Copyright 2008 by The American Law Institute. Reproduced with permission. All rights reserved.
INTELLECTUAL PROPERTY:
PRINCIPLES GOVERNING JURISDICTION, CHOICE OF LAW,
AND JUDGMENTS IN
TRANSNATIONAL DISPUTES
(with Comments and Reporters’ Notes)
Part II
JURISDICTION
Chapter 2
Jurisdiction over the Subject Matter
§ 211. Subject-Matter Jurisdiction over Claims
(1) Except as provided in subsection (2), a court is competent to adjudicate claims
arising under foreign laws pertaining to the subject matter of these Principles. However,
with respect to each asserted claim, the court must have subject-matter jurisdiction
under its local law and personal jurisdiction under §§ 201-207.
(2) A judgment holding registered rights granted under the laws of another State
invalid is effective only to resolve the dispute between or among the parties to the action.
Comment:
a. Subject-matter jurisdiction generally. Each State controls the reach of its courts’
authority over the subject matter of disputes. For example, the Principles cannot alter a rule
that limits a court’s power to entertain foreign intellectual property claims. However, the
efficiency goals underlying the Principles are best effectuated when the rules on adjudicatory
authority are broad enough to encompass foreign claims. In cases where such authority is
unavailable, however, the Principles provide a mechanism for cooperative adjudication. See
§§ 221-223.
b. Subject-matter jurisdiction over registered rights. There is substantial sentiment that
issues regarding the validity of a registered right, particularly a patent right, should be
adjudicated in the courts of the State in which the right is registered. Only this State is
competent to cancel the registration. Furthermore, there are regional agreements that confine
adjudicatory authority to the State of registration. Some States further channel validity
disputes into special fora. These States are willing to accept bifurcated adjudication because
the issue of infringement will be determined more quickly, and this could promote settlement.
Nonetheless, the Principles do not include a blanket prohibition on the adjudication of matters
involving a foreign State’s registered rights, because separating adjudication of validity from
infringement can have substantive ramifications. Separate resolutions can prevent a court
from hearing all of the evidence relevant to the action and from using its understanding of
how a technology is utilized to inform its decision on the scope of the right. Bifurcating
validity and infringement can also increase the parties’ costs. In cases where rights under the
laws of multiple States are in issue, the Principles therefore permit adjudication but confine its
effect to the parties to that litigation. This limit on jurisdiction is enforced by § 413(2).
REPORTERS’ NOTES
1. Adjudication inter se. Limiting judgments of invalidity of a foreign patent to inter se
effect is arguably inconsistent with the concerns for judicial economy that underlie both the
Principles and doctrines of claim and issue preclusion. Whether the claim concerns a local or
a foreign patent, the patentee will have had its day in court. Thus, § 211(2) is in a sense a
derogation from general concepts of preclusion law. By contrast, the Principles do not depart
from the general rule of preclusion law that decisions holding a patent valid cannot bind third
parties. Accordingly, when a patent’s validity is upheld, an exclusion equivalent to that of §
211(2) is not required.
The Principles’ approach to the registered-rights problem was suggested by Curtis
Bradley, writing at the behest of the United States State Department negotiators of the Hague
Judgments Draft. See Special Commission on International Jurisdiction and the Effect of
Foreign Judgments in Civil and Commercial Matters, Hague Conference on Private
International Law, Work Doc. No. 97E, 39, 122 (Nov. 10-20, 1998). He distinguished
between rights among individuals and rights against the world. Under his proposal to the
Hague drafters, parties would be allowed to litigate their entire case in any court that has
jurisdiction under the general terms of these Principles. However, if the case were litigated
outside the State where the right was deposited or registered, the “status or validity of the
deposit or registration of . . . rights [would have] effect as between the parties only.” Id. This
approach is also being pursued by the Max Planck Institute project. It may not result in as
much duplicative litigation as might appear at first blush, for once the court of one
commercially significant jurisdiction declares a patent invalid, the patentee cannot easily
enforce the right, or counterpart rights, against any other party.
There are, however, several counterarguments. If it is true that the patentee is hampered
in its ability to enforce a right declared invalid in a proceeding with limited effect, then
licensees who continue to license the patent compete at a disadvantage with respect to the
judgment winner. The result is that the patent does not serve its intended purpose of
stimulating innovation by rewarding innovators. In addition, the popularity of the EPC and
the PCT means that many national patents stem from a single application. In particular, the
possibilities the PCT creates for work-sharing among patent offices generate incentives for
nations to further harmonize their requirements for patent protection. As this system evolves,
the scope of validity determinations should be revisited.
