” (Decision, C.I.2.c.bb). However, “intermediaries are only liable for omission [i.e. failure to prevent infringement] and not damages” (Decision, C.I.2.h.bb). While these passages of the judgment appear to highlight specifically managing directors, the same principles have also been applied by the Local Division to the directors of the UK entity, even though they were not expressly managing directors as such.
Limitation of effect in Germany
Due to the prior final decision of the German national court on the question of infringement by Belkin GmbH and Belkin Limited, the Local Division applied the principle of res judicata and thus the UPC judgment has no effect on Belkin GmbH and Belkin Limited in Germany but does have effect in the remaining UPC states in which the patent is in force.
Final decision
The Local Division issued a permanent injunction against all the defendants (with a carve out for Germany discussed above) and awarded provisional damages from the corporate defendants. It was determined by the Local Division that recall and removal from distribution channels of the infringing products wouldn’t be proportionate (Art. 64(4) UPCA) and so a recall was not ordered.