Intellectual Property Enterprise Court

IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
INTELLECTUAL PROPERTY ENTERPRISE COURT

		Royal Courts of Justice, Rolls Building Fetter Lane, London, EC4A 1NL
		09/06/2014

Judge Hacon :

Background

1. The Defendant ("B&S") is a company domiciled in Germany. It is the registered proprietor of European Patent (GB) 1 095 541 ("the Patent") which relates to energy saving technology for use with fluorescent tubes. The application for the Patent was filed on 30 September 1999 by Inotec GmbH ("Inotec"). On 27 October 2001 Inotec assigned the application to the Claimant ("FND"), a company domiciled in the Cayman Islands. The Patent was granted by the European Patent Office on 17 July 2002.
2. On the face of a written declaration of assignment dated 23 March 2009 the Patent was assigned from FND to B&S. The declaration is signed by Alois Steiert who, at least until 21 February 2009, was a director of FND. The assignment was registered by the UK Intellectual Property Office ("IPO") so that B&S is recorded as the registered proprietor of the Patent.
3. FND claims that on 23 March 2009 Mr Steiert had no authority to assign the Patent and that the purported assignment is of no legal effect. On 17 September 2012 FND filed a reference in the IPO under section 37 of the Patents Act 1977 ("the Act") claiming entitlement to the Patent.
4. There was a hearing on 23 October 2013. In a Decision dated 23 December 2013 the Hearing Officer, Julyan Elbro, directed that the claim would be more properly dealt with by the court and therefore declined to deal with the reference, pursuant to section 37(8) of the Act.
5. On 7 January 2014 FND issued a claim form in this court ("the IPEC") claiming entitlement to the Patent. An acknowledgment of service dated 20 February 2014 was filed by B&S in which B&S indicated its intent to challenge the jurisdiction of the court. By an application notice dated 4 March 2014 B&S sought a declaration that the court has no jurisdiction to hear the dispute and an order setting aside the claim form. That application is now before me.

Grounds for the jurisdiction of the court

6. The jurisdiction of the court is governed by Council Regulation (EC) 44/2001 ("the Brussels I Regulation"). B&S's initial skeleton argument in support of this application challenged jurisdiction on straightforward grounds. Art.22(4) does not apply to a dispute about the ownership of registered intellectual property rights, see Case 288/82 Djuinstee v Goderbauer [1983] ECR 3663. Therefore art.2 of the Regulation applies. B&S is domiciled in Germany, accordingly the present dispute must be brought there.
7. FND's skeleton argument disputed none of this, save the final conclusion. It was argued that this court has jurisdiction on four alternative grounds. It is convenient to deal with them in the following order:

(1) The English courts are the forum conveniens;

(2) art.5(3) of the Brussels I Regulation applies;

(3) art.23(1)(b) applies;

(4) art.24 applies.

Forum conveniens

8. This ground was not pursued at the hearing, I think with good reason. The doctrine of forum non conveniens, and by extension an argument that England is the forum conveniens, is incompatible with the Brussels I Regulation and can have no application where the Regulation is engaged (see Case C-281/02 Owusu v Jackson [2005] ECR I-1383).

Article 5(3)

9. Art.5(3) states

"A person domiciled in a Member State may, in another Member State, be sued:

…

(3) in matters relating to tort, delict or quasi-delict, in the courts for the place where the harmful event occurred or may occur."

10. FND argued that the claim to ownership of the Patent related to a tort, namely the misrepresentation by Mr Steiert of his authority to assign the Patent on behalf of FND. That had happened in Germany but FND submitted that the place where the harmful event occurred, namely the registration of the Patent in B&S's name, was England. Case 21/76 Handelswerkerij GJ Bier BV v Mines de Potasse D'Alsace SA [1976] ECR 1735 was cited.
11. Originally this argument was put on the basis that the tort was fraud on the part of Mr Steiert. When it was pointed out that FND had abandoned any allegation of fraud in the proceedings before the IPO, to the extent of striking out parts of its Statement of Grounds, misrepresentation was relied on instead as the relevant tort.
12. I do not accept that art.5(3) applies, the tort relied on being misrepresentation (or fraud). It has long been established that the expression 'matters relating to a tort, delict or quasi-delict' comprehends all actions which seek to establish the liability of a defendant which are not related to a contract within the meaning of art.5(1), see Case 189/87 Kalfelis v Bankhaus Schröder Münchmeyer Hengst & Co [1988] ECR 5565. Since Kalfelis there has since been considerable discussion by the courts of what constitutes the 'liability' of a defendant (see, for example, Briggs and Rees, Civil Jurisdiction and Judgments 5th ed., at ¶2.173 to 2.174). The claim is to the entitlement of the Patent; it is not alleged, and so far as I am aware could not be alleged, that the Patent is owned by B&S through any misrepresentation on the part of B&S. Mr Steiert is not a defendant.

