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Wednesday, 23 January 2013

The Battle of the Tablets: Dutch follow the Court of Appeal for England and Wales on Apple's RCD

Oh, a new claw scratcher!
(c) CNET/Eric Mack
On January 16, a new episode of the Battle of the Tablets was aired. The plot, once again, revolved around the alleged infringement of Apple's registered Community design 000181607-0001 by Samsung's tablet computers Galaxy Tab 7.7, 8.9 and 10.1. Starring in the latest development of Apple v Samsung [or, more properly, Samsung v Apple; Merpel notes that actions for declaration of non-infringement appear to be back-to-front: where infringement is alleged, it is usually in the form of a counterclaim brought by the defendant] is the Rechtbank 's-Gravenhage (The Hague District Court). The Dutch court ruled that a previous decision on the same cause of action, rendered by the High Court for England and Wales and affirmed by the Court of Appeal, as Community design courts of first and second instance, had already defined the matter on a pan European basis. Therefore, it followed the prior judgments and rejected claims of infringement, as Apple failed to provide reasons to reconsider the UK decisions.

The District Court provided a brief overview of the cases in which the matter had been previously litigated (or where litigation was still on-going). It noted that:

- in the Netherlands, on 24 August 2011, a court ruled that the Galaxy Tab 10.1 did not fall within the scope of the asserted RCD (judgment upheld on 24 January 2012);

- in Germany, on 24 October 2011, the Landgericht Düsseldorf stated that the Galaxy Tab 7.7 fell within the scope of the RCD and declined jurisdiction to hear the claims against Samsung Ltd; on 24 July 2012, the Oberlandesgericht Düsseldorf amended the lower court's ruling, affirming jurisdiction with regard to Samsung Ltd, and granted a preliminary injunction which prohibited the sale of the Galaxy Tab 7.7 in the EU;

-in the UK, on 9 July 2012, the High Court ruled that the Galaxy Tab 7.7, 8.9 and 10.1 did not fall within the scope of the RCD (judgment upheld by the Court of Appeal on 18 October 2012).

The UK case was taken as a reference, being the first judgment on the merits in which the alleged infringement of the RCD had been examined. In particular, the Dutch court explicitly recalled the words of the Court of Appeal's judge, Lord Justice Jacob, who had criticized the Oberlandesgericht's decision of 24 July 2012 for being inconsistent with the previous decision of the High Court of 9 July 2012:
"Firstly I cannot understand on what basis the Court thought it had jurisdiction to grant interim relief ...  After all there is now a Community-wide decision on the point, now affirmed on appeal. One would think that ought to put an end to all other litigation about it.
Secondly I cannot see any basis for an interim injunction. The UK court had already granted a final declaration. Moreover it was sitting not just as a UK court but as a Community Court ... There was no room for "provisional" measures once Judge Birss, sitting as a Community Court had granted a final declaration of non-infringement ... So his declaration of non-infringement was binding throughout the Community. It was not for a national court - particularly one not first seized - to interfere with this Community wide jurisdiction and declaration".
Samsung Galaxy Tab 8.9 and Apple's RCD
Assessing its jurisdiction, the Dutch court observed that the parties in the case before it (Samsung Electronics Co Ltd. (Korea), Samsung Electronics Benelux BV, Samsung Electronics Logistics Europe BV, Samsung Electronics Overseas BV) differed from those involved in the UK case (Samsung Electronics UK Ltd.), albeit being part of the same group (SEC). Consequently, it held that they did not constitute "same parties" within the meaning of Article 27 of Council Regulation 44/2001, as their interests could not be deemed identical nor indissociable (see Case C-351/96, Drouot v CMI Industrial Sites et Al.). The applicability of Article 28, which deals with related actions pending in the courts of different member states, was also considered, but the court denied to refer the case to a foreign court ex officio. Thus, it affirmed its jurisdiction pursuant to Articles 81.1 b) and 82 of Council Regulation 6/2002 (CDR) [and a bit of help from Article 24 of Regulation 44/2001, suggests Merpel].

On the merits, the Dutch court observed that the trial unfolding before it involved the same subject-matter and cause of action of the case decided by the High Court and the Court of Appeal, as Community design courts, namely whether the tablets Galaxy Tab 7.7, 8.9 and 10.1 fell within the scope of the RCD. It also evidenced that Apple had not brought any new evidence or argument to justify a re-examination of the prior decisions, which the court, in principle, must follow. It therefored rejected Apple's counterclaims and provided the declaration of non infringement demanded by Samsung (the court also rejected Apple's claims related to the Galaxy Tab 10.1v, not examined in the UK trial, for lack of substantiation).

