The Court of Appeal of the Unified Patent Court (UPC) issued its first substantive decision on 26 February 2024.  The Appeal concerned a preliminary injunction granted by the UPC Local Division in Munich to 10X Genomics against NanoString Technologies.

Summary

The Court of Appeal [in its Order available here] confirmed that, since an order for provisional measures is issued following summary proceedings in which the parties have a limited opportunity to present facts and evidence:

“the standard of proof must not be set too high, in particular if delays associated with a reference to proceedings on the merits would cause irreparable harm to the proprietor of the patent[1]…On the other hand, it must not be set too low in order to prevent the defendant from being harmed by an order for a provisional measure that is revoked at a later date[2]”[3].

The applicant for provisional measures must provide reasonable evidence to satisfy the court to a sufficient degree of certainty that the applicant is entitled to institute proceedings and that the patent is valid and infringed (or infringement is imminent). The order further explains that “Such a sufficient degree of certainty requires that the court considers it at least more likely than not that the Applicant is entitled to initiate proceedings and that the patent is infringed. A sufficient degree of certainty is lacking if the court considers it on the balance of probabilities to be more likely than not that the patent is not valid”.

In the first instance proceedings, the Local Division considered that there was “sufficient certainty” that claim 1 of the Patent – which relates to a method for detecting a plurality of analytes in a cell or tissue sample – was legally valid. For this they considered it sufficient that there was “preponderant likelihood” that the patent was valid. Notably, despite being preliminary proceedings in which facts and evidence of the parties are limited, the first instance decision totalled over 100 pages, and considered each issue in some detail. It also went so far as to indicate that there was a “very high degree of probability” of infringement and that the court was “convinced with a significantly higher probability that the patent at issue is valid”[4].

The Local Division considered, and the Court of Appeal agreed, that the object of detection in D6 is not “a cell or tissue sample”, and that therefore claim 1 is likely to be found novel over D6. However, the Local Division also considered that a revocation on the ground of inventive step was not to be expected, on which point the Court of Appeal disagreed. The inventive step reasoning in the appeal decision relied in part on another document, B30, which was only submitted with the statement of grounds of appeal. Since it was considered more likely than not that the subject-matter of claim 1 would be found to be obvious, the Court of Appeal concluded there is no sufficient basis for the issuance of a preliminary injunction and they ordered 10x Genomics to bear the costs.

How does the approach of the UPC Court of Appeal compare with EPO proceedings?

The approach of the Local Division in interpreting the claim, and assessing novelty, inventive step and sufficiency was broadly in line with that followed by the EPO in patent examination and opposition, albeit without explicitly defining an “objective technical problem”. A similar approach was also followed by the Court of Appeal.

It is also interesting to note that the Court of Appeal in this case admitted a new document which was only submitted with the statement of grounds of appeal and declared the patent less likely to be valid in view of this new evidence. It remains to be seen whether such an approach may be limited to appeals from applications for provisional measures rather than appeals from substantive decisions on validity (which are yet to reach the UPC Court of Appeal).  However, this may come as a surprise to Patentees, who are accustomed to the strict rules of procedure of the EPO Boards of Appeal which often make it very difficult for new documents to be submitted.

Are PIs being granted fairly by the UPC?

In this decision, the Court of Appeal sets out clearly the standard for assessing the likelihood of infringement and validity, in order to determine whether a preliminary injunction is justified, and applied this to the specific facts of the case. However, it gives little consideration to wider factors relating to the likely damage to each party, and how this should be balanced (i.e. assessing what is referred to in the English Courts as the “balance of convenience”).

NanoString did provide a number of reasons in first instance proceedings as to why a preliminary injunction would be “disproportionate”. Firstly, that it risked excluding NanoString from the European market permanently, whereas 10x Genomics could simply await the outcome of the final proceedings without financial or other losses. On this point, the Court of first instance concluded that the possibility of long-term harm depending on the outcome was not solely to the detriment of NanoString.

NanoString further argued that a preliminary injunction was disproportionate since the allegedly infringing product is a subordinate part of a larger, complex product for which development costs over 93 million USD were incurred, that the second claimant is a non-practising entity and therefore has no interest in the enforcement of a prohibitory injunction, and that the contested embodiments are of irreplaceable importance for research into a number of serious, life-threatening diseases. The Court of first instance considered that – in the specific context – these other circumstances were not to be taken into account in weighing up interests that would argue against a prohibitory injunction. The Court of Appeal gave no comment on this reasoning.

Weighing up interests of the parties and NPEs

With regard to non-practising entities, the first instance court confirmed that the status of “NPE” does not affect entitlement to file a request for a preliminary injunction (see Article 47 UPCA) and also that the status as an NPE did not seem to preclude the granting of a preliminary injunction since possible financial damages can justify an injunction. This is notable since so far the UPC has already attracted actions from several NPEs.

After the UPC had already heard the appeal, NanoString filed for Chapter 11 bankruptcy in the US court. However, the UPC declined to stay proceedings on account of this, explaining that the proceedings need not be stayed if the oral hearing has already taken place and the matter is ready for resolution.

The possibility of a UPC-wide preliminary injunction is certainly an enticing one for Patentees (and an alarming one for potential infringers). According to an official update from the UPC in February 2024, the Court of First Instance has received 23 applications for provisional measures (including some relating to preserving evidence and orders for inspection) since 1 June 2023. It is clear from this decision that, in order to obtain a preliminary injunction, the Court must at least be convinced with a sufficient degree of certainty that the patent is more likely than not valid and infringed. However, this Appeal decision does not offer any insight, at this early stage, as to how the UPC will weigh up the wider interests of the parties such as the likely extent of harm to the respective parties in the event of either outcome.

[1] Art. 62(2) and (5), 60(5) UPCA (see CJEU, judgment of 28 April 2022, Phoenix Contact, C-44/21, EU:C:2022:309, para. 32 with reference to Art. 9(1)(a) Directive 2004/48/EC)

[2]Pursuant to Art. 62(5), Art. 60(8) and (9) UPCA, R. 213 RoP, Art. 62(2) UPCA, cf. also Art. 9(7) Directive 2004/48/EC

[3] Page 27, Section 5a, Order of the Court of Appeal of the Unified Patent Court issued on 26/02/2024 in the proceedings for provisional measures concerning EP 4 108 782

[4] Decision and orders of the Court of First Instance of the Unified Patent Court in the proceedings for granting of provisional measures concerning EP 4 108 782 Proceedings No. UPC CFI 2/2023 issued on: 19 September 2023 – page 91