A recent case before the Unified Patent Court's Local Division in Munich has unfolded, casting a spotlight on critical cost considerations in preliminary injunction proceedings. This case serves as a notable illustration of how the Rules governing cost allocation are to be applied in preliminary injunction proceedings, with a particular emphasis on evaluating the behavior of the involved parties in determining cost distribution.
Summary of Facts:
The case involves a dispute over European Patent 3 763 331, which pertains to a crimping device for crimping stent-based valve prostheses, particularly heart valve prostheses. On June 19, 2023, the applicant issued a warning letter to the respondents for allegedly infringing the patent. On June 30, 2023, the applicant informed the respondents that the request for a unitary effect for the patent had been withdrawn, and the patent would now be enforced as a conventional European patent. The pre-litigation deadline expired unsuccessfully on July 13, 2023.
On July 18, 2023, the applicant filed a motion for interim measures with the Munich Local Division. On September 25, 2023, the respondents submitted a cease and desist declaration. The applicant accepted this declaration on September 29, 2023.
In a video conference on October 2, 2023, both parties unanimously declared that the proceedings were resolved under Rule 360 RoP and no oral hearing was necessary. However, they remained in disagreement regarding the allocation of costs.
Grounds for the Order:
1. Resolution of the Main Matter
If the court determines that a lawsuit has become obsolete and the main matter has been resolved, it can, under Rule 360 RoP, "dismiss" the case at any time upon request of a party or ex officio, after granting the parties a legal hearing. The term "dismiss" (“abweisen”) in the German version is considered poorly chosen compared to the English (dispose of the action) and French (mettre fin à l’instance) versions. The intention of the procedural rules to provide a means to conclude proceedings without a decision on the main matter is better expressed by the German verb "abtragen" (dispose of). The provision is to be applied accordingly to applications for interim measures as there is an unintended regulatory gap concerning the consequences of resolution in such proceedings.
2. Cost Allocation
According to Article 69.1 UPCA, costs are generally borne by the unsuccessful party, up to a limit set by the procedural rules, unless equity reasons dictate otherwise. In case of partial success or exceptional circumstances, the court may, under Article 69.1 UPCA, order costs to be distributed equitably or each party to bear their own costs. If a party causes unnecessary costs, they may be required to bear them under Article 69.1 UPCA. In the absence of specific provisions in the procedural rules for interim proceedings, Rule 118.5 RoP for main proceedings is to be applied correspondingly.
The resolution and disposal in this case result from exceptional circumstances - the resolution of the dispute due to the respondents' issuance of the cease and desist declaration on September 25, 2023, and its acceptance by the applicant. Under these circumstances, it would be inequitable to impose costs on the applicant. Regardless of the admissibility and merits of the applicant's request for interim measures at the time of resolution, the respondents could have issued the declaration much earlier, thereby avoiding unnecessary costs incurred by the applicant.
3. Appeal Authorization
The appeal is permitted under Rule 220.2 RoP, as the issue of applying Rules 360 and 118.5 RoP to resolved applications for interim measures is decided for the first time in this case.
Take aways:
