Ablynx NV & Anor v VHsquared Ltd & Ors

Under EU Regulation 1215/2012, article 31(2) is a procedural rule. Where there is a prima facie case for an exclusive choice-of-court agreement in favour of a court of another Member State, the court first seised must stay proceedings while the designated court determines the agreement’s validity and scope.

Article 24(4) confers substantive exclusive jurisdiction over patent validity, but must be construed narrowly. An allegation of invalidity does not necessarily bring a multi-issue infringement action, including independent licensing and experimental-use issues, within that exclusive jurisdiction. The court first seised need only assess, on a prima facie basis, whether article 25(4) invalidates the choice-of-court agreement.

Ablynx, an exclusive sub-licensee for medical uses of European patents with United Kingdom designations, alleged that VHsquared had infringed the patents. VHsquared relied on a sub-licence in the Reserved Sector and on an exclusive jurisdiction clause in the underlying Unilever Licence in favour of the Brussels courts.

VHsquared commenced proceedings in Belgium concerning Ablynx’s standing and whether its activities fell within the Unilever Licence. It then challenged the English court’s jurisdiction. The Patents Court held that the English court had exclusive jurisdiction because a proposed invalidity defence engaged article 24(4) of EU Regulation 1215/2012, thereby depriving the Belgian choice-of-court clause of legal force: [2019] EWHC 792 (Pat).

The issue on appeal was whether the English court had to stay the action under article 31(2), leaving the Belgian court to decide the effectiveness and scope of the jurisdiction agreement.

1. Appeal allowed. The English action was stayed until the Belgian court had ruled on its jurisdiction and, if it accepted jurisdiction, on the scope of the Unilever Licence.

2. Article 31(2) of EU Regulation 1215/2012 is procedural. It determines which court should decide jurisdiction where parallel proceedings exist. Although article 24 has priority in determining substantive jurisdiction, article 31(2) permits the court designated by an exclusive choice-of-court agreement to decide whether another Member State’s court has exclusive jurisdiction and whether article 25(4) removes legal force from the agreement.

3. The English court therefore had to decide only whether VHsquared had established a prima facie case that Ablynx was bound by the jurisdiction agreement, that the dispute fell within it, and that article 25(4) did not obviously invalidate it. Conflicting Belgian-law evidence on whether a non-party sub-licensee was bound, and on the clause’s scope, could not finally be resolved by the English court at that stage.

4. Article 24(4) had to be construed narrowly. Following [2019] UKSC 40, the earlier broad overall evaluation of the proceedings and the refusal to sever issues were wrong. The proposed invalidity defence concerned only patent validity. The licence, experimental-use, limitation and factual defences did not engage article 24(4) and were not inextricably linked with validity. It was therefore arguable that article 25(4) did not invalidate the choice-of-court agreement for disputes falling within its scope.

5. Since the scope of the licence was integral to the action, article 31(2) required a stay of the whole English action. The Belgian court was to determine definitively whether, and to what extent, the jurisdiction agreement operated.

• Court of Appeal (Civil Division): Allowed VHsquared’s appeal and stayed the English action under article 31(2) of EU Regulation 1215/2012: [2019] EWCA Civ 2192.
• Patents Court, High Court: Held that article 24(4) gave the English court exclusive jurisdiction and refused a stay: [2019] EWHC 792 (Pat).