German courts had frequently determined validity or invalidity of foreign patents with
effect inter se where invalidity is raised as a defense in infringement actions. However, the
European Court of Justice has recently ruled this practice to be inconsistent with art. 16 of the
Brussels Regulation even when the patents arise from a single EPC application. It held that
limiting the effect of the decision to the parties would “lead to distortions, thereby
undermining the equality and uniformity of rights and obligations arising from the
Convention for the Contracting States and the persons concerned.” Case C-4/03, Gesellschaft
für Antriebstechnik mbH & Co KG v Lamellen und Kupplungsbau Beteiligungs KG, [2006]
F.S.R. 45, 30. The court was skeptical of the efficiencies that could be achieved though inter
se determinations of the validity of foreign patents. The Principles nonetheless assume that
consolidation of multiple national patent claims will become increasingly important in a
globalized marketplace. European scholars agree, see European Max-Planck Group for
Conflict of Laws in Intellectual Property, Exclusive Jurisdiction and Cross-Border IP (Patent)
Infringement: Suggestions for Amendment of the Brussels I Regulation, [2007] EIPR 194
(“Country-by-country litigation is not the answer, as it can lead to contradictory decisions and
its costs can be prohibitive.”). A mechanism for public notification of inter se invalidity
determinations would be a useful complement to the Principles as it would contribute to
maintaining the public domain.
2. Allocation of judicial authority over foreign versus domestic intellectual property
disputes. In some States, domestic intellectual property cases are channeled to a specific
forum. In situations where a domestic claim is pleaded in addition to foreign claims, the entire
dispute should be heard in that court. However, in the event that only foreign claims are at
issue, the specific forum may lack subject-matter jurisdiction. In that event, one of the
forum’s courts of general jurisdiction may entertain the case. This scenario may transpire
when alleged infringements are occurring in several States other than that of the defendant’s
residence. The plaintiff should be permitted to choose between a single forum competent to
hear all claims, yet inexpert in intellectual property, and a multiplicity of more expert fora
competent to hear only national claims. Cf. London Film Prods. Ltd. v. Intercontinental
Commc’ns Inc., 580 F. Supp. 47 (S.D.N.Y. 1984) (suit brought in forum of defendant’s
residence, alleging infringement of copyright in several Latin American countries. Dismissal
on ground of forum non conveniens inappropriate).
§ 212. Subject-Matter Jurisdiction over Counterclaims, Supplemental Claims, and
Defenses
(1) A court may determine all claims and defenses among the parties arising out of the
transaction, occurrence, or series of transactions or occurrences on which the original
claim is based, regardless of the territorial source of the rights at issue or of the party
that asserts them. However, with respect to each asserted claim, the court must have
subject-matter jurisdiction under its local law and personal jurisdiction under
§§ 201-207.
(2) A court may decline to exercise jurisdiction over a claim unrelated to intellectual
property rights when the claim substantially predominates over the claims properly
within the scope of these Principles.
(3) A court shall not decline to exercise jurisdiction over any claims for the sole reason
that the claims are based on foreign law.
(4) A court has authority to consider defenses related to the invalidity of registered
rights. In a dispute in which a court in one State has determined that a right registered
in another State is invalid, the judgment is effective only to resolve the dispute between
or among the parties to that action.
(5) A court may permit intervention by a person having an interest substantially
connected to the subject matter of the proceeding if the court finds that the intervention
will not cause undue confusion or delay, or otherwise unfairly prejudice a party.
