Unsubstantiated License Defenses and Accessory Liability: The Mannheim Local Division on EP 2 563 695 B1
The Mannheim Local Division clarifies the strict substantiation requirements for license defenses based on parallel national proceedings. The decision also applies the Philips v. Belkin standard to statutory corporate directors.
When a former licensee continues to manufacture and sell a patented product while challenging the termination of the license in parallel national proceedings, the patent proprietor faces a strategic choice. Do they await the outcome of the national contract dispute, or do they enforce the patent directly at the Unified Patent Court? In UPC-CFI-0001135/2025, Honeywell chose the latter route for a telescopic belt conveyor, testing the boundaries of how the Mannheim Local Division handles unsubstantiated license defenses and requests for a stay of proceedings.
Why did the Mannheim Local Division refuse to stay the proceedings under Rule 295(m) RoP?
The defendants requested a stay of proceedings under Rule 295(m) RoP, arguing that parallel Dutch proceedings concerning the validity of the license termination should be resolved first to avoid irreconcilable judgments. The panel declined the request. The panel emphasised that the proper administration of justice requires expeditious and high-quality decisions. Because the oral hearing had already taken place and the defendants had failed to substantiate their license defense in the UPC proceedings, the interest in an efficient resolution outweighed the desire to await the outcome of the Dutch national court.
How did the panel assess the unsubstantiated license defense?
The defendants argued they had the proprietor's consent under Article 25 UPCA, relying on a 2022 Licence Agreement and a purported 2024 agreement. However, they merely referred to their submissions in the Dutch proceedings without providing the underlying exhibits or detailing the applicable foreign law. The panel held that a mere referral to written submissions in other proceedings does not amount to a sufficiently substantiated defense under the Rules of Procedure. The defendants bore the consequences of this omission, leading to the outright dismissal of the license defense.
When are statutory directors and shareholders liable for a subsidiary's infringement?
The decision provides a concrete application of the Philips v. Belkin standard for accessory liability. Solvest VII, the sole shareholder of the manufacturing entity Sovex Systems B.V., and two statutory corporate directors, Solvink and Kleine Beuk, were held liable as infringers. The panel found that they were aware of the patent and the unlawfulness of the continued offering of the "Bendy Boom" following the license termination. Because they failed to instruct Sovex Systems B.V. to stop the infringing acts when it was possible and reasonable to do so, the acts were attributed to them. Interestingly, the panel left open whether the Philips v. Belkin criteria for natural persons strictly apply to statutory corporate directors, as the threshold for liability was met in any event.
Why did the articulated boom of GB 753 fail to anticipate the nested conveyor section?
On validity, the defendants argued that claim 1 of EP 2 563 695 B1 lacked novelty over prior art document GB 753. The dispute centered on feature 1.7, which requires the pivotable conveyor section to be "nested within an adjacent conveyor unit". The panel noted that GB 753 explicitly states its articulated boom section does not have telescopic capability. Instead, it is arranged to fall back and overlie the retracted main sections. The panel held that a statement confirming the absence of a technical arrangement cannot be understood as an implicit disclosure of it. Consequently, the overlying boom was not nested, preserving novelty.
What must practitioners change when relying on parallel national proceedings after this decision?
This decision demonstrates that defendants cannot simply use parallel national contract litigation as a shield against UPC infringement actions without fully substantiating the defense before the panel. In practice, practitioners should explicitly substantiate any license defense within the Statement of defence itself. Relying on cross-references to national dockets or withholding exhibits to save costs risks the defense being dismissed. Furthermore, corporate officers and shareholders may need to actively instruct subsidiaries to cease operations once a license is terminated. Passive knowledge of continued infringement can trigger corporate accessory liability, making the directors and holding companies directly responsible for damages and subject to injunctions.
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Further Reading
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