As noted on this blog
previously (see here and here), in December Judge Alan Albright (W.D. Tex.)
issued a temporary restraining order, later converted into a preliminary
injunction, ordering U.S. patent assertion entity Onesta from adjudicating
claims against BMW for the infringement of U.S. patents in the Munich Regional
Court. On February 13, the judge issued
his written order explaining his reasoning.
The order is available on Westlaw (2026 WL 474871) and from other
sources, such as Pacer.
By way of background,
one year ago the Court of Justice for the European Union issued its decision in
BSH v. Electrolux. In that case,
the owner of a European Patent filed an action in Sweden, against a defendant
domiciled in Sweden, for the infringement not only of the Swedish part of the patent
in suit, but also for the infringement of the corresponding parts validated in nine
other European Patent Convention (EPC) member states--including at least one (Türkiye)
which is not an EU member. One of the
questions presented was whether the Brussels Regulation Recast conferred
exclusive jurisdiction over a Turkish court in respect of the part validated in
Turkey. The court held that it did not,
but rather that the Swedish court may adjudicate both the infringement and validity
of the Turkish part, although the validity ruling would apply only inter
partes (in other words, the effect of the ruling would not be to nullify
the Turkish part as against the world). In
reaching this conclusion, the court stated that
. . . the court of the Member State in which the
defendant is domiciled which is seised, as in the case in the main proceedings,
on the basis of Article 4(1) of the Brussels I bis Regulation, of an
infringement action in the context of which the issue of the validity of a
patent granted or validated in a third State is raised as a defence, does have
jurisdiction to rule on that issue if none of the restrictions referred to in
paragraphs 63 to 65 of the present judgment is applicable, given that the
decision of that court sought in that regard is not such as to affect the
existence or content of that patent in that third State, or to cause its
national register to be amended.
. . . As the Advocate General observed in point 62 of
his Opinion of 22 February 2024 and as the parties to the main proceedings and
the European Commission stated at the hearing on 14 May 2024 before the Court,
that decision has only inter partes effects, that is to say, a scope
limited to the parties to the proceedings. Thus, where the issue of the
validity of a patent granted in a third State is raised as a defence in an
action alleging infringement of that patent before a court of a Member State,
that defence seeks only to have that action dismissed, and does not seek to
obtain a decision that will cause that patent to be annulled entirely or in
part. In particular, under no circumstances can that decision include a
direction to the administrative authority responsible for maintaining the
national register of the third State concerned (paras. 74-75).
The court’s reasoning
does not, at least explicitly, appear to hinge on the “third State” being a
party to the EPC, and thus could be cited in support of the Munich court’s
jurisdiction to adjudicate claims for the infringement of a U.S. patent in an
action filed against a company (like BMW) domiciled in Germany. Then again, as Judge Albright notes in his order,
the BSH “decision never expressly grants long-arm authority to divest
U.S. courts of jurisdiction to enforce U.S. patents.” Fair enough.
In any event, in
granting the ASI, Judge Albright goes through the Fifth Circuit’s test for
granting an ASI, which is largely similar to what other U.S. circuits require. First, it is undisputed that the parties to
the U.S. and Munich actions are the same, and the U.S. action (BMW’s action for
a declaratory judgment of patent misuse, noninfringement, and invalidity) would
dispose of the relevant issues in Munich.
Second, the Munich action would “frustrate a policy of the forum issuing
the injunction” or, alternatively, would “cause prejudice or offend other
equitable principles.” In this regard, he
writes that “[a]llowing the Munich proceedings to continue threatens the United
States' policy interest in adjudicating its own patents and protecting
litigants' jury rights in infringement cases. Similarly, proceedings in the
Munich court necessarily deprive BMW of critical defendant rights available
only here—e.g., fact discovery; invalidity consideration with erga omnes
effect; and juries as a bulwark against the improper grant or assertion of U.S.
patents. . . . [E]nsuring that U.S.
