EXCLUSIVE jurisdiction in intellectual property (IP) disputes has been the subject of many court decisions in recent years, both in the EU and beyond. The judgment of the CJEU in IRnova v FLIR is the latest European development in this area (8 September 2022, C-399/2, EU:C:2022:648). It concerns the interpretation of Article 24(4) of the Brussels I Regulation 1215/2012 (Brussels Ia), which confers exclusive jurisdiction on the courts of the Member State of deposit or registration “in proceedings concerned with the registration or validity of patents, trade marks, designs, or other similar rights required to be deposited or registered, irrespective of whether the issue is raised by way of an action or as a defence”. In its judgment, the CJEU not only held that this article does not apply in entitlement and ownership disputes based on inventorship, but it also denied its application to patents registered in non-EU states.

The dispute involved two Swedish companies in the infrared industry. The plaintiff, IRnova, brought proceedings in Sweden arguing that it was entitled to American patents as well as European, American and Chinese patent applications registered and filed by the defendant, FLIR. According to IRnova, the underlying inventions had been created while the parties had a business relationship and by one of IRnova's employees in the course of his duties. As the employer, IRnova claimed that it was entitled to the inventions, at least in part.

At first instance, the Swedish court accepted to hear the dispute regarding the European patent application, based on special Swedish rules implementing the Protocol on Jurisdiction and the Recognition of Decisions in respect of the Right to the Grant of a European Patent, annexed to the European Patent Convention. However, the court declined jurisdiction over the patents registered and applied for in the US and China, holding that the action was so related to the registration and validity of the patents that it fell within the scope of Article 24(4) Brussels Ia. In doing so, the court applied this provision reflexively – to patents registered or applied for in third states. While noting that the wording of Article 24(4) did not cover such patents, it found that the rule was “supported by strong public policy reasons” and reflected “internationally accepted principles of jurisdiction” from which it would be “inappropriate” to depart (Stockholm Patent and Market Court, 29 April 2020, n° 17315-1, 11).

On appeal, the case was referred to the CJEU, which had to determine – according to its own reformulation – if Article 24(4) Brussels Ia covered “proceedings aimed at determining in the context of an action based on alleged inventor or co-inventor status, whether a person is the proprietor of the right to inventions covered by patent applications deposited and by patents granted in third countries” (at [24]).

The CJEU began by establishing that the registration of the patents and deposit of the patent applications in third states constitute international elements that are sufficient to trigger the application of the Brussels Ia Regulation (at [26]–[31]). However, it then deduced from the wording of Article 24(4) that this provision only applies to patents registered or applied for in Member States (at [34]). As this was not the case here, Article 24(4) did not apply to the proceedings (at [35]).

Next, the CJEU found that, in any event, the proceedings were not “concerned with the registration or validity of patents” within the meaning of Article 24(4) (at [36]). It recalled that the scope of this provision must be limited to what is necessary to achieve its purpose (at [39]), namely to ensure that jurisdiction “rests with courts closely linked in fact and law to the register, since those courts are best placed to adjudicate on cases where the validity of the right concerned, or even the existence of the deposit or registration, is in dispute” (at [36]). In particular, the court had previously decided that “the question of who is entitled to a patent” and “whether a person [has] been correctly registered as the proprietor of a trade mark” fall outside the scope of Article 24(4) (at [41], citing Duinjstee, C-288/82, EU:C:1983:326, and Hanssen, C-341/16, EU:C:2017:738).

Applying these principles, the court found that Article 24(4) similarly does not cover the issue of “whether FLIR must be regarded as being the proprietor of the right to the inventions or to a portion of them” (at [42]). As the issue of knowing to whom an IP right belongs “is not, generally, closely linked in fact and law” to the place of registration (at [41], [43]), the same is true where the issue does not relate to the right as such or the application “but to their subject matter, …, namely the invention” (at [43]). Further, the identification of the inventor is a preliminary matter that is separate from “the existence of the deposit of a patent application or to the grant of that patent” (at [44]). Such identification is also separate from “the validity of such a deposit, since it seeks only to determine the right to the inventions at issue themselves”, even if the absence of a right to an invention may constitute a ground to invalidate the patent (at [45]). Finally, the identification of the inventor does not concern “the validity of the granted patent at issue” (at [46]). Although the referring court may have to examine the claims of the patents and patent applications under Chinese and US law, that task would not relate to the “patentability of [the] invention” (at [46]) and would need to be carried out in infringement disputes as well, even by courts sitting outside the state of registration (at [48]). Accordingly, Article 24(4) Brussels Ia did not apply to the proceedings (at [49]).

The CJEU's finding that entitlement disputes based on inventorship fall outside the scope of Article 24(4) is unsurprising. It is also in line with the court's previous case law – namely, Duinjstee and Hanssen, which respectively involved a patent ownership dispute between an employer and its employee, and a trademark ownership claim based on a contract. Difficulty arose in IRnova because determining the inventor requires examining the inventive concept under the law of the registration state. But the court would not be considering whether that concept meets the requirement of inventive step, as in validity disputes. Rather, inventorship disputes are generally factual and necessitate identifying who developed the inventive elements. And, in this regard, the relevant facts will most likely be located where the invention was created, not at the place of registration. In IRnova, for example, the claimant submitted that FLIR extracted the invention from e-mails and presentations taking place in Sweden. Admittedly, the US and Chinese courts would be well placed to decide whether these facts are sufficient for IRnova's employee to qualify as the inventor or a joint inventor under US and Chinese law. Nevertheless, in the absence of the requisite close factual and legal connection between the place of registration and inventorship issues, those courts are not necessarily best placed to do so.