Comment:
a. Power to entertain transactionally related claims. This Section suggests that where a
court has subject-matter jurisdiction and personal jurisdiction pursuant to §§ 201-207, it
should exercise the authority to permit litigants to assert all their claims arising out of the
same transaction or occurrence or series of transactions or occurrences.
b. Distinction between subject-matter and personal jurisdiction. Subject-matter authority
must be distinguished from personal jurisdiction. The rules on when a defendant is subject to
suit are set out in §§ 201-207. For example, a court may lack personal jurisdiction to entertain
supplemental claims in cases in which the court’s power arises from specific jurisdiction, e.g.,
under § 204(2). In such cases, however, once the defendant is successfully joined in the suit, it
may for efficiency reasons decide to waive the objection to personal jurisdiction, § 203.
c. Other bases of personal jurisdiction. These rules are intended to govern adjudication
and enforcement under these Principles. Local law may permit the assertion of jurisdiction in
situations that are not addressed by §§ 201-207, or that are prohibited under § 207; further, it
may be more liberal in permitting the assertion of transactionally related claims that would
not be cognizable under the Principles. However, because the Principles envision wide-
ranging coordination of multinational cases, limits are placed on the jurisdictional reach of
participating courts. When personal jurisdiction is asserted over a claim only because it is
permitted to do so under local law, the resulting judgment may be enforceable locally, but it
may not be entitled to enforcement under §§ 401-403 of these Principles.
d. Same transaction, occurrence, or series of transactions or occurrences. This Section
adopts a transactional approach to determining the appropriate scope of litigation. Because the
transactional approach represents the modern view in most jurisdictions, the Principles reject
tests based on the claims in the case, the theories of recovery, the evidence necessary, and the
like. The transactional approach should be understood in light of the efficiency and fairness
goals of the Principles. A narrow scope of authority would require parties pursuing claims or
enforcing judgments to proceed in several fora simultaneously, thereby undermining both
objectives. Thus, the standard is to be administered pragmatically, based on the relationship of
the operative facts and the relatedness of the issues in the dispute in time, space, origin, and
motivation. The ultimate question concerns the convenience of trial and the expectations of
the parties in light of evolving practices in transnational litigation.
e. Foreign-law claims. Parties should be permitted to assert claims based on foreign
laws when they are closely related to the dispute the court is entertaining. The mere presence
of a foreign-law claim should not determine whether the court has subject-matter authority in
the first instance. Cf. § 103(2). However, it may be appropriate to decline to hear a foreign-
law claim because the claim is novel or better handled by a specialized tribunal; the law is
unclear or violates local public policy; or the evidence is all located outside the forum. In
addition, the presence of foreign-law claims may affect whether the court entertains the case
or stays its action pending adjudication elsewhere, or whether a global dispute is resolved
cooperatively or through consolidation. See § 222.
Illustration:
1. X holds a Xandian and a Patrian patent on an invention of an electronic instrument.
Alleging infringement of the Xandian patent, X brings an action in Xandia against Y, who is
selling similar instruments in both States. X seeks to file a supplemental claim for
infringement of the Patrian patent. Y moves for dismissal under the doctrine of forum non
conveniens.
If the Xandian and Patrian patents are directed to the same technology, the court should
consider whether efficiencies can be obtained from trying the claims together. For example,
the claims may be identical (as they might be were both States party to an agreement such as
the EPC). Or, even where the claims differ, the most difficult task for the court may be
mastering the technology underlying the patents. If so, it might be wasteful to require yet
another court to learn the technology. In such a situation, the Principles would regard a forum
non conveniens dismissal as inappropriate.
f. Power to decline to exercise subject-matter jurisdiction. Section 212(2) allows courts
to decline to exercise authority over certain claims. Courts may dismiss claims unrelated to
intellectual property law when they predominate over intellectual property claims. In addition,
novel claims, claims involving law that is unclear or that is best channeled to a specialized
tribunal, may be declined.
g. Rejection of the imposition of a compulsory joinder rule. Although the general
approach of these Principles strongly favors the assertion of transactionally related claims in a
single action, they do not go further and require the joinder of related claims, nor do they
impose stringent rules on preclusion (res judicata) that would regard omitted transactionally
related claims as precluded. Although U.S. federal law provides for this, such is not the rule in
most countries; to impose it here would lead clients who are advised by attorneys unfamiliar
with the U.S. system to inadvertently lose their rights. The Principles do not, however, bar
those jurisdictions that have compulsory joinder rules from applying them. Thus, in
jurisdictions that have adopted the Principles, and that do not impose compulsory joinder,
plaintiffs may—but are not required to—present all claims arising out of the transaction,
including those that sound in foreign law. Similarly, unless forum law provides otherwise,
defendants may—but need not—present counterclaims arising under foreign laws. As a result,
parties who wish to resolve all their claims in a single court may do so, but they cannot use
preclusion law to curtail other parties’ abilities to preserve their claims. See also § 223(6)
(limiting the preclusive effect of decisions on coordination and judgments in coordinated
actions).
