Dealing with difficult service in the UPC: An Update

In January, we considered the UPC's approach to service outside the Contracting Member States in its first six months operating, focusing on the cases of Philips IP Ventures v Belkin¹ and Panasonic v Xiaomi². This update examines four recent orders relating to service in the UPC and the implication of these orders for parties seeking to have a statement of claim served.

Legal Framework

The Service Provisions of the UPC Rules of Procedure are split into three sections. Section 1 (R. 270, R. 271, R. 272) covers service within the Contracting Member States; Section 2 (R. 273, R. 274) covers service outside the Contracting Member States; and Section 3 (R. 275) provides for service of the statement of claim by an alternative method or at an alternative place - such an order to be made upon application by the Claimant when there is a "good reason". These provisions were designed in conformity with EU law and the Hague Service Convention. ^3,4

Daedalus v Xiaomi (Court of Appeal)⁵

This Order issued by the Court of Appeal provides further insight on the service of a statement of claim on Defendants in China and Taiwan, and in particular the application of R. 273 and R. 274.

Daedalus brought an infringement action against five defendants before the Court of First Instance, Hamburg Local Division. Two of the Defendants (referred to here as the Chinese Xiaomi companies) have their registered offices in China, whilst two of the defendants (Xiaomi NL and Xiaomi DE) have their registered offices in the Netherlands and Germany respectively. The fifth defendant (referred to here as MediaTek) has its registered office in Taiwan.

Daedalus claimed that service of the statement of claim on the Chinese Xiaomi companies should be effected via Xiaomi DE, and that service on MediaTek should be effected via MediaTek Germany GmbH, relying on R. 271.5(a).

The Hamburg Local Division dismissed Daedalus' request. The Local Division concluded that R. 271.5 is not relevant since the Chinese Xiaomi companies and MediaTek are domiciled outside the Contracting Member States and that service had to be effected in accordance with R. 273 and R. 274.1. These provisions require at least a first attempt of service by (i) The law of the European Union on the service of documents in civil and commercial matters [Regulation (EU) 2020/1784] where it applies; (ii) The Hague Service Convention or any other applicable convention or agreement where it applies; or (iii) to the extent that there is no such convention or agreement in force, either by service through diplomatic or consular channels from the Contracting Member State in which the sub-registry of the relevant division is established (see R. 274.1(a)). Since Regulation (EU) 2020/1784 does not apply in China, the Local Division ordered that service on the Chinese Xiaomi companies should be attempted through the Hague Service Convention. Neither Regulation (EU) 2020/1784, nor the Hague Service Convention (or any other applicable conventions) apply in Taiwan, therefore the Court ordered that at least a first attempt of service on MediaTek should be made through diplomatic or consular channels.

Daedalus appealed this order. In their submissions, they argued that R. 271.5(a) permits that service can be effected "where the defendant is a company or other legal person, at its statutory seat, central administration or principal place of business within the Contracting Member States or at any place within the Contracting Member States where the company or other legal person has a permanent or temporary place of business" and that the national German subsidiaries of the Chinese Xiaomi companies and MediaTek are each a "permanent place of business" in the meaning of R. 271.5(a). The Court of Appeal did not accept this argument, noting that the wording of R.271.5(a) strongly suggests that it only applies to service on companies or other legal persons with their statutory seats, central administration or principal place of business within the Contracting Member States.

The Court of Appeal held that the Chinese Xiaomi companies and MediaTek are companies with registered offices outside the Contracting Member States and that R. 271.5(a) did not apply. It concluded that "a defendant company in China or Taiwan can also not, as a starting point, be served a Statement of Claim via a company within the same group in a Contracting Member State. Such a group company cannot automatically be seen as a statutory seat, central administration or principal place of business of a defendant company in China or Taiwan, nor a place where such defendant company has a permanent or temporary place of business".

Parties should be aware that they will be expected to follow the steps outlined in R. 273 and R. 274.1 when serving a statement of claim outside the Contracting Member States. Although there is no definition of what constitutes service within and outside the Contracting Member States in the Rules of Provision, it is clear that the Court of Appeal considers there to be a systematic division between these two types of service.

NEC v TCL (Court of Appeal)⁶

This order relates to service of a statement of claim on a company in China and provides guidance on when the UPC will permit service by other means (R.274.1(b)), by an alternative method or at an alternative place (R.275.1).

NEC sued various TCL companies, including three Asian entities, jointly referred to in the order as the Asian TCL companies. NEC requested that either: (1) Service of the statements of claim on the Asian TCL companies would be effected by email to the Chief Intellectual Property Officer of the TCL Group of Companies pursuant to R.275.1; or (2) service would be effected by public service in the form of a written notice to be displayed in the publicly accessible premises of the Munich Local Division.

These requests were denied. The Local Division held that R. 275 does not permit the Court to designate someone as authorised to accept service, if that person has not been notified as willing to accept service of the statement of claim on behalf of the defendant at an electronic address (R271.1(c)).

The court also commented on the application of R275.1, which states "Where service in accordance with Section 1 or 2 could not be effected the Court on an application by the claimant that there is a good reason to authorise service by a method or at a place not otherwise permitted by this Chapter, the Court may by way of order permit service by an alternative method or at an alternative place." The Court concluded that this includes a requirement of an actual, but unsuccessful prior service attempt.

NEC appealed, however the Court of Appeal concluded that the Munich Local Division was right in rejecting NEC's requests. The Court of Appeal concluded that the Asian TCL companies are companies with registered offices outside the Contracting Member States therefore service is governed by R.273 and R.274.1. Since Regulation (EU) 2020/1784 does not apply in China, the Local Division ordered that service on the Asian TCL companies should be attempted through the Hague Service Convention (R.274.1(a)(ii)). It upheld the conclusion of the Local Division that R275.1 requires a prior service attempt, noting in particular that any interpretation that ignored this requirement would be in contravention with the Hague Service Convention itself.⁷

NEC v TCL (Local Division Munich)⁸

This order issued by the Local Division Munich demonstrates that in some circumstances a written statement by a party can be proof of service.

As outlined above, the Claimant (NEC) sued certain TCL companies, including Defendant 2 (TCL Industrial Holdings Co., Ltd) domiciled in China. Defendant 2 filed a preliminary objection on 11 June 2024. When questioned by the Court, Defendant 2 specified in a statement of 30 July 2024 that it had received the complaint on 11 May 2024. The Court considered the Defendant's statement to be proof of service and decided that there was no need to wait for further proof of service from the Chinese authorities (which had yet to be received on the date of the decision).

In summary, the decision in NEC v TCL is consistent with the decision of the Local Division Mannheim in Panasonic v Xiaomi⁹  which, as we reported on in January, is that the UPC will continue to interpret R. 275 as an exceptional provision and will only permit service by an alternative method or at an alternative place in circumstances where service was attempted in accordance with R. 270-274 but unsuccessful. The decision of the Local Division Munich, gives one illustration of how the UPC is willing to find a practical solution where service out of jurisdiction cannot otherwise be perfected.

Panasonic v. Xiaomi (Local Division Mannheim)¹⁰

This decision shows how the UPC can deal efficiently with issues relating to international service.

In the original proceedings, Panasonic brought an action against a number of companies belonging to the Xiaomi group. Panasonic argued that service of the claim against the Hong Kong-based company should be effected via Xiaomi's German subsidiary, however this request was denied. The proceedings against the Xiaomi defendant in Hong Kong were then severed and the court initiated service of the claim in accordance with the Hague Service Convention. The Hague Service Authority in China refused service on the basis that some of the attachments were not duplicated and that the defendant's address was "Hong Kong" and not "Hong Kong SAR, China". In particular, the authority returned the documents with a request for correction, because the references to Hong Kong were said to be "on an equal basis with references to sovereign states like "China" in the documents to be served".

The Court held that in the present case of a serious and final refusal following an actual attempt to serve, no further attempt to serve was necessary. There was no prospect of success for any of the methods of service proposed by Panasonic. All possibility of service under R. 270-274 were exhausted, therefore a further attempt to serve the application under an alternative procedure or at an alternative place pursuant to R. 275.1 was not required. Pursuant to Rule 275.2, which states that "…the Court may order that steps already taken to bring the Statement of claim to the attention of the defendant by an alternative method or at an alternative place is good service", the court ordered that the steps already taken would constitute legally valid service. The court ordered that a reference to the decision using specified wording should be publicly accessible on the homepage of the Court website.

^{1 ORD_576855/2023, CFI_5/2023
2 App_589186/2023, CFI_219/2023
3 The Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters, more commonly known as the "Hague Service Convention" is a multilateral treaty designed to give litigants a reliable and efficient means of service documents on parties living, operating or based in another country.
4 Article 24(1)(d) of the Agreement on a Unified Patent Court (UCPA) stipulates that the Court shall base its decision on other international agreements applicable to patents and binding on all the Contracting Member States.   
5  See the Order dated 5 August 2024 in the Court of Appeal in APL_21602/2024, UPC_CoA_183/2024 
6 See the Order dated 29 July 2024 in the Court of Appeal in APL_8972/2024,
7 See Article 15.2 Hague Convention.
8 See the Order dated 6 August 2024 by the Local Division Munich in NEC v TCL, APL_8972/2024, UPC_CoA_69/2024; APL_8977/2024, UPC_CoA_70/2024
9 App_589186/2023, CFI_219/2023
10 See the Order dated 31 July 2024 by the Local Division Mannheim in Panasonic v Xiaomi in APP_43960/2024, UPC_CFI_330/2024}