Interestingly, the CJEU did not consider another rationale for Article 24(4) Brussels Ia, which is that the grant of patents is “an exercise of national sovereignty” (Jenard Report to the Brussels Convention (OJ 1979 C 59, 36)) necessitating “the involvement of national administrative authorities” (GAT, C-403, EU:C:2006:457, at [23]). However, it is arguable that inventorship disputes are primarily concerned with private interests, as evidenced by the fact that patents can generally be assigned. In addition, a change in ownership simply entails a modification of the register. It is therefore less politically sensitive than a judgment on validity, which requires the IP right to be removed from that register. Of course, this is no longer true if the claimant argues that the patent should be invalidated or refused registration on the ground of lack of entitlement of the proprietor. In such a case, Article 24(4) would still be triggered. But if the claimant does not challenge the validity of the patent or the legality of the registration, the parties can resolve the dispute in a single forum even if it involves rights registered or applied for in several countries.

Nevertheless, the court's answer on whether Article 24(4) covers inventorship disputes was only obiter (“in any event”, at [36]). Although that answer was included in the operative part of the judgment (at [49]), the key point is that Article 24(4) does not apply to patents registered or applied for in third states (at [34]–[35]). At first sight, this is significant, as the CJEU appeared to deny that Article 24(4) has reflexive effect, a question that was almost as old as the 1968 Brussels Convention itself. Both the European legislature and the landmark Owusu decision had left it open (C-281/02, EU:C:2005:12). On a closer look, however, the CJEU only denied that Article 24(4) directly applies to patents registered or applied for outside the EU. As is evident, the wording of this provision is only concerned with IP rights registered or applied for in Member States. Thus, a court cannot – pursuant to Article 24(4) – decline jurisdiction in favour of the courts of a third state in which an IP right has been registered or applied for.

But the CJEU said nothing about whether courts can decline jurisdiction pursuant to national law. Potentially, the rule incorporated in Article 24(4) could still have indirect reflexive effect. That is, courts could take this provision into consideration, as a fact, in deciding their jurisdiction. However, whether the Brussels Ia Regulation permits such an approach is unclear, as the general domicile-based rule of jurisdiction of Article 4 is – save in the special cases provided by the regulation – mandatory. While Articles 33 and 34 Brussels Ia enable courts to stay proceedings if an identical or related action is pending before the courts of a third state, the regulation does not recognise this power when the latter have not been seized. One may argue that, following Coreck Maritime, choice-of-court agreements designating the courts of a third state are governed by the law applicable under the conflict rules of the forum (instead of what is now art. 25 Brussels Ia), which implies that courts can decline jurisdiction under national law if the agreement is valid (C-387/98, EU:C:2000:606, at [19]). By analogy, courts might still have the power, under national law, to decline jurisdiction in favour of the courts of a third state in which an IP right has been registered or applied for. But this is still undecided, and it is regrettable that the CJEU did not provide any guidance in IRnova.

Even assuming that Article 24(4) can still have indirect reflexive effect, it is similarly unclear when courts should decline jurisdiction. In IRnova, for example, the fact that Article 24(4) Brussels Ia does not cover inventorship disputes suggests, by analogy, that the Swedish court should hear the inventorship dispute over the third state patents and patent applications. But can the court adopt a different solution for third state IP rights as opposed to IP rights registered or applied for in Member States? Can it consider, for example, the fact that the judgment would be difficult to enforce in the US and China? In the eyes of the US courts, the Swedish court might not have subject matter jurisdiction to adjudicate disputes on the ownership of American patents (see by analogy Voda v Cordis, 476 F3d 887 2007; but see with regards to patent ownership, Medigene A.G. v Loyola Univ. of Chicago, n° 98-2026, 2001 WL 1636916, ND Ill 2001). At best, the doctrine of collateral estoppel suggests that the issue could not be relitigated between the parties (Pony Express Records, Inc. v Springsteen, 163 F Supp 2d 465, DNJ 2001; Vas-Cath Inc v Mahurkar, 745 F Supp 517, ND Ill 1990). But it is unlikely that the Swedish judgment could be used to modify the patent owner in the US register. The same is true in China, where IRnova would need to demonstrate that the Swedish court had indirect jurisdiction to adjudicate the Chinese patent applications, and – in the absence of a bilateral treaty with Sweden – that Swedish courts reciprocally enforce Chinese judgments, at least de jure (Nuo Ji et al, “Enforcement of Judgments in China: Overview”, Practical Law, Question n° 17).

Again, however, it is unclear that the Swedish court can – or indeed should – consider the views of the registration states. Consistency with the regulation, the objectives of certainty and uniform application, as well as the CJEU's general hostility to discretionary approaches, rather suggest that the same solution should be adopted regardless of the state in which the IP right is registered. These considerations might well prove important in a pending case (BSH Hausgeräte, C-339/22), where one of the issues is whether Article 24(4) Brussels Ia confers exclusive jurisdiction to the Turkish courts in respect of a Turkish patent whose invalidity has been raised incidentally. While the court is likely to reiterate that Article 24(4) is not directly applicable, that case provides another opportunity to clarify whether the rule may still be taken into consideration with regards to third state IP rights, and whether a different approach than that provided under the regulation is permitted.