This judgment addresses [and raises, argues Merpel] some interesting questions. The CDR contains several provisions concerning the effects of judgments rendered by the Community design courts (Articles 87, concerning the declaration of invalidity of a Community design; Article 91, concerning related actions; Article 95 on parallel actions). The rationale behind these provisions seems to be encrypted in recitals 29 and 30 to the Preamble of Regulation 6/2002:
(29) It is essential that the rights conferred by a Community design can be enforced in an efficient manner throughout the territory of the Community
(30) The litigation system should avoid as far as possible ‘forum shopping’. It is therefore
necessary to establish clear rules of international jurisdiction.
EU-wide effects, you say?
Articles 81 and 82 of the CDR provide the key tools needed to reach these objectives, setting out the Community design courts' jurisdiction and the implicit EU-wide effect of their decisions (since re-litigation, between the same parties, is precluded by the principle of res iudicata and by the exclusive jurisdiction). However, the Apple v Samsung cases pending before several national courts in Europe expose the inherent limitations of such provisions. It is evident that a substantial re-examination of a subject-matter already adjudicated, by means of new actions brought in other member states by a different party, belonging to the same group, implies the risk of conflicting judgments and determines an inefficient enforcement of the protected designs, the very same issues which the CDR intended to resolve. This concern emerges clearly in the words of Lord Justice Jacob, in the Court of Appeal's judgment of 18 October 2012:
"The Oberlandesgericht apparently also thought it had jurisdiction because the party before it was SEC whereas the party before the English court was SEC's UK subsidiary. With great respect that is quite unrealistic commercially - especially as I shall recount below, Apple at least took the view that SEC would be liable for the subsidiary's actions. They were all one "undertaking". I use the word of EU law for this sort of situation".
Two possible solutions emerge. The first argues that, in a similar situation, courts could deny jurisdiction, giving a broad interpretation of the concept of "same parties" and considering subsidiaries as part of the same undertaking, or reject the action, applying the principle of res iudicata. However, this solution appears to raise more problems (both procedural and substantial) than it solves. 

The second solution, which is endorsed by the Dutch court, focuses on the identity of the subject-matter and cause of action. It clarifies that, in principle, the previous decision will be followed, respecting the principles laid out by the CDR . At the same time, it allows the parties to bring new arguments to justify a re-examination of the matter, and to introduce their own interests (e.g. related to the sale of variants of the same product, destined to different markets [Merpel loves it when competition law crosses her path]) within the trial. This Kat thinks that this could be the best solution to the issue, as it represents a reasonable balance between the efficient enforcement of design rights and the protection of the interests of the parties involved (see also the Court of Appeal's reasoning in Grimme v Scott). Further, it appears coherent with the mechanisms designed by Articles 27 and 28 of Regulation 44/2001.

1 comment:

Gibus said...

Since Brussels I regulation (EC 44/2001) is referred to in this judgement, I jump on this to raise two issues which seem to not have been considered by any Kat interested by the Unitary Patent here.

First, it has been rightly recalled by some Kats here and by others elsewhere that the unitary patent regulation could only enter into forced once the Unified Patent Court (UPC) international agreement has been ratified by France, Germany and the United-Kingdom (raising sometimes some concerns with regard to the referendum about UK leaving EU as proposed recently by Cameron) and 10 other Member States. But what has not been pointed out is that, according to Article 89 UPC, the UPC cannot entered into force before Brussels I regulation has been amended with specific provisions with regard to UPC jurisdiction.

Too bad, a recast of Brussels I regulation has just been voted by the EU Parliament and the Council (EU 1215/2012, published on EUOJ of December 20th, 2012, L 351/1). But nothing about UPC was taken on board in this recast. Therefore the Commission has to made another proposal which has to go through the EU legislative procedure. That is: the UPC agreement, nor the unitary patent regulation cannot enter into force before another amendment of Brussels I is voted by the European Parliament and the Council. Who has said that first unitary patents should be granted in early 2014?

But the second point is that the Commission could be quite reluctant to propose such an amendment of Brussels I regulation. Because it would prove without any doubt that the UPC is affecting, and even is altering, the scope of common EU rules. According to Art. 3.2 TFEU, in such a case, the Union would have exclusive competence for the conclusion of an international agreement. This has been recently confirmed by the CJEU (Case C‑370/12 of November 27th, 2012, about the Treaty establishing the European stability mechanism (ESM) that it follows from Art. 3.2 TFEU that “Member States are prohibited from concluding an agreement between themselves which might affect common rules or alter their scope.” Therefore, Art. 3.2 TFEU shall apply to the UPC international agreement, and the EU shall have exclusive competence to conclude UPC. There is no way to consider that the unitary patent regulation could amount to an explicit authorisation from to EU to waive its exclusive competence. Therefore, Member States are not authorised to conclude the UPC between themselves.

Any thoughts on this?

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