Illustration:
2. KCo. sues Thumbnail Inc. in Patria, where Thumbnail is resident. KCo. claims that
Thumbnail’s visual search engine, which displayed search results as thumbnail pictures,
violates KCo.’s worldwide copyrights in the pictures. Because Thumbnail is subject to
personal jurisdiction in Patria for any claim (§ 201), KCo. can, in addition to its claims under
Patrian law, add copyright claims based on the laws of all of the countries in which
Thumbnail Inc.’s search results are available. Alternatively, Thumbnail could ask for
declarations that KCo.’s foreign rights are not being violated.
If Thumbnail regards KCo.’s activities as anticompetitive, it could defend on the ground
of copyright misuse and could add claims based on competition law in the countries in which
it is accused of copyright infringement. However, if the court determines that the case is
mainly about anticompetitive conduct, it could decline to exercise supplemental authority (§
212(2)) and remit the competition issues to a more suitable court.
KCo. could try to thwart consolidation by asserting claims that Thumbnail’s patents on
its search engines are invalid; it could then argue that consolidation is inappropriate because
these claims should be litigated in a court expert in patent law or in the fora of the States
where the patents are registered. Under
§ 212, the court could determine that the patent claims are not transactionally related to the
copyright claims and decline to exercise authority over them, while still retaining all
copyright claims, defenses, and counterclaims. If the patent claims are asserted elsewhere, and
one of the parties moves for coordination, the cases could be handled cooperatively.
If the forum’s procedural law does not make joinder compulsory, Thumbnail would not
be required to assert its competition claims in this court. It could equally choose to challenge
KCo.’s anticompetitive conduct in separate suits, which would not fall within these
Principles.
h. Registered rights. Section 212(4) proposes a special rule when the court of one State
declares rights registered in another State invalid. The Principles set out a similar rule in §
211(2), when the claim is raised in the first instance by the plaintiff, and in
§ 213(3), when the issue of invalidity is raised in a declaratory-judgment action. For further
discussion, see § 213, Comment c and Reporters’ Note 2. See also § 413(2) (enforcement of
determinations of invalidity).
i. Intervention. Resolution of global disputes can be greatly facilitated if interested
parties intervene in cases affecting their interests. However, the efficiency of the adjudication
may depend on the timing of the intervention. If the existing parties would be prejudiced by
the intervention, the court should deny the motion to intervene. Similarly, the motion should
be denied if intervention would cause confusion or delay. An intervening party should have
the same rights and obligations as the original parties, subject to adjustments the court might
make to protect the original parties from delay, confusion, or prejudice. The intervenor does
not, however, have the right to delay resolution of the dispute as a whole by invoking a court-
selection clause.
REPORTERS’ NOTES
1. Transactional relationship. This approach is similar to the transaction test for claim
preclusion as illustrated in the Restatement Second, Judgments § 24 and Comment a.
Although the Brussels Regulation does not expressly deal with this issue, it contemplates
consolidation of related claims in art. 28, which allows courts other than the one first seized to
suspend proceedings when related claims are pending in several fora. However, the practice
has been limited in patent litigation. See Case C-593/03, Roche Nederland BV v. Primus,
[2007] F.S.R. 5.
2. Judicial acceptance of foreign-law claims that arise from transactions that also
implicate local rights. For cases accepting jurisdiction over foreign-law claims, see, e.g.,
Boosey & Hawkes Music Publishers, Ltd. v. Walt Disney Co., 145 F.3d 481, 491-492 (2d Cir.
1998); Aztech Sys. Pte Ltd. v. Creative Tech. Ltd., [1996] 1 S.L.R. 683 (High Ct. 1995)
(Sing.); Creative Tech. Ltd. v. Aztech Sys. Pte. Ltd., [1997] 1 S.L.R. 621 (C.A.) (Sing.).
Illustration 1 is based on the facts of Mars Inc. v. Kabushiki-Kaisha Nippon Conlux, 24 F.3d
1368 (Fed. Cir. 1994), where the courts took an opposite approach to the one advocated by the
Principles: the Federal Circuit affirmed the district court’s refusal to exercise supplemental
jurisdiction over the Japanese infringement claim. See also Voda v Cordis, 476 F.3d 887 (Fed.
Cir. 2007).
