CJEU, judgement dated February 25, 2025 – C-339/22 (BSH./.Electrolux)
The CJEU brings long-awaited clarity into cross-border patent litigation: A court of an EU Member State where the defendant is domiciled does not lose jurisdiction to rule on acts of patent infringement in another EU or non-EU state, even if an invalidity defense is raised. In case of a non-EU state, the court may even have competence to decide on the invalidity defense with inter partes effect, i.e. a scope limited to the parties to the proceedings.
1. Background
Electrolux, a company domiciled in Sweden, was sued by BSH before a Swedish Court for infringement of all national parts of a European bundle patent, including a non-EU member state of the European Patent Convention (here: Turkey).
Electrolux raised an invalidity defense and argued that the questions of validity and infringement are "indissociable". Electrolux took the stance that the Swedish Court was generally competent under Art. 4 (1) Brussels I-bis Regulation ("Brussels I*") (place of general jurisdiction) but did not have jurisdiction according to Art. 24 no. 4 Brussels I* (place of registration) regarding acts of infringement outside of Sweden.
The Swedish first-instance court followed Electrolux and declined jurisdiction regarding these acts of infringement. Following that, the Swedish appellate court sought clarification by the CJEU on the interpretation of Art. 24 no. 4 Brussels I* by way of a preliminary ruling.
2. The CJEU's ruling
The CJEU rules that a court of an EU Member State competent under Art. 4 (1) Brussels I* retains jurisdiction over the infringement action concerning acts of infringement in another EU Member State in case of an invalidity defense. At the same time, the courts of the EU Member State where the patent-in-suit is registered shall have exclusive jurisdiction over the question of invalidity under Art. 24 no. 4 Brussels I*.
The ruling is based on three essential reasons:
- Art. 24 no. 4 Brussels I* is an exception to the general rule of Art. 4 (1) Brussels I* and is thus to be interpreted narrowly. The exclusivity under Art. 24 no. 4 Brussels I* only applies to proceedings concerning validity "as such". As invalidity defenses in infringement proceedings are the rule, the place of "general" jurisdiction would become the exception in that regard, turning the system upside down.
- Since one of the primary goals of Brussels I* is to provide for a high degree of foreseeability (recital 15), jurisdiction cannot be dependent on the defense brought by the defendant. This is reinforced by the fact that the court seised would have no possibility to refer the proceedings to the competent court under Art. 27 Brussels I*.
- The objective of Art. 24 no. 4 Brussels I* is to reserve the decision on validity (as such) for the court with the closest material and legal proximity. Art. 4 (1) Brussels I*, on the other hand, allows a right holder to concentrate infringement proceedings in one forum, avoiding the risk of divergent decisions. As the court seised with the infringement action, where appropriate, has the option to stay the proceedings, awaiting the competent court's judgement on validity, there are no negative repercussions of "splitting" the infringement and validity proceedings.
With regard to non-EU states, the CJEU holds that Art. 24 (4) Brussels I* does not apply. Other instruments may, however, be relevant (Art. 73 Brussels I*). If not, as is the case with Turkey, there is no specific provision which would prevent the EU Member State's court seised of the infringement action from deciding on the validity of the patent in the non-EU state. However, the general principle of non-interference prohibits a ruling on the validity as such with erga omnes effect. The court is therefore restricted to assessing an invalidity defence with inter partes effect, i.e. a scope limited to the parties of the proceedings.
3. Remarks
The CJEU's ruling is a landmark precedent for global cross-border patent infringement litigation providing an extremely long-arm jurisdiction within centralized infringement proceedings which cannot be overestimated.