patent infringement claims are adjudicated in U.S. courts is ‘necessary to
provide full justice to the parties’ in this case because BMW seeks a jury
trial on the infringement claims” (citation omitted). Further, in Judge Albright’s reading, the
Paris Convention “expressly affirms the independence of each country’s patent
system and reserves the ‘provisions . . . relating to . . . jurisdiction’ to each member state” (quoting Voda
v. Cordis Corp., 476 F.3d 887, 898-99 (Fed. Cir. 2007)). In addition, although there is case law authorizing
the adjudication of U.S. copyright claims in foreign courts (and, I would note,
vice versa), the court notes that “[u]nlike with copyrights, receiving patent
protections in the U.S. requires a rigorous application and examination process”;
and he cites the act of state doctrine, which in general counsels against second-guessing
the exercise of another state’s sovereign authority. Third, the court finds that an ASI would not
offend international comity because “comity is implicated by ‘public
international issues,’ but not ‘private’ disputes” (though one might ask, if
that is the case, why courts should bother considering comity at all in the context
of deciding whether to grant an ASI in a private dispute). He does note, however, that
There are factors present in this case that are
abnormal in the ASI context. For instance, the Court is unaware of any cases
where an ASI has been granted to terminate the first filed proceedings between
the parties. Moreover, this case features the unusual argument by Onesta that
BMW would be inconvenienced by defending in a forum outside of its domicile,
while BMW seeks courts outside its domicile. . . . But there is no recognized
first-filed principle. See Laker Airways Ltd. v. Sabena, Belgian World
Airlines, 731 F.2d 909, 927 (D.C. Cir. 1984) (“The mere filing of a suit in
one forum does not cut off the preexisting right of an independent forum to
regulate matters subject to its prescriptive jurisdiction.”); Microsoft
Corp. v. Motorola, Inc., 696 F.3d 872, 887 (9th Cir. 2012) (“The order in
which the domestic and foreign suits were filed ... [is] not dispositive.”).
And making sure that U.S. patents are tried in U.S. courts, which regularly
apply U.S. patent law is more “convenien[t]” for the courts of each sovereign.
. . .Finally, given Onesta's domicile in the United States and BMW's desire to
litigate here, the Court finds that neither party would be inconvenienced by
doing so. . . .
It will be
interesting to see what happens on appeal if the parties do not settle the matter
or at least agree to some procedure for resolving it--though I suspect that
under U.S. law it may be difficult to overturn the decision on appeal. Nevertheless, here are a few random thoughts:
1. The
court invokes the United States’ interest in adjudicating its own patents and
protecting litigants’ rights to a jury trial, to fact discovery, and to an
invalidity determination with erga omnes effect. But of course all of those things would be
unavailable in a case in which a foreign court adjudicates foreign copyright
rights, about which the court is more sanguine. And is it really true that the adjudication of
U.S. patent infringement claims in a U.S. court is “necessary to provide full
justice to the parties” because BMW seeks a jury trial? To my knowledge, no other country in the
world provides jury trials in patent infringement actions (or discovery to the same
extent the U.S. does, for that matter); does that mean that every country’s
system is unjust? I suppose the response
would be no, it’s just that actions for the infringement of U.S. patent rights
come with a guarantee of right to trial by jury, as a matter of U.S.
constitutional law (and regardless of whether the party requesting a jury is
the plaintiff or the defendant, domestic or foreign), and therefore the Munich
court’s inability to convene a jury would render its decision on U.S. patent
infringement claims unjust. But again,
if that is true, why isn’t it true for copyright claims—or other instances in
which foreign courts might make determinations under U.S. law?
2. A more serious problem, in my view, is that
in countries such as Germany infringement and validity determinations are bifurcated—determined
by different courts in different proceedings—such that a judgment of
infringement may be entered with regard to a patent later determined to be
invalid (the “injunction gap”).