3. Discretion to decline jurisdiction. This procedure is derived from U.S. federal law,
see 28 U.S.C. § 1367(c), which similarly weighs against other interests the interest in
providing a court for consolidating a multiplicity of claims that may be sourced in the law of
more than one sovereign.
The discretion to refuse to expand the court’s subject-matter reach should be
distinguished from considerations of where a consolidated case is best heard. That decision,
akin to determinations of forum non conveniens, is controlled by §§ 222-223. On such
dismissals, see, e.g., Richard Fentiman, Intellectual Property and the Conflict of Laws, A
Study on Behalf of the European Commission Directorate General XV, Chapter V, p. 7 (final
report, Nov. 1995) (English courts).
4. Illustration 2. The Illustration is loosely based on Kelly v. Arriba Soft Corp., 336
F.3d 811 (9th Cir. 2003).
5. Intervention. Rule 5.3 of the ALI/UNIDROIT Principles of Transnational Civil
Procedure similarly contemplates intervention.
§ 213. Declaratory Judgments
(1) An action for a declaratory judgment other than one to declare a registered right
invalid may be brought on the same terms as an action seeking substantive relief.
(2) Except as provided in subsection (3), an action to obtain a declaration of the
invalidity of a registered right may be brought only in the State of registration.
(3) An action to declare the invalidity of the rights registered in two or more States may
be brought in the State or States in which the defendant is resident, but the judgment
will be effective only to resolve the dispute between or among the parties to the action.
(4) A court exercising jurisdiction under this Section may not exercise coordination
authority under § 221.
Comment:
a. Declaratory judgments generally. Actions for declarations of rights are particularly
important to the intellectual property industries because commercialization often entails
substantial investments. Without the ability to bring “negative declarations” that permit a
court to declare a particular product unprotected or within the scope of a license, these
investments would have to be made without knowing whether the information was actually
available for the investor’s use. Should the investor guess wrong, sunk resources would be
wasted. At the same time, it is not desirable for investors to shy away from using material that
is in the public domain: there is, in fact, a strong public interest in permitting the exploitation
of material that is not properly the subject of intellectual property protection. Section 213
furthers these private and public goals by creating an avenue for clarifying rights. Declaratory
judgments can also be useful to rights holders because they provide a mechanism for
clarifying relationships.
b. Declarations as to the validity of registered rights. There is substantial sentiment that
issues regarding the validity of a registered right, particularly a patent right, should be
adjudicated in the courts in the State in which the right is registered. Indeed, there are regional
agreements that so provide. Some countries further channel validity disputes into special fora.
Although the Principles do not include a blanket prohibition on the adjudication of matters
involving a foreign State’s registered rights, these adjudications receive special treatment.
When the sole objective of the litigation is a declaration of invalidity of rights under the law
of a particular State, § 213(2) requires adjudication of the case in the courts in that State. In
cases where rights under the laws of multiple States are in issue, § 213(3) permits the suit
only in the right holder’s residence(s), but limits the effect of the judgment to the parties.
c. Effect of the declaration. When a court declares rights registered in other States
invalid, the effect runs only between the parties to the litigation. See § 213(3). Moreover, the
Principles apply this solution to any determination of invalidity, including one resulting when
the issue of validity arises by way of defenses such as to an infringement action or to a
contract claim. See §§ 211(2), 212(4), and 413(2). This rule represents a compromise: on the
one hand, courts are reluctant to second-guess the acts of foreign public authorities; on the
other hand, there are efficiency gains. Furthermore, separating adjudication of validity from
infringement can have substantive ramifications because it prevents a court from hearing all
of the evidence relevant to the action and from using its understanding of how a technology is
utilized to inform its decision on the scope of the right. Bifurcating validity and infringement
can also increase the parties’ costs. Accordingly, § 213(3) allows a court in one State to
adjudicate the validity of registered rights in another State, but only to clarify the rights of the
parties among themselves. In cases where it appears that validity issues are being raised to
thwart efficient adjudication, a court may exercise its authority under § 212(2) to sever those
parts of the case for determination in a more appropriate court. Should the parties prefer an
adjudication of rights against the world, the appropriate approach is to bring actions in each
State in which the right is registered, and then move for cooperative treatment under
§ 222.
d. Declaratory judgments and coordination authority under § 221. Declaratory-judgment
actions create unique forum-shopping opportunities to those who would otherwise be
defendants in infringement actions. If the intellectual property rights holder is amenable to
suit in a court that moves its dockets slowly, the would-be defendant could file a declaratory
suit there in order to block adjudication of the infringement action in a court more likely to
award injunctive relief quickly. To avoid misuse of declaratory-judgment actions, §§ 213(4)
and 221(5) refrain from treating a court hearing a declaratory case as the coordination court.