It provides ample forum shopping opportunities for litigants on a global scale. The right holder can choose the national court of an EU Member State where the targeted defendant is domiciled. The right holder can also choose the UPC instead (Art. 71b no. 1 Brussels I*). The relief sought can be extended to cover the whole global patent family of the patent(s) at issue, therefore encompassing injunctive relief and/or damages not only for EU territory but – by way of example – also the US, China, Japan, Korea, India, Brazil, the UK and Switzerland. The ruling also allows for split strategies: For example, a right holder can sue for damages in a US court and for an injunction over the same US patent(s) in a European court if the defendant is domiciled in an EU Member state to profit from lower litigation cost with potentially easier access to injunctions in Europe. That said, the European court would likely have to apply US law for the US portion of the case, potentially including the restrictive eBay v. MercExchange standard, when deciding on whether or not to grant injunctive relief for US territory. However, the RESTORE Patent Rights Act, which aims at getting rid of this standard, has just been re-introduced in the 119th US congress and may provide for a very relevant change of the US law, making injunctions a regular remedy again.
Invalidity defenses do not limit international jurisdiction and respective forum shopping, as the CJEU expressly held. However, a cross-border patent litigation campaign can –and in high value cases will – certainly trigger multiple national invalidity actions and respective cost exposure and risk. In addition, the European court may stay the infringement proceedings in view of an invalidity defense raised. The CJEU referred in this context to the standard developed in 2012 in Solvay v Honeywell (C-616/10), according to which a stay can be ordered if there is a reasonable and non-negligible chance that the patent(s) at issue will be declared invalid. However, there is no specific statutory provision under EU law on such stays, which means that there is some flexibility under the procedural law of the court of the EU Member State where the defendant is domiciled.
As far as the UPC is concerned, there is already a first-instance precedent by the Duesseldorf Local Division which held that it has long-arm jurisdiction over acts of infringement committed in non-EU Member States of the EPC (specifically the UK) based on Art. 71b no. 1, 4 (1) Brussels I* (UPC, Duesseldorf LD, decision of January 28, 2025, UPC_CFI_355/2023 – Fujifilm/Kodak). However, some UPC specific questions are open as the Vienna Local Division has set up the requirement of filing a counterclaim for revocation in order for invalidity defenses to be considered (UPC, Vienna LD, decision of January 15, 2025, UPC_CFI_33/2024 – Swarco/Strabag) and as a counterclaim for revocation is only available against European patents according to Art. 32 (1) lit. e) in conjunction with Art. 2 g). Yet, we tend to think that those are hurdles which can and likely will be overcome by future case law.
Another question is whether a defendant domiciled in an EU Member State can be used as an anchor defendant to involve the defendants' group of companies as further defendants, even if they are domiciled elsewhere. The CJEU's ruling did not have to touch upon this question. However, earlier CJEU case law did: It is certainly worth noting at the outset that the additional defendants can be domiciled outside the EU Member State where the anchor defendant is domiciled, but still have to be domiciled in another EU Member State by virtue of statutory EU law (Art. 8 no. 1 Brussels I*). In the 2006 Roche v Primus case (C-539/03), the CJEU held that companies which belong to the same group and may have acted in an identical or similar manner in accordance with a common business policy developed by one of them do as such not fulfil the "close connection" requirement of Art. 8 no. 1 Brussels I*. Although this ruling has been widely criticized, it has not (yet) been overruled and therefore still applies by limiting anchor defendant strategies based on the "spider in the web" doctrine. On the other hand, in Solvay v Honeywell (Case C-616/10), the CJEU held that multiple defendants can be sued together with an anchor defendant if they infringe the same patent(s) in the same territory based on the same infringement. Thus, anchor defendant strategies should work in cases of joint liability.
Yet, there are still many important open questions regarding global cross-border litigation strategies after BSH v Electrolux: some relate to the applicable law, at least substantive law and potentially even procedural law. Others relate to issues of international comity, the enforcement and recognition of cross-border decisions by other states as well as to potential anti-suit or anti-enforcement counter-injunction strategies. Another important question is the standard under which an invalidity defense will lead to a stay of centralized cross-border infringement proceedings, and whether the stay will apply to the entire proceedings or just a national portion thereof. Finally, time will tell how else courts in other jurisdictions will respond, e.g. by providing long-arm jurisdictions themselves in competition for cases.
Exciting or worrying times ahead – depending on the perspective.
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