Journal

First UPC Court of Appeal order on a stay

In a UPC first, the Court of Appeal has issued an order regarding the granting of stays. The Court sets out a prevailing principle that stay requests will not be granted. An exception to this principle is when a rapid decision from the EPO is expected, but the Court may exercise its discretion on whether to actually stay the proceedings. By Conor Wilman (Fellow).

On 2 May 2024, the Court of Appeal heard its first case in relation to a stay application pursuant to rule 295(a) RoP (APL_3507/2024; UPC_CoA_22/2024). In this matter, the appellant, Carrier Corporation, was represented by Dehns. In this case, there is an opposition running in parallel to the revocation action.

The decision, issued on 28 May 2024,[1] states that the Court will not stay proceedings as a general principle. This is because a stay of proceedings is counter to the objective of the Court to ensure that a final oral hearing will take place within one year. The mere fact that there is a parallel opposition is not sufficient to stay proceedings, even if the opposition is accelerated. Instead, great emphasis is placed on the balance of interests of the parties.

Background

The claimant, Bitzer Electronics, initiated a revocation action (UPC_CFI_263/2023) against the defendant, Carrier Corporation, at a similar time as filing a parallel opposition at the European Patent Office (‘EPO’). The defendant applied for a stay of proceedings at the UPC.

The defendant argued that the parallel opposition was being accelerated, and that accelerated opposition proceedings generally lead to proceedings being resolved within nine-ten months. The defendant also argued that the extent of the opposition was broader in substantive and territorial scope than that of the revocation action, so litigating both actions in parallel would be costly as well as procedurally inefficient.

An order was issued by the Paris Central Division on 8 January 2024 (ORD_591040/2023).[2] In that order, the Court considered the meaning of a decision being given ‘rapidly’, as stated in rule 295(a) RoP, and gave weight to the relative interests of the parties. No date had been set for the opposition hearing, so the Court deemed there to be an absence of a ‘concrete expectation’ of a decision in the near future. The Court granted leave to appeal, recognising the need for a consistent approach in stay decisions.

Although it was not referenced by the Paris Central Division, the test of requiring a ‘concrete expectation’ (that is, a known date in time) in the near future was employed in November by the Munich Central Division in a revocation action between Astellas and Healios (UPC_CFI_80/2023). In that order (dated 20 November 2023; ORD_579547/2023),[3] despite an opposition hearing date being set three months before the oral hearing for the revocation action, the court did not deem this to be sufficiently ‘rapid’, although the length of time taken by a potential appeal against the Opposition Division’s decision also appears to have been a factor in the Court’s decision.

On 23 January 2024, the defendant filed an appeal against the Paris Central Division’s order.

When will the UPC grant a stay application?

The Court of Appeal sets out a series of principles for staying revocation actions where there are parallel EPO opposition proceedings at paragraphs 21 to 27. Those principles are as follows:

1. The Court will not stay proceedings, as any stay would threaten the Court’s objective for the final oral hearing taking place within one year of the start of an action.
2. The mere fact that there is a parallel EPO opposition is not sufficient to allow an exception to the first principle. This does not negatively impact harmonisation of decisions between the EPO and the UPC as the last body to decide would consider the decision of the first body.
3. Pursuant to article 33(1) UPCA and rule 295(a) RoP, an exception to the first principle is where a ‘rapid’ decision may be expected from the EPO. The terms ‘rapid’ and ‘rapidly’ must be interpreted in light of the circumstances of the case, the rights to an effective legal remedy and a fair and public hearing, and the principles of proportionality, flexibility, fairness, and equity.
4. The Court’s power to apply the exception is discretionary.
5. Where the opposition proceedings are accelerated, this fact is not enough in and of itself to qualify that a decision would be expected rapidly.

When applied in the present case, the UPC oral hearing is set for 21 June 2024 while the opposition hearing is set for 24 October 2024. As the UPC hearing takes place first, the Court sees no reason to stay the proceedings to wait for the outcome of the opposition.

With particular regard to the argument that duplication of proceedings places undue burden on the appellant/defendant, the Court rejected this argument. At paragraph 31 of the order, the Court reasoned that unnecessary duplication could only be avoided once the decision in the opposition was final, which might not occur until an appeal is concluded. This would require a long-term stay of the UPC proceedings, which is at odds with the principle that the UPC oral hearing should be concluded within one year. Acceleration of the opposition does not alter this fact.

The defendant/appellant had also argued in its statement of appeal that the Court of First Instance had not provided them with an opportunity to respond to evidence put forward by the claimant/respondent concerning the duration of opposition proceedings. The Court of Appeal determined, in paragraph 35, that such evidence is irrelevant; only the date of the decision matters. Additionally, the Court deems the defendant/appellant’s arguments to be ‘unfounded’ as the stay request itself requires a rapid decision, rather than an extensive debate. Thus, the defendant/appellant’s right to be heard had not been violated.

Is it ever possible for proceedings to be stayed?

With the principles set out by the Court of Appeal relating to stays, the Court appears to envision that stays would only be granted in a narrow set of circumstances. The mere fact that there is a parallel opposition, accelerated or not, is insufficient.

Perhaps if a decision in opposition proceedings was due to be given during the written proceedings, this might be cause for a short stay to allow parties to take that decision into account in pleadings before the UPC.

In any case, for a stay to be granted, it is a necessary condition that a rapid decision from the EPO is expected. Even when such a decision is expected, it is within the Court’s discretion whether a stay is granted or not.

The question of stays in circumstances not relating to a parallel EPO opposition to a UPC revocation action is open, but the Court’s default position is clear: stays will not be granted.

Conor Wilman is an associate at Dehns.

Notes and references

[1] https://www.unified-patent-court.org/en/node/757

[2] https://www.unified-patent-court.org/en/node/551

[3] https://www.unified-patent-court.org/en/node/499