In this way, the Principles allow a rights holder to trump the declaratory plaintiff’s choice by
bringing its own action; the court where the rights holder sues is then treated as the court first
seized.
Illustration:
1. PaulCo, a Patrian corporation, brings an action against ClaraCo in Xandia, which is
ClaraCo’s principal place of business, for a declaration that ClaraCo’s Xandian, Patrian,
Tertian, and Quatrian patents are invalid. Xandian courts are overburdened and known for
delay. Subsequently, ClaraCo brings an infringement suit against PaulCo in Patria, alleging
that these patents are being infringed.
Under these Principles, Patria will be considered the court with the authority to
coordinate and will have primary authority to determine coordination issues. When Xandia’s
court reaches the case, it should suspend proceedings pending the Patrian disposition.
e. Justiciability. Because declarations of validity can bind only parties to the litigation, a
patent is vulnerable to successive attacks. The risk of successive suits reduces patent value,
and the cost of these actions may erode the patentee’s ability to successfully defend. To
prevent the patent from becoming an “invitation to litigate,” some jurisdictions impose a
requirement that the declaratory plaintiff in an invalidity action demonstrate an interest in the
suit, such as a credible threat of an infringement action or a substantial investment in patent-
specific technology. Section 213 is not intended to change such domestic rules on
justiciability.
REPORTERS’ NOTES
1. Declaratory-judgment actions. The ability to bring declaratory-judgment actions on
such issues as validity, infringement, ownership, and assignment is well recognized. See, e.g.,
Conmed Corp. v. ERBE Electromedizin GmbH, 129 F. Supp. 2d 461 (N.D.N.Y. 2001)
(patents); Sumitomo Elec. Indus., Ltd. v. Corning, Inc., 169 F. Supp. 2d 440 (M.D.N.C. 2001)
(patents); Hal Roach Studios, Inc. v. Richard Feiner & Co., 896 F.2d 1542, 1555-1556 (9th
Cir. 1990) (copyrights); Bryan Ashley Int’l, Inc. v. Shelby Williams Indus., Inc., 932 F. Supp.
290, 292-293 (S.D. Fla. 1996) (copyrights); Starter Corp. v. Converse, Inc., 84 F.3d 592 (2d
Cir. 1996) (trademarks); Caesar’s World, Inc. v. Milanian, 247 F. Supp. 2d 1171 (D. Nev.
2003) (trademarks). The Principles rely on local rules to determine standing; enforcement is
controlled by Part IV.
2. Patent litigation. In patent litigation, the principal use of declaratory judgments is
likely to be as a mechanism for challenging patent validity. The importance of such actions is
illustrated by the facts of Polaroid Corp. v. Eastman Kodak Co., 789 F.2d 1556, 1557 (Fed.
Cir. 1986). The improvident investment Kodak made in instant cameras could have been
avoided had Polaroid’s rights been clarified earlier, for example through a declaratory-
judgment action. Instead, Polaroid brought an infringement action after Kodak started selling
instant cameras. Although Polaroid sued for infringement quickly, the suit took many years to
decide. See id. at 1557. By the time the patent was held valid and infringed, Kodak had
invested heavily in the field and many of its employees and customers were seriously affected
by the resulting judgment, see Daniel F. Cuff, Kodak Reports a Loss After Taking Writeoff,
N.Y. Times, Feb. 19, 1986, at D6 (forced withdrawal from instant-camera field after patent
ruling costing Kodak $494 million); Thomas J. Lueck, The Talk of Rochester; A City
Nervously Waits for Layoff News, N.Y. Times, Feb. 14, 1986, at B1 (describing losses to
Kodak and its workers resulting from enforcement of Polaroid’s instant-camera patent against
Kodak). Cf. Fogerty v. Fantasy, Inc., 510 U.S. 517, 527 (1994) (“Because copyright law
ultimately serves the purpose of enriching the general public through access to creative works,
it is peculiarly important that the boundaries of copyright law be demarcated as clearly as
possible. To that end, defendants who seek to advance a variety of meritorious copyright
defenses should be encouraged to litigate them to the same extent that plaintiffs are
encouraged to litigate meritorious claims of infringement.”)
