UPC Paris Central Division to decide on treatment of whether affiliates are the “same party” as their parent
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For the first time, on Thursday 26 October, an oral hearing took place at the Paris Central Division. It pertained to a preliminary objection lodged in a revocation action brought by Meril Group against a patent owned by Edwards Lifesciences Corporation.
The parties are involved in a number of actions before various divisions of the UPC, and this plurality of actions is precisely what gave rise to the preliminary objection. On 1 June 2023, the first day of operation of the UPC, Edwards Lifesciences brought infringement proceedings against Meril Gmbh before the Munich local division on the basis of European Patent No. 3 646 825. Some time later, on 4 August 2023, Meril Italy, a newly formed subsidiary of the Meril group, brought a revocation action against the same patent before the Paris Central Division.
Given the pending infringement action in the Munich Local Division, Edwards Lifesciences raised a preliminary objection to request that these two cases be joined before that Division. In support of this request, the claimant invoked article 33, 4° UPCA, according to which, although actions for revocation are in principle brought before the Central Division, the situation is different when an action for infringement relating to the same patent and between the same parties has already been brought before a Local Division. In such a case, these actions may only be brought before the same local or regional division, i.e. the Munich Local Division in the present case.
In this case, the patent is undeniably the same. The objection therefore hinges on the interpretation of the expression "same parties": are Meril Gmbh and Meril Italy, i.e. the parent company and its subsidiary, the same parties, or should they be considered as such?
Edwards Lifesciences argues that the two entities form a single entity because of their common legal and economic interests. Economically, the newly established Meril Italy would be no more than an "empty shell", created for the sole purpose of promoting the interests of Meril Gmbh, which is actually the only economically active company. Legally, they are undeniably pursuing the same objective, which is to have the patent in suit revoked.
Meril Italy, for its part, pointed out that each economic entity is independent, even when they are affiliates of the same group, and each enjoy a distinct legal personality that enables each to act in their own name, and notably to bring legal actions individually. A legal entity could not reasonably be deprived of this right because of actions brought by its parent company. A strict approach to the term "same parties" must therefore be adopted, as the exception provided for in article 33,4° UPCA can only be set aside if two legal entities have "identical and indissociable" interests, which is not the case here. Meril Italy also argued that the provisions of the Brussels II bis Regulation cannot be relied upon to justify a transfer of the case to the Munich Local Division, as the UPC, including all its Divisions, must be considered as a single court for purposes of that Regulation.
The decision will be issued in a few weeks. The legal issue it will decide will heavily influence the margins of manoeuvre available to defendants before the UPC – which structurally offers multiple choices to claimants but far less to defendants. Also, if the two cases are not joined before the Munich Local Division, this will be another example of a bifurcation between validity and infringement – please read our views on this topic in our article “Half an hour for a bifurcation: UPC Central Division rejects preliminary objection after first oral hearing”.
This article was authored by David Por, Cyril Riffaud and Fanny Chouvellon.
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