Article 23(1)(b)

13. Art.23(1) of the Brussels I Regulation is in the following terms:

"If the parties, one or more of who is domiciled in a Member State, have agreed that a court or the courts of a Member State are to have jurisdiction to settle any disputes which have arisen or may arise in connection with a particular legal relationship, that court or those courts shall have jurisdiction. Such jurisdiction shall be exclusive unless the parties have agreed otherwise. Such an agreement conferring jurisdiction shall be either:

(a) in writing or evidenced in writing; or

(b) in a form which accords with practices which the parties have established between themselves; … "

14. FND submitted that in the IPO proceedings B&S had entered into argument regarding the merits of FND's claim and that, while nominally reserving its right to challenge jurisdiction, it had in effect conducted itself in a manner indicating abandonment of that challenge. This constituted a practice which the parties had established between themselves within the meaning of art.23(1)(b) on which FND could now rely. Pursuant to that article the English courts have exclusive jurisdiction.
15. It is important to bear in mind that paragraph (1)(b) falls within an article (art.23) concerned with the choice of jurisdiction by agreement between the parties. Briggs and Rees give a helpful summary of the history and purpose of art.23(1)(b) (at ¶2.116):

"The wording which now appears as Article 23(1)(b) was introduced into the Brussels Convention on the accession of Spain and Portugal, to loosen the grip of the formality requirement of writing or evidence in writing [required by art.23(1)(a)]. It goes beyond the liberalisation of the requirement of writing, in that it allows for an agreement on jurisdiction to be validated even where there is an absence of writing recording the assent of the party to be bound, so long as there is evidence of a practice having been established between the parties. The reference to practices which the parties have established between themselves has in mind, no doubt, a situation in which the history of past dealings would suggest that it would be bad faith on the part of a party who sought to rely on the lack of writing to challenge the formal validity of the agreement, or to argue that there was no notice of the proposed agreement on jurisdiction."

Litigation, including that in the IPO, is not centred on any agreement between the litigating parties – rather the opposite. Of course it is possible that parties may agree about particular matters during the course of litigation, such as an agreement that for the purposes of the dispute an identified assertion will be taken to be unchallenged, but nothing of that sort happened between these parties in the IPO. I will hypothesise for this purpose that in the IPO B&S had expressly and unequivocally abandoned any challenge to the jurisdiction of English courts. That would have been a concession by B&S in the course of the proceedings, not an agreement between the parties by way of a course of conduct or, more exactly, an agreement in a form which accorded with practices which the parties had established between themselves.

16. I therefore reject the submission that this court has jurisdiction pursuant to art.23(1)(b).

Article 24

17. Article 24 of the Brussels I Regulation is as follows:

"Apart from jurisdiction derived from other provisions of this Regulation, a court of a Member State before which a defendant enters an appearance shall have jurisdiction. This rule shall not apply where appearance was entered to contest jurisdiction, or where another court has exclusive jurisdiction by virtue of Article 22."