3. Declarations of noninfringement distinguished. A decision of the Swiss Supreme
Court, Bundesgericht [BGer] [Federal Court], Feb. 21, 2003, Entscheidungen des
Schweizerischen Bundesgerichts [BGE] 129 III 295 (X AG v. Y SpA) (Switz.), recognizes
this distinction. Notwithstanding art. 22(4) of the Brussels Regulation and art. 16(4) (now
22(4)) of the Lugano Convention, which give exclusive authority to the courts of the State in
which a right is registered to pass on the validity of the right, the Supreme Court accepted
Swiss jurisdiction over an action seeking a declaration of the noninfringement of Belgian,
Dutch, French, English, Italian, Swedish, and Spanish patent rights deriving from the same
EPC application, and all held by a Swiss patent holder. The court founded its competence on
art. 2 of the Lugano Convention, which gives general competence to the defendant’s home
forum. By contrast, more recently, the Swiss Supreme Court, in a decision of Oct. 23, 2006,
ATF 132 III 778, rejected jurisdiction of Swiss courts over an action seeking a declaration of
invalidity and of noninfringement of French and German EPC-derived patents held by a
German defendant. The court’s citation of both art. 16(4) (now 22(4)) of the Lugano
Convention and the ECJ’s decision in Case C-593/03, Roche Nederland BV v. Primus, [2007]
F.S.R. 5 calls into question whether a Swiss court would, in the future, retain jurisdiction over
an action against a Swiss defendant when it involves foreign patents.
Nonetheless, the Principles take the position that consolidating declaratory actions
before one court, at least where the patent rights at issue are identical, is desirable, as each
territorial right is based on the grant of a single title of intellectual property right such as the
European patent. One may also question the traditional view that the courts of a foreign State
would not have the technical skill needed to adjudicate the infringement of a national patent.
Counsel and experts’ opinions can help the court understand the applicable law and the
practice of the other jurisdiction. Sections 221-223 of the Principles are designed to achieve
this result.
§ 214. Provisional and Protective Measures
(1) A court has jurisdiction to order any provisional or protective measures consistent
with its authority under §§ 201-207 and §§ 221-223 of these Principles.
(2) The courts in any States in which intellectual property rights are registered or in
which tangible property is located have jurisdiction to order any provisional or
protective measures with respect to that property. The measure shall be limited to the
territory of that State.
(3) A person having custody or control of goods in transit, even if not an infringer by the
law of the State in which the goods are temporarily located, may be the subject of an
action for an order of temporary detention of the goods while the true owner or owners
are identified and joined to the proceedings.
Comment:
a. Transborder relief. These Principles cannot change domestic law to give courts
authority to provide provisional relief when such authority is lacking under local law. Thus,
for example, if the Brussels Regulation prohibits transborder injunctions or U.S. law prohibits
seizure of non-U.S. property, this provision cannot be given full effect. However, if such
authority is provided by local law, § 214(1) gives a court with appropriate jurisdiction over a
defendant (as defined by these Principles) plenary authority to order provisional or protective
measures, including ex parte relief and the issuance of transborder injunctions. This provision
is also meant to suggest that, as global disputes proliferate and are thought to require
coordination, the subsidiary power to order provisional relief is also necessary.
It is contemplated that this authority should be exercised by the court that has
jurisdiction over the merits of the case; it can also be exercised by the court in which the
dispute on the merits will presumptively be filed.
b. Local relief. Section 214(2) gives parties the flexibility to protect their interests in
jurisdictions other than the one in which the action is pending or will be filed. As noted
above, the court where the case has been or will presumptively be filed has plenary authority
to award preliminary relief, including transborder injunctive relief, consistent with its
adjudicatory authority. In addition, the parties may obtain local preliminary relief from other
courts. However, these courts have authority only with respect to local property, tangible and
intellectual.
In making its decision on ordering relief, the court will consider local law as well as
local public policy.
Illustration:
1. A, a Patrian resident, claims to hold the rights of reproduction, distribution, and
communication to the public in a sound recording of Patrian folk music. B, a resident of
Xandia, uploads the content of the CD without authorization to a server maintained by C, a
Xandian, in Xandia. A sues B and C in Xandia.
If A can show that, under Xandian law, he is entitled to provisional relief, the Xandian
court can enjoin B and C from making the music available anywhere pendente lite. If A finds
that B is distributing CDs of the music in Patria, he can also ask the Patrian court to take
control of the CD stock. In deciding whether to take control over the property, the court can
consider whether restricting the distribution of the CDs violates Patrian public policy.
c. Relationship between § 214(2) and §§ 222, 223. Section 214(2) can be viewed as an
exception to the rules that require courts to suspend proceedings pending adjudication in the
coordination court or the consolidation court because they provide other tribunals with
authority over the dispute. In the case of provisional remedies to preserve evidence or the
status quo, however, time is often of the essence; the court best situated to achieve those goals
is generally the court where the intellectual property or physical goods are located.
d. Protective seizures. Section 214(3) addresses the case of goods in transit, that is,
tangible goods shipped from one State, across another State, to be sold in a third State where
the sale infringes intellectual property rights in that third State. The goods can be seized
where they are found, even if they were just passing through on their way to sale in another
State.
REPORTERS’ NOTES
1. Controversy over cross-border injunctions. The availability of transborder measures
under the Brussels Regulation has been hotly contested. See, e.g., John Gladstone Mills III, A
Transnational Patent Convention for the Acquisition and Enforcement of International Rights,
84 J. Pat. & Trademark Off. Soc’y 83, 85 (2002); Fritz Blumer, Jurisdiction and Recognition
in Transatlantic Patent Litigation, 9 Tex. Intell. Prop. L.J. 329, 336 (2001). The European
Court of Justice’s decisions in Case C-593/03, Roche Nederland BV v. Primus, [2007] F.S.R.
5, and Case C-4/03, Gesellschaft für Antriebstechnik mbH & Co KG v Lamellen und
Kupplungsbau Beteiligungs KG, [2006] F.S.R. 45 cast doubt on the authority of an EU court
to grant relief regarding foreign patent rights. It could therefore be argued that this power
should be eschewed by the Principles. One reason for rejecting a more restrictive approach is
that the problems involved in cross-border cases have generally concerned patent rights in the
European Union, where the resolution of challenges to validity is subject to special
jurisdictional limitations under the Brussels Regulation. The AIPPI appears to recognize a
need for cross-border orders generally, indicating that “[t]he court making a judgment should
determine which of the available remedies are to be applied,” but that “any enforcement of a
judgment in another country shall be subject to the law of that country . . . .” AIPPI, Q174
Resolution, art. 3. This is essentially the approach followed here.
2. Utility of cross-border provisional relief. The time value of information and the
inability to return (or forget) what has been learned makes the availability of preliminary
relief particularly important in intellectual property disputes. This provision allows courts to
use whatever flexibility their national law permits in shaping interim orders to assure that the
status quo is maintained during the pendency of adjudication. Such relief can also be used to
secure assets from which the judgment will be satisfied. Some States do not permit courts to
order worldwide orders to secure assets (Mareva injunctions). See, e.g., Grupo Mexicano de
Desarrollo S.A. v. Alliance Bond Fund Inc., 527 U.S. 308 (1999). Where courts enjoy this
power, it is limited to securing assets; it does not thereby obtain jurisdiction over the merits of
the claim. Given the ability of the parties to obtain execution of judgments or decrees
rendered in accordance with these Principles (§ 401), where the executing court has
determined that the Principles apply, it is not necessary to make the asset-conserving court the
court that hears the merits in order to ensure practical recovery. Nothing in these Principles
would require jurisdictions to change their laws. However, the absence of this authority might
affect the parties’ choice of court.
3. Local relief. The power of a court other than the one entertaining the dispute to order
provisional relief with respect to people or property within the forum State is recognized by
the ALI/UNIDROIT Principles of Transnational Civil Procedure, Principle 2.3.
4. Protective seizures. For examples of such actions in the United Kingdom, see, e.g.,
Norwich Pharmacal Co. v. Customs & Excise Comm’rs, [1974] A.C. 133, 146 (H.L.);
Washburn v. Cunard, [1889] 6 R.P.C. 398; and Smith, Kline & French Labs. Ltd. v. RD
Harbottle (Mercantile) Ltd., [1980] R.P.C. 363 (Ch. D. 1979).