Conditional Counterclaims for Revocation: The Court of Appeal on Rule 263.3 RoP
The Court of Appeal has clarified the procedural mechanics for making a counterclaim for revocation conditional upon a finding of infringement. The order establishes a framework for conditional appeals to preserve validity attacks.
The Court of Appeal has established that a defendant in infringement proceedings may validly limit a counterclaim for revocation by making it conditional upon a finding of infringement.
In UPC-CoA-40/2026, the panel provided a comprehensive procedural framework for managing such conditional counterclaims across both instances of the Unified Patent Court.
How did the Local Division Munich handle the conditional limitation?
The dispute arose in infringement proceedings brought by Emboline against AorticLab concerning EP 2 129 425. AorticLab initially lodged a standard counterclaim for revocation. During the oral hearing before the Local Division Munich, AorticLab declared it would not pursue the counterclaim as originally filed. Instead, the defendant made the counterclaim dependent on the occurrence of a finding of patent infringement by the Court.
The Local Division Munich found that the patent had not been infringed. Consequently, the condition for deciding the counterclaim was not fulfilled. The Court of First Instance did not decide on the counterclaim, held that the costs incurred in relation to it were unnecessary, and ordered AorticLab to bear those costs pursuant to Article 69(3) UPCA.
Why does Rule 263.3 RoP apply to conditional counterclaims?
The Court of Appeal endorsed the approach taken by the Court of First Instance. The panel noted that neither the UPCA nor the Rules of Procedure expressly address making a counterclaim conditional upon a finding of infringement.
However, the Court of Appeal reasoned that the balance of interests corresponds to that in the case of an unconditional limitation of a claim. Failing a specific rule covering this situation, the panel held that Rule 263.3 RoP shall apply by analogy (reasons 5). Under this framework, if a counterclaimant unconditionally requests that its claim is made conditional upon a finding of infringement, the request shall be granted.
How must a counterclaimant protect its position on appeal?
A critical procedural gap emerges when the Court of First Instance finds no infringement and the original claimant appeals. Even though the decision not to decide the counterclaim aligns with the defendant's own conditional request, the Court of Appeal held that the counterclaimant must nevertheless be considered to have a legitimate interest in an appeal (reasons 7). If the appellate panel were to overturn the non-infringement finding, the condition would be fulfilled.
To navigate this, the Court of Appeal outlined a specific mechanism. The counterclaimant may lodge an appeal pursuant to Rule 220.1(a) RoP under the condition that the infringement claimant lodges an appeal against the main decision. The financial mechanics are strictly tied to the claimant's actions:
- Once an appeal in the infringement action is lodged, the condition is fulfilled and the regular appeal fee must be paid.
- If no appeal against the decision in the infringement action is lodged within the relevant time period, the appeal is considered not lodged and no appeal fees are due.
What happens if the Court of Appeal overturns the non-infringement finding?
If the case proceeds to appeal, the counterclaim for revocation remains conditional unless the counterclaimant explicitly requests to remove the condition. Such a removal requires leave to change the claim pursuant to Rule 263 RoP by analogy.
Should the Court of Appeal find infringement, thereby fulfilling the condition, the panel clarified the jurisdictional outcome. The Court of Appeal shall as a rule not refer the counterclaim back to the Court of First Instance, but shall decide on it (reasons 10). This aligns with Article 75(1) UPCA and Rule 242.2(b) RoP, ensuring procedural efficiency.
What must defendants change when drafting counterclaims after UPC-CoA-40/2026?
This order provides a clear procedural pathway for defendants seeking to optimize litigation costs. By making a counterclaim for revocation conditional upon a finding of infringement, defendants can potentially avoid the costs associated with a full validity trial if they are confident in their non-infringement position.
However, practitioners must actively manage the appeal phase. If the Court of First Instance dismisses the infringement action, the successful defendant cannot simply remain passive. To preserve the revocation attack in case the claimant appeals, the defendant must proactively lodge a conditional appeal against the decision not to decide the counterclaim. Because this mechanism was previously unclarified, the Court of Appeal explicitly noted that AorticLab, having missed the appeal deadline, may wish to request re-establishment of rights pursuant to Rule 320 RoP. Future litigants will be expected to utilize the conditional appeal mechanism from the outset.