UPC: the Paris CD on the notion of "same parties"

By order dated 13 November 2023, the Paris Seat of the UPC Central Division (CD) elaborated on when two parties are to be considered the “same parties” under Article 33 UPCA (ord. 578356-2023 – UPC_CFI_255/2023, Edwards Lifesciences Corporation vs Meril Italy s.r.l.).

Specifically, in August 2023 Meril Italy brought a patent revocation action before the Paris CD. Edwards lodged a preliminary objection questioning the competence of the Paris CD pursuant to Article 33 UPCA: it claimed that an infringement action between the same parties in relation to the same patent was already pending before the Munich Local Division (LD), hence, under Article 33 (4) UPCA, the revocation action may only be brought before the Munich LD. Indeed, on 1 June 2023 Edwards had filed an infringement action under the patent in suit before the Munich LD against the parent company of Meril Italy, Meril Life Sciences Pvt. Ltd. (Meril India) and its subsidiary Meril GmbH (Meril Germany). According to Edwards, these were to be considered the “same party” as Meril Italy.

As is known, according to Article 33 (4) UPCA, actions for revocation of patents shall be brought before the CD; however, if an action for infringement between the same parties relating to the same patent has been brought before a local or a regional division, the revocation action may only be brought before the same local or regional division. The point at issue in this case was, therefore, whether Meril Italy could be considered the same party as Meryl India or Meril Germany.

In this respect, the Paris CD firstly pointed out that, from a literal viewpoint, pursuant to the applicable Italian national law, Meril Italy is a different legal entity, hence a different party, from Meril India and/or Meril Germany.

Secondly, the court dismissed Edwards’ arguments that the notion of “same parties” should be interpreted broadly, noting the following.

·       “The principles set in in the ruling Drouot assurances v Consolidated metallurgical industries and others (C-351/96) – according to which the expression ‘same parties’ has to be interpreted in a way that includes also a situation in which it is established that the interests of two different parties are ‘identical and indissociable’ – cannot apply in the present case as they have been set to address a different legal issue, namely to determine which national judge has jurisdiction in case of different actions are filed in different Contracting States. (…) The situation at hand is different and not comparable to it because no jurisdiction issue is disputed and, moreover, UPCA provides for an autonomous set of rules that regulates the situations of parallel proceedings”.

·       “There is no sufficient evidence that Meril Italy is a straw company for Meril India”, which would require to demonstrate “a legal activity that appears as related to it and the agreement that the relative effects will be produced in respect of a different entity”. “This Court deems that the fact that Meril Italy has identical economic interests of its parent company in the outcome of the revocation action, it is a fully-owned subsidiary of Meril India, its directors worked or have been working (also) for Meril India and its only officers/employees are also Meril India’s employees do not constitute serious and concordant indications of the existence of the agreement”. “The same can be said regarding the fact that Meril Italy has been registered last March 2023, that, according to Edwards, would raise strong suspicions as to whether it was created with sole intention of attacking Edwards’ patents and attempting to bypass the provisions of the UPCA. This fact does not offer sufficient evidence of the alleged abusive intent, because, firstly, there is no prove that, at the date of March 2023, the Edwards patents would not be opted out and, secondly, there is no element that leads to the exclusion that the registration of a new subsidiary in Italy was part of an effective business plan”. “As for the allegation that Meril Italy does not have an independent office in Italy and does not run any sort of business, those indications – more serious and concordant of a fictitious legal entity than the previous ones – may be justified by the fact that the company has been incorporated recently (March 2023) and, for this reason, the organization of its activity is still in a preparatory phase.

·       “As for the dreaded situation of Edwards being targeted by two revocation actions against the same patent by the Meril group – one before this Seat and another before the Munich Local Division by the way of a counterclaim – it must be noted that Article 33 (3) UPCA establishes that in such a situation the local division, in alternative to proceed with both the action for infringement and with the counterclaim for revocation, may refer the counterclaim for revocation for decision to the central division and suspend or proceed with the action for infringement or with the agreement of the parties, refer the case for decision to the central division. The use of this discretionary power by the local division may avoid that two divisions of the Court would decide on the same issue and that competitors would have two (or more) ‘shots’ at the same patent and would exploit the possibility of different assessments on the same issue by UPC judges”.

In the light of the above, the court rejected Edwards’ preliminary objection.

Furthermore, the court also rejected Edwards’ request that Meril be ordered to provide security for legal costs under Article 69 UPCA and Rule 158 RoP. In this respect, the court dismissed Meril’s objections that such a request cannot be made in a preliminary objection and cannot be handled by the judge rapporteur. However, it found that the request was without grounds as “the mere circumstance that Meril Italy is, at the moment, not active in the market and that it has a share capital of only euro 10,000.00 is not a sufficient reason to believe that Edwards will not be able to enforce its claim for reimbursement of costs. Indeed, the fact that Meril Italy does not run any business at the moment can be justified by its recent establishment and by the need to carry out a preparatory activity, while the low amount of share capital is not necessarily a sign of a lack of financial availability, taking also in account that the company is included in a corporate group and that there is no allegation that the group is in financial difficulties”.

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