A&O Shearman
NEC v TCL, CoA Luxemburg, July 29, 2024 (UPC_CoA_69/2024 & UPC_CoA_70/2024)
Daedalus v Xiaomi and MediaTek, CoA Luxemburg, August 5, 2024 (UPC_CoA_183/2024)
One of the known challenges in litigation against defendants domiciled outside the EU is effecting service. This can take a long time in some cases due to the formalities and slowness of national systems. Plaintiffs at the Unified Patent Court face the same problems, where effective service can take up to 18 months. Both plaintiffs and courts have become creative when assessing the different ways of determining effective service. The UPC Court of Appeal recently addressed this question in two cases involving service of SoC to defendants in China and Hong Kong SAR. In NEC v TCL NEC brought infringement proceedings before the Munich Local Division (including against European and Asian TCL subsidiary companies in China and Hong Kong SAR), and requested that service of Statement of Claim (SoC), on the Asian subsidiaries, be made by email. In Daedalus v Xiaomi & MediaTek, Daedalus brought infringement actions before the Hamburg Local Division against European and Asian Xiaomi subsidiaries (including in China) and against MediaTek (in Taiwan) and requested that service of SoC on the Asian defendants be made through their German subsidiaries, Xiaomi Technology Germany GmbH and MediaTek Germany GmbH.
In both cases, the Court of Appeal denied the request, confirming the first instance orders.
Applicable rules
Service of SoC outside a UPC Member State is governed by Rule 274 of the Rules of Procedure (RoP), which provides for different methods of service depending on whether there is an applicable convention or agreement between the UPC and its Member States on the one hand and the State where service is to be effected on the other.
The methods of service allowed by this rule include any method provided by Regulation (EU) 2020/17842 (for intracommunity service) or by the Hague Service Convention3 (for service in a non-EU member state that has ratified this treaty). Service in a non-EU member state that has not ratified the Hague Service Convention is to be effected through diplomatic or consular channels.
Service of SoC in China, Hong Kong SAR and Taiwan
In these recent orders of the UPC Court of Appeal, the court clarified that where the case involved defendants in China and Hong Kong SAR, service must be first attempted according to the Hague Service Convention. This International treaty, widely ratified (including by China), establishes a system of central authorities for the transmission and execution of requests for service of documents between contracting states.
In contrast, Taiwan has not ratified the Hague Service Convention, so that service of SoC in this country shall be effected through diplomatic or consular channels from the UPC Member State in which the subregistry of the UPC Division seized of the case is established–in this case, from Germany.
Alternative means or places of service are not available before a first attempt
According to Rules 274.1(b) and 275 RoP, an attempt shall be made to serve SoC by the methods provided for by Rule 274.1(a) RoP before the Court can authorise any alternative means or places of service.
In NEC v TCL, the request that service be made by email to Mr. X, Chief Intellectual Property Officer of TCL, could thus not be granted: although the Hague Service Convention applies in China and Honk Kong SAR, China has notified some reservations, and in particular allows service by email only with prior consent of the recipient. The consent of Mr. X, who was cc’d in emails between TCL & NEC discussing the SoC & a possible cross licensing agreement, was not obtained. In Daedalus v Xiaomi & MediaTek the request to serve the Asian defendants through their German subsidiaries was also denied. Daedalus failed to provide evidence that the Asians defendants had a statutory seat, a central administration, or a principal place of business Additionally, the principle of corporate separation would prevent the imputation of knowledge of the SoC to the Asian defendants if they were served through their German subsidiary.
Takeaways
These two orders of the UPC Court of Appeal underscore the necessity for claimants to exhaust the applicable means of service provided for by Rule 274.1 RoP when serving SoC on defendants having their place of business outside a UPC Member State, before resorting to any alternative means or places of service under Rules 274.1(b) and 275 RoP. These two orders highlight the importance of adhering international conventions and agreements to ensure proper service and safeguard defendants rights in cross-border disputes before the UPC. In a recent ruling of the Mannheim Local division4, the Chinese authorities denied service, i.e. The SoC had referred to the defendant’s address as “Hong Kong”, instead of “Hong Kong, SAR of China”. The Mannheim Local Division ruled that the court cannot, at the request from the central authority of a state in which service was requested, censor or modify the content of submissions filed by parties before the UPC. It was stated that it was not necessary to attempt to serve the SoC by a different method or at a new location, in accordance with Rule 271 RoP, once all options for service under Rules 271-274 of the Rules of Procedure had been exhausted and if the central authority of requested In this case, the court thus recognized the steps already taken to bring the statement of claim to the defendant’s attention as a valid service according to Rule 275.2 RoP.
It will be interesting to see whether the UPC Court of Appeals will uphold this order, too.
Footnotes
1 Munich District Court I, judgment of 25 February 2021, 7 O 14276/20, margin no. 33
2 Regulation 2020/1784 of the European Parliament and of the Council of November 25, 2020 on the service of documents in the Member States in civil or commercial cases (recast)