Moreover, injunctive relief in favor of the prevailing patentee is
near-automatic, indeed often viewed as being part of the claim for relief,
rather than merely a remedy as in Anglo-American law. See my new book, p.10 n.23 (stating
that “in common law systems the law of remedies is viewed as something of a
stand-alone discipline, albeit one that may be applied in different ways in
relation to different bodies of private law. In civil law countries such as Germany, by
contrast, rights and remedies are viewed as being more closely connected, such
that, as indicated in the text above, the infringement of a patent (for
example) almost always results in the entry of an injunction. See Franz Hofmann
and Franziska Kurz, Introduction to the “Law of Remedies,” in Law of Remedies:
A European Perspective 3, 5 (Franz Hofmann and Franziska Kurz eds., Intersentia
Ltd. 2019) (stating that “[u]nlike in common law countries, the question is
not: which remedies are available to cure a wrong? Instead, German lawyers
comprehend the legal system as a compilation of ‘subjective rights’”).” So if a German court were to decide the
infringement action against BMW, would it have to depart from its standard practice
and consider whether the U.S. patent is valid? Would the availability of an injunction be
determined under German or under U.S. (eBay) law? Beats me—but I can see why BMW, despite not
being “inconvenienced” by litigating in its home forum, might prefer to take
its chances in Texas, despite the possible risk of a larger damages award under
U.S. law, if the case were to proceed that far.
3. As many readers know, German courts generally
disapprove of other states granting ASIs directed against the litigation of
disputes or the enforcement of judgments in German courts. That perspective may not matter so much here,
however, if the German court itself would prefer not to have to decide some of
the questions above, or if it would be inclined in any event to stay the
adjudication of the U.S. patents pending proceedings in the U.S. (something the
CJEU expressly suggested as a possibility in a case in which an E.U. court is
asked to adjudicate a claim arising under another E.U. member state’s
law). But let’s imagine, just for the
sake of argument, a case in which an E.U. court was asked to adjudicate a claim
for the infringement of a U.S. patent and was not willing to cede jurisdiction
to the U.S. court that enjoins the E.U. plaintiff from proceeding in the E.U.;
maybe the E.U. court issues an AASI in response. Which country is violating the comity
norm: the country issuing the ASI (which,
one could agree, indirectly interferes with the operation of a foreign court),
or the court that claims the right to adjudicate foreign patent claims (which,
one could argue, indirectly interferes with the operation of its
counterpart)? Note that the WTO
arbitration award last summer in the dispute between the EU and China can be
read as disapproving both of ASIs (that is, disapproving of them beyond the
context of the Chinese ASI policy at issue) and of the adjudication of foreign
IP rights. See my post on the WTO
decision here, points 6b and 6c. Then
again, what precedential value, if any, does a WTO arbitration award have?
4. There is some non-binding authority under U.S.
law that might disagree with the position staked out by Judge Albright in BMW. For example, section 211 of the American Law
Institute’s 2007 Principles of the Law—Intellectual Property, titled “Subject-Matter
Jurisdiction over Claims,” recommends that, in general, “a court is competent
to adjudicate claims arising under foreign laws pertaining to the subject
matter of these Principles,” as long as it has subject matter and personal
matter jurisdiction under local law, and as long as “[a] judgment holding
registered rights granted under the laws of another State invalid is effective
only to resolve the dispute between or among the parties to the action.” Similarly, in her dissent in Voda v. Cordis,
476 F.3d 887 (Fed. Cir. 2007), Judge Pauline Newman disputed,
among other things, the characterization of patent grants as “acts of state” (as
opposed to ministerial acts) for purposes of the act of state doctrine, and
also did not believe that the Paris Convention or TRIPS Agreement “prohibits
resolution by a national court of private disputes that include foreign patent
rights. She wrote:
The panel majority raises the specter that foreign
courts might adjudicate United States patent rights, proposing that if our
courts are permitted to decide questions under foreign patent law, other
countries will feel free to decide questions of United States patent law.
Cordis too sounds the alarm, stating that creative litigants will choose exotic
foreign forums to resolve complex patent issues, and that the district court's
decision will open the door to international chaos. I doubt that a United
States district court is an exotic foreign forum; and it is not new for courts
in other countries to apply the law of other nations when warranted. . . . All
nations have recognized their obligation to provide a judicial forum to address
disputes involving their citizens; no warrant has been shown to remove foreign
patents from this purview.
Judge Newman’s
dissent did not expressly grapple with Paris Convention articles 2(3) and 4bis,
however, though perhaps an argument could be made that neither provision necessarily
or inherently entails exclusive adjudicatory jurisdiction. Whether that is the correct reading of the
Convention, I’m not sure.