18. It was common ground that if the proceedings before this court were considered in isolation, B&S did not enter an appearance. In the acknowledgment of service the box for challenging jurisdiction was crossed and within 14 days of filing the acknowledgment B&S made its application disputing the court's jurisdiction supported by evidence pursuant to CPR 11(4).
19. FND's skeleton argument based its case in relation to art.24 on the same facts as, and by way of alternative to, the argument in relation to art.23(1)(b). In short, B&S had entered into what FND characterised as protracted proceedings before the IPO, B&S had engaged in those proceedings without first seeking to challenge jurisdiction and thus committed itself to the jurisdiction of the English courts. There was said to be a 'seamless connection' between the IPO proceedings and those currently before this court, such that they can be deemed to be the same. It was now too late to challenge jurisdiction.
20. The primary response of counsel for B&S when opening the application before me was that the IPO was not 'a court of a Member State' within the meaning of art.24 and therefore no question of entering an appearance could arise. No authority has been found by either counsel which touches on what 'a court of a Member State' and 'the courts of a Member State' mean in the Brussels I Regulation. I suggested that a potential difficulty with this argument was that those articles which confer jurisdiction in the Brussels I Regulation, such as arts.2, 5 and 6, could never confer jurisdiction on the IPO because it is neither a court of a Member State (nor ipso facto a court of a place in a Member State). Counsel for B&S submitted that the IPO could have jurisdiction if it was conferred by English law (or presumably the law of any other part of the UK), but not if jurisdiction was conferred pursuant to the Brussels I Regulation.
21. I think this is a false distinction. It seems to me that it is wrong to treat the Brussels I Regulation as either applying or not applying to a question of jurisdiction as if it were alternatively turned on or off. The Regulation always applies but in some purely local circumstances, take for instance whether an intellectual property case should be heard by the general Chancery Division, the IPEC, the IPO or an Appointed Person, the Regulation has nothing to say and is therefore not engaged. In other local circumstances, such as whether English or Scottish courts have jurisdiction, or whether this or that county court has jurisdiction, it might be engaged (see arts.5 and 6).
22. On the present facts, when FND started proceedings there was necessarily a question as to whether such proceedings should be started in England, Germany or elsewhere, irrespective of whether the parties in fact gave the issue much attention. The Brussels I Regulation was undoubtedly engaged; identifying which courts had jurisdiction depended on the application of its provisions. If B&S's submission were right, the proceedings could and should never have been started in the IPO, leaving aside other possible reasons, because it is not a 'court'. The IPO is forever excluded from jurisdiction where the Brussels I Regulation is engaged. I note that this was not a point taken at the time, i.e. before the IPO, but in any event I do not accept it. If at the start of the IPO proceedings the Regulation awarded jurisdiction to the English courts (I make that hypothetical assumption solely for the purpose of this paragraph) then the proceedings were properly started in England. In my view identifying the tribunal or tribunals in England which were entitled to hear the case was then a matter concerning which the Regulation was indifferent. It was consequently determined solely according to English domestic law. In other words, 'the courts of the Member State' in arts.2, 5, 6 and 'a court of a Member State' in art.24 of the Regulation encompass any tribunal of the relevant Member State, or tribunal of a place within the Member State as the case may be, which may lawfully hear the proceedings.
23. B&S also made the following submissions on the assumption, contrary its primary case, that the IPO is 'a court of a Member State':

(1) It was impossible to enter an appearance in the IPO according to the rules of the IPO because those rules have no equivalent to CPR Part 11 for disputing the court's jurisdiction. If the jurisdiction could not be disputed, neither could a litigant submit to it as a matter of English law.

(2) It was not possible to enter an appearance in the IPO within the meaning of art.24 of the Brussels I Regulation.

(3) The IPO proceedings were in any event now terminated. The only relevant question was whether B&S had entered an appearance before the IPEC. It was common ground that it had not if the IPEC is considered in isolation. It was wrong in law to treat the IPEC proceedings as being a seamless continuation of the IPO proceedings, as FND alleged.

Whether a party can dispute the jurisdiction of the IPO

24. Art.24 does not specify the rules according to which a party enters an appearance before the court of a Member State. The relevant rules are those of the procedural law of the court in question, provided that they are consistent with the jurisdictional rules of the Brussels I Regulation (see Maple Leaf Macro Volatility Master Fund v Rouvroy [2009] EWHC 257 (Comm), at [189]).
25. CPR Part 11 does not apply in the IPO but it does not at all follow that a party is thereby precluded from challenging the IPO's jurisdiction. As counsel for FND rightly pointed out, under the Patents Rules 2007, which govern the conduct of proceedings in the IPO, rule 78 would allow a defendant to challenge jurisdiction in his counterstatement and indeed B&S did exactly that, albeit in an equivocal way. Rule 83 permits a party to apply to strike out his opponent's statement of case on grounds which include, under rule 83(2)(a), that the statement of case "discloses no reasonable grounds for bringing or defending the claim". A party is free to challenge the jurisdiction of the IPO under the Brussels I Regulation if it so chooses.

Whether a party can enter an appearance before the IPO

26. Since entering an appearance before a court of a Member State is governed by local law (see Maple Leaf above), it follows that a party can enter an appearance before the IPO within the meaning of art.24.

Whether a party who reserves his position on jurisdiction can enter an appearance

27. Before going on to B&S's third argument, there is an issue I should address first. B&S did not argue that its reservation made regarding jurisdiction before the IPO precluded the possibility that it had entered an appearance before the IPO. I will therefore not explore in exhaustive depth the law in relation to the degree to which a party is entitled to dispute the jurisdiction of the court and simultaneously take one or more steps in the proceedings inconsistent with his challenge to the jurisdiction, in particular a step relating to the decision on the merits. My own researches suggest that the law is not altogether clear. However, for reasons that will appear below I should say something about the view I have reached in this regard.
28. In Global?Multimedia ?International ?Limited v ARA Media Services [2006] EWHC 3612 (Ch) the Chancellor said this:

"[27] The test to be applied in determining whether any particular conduct amounts to a submission to the jurisdiction was considered by Colman J. in Spargos Mining NL v Atlantic Capital Corporation [1995] reported only in "The Times" for 11th December, but quoted in full by Patten J. in SMAY Investments Ltd. v Sachdev [2003] 1WLR 1973 at p.1976. I reproduce the whole of the quote as set out in that paragraph 41 from the Judgment of Patten J:

"In approaching the question of submission, I have in mind the following authorities. In Astro Exito Navagacion S.A. v. W.T. Hsu, otherwise known, more pronounceably, as The 'Messiniaki Tolmi', [1984] 1 Lloyds Reports, 266 , Lord Justice Goff (as he then was) at page 270, said this:

'Now a person voluntarily submits to the jurisdiction of the Court if he voluntarily recognizes, or has voluntarily recognized, that the Court has jurisdiction to hear and determine the claim which is the subject matter of the relevant proceedings. In particular, he makes a voluntary submission to the jurisdiction if he takes a step in the proceedings which in all the circumstances amounts to a recognition of the Court's jurisdiction in respect of the claim which is the subject matter of those proceedings. The effect of a party's submission to the jurisdiction is that he is precluded thereafter from objecting to the Court exercising its jurisdiction in respect of such claim. Whether any particular matter, for example an application to the Court, amounts to a voluntary submission to the jurisdiction must depend upon the circumstances of the particular case.'

In Sage v. Double A Hydraulics Ltd, [1992] Times Law Reports, 165 , Lord Justice Farquharson said (and this is a report of the judgment which is not reported in oratio recta):

'A useful test was whether a disinterested bystander with knowledge of the case would have regarded the acts of the Defendant, or his solicitors, as inconsistent with the making and maintaining of his challenge.'

In arriving at the view to be imputed to the disinterested bystander, it seems to me that one has to bear in mind that there will be an effective waiver, or a submission to the jurisdiction, only where the step relied upon as a waiver, or a submission to the jurisdiction, cannot be explained, except on the assumption that the party in question accepts that the court should be given jurisdiction. If the step relied upon, although consistent with the acceptance of jurisdiction, is a step which can be explained also because it was necessary or useful for some purpose other than acceptance of the jurisdiction, there will, on the authorities, be no submission.

If the well-informed bystander had been left in doubt because what the defendants had done was equivocal, in the sense that it was explicable on other grounds in addition to agreement to accept the jurisdiction of the court, then the conclusion must be, on the authorities, that there would have been no submission to the jurisdiction. The representation derived from the conduct of the party said to have submitted must be capable of only one meaning."

[28] Thus the test to be applied is an objective one and what must be determined is whether the only possible explanation for the conduct relied on is an intention on the part of the defendant to have the case tried in England."

29. It is accordingly clear that as a matter of English law a defendant will have waived an objection to jurisdiction by reason of his conduct if that conduct, assessed objectively, is capable of being interpreted only as an intention on his part to have the case tried in England. Where his conduct includes at least some sort of reservation with regard to his right to challenge to the jurisdiction, it seems to me that this must be considered as part of the overall picture in making the objective assessment. Both the force and clarity of the reservation and the nature of the other conduct will be relevant. I also take the view, however, that a defendant cannot treat an expressed reservation of his right to challenge jurisdiction as a 'get out of jail free card', invariably overriding any other conduct so that he can never be said to have submitted to the jurisdiction.
30. This objective assessment of the defendant's conduct is equally relevant to whether he has entered an appearance within the meaning of art.28 of the Brussels I Reguation. Teare J said in Antonio Gramisci Shipping Corp. v Recoletos Ltd [2012] EWHC 1887 (Comm); [2012] I.L.Pr 36 :

"[65] It is common ground that in determining whether there has been an appearance pursuant to art.24 of the Brussels Regulation it is appropriate to consider whether there has been a submission to the jurisdiction in accordance with the local law, in this case, English law."

Teare J went on to refer to the judgment of the Chancellor in Global Multimedia. (The ruling of the Court of Appeal on appeal from Teare J's order was not concerned with art.24, in relation to which permission to appeal was refused).

31. Was B&S's overall conduct before the IPO, objectively assessed, conduct for which the only possible explanation was an intention (I would add: including an intention later abandoned) to have the dispute with FND tried in England?
32. FND filed its statement of grounds dated 10 September 2012. In response B&S filed a counterstatement dated 4 January 2013 which took the form of fully pleaded defence to FND's allegations. Quite aside from various general assertions on the merits of the case, B&S addressed and responded to the allegations in the statement of grounds paragraph by paragraph in the usual way of a defence. The counterstatement also included this at paragraph 6:

"Further, the companies referred to and some of the relevant documents are the subject of several different applicable laws and the courts of other jurisdictions may be the correct forum to decide some or all of the issues raised in this application. B & S reserves all its rights in respect thereof in particular until legal advice has been sought as to such several applicable laws and jurisdiction."

33. So a reservation with regard to jurisdiction was there but it was both equivocal and conditional. The main thrust of the counterstatement was an engagement in detail with FND on the merits of the case.
34. There was a response to counterstatement dated 21 March 2013 from FND. In a written preliminary evaluation dated 9 July 2013 the Hearing Officer indicated that he wished to be addressed on the question whether the Comptroller should decline to deal with the reference in favour of determination by the court. B&S's response was that he should indeed decline to deal with the case; FND said that the Comptroller should decide the matter. A hearing for 23 October 2013 was arranged to resolve that point. B&S did not attend the hearing, but made written submissions. Once again, these do not seem to me to be consistent with a challenge to the jurisdiction. They are recorded by the Hearing Officer as follows:

"[8] In its written submissions, the defendant argues that this case is not about any aspect of patent law, but will involve detailed consideration of a number of non-patent law points, notably the effect of the share mortgage and the validity of the assignment, and also potentially questions of fraud. It also argues that this may involve issues of foreign law, as the claimant is incorporated in the Cayman Islands and the share mortgage is expressed to be governed by the laws of Hong Kong. It further argues that cross-examination of Mr Steiert and others is likely to be necessary."

35. Thus B&S's primary position was not that the Comptroller should decline to hear the case because he had no jurisdiction; it was that he should decline because the case was of a nature that it would be better heard by the Patents Court or the IPEC. B&S did, however, also apparently raise the jurisdiction point again. The Hearing Officer recorded this:

"[9] The defendant also states that it reserves its rights to assert that the tribunals and/or courts of England and Wales lack jurisdiction, and/or are not the appropriate forum for determining this matter."

36. Taking all this into consideration I take the view that the overall conduct of B&S before the IPO could only be interpreted as a willingness for the dispute with FND to be heard in England, initially by the IPO and subsequently, by the time of the hearing in the IPO, that it should be heard by the Patents Court or the IPEC. B&S therefore entered an appearance before the IPO. For the reasons I have given above, I think that the IPO is a 'court' of the UK for the purposes of art.24, so B&S entered an appearance before a court of the UK within the meaning of that article.

