Ablynx NV & Anor v VHsquared Ltd & Ors

The Court of Appeal allowed the appellants' appeal against the Patents Court's refusal to stay English proceedings and ordered a stay pending a determination by the Belgian court of the effect of an exclusive choice-of-court clause. The decision turned on the interpretation and interaction of the Recast Brussels Regulation (EU Regulation 1215/2012) provisions governing exclusive jurisdiction (in particular Article 24(4)), party autonomy and the procedural rule giving priority to the court designated in an exclusive jurisdiction agreement (Article 31(2)).

The court held that where a parallel action has been brought in the court designated by an exclusive jurisdiction clause the court first seised must, on a prima facie basis, stay proceedings under Article 31(2) and leave it to the designated court to decide whether the clause is effective or is overridden by the exclusive jurisdiction rules of Article 24 (as expressed in Article 25(4)). The English court should consider only whether there is a prima facie case that the clause applies and that Article 25(4) does not obviously invalidate it; it should not undertake a full substantive determination of Article 24(4) in preference to the chosen court.

The court identified and applied relevant authorities (including GAT, BVG, Solvay and Koza) and concluded that the Patents Court had erred by conducting an overarching evaluative assessment of the dispute and by deciding the Article 24(4)/Article 25(4) issue itself rather than staying the claim pending the Belgian court's determination.

Background and parties:

• Ablynx NV (and VIB) were exclusive licensees under European patents with UK designations for certain medical uses of camelid antibodies; VHsquared Ltd held a sublicense limited to a defined "Reserved Sector" granted under an earlier Unilever licence which contained an exclusive jurisdiction clause in favour of the Brussels courts.
• Ablynx sued in England for alleged infringement of the UK-designated patents and for wrongful advantage. VHsquared contended that its activities fell within its licence and that the Belgian courts (designated in the licence) had exclusive jurisdiction to determine questions about the licence's scope; VHsquared also brought proceedings in Belgium concerning scope/standing.

Procedural posture:

• First instance: His Honour Judge Hacon in the Patents Court ([2019] EWHC 792 (Pat)) held that Article 24(4) of the Recast Regulation conferred exclusive jurisdiction on the English courts because the English proceedings were, in substance, concerned with the validity of the UK-designated patents and accordingly refused to stay the English action.
• On appeal the Court of Appeal granted permission and determined whether the Patents Court should have stayed the English proceedings following Article 31(2) given the Belgian choice-of-court clause in the Unilever Licence.

Nature of relief sought:

• Ablynx sought remedies for patent infringement in the UK (and alleged a wrongful advantage). VHsquared sought a declaration in Belgium that its activities fell within the Unilever licence and challenged the English court's jurisdiction by way of stay application.

Issues framed by the Court of Appeal:

(i) Whether Article 24(4) of the Recast Regulation (exclusive jurisdiction for registration/validity of patents) was engaged; (ii) whether Article 31(2) required the English court to stay proceedings in favour of a designated court first seised; (iii) whether the Patents Court should decide, on the merits, whether Article 25(4) invalidated the choice-of-court clause or whether that was for the Belgian court to decide on a prima facie basis; and (iv) related questions about the scope of the Unilever Licence and whether Ablynx was bound by it under Belgian law.

Court's reasoning:

• The Court of Appeal emphasised the procedural operation of Article 31(2): where the court designated in an exclusive jurisdiction clause is seised the court first seised should stay under Article 31(2) and the designated court has priority to decide the agreement's validity and scope; the first seised court need only determine whether there is a prima facie case that the clause applies and that Article 25(4) does not obviously render it ineffective.
• The court held that the Patents Court had erred by carrying out a broad 'overall evaluation' of the dispute and by attempting to decide whether Article 24(4) displaced the choice-of-court clause; instead, the question whether Article 25(4) invalidated the clause was a matter appropriately decided by the designated Belgian court on the prima facie showing established by VHsquared.
• The Court considered authorities including GAT, BVG, Solvay and the Supreme Court's decision in Koza, and concluded that Article 24(4) must be narrowly interpreted and that the English court should not pull all issues into its exclusive jurisdiction where multiple issues (contractual scope, experimental exception, limitation) are raised that do not necessarily turn on patent validity.

Conclusion:

The Court allowed the appeal and ordered a stay of the English proceedings until the Belgian court has ruled on (a) whether it has jurisdiction under the exclusive clause and (b) if so, the scope and effect of that clause in relation to the present disputes.

Appeal allowed. The Court of Appeal held that the Patents Court had erred by deciding, on the merits, that Article 24(4) displaced the licence's exclusive jurisdiction clause; under the Recast Regulation (in particular Article 31(2)) the court first seised should have stayed the proceedings on a prima facie basis and left it to the designated Belgian court to determine whether the exclusive clause was effective or was overridden by Article 24(4). The English proceedings were therefore stayed pending the Belgian court's decision on jurisdiction and scope of the choice-of-court clause.

Appeal from the High Court of Justice, Business and Property Courts, Intellectual Property List (Patents Court) (His Honour Judge Hacon) where the judge refused to stay English proceedings ([2019] EWHC 792 (Pat)). The appeal was heard in the Court of Appeal and allowed ([2019] EWCA Civ 2192).