Jurisdictional Challenges and Stays of Proceedings in FRAND Counterclaims: The Court of Appeal
In three parallel orