Sandisk Corporation v Koninklijke Philips Electronics NV & Ors

Article 5(3) of the Brussels Regulation confers exceptional jurisdiction only where the harmful event occurred, or the immediate victim suffered direct damage, in the forum. Economic loss felt by a claimant’s United Kingdom distribution network is insufficient where the loss is suffered by the claimant elsewhere. The jurisdiction must be established on a good arguable case.

Article 31 requires a real connecting link between the subject matter of the provisional measure and the forum. Courts in the Member State where assets, goods or enforcement activity are located are ordinarily best placed to grant protective relief. Patent enforcement is abusive only in wholly exceptional circumstances, including where proceedings cannot reasonably be regarded as an attempt to assert rights and form part of a plan to eliminate competition.

SanDisk brought proceedings alleging that the defendants had infringed the Chapter I and Chapter II prohibitions of the Competition Act 1998 and Articles 81 and 82 of the EC Treaty. It alleged abusive collective licensing, tying, excessive royalties, misuse of the patent system, and sham or harassing enforcement proceedings concerning MP3 patents.

The defendants applied for declarations that the English court lacked jurisdiction. SanDisk also sought interim relief requiring notice before further patent-related enforcement action in the European Economic Area. The principal questions were whether jurisdiction arose under Articles 5(3) or 31 of the Brussels Regulation, and whether the pleaded conduct disclosed an arguable abuse.

1. The applications challenging jurisdiction were successful. The pleaded case did not establish that the first steps of the alleged abuses occurred in England and Wales, or that SanDisk suffered immediate damage there. The claim therefore did not satisfy Article 5(3) of the Brussels Regulation.

2. Article 5(3) is an exception to the defendant’s domicile jurisdiction and must be interpreted restrictively. The place of damage is the place where physical damage or recoverable economic loss is actually suffered, and not every place where consequential effects are felt. The court also required a good arguable case, applying Canada Trust v Stolzenberg (No 2) [1998] 1 WLR 547.

3. The licensing complaints could not support jurisdiction. The offer identified only patents asserted to be essential, proposed standard reasonable royalties and limited the licence to the patent term. The tying, excessive royalty and duration allegations were therefore unarguable on the material before the court.

4. Enforcement measures in Germany, Italy and the Netherlands caused any immediate loss in those jurisdictions. The country-by-country enforcement of European patent rights was not, without more, oppressive, particularly in light of GAT v LUK Case C-4/03; [2006] FSR 45 and Roche v Primus Case C-539/03; [2007] FSR 5.

5. Following ITT Promedia NV v Commission Case T-111/96; [1998] ECR II-2937, access to the courts is a fundamental right and litigation by a dominant undertaking is abusive only under two cumulative, strictly construed criteria. The enforcement action could be regarded as harassment only if the patent was obviously not infringed or invalid and the patentee knew or believed that to be so. The pleaded case did not meet that high threshold.

6. Article 31 also could not support the proposed notice order. Applying Denilauler Case 125/79; [1980] ECR 1553 and Van Uden Case C-391/95; [1998] ECR I-7091, there was no real connecting link between the requested measures and England and Wales. The interim relief was refused in any event because the claim was unarguable in the relevant respect and had been brought after extraordinary delay.