Whether entering an appearance before the IPO gives the IPEC jurisdiction

37. That still leaves open the question whether B&S was entitled to challenge jurisdiction afresh when the proceedings in the IPEC were launched.
38. FND submitted that the present proceedings in the IPEC are a 'seamless continuation' of those before the IPO. I don't think that is quite right. Pursuant to s.37(8) of the Act the Hearing Officer on behalf of the Comptroller declined to deal with the dispute and those proceedings came to an end. FND was obliged to and did start fresh proceeding in the IPEC by its claim form dated 7 January 2014. However that consequence of English procedural law does not seem to me to make a difference.
39. Use of the singular in art.24: 'a court' of a Member State, cannot imply that entering an appearance before a court gives only that particular court jurisdiction. As counsel for B&S accepted, a court hearing a case on appeal must also have jurisdiction even though it is different from the court to which art.24 first applied.
40. The important distinction, B&S submitted, was that bringing the proceedings in the IPEC required a fresh originating process: a claim form. In effect, counsel for B&S argued that entering an appearance before a court of Member State gives jurisdiction to that court and any other court to which the proceedings progress, provided that no fresh originating process is required. If it is required, the slate is wiped clean and the defendant may raise anew a challenge to jurisdiction.
41. No authority was provided in support of this proposition, whether direct or tangential. No policy reason was advanced to suggest why it would be in the European public interest. It seems to me that there are two related reasons why it would not. The first is that the effect of such a rule would vary from one Member State to another, depending on the vagaries of national procedural law. The second is that because of such variation art.24 would lack predictability in its effect, leaving litigants uncertain where they stand. The better view, in my judgment, is that once a party has entered an appearance before a court of a Member State, that court, together with any other court of the Member State which may hear any stage of the proceedings according to local law, has jurisdiction under art.24.
42. Since B&S has entered an appearance before the IPO, it follows that this court also has jurisdiction over the proceedings pursuant to art.24.

Abandonment of Article 24 by FND

43. Towards the end of his submissions in response to those of B&S, counsel for FND stated that he no longer advanced any argument for jurisdiction pursuant to art.24. I asked why. He said that FND was precluded from relying on art.24 because of the express exception in that article to its applicability where another court has exclusive jurisdiction by virtue of art.22. I pointed out that art.22 does not apply to questions of ownership of a patent, reminding him of Djuinstee (cited above), which I had thought to be common ground. Counsel for FND nonetheless repeated that reliance was no longer placed on art.24. He submitted that the IPO was not a court of a Member State within the meaning of art.24 since proceedings in the IPO were to be treated as arbitrations and fell outside the ambit of the Brussels I Regulation (art.1(1)).
44. This left me a little nonplussed. In the normal course it is for parties to decide which points they wish to pursue and generally speaking it is not for the court to interfere with that. Moreover this is not a case, such as arises under art.25 and art.27 of the Brussels I Regulation, where the court must of its own motion decide on its jurisdiction.
45. Nonetheless, this is still a question about this court's jurisdiction. I have been given reason to consider the effect of art.24 in the present case. In doing so I have considered the effect in law of B&S's stated reservations regarding the jurisdiction of the IPO. I do not accept either of the points made at the hearing by counsel for FND regarding the non-applicability of art.24: in my view art.22 is not engaged and I reject the submission that proceedings before the IPO are to be treated as arbitration proceedings within the meaning of art.1(1) of the Brussels I Regulation. I have reached the conclusion, for the reasons I have given, that B&S entered an appearance before a court of the UK within the meaning of art.24 – the IPO – and that as a consequence the IPEC has jurisdiction.
46. Under the terms of art.24, where it applies the court "shall have jurisdiction." These words echo the words of art.2: subject to the Regulation persons domiciled in a Member State "shall … be sued in the courts of that Member State". It is established law that a court which has jurisdiction under art.2 cannot decline the jurisdiction, see Owusu v Jackson (cited above). I bear in mind that art.2 constitutes a basic rule of the Brussels I Regulation whereas art.24, as an exception, falls to be construed more narrowly (see for example Kalfelis in the context of exceptions provided for in art.5). But having construed art.24 I have concluded that this court has jurisdiction. And although FND has abandoned art.24 it still submits that this court has jurisdiction. It seems to me that consequently this court must accept jurisdiction.

Conclusion

47. The application by B&S is dismissed.