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UPC – EDWARDS LIFESCIENCES V MERIL – WHAT ARE “SAME PARTIES”?

Posted: November 27th, 2023

Edwards Lifesciences Corporation v Meril Italy srl (UPC, Central Division) – order dismissing preliminary objection questioning the compe-tence of the Central Division, based on comprehensive interpretation of the term “same parties” pursuant to Article 33(4) UPCA, by Dr. Michael Kobler, Bardehle Pagenberg, Munich

Edwards Lifesciences Corporation (hereinafter: “Edwards”) filed an infringement action based on EP 3 646 825 (“EP ‘825”) against Meril Life Sciences Pvt. Ltd. (“Meril India”) and its German subsidiary Meril GmbH (“Meril Germany”) before the Munich Local Division of the Unified Patent Court on 1 June 2023. Meril India’s Italian subsidiary Meril Italy srl (“Meril Italy”) subsequently filed a stand-alone revocation action against Edwards regarding EP ‘825 on 4 August 2023. Edwards filed a preliminary objection arguing that the Central Division was not competent for the revocation action pursuant to Article 33(4) UPCA, which states that, if an action for infringement “between the same parties relating to the same patent has been brought before a local or a regional division”, a revocation action “may only be brought before the same local or regional division”.

By order of November 13, 2023, the Central Division (through Presiding Judge and judge-rapporteur Paolo Catallozzi) dismissed the preliminary objection, finding that Meril India or, resp., Meril Germany, and Meril Italy were not “the same par-ties” and that Article 33(4) UPCA was, therefore, not applicable.

The written reasoning of the order includes a comprehensive review of the term “same parties” in Article 33(4) UPCA, beginning with the literal interpretation of the term and continuing with some points raised by Edwards, namely the CJEU judgment in the case “Drouot assurances v Consolidated metallurgical industries and others”, the “strawman company” theory, as well the unified administration of justice:

• As a starting point of the literal interpretation (marginal no.s 29 et seqq.), the Court points to Article 46 UPCA, which stipulates that “any natural or legal person, or any body equivalent to a legal person entitled to initiate proceedings in accordance with its national law, shall have the capacity to be a party to the proceedings before the Court”. Consequently, the Court looked at Italian law to assess whether Meril Italy had the capacity to be a party and whether it was a separate party from Meril India and Meril Germany, answering both questions in the affirmative. In particular, the Court found that a corporate connection, even in case of joint liability, did not overcome the fact that two companies have a separate legal personality.

• With respect to the judgment by the Court of Justice of the European Union (CJEU) in the case “Drouot assurances v Consolidated metallurgical industries and others” (judgment of 19 May 1998, case C-351/96), where the CJEU had decided that two different parties with “identical and indissociable” interests were to be regarded as one party for the purposes of Article 21 of the Brussels Convention on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters (which preceded Article 29 of the Brussels I-Regulation), the Central Division found that the principles of the CJEU’s decision could not apply to the case at hand, because Article 21 of the Brussels Convention and Ar-ticle 33(4) UPCA were directed at different legal issues and because the UPCA provided for an autonomous set of rules regulating the situation of parallel proceedings (marginal no.s 44 et seqq.).

• Regarding the “strawman company” theory (marginal no.s 56 et seqq.), while accepting the argument in principle, the Court did not see sufficient evidence that Meril Italy was a straw company for Meril India or Meril Germany, i.e. acting only on paper with the actual (legal) effects being produced in respect of the latter(s) based on an agreement between the companies. The Court acknowledged that it is extremely difficult for a third party to provide direct evidence for such agreement and found that it was sufficient if “serious and concordant indications of the existence of this agreement” were provided (marginal no. 61) – according to the order, identical economic interests, Meril Italy being a fully-owned subsidiary of Meril India with its directors having worked (also) for Meril India and its only officers/employees being also Meril India’s employees, and Meril Italy having been founded only recently (in March 2023), without an office in Italy or running any sort of business, were not sufficient to prove that Meril Italy was only a fictitious legal entity.

• Finally, with respect to the uniform administration of justice (marginal no.s 70 et seqq.), the Court pointed to the UPCA and the Rules of Procedure providing for a “set of tools” to deal with parallel proceedings before different divisions, here: a counterclaim for revocation following an infringement action before a Local or Regional Division and a stand-alone revocation action before the Cen-tral Division, in particular the Local or Regional Division having the discretionary power to stay the proceedings pursuant to Rule 295(m) RoP or to refer the counterclaim for revocation (or even the whole case) to the Central Division pursuant to Article 33(3) UPCA. Against this background, the orders states that the lodging of a similar, if not identical, revocation action by a Plaintiff that is only linked with a Defendant in infringement proceedings, does not per se constitute an abuse of the Unified Patent Court framework (marginal no. 84).

As a side note, the Court also did not order Meril Italy to provide a security for costs, as requested by Edwards.

Assuming that the order is appealed by Edwards, it will be very interesting to see whether, or to what extent, the Court of Appeals confirms the Central Division’s decision, particularly in view of the CJEU’s case law on Article 21 of the Brussels Convention and Article 29 of the Brussels I-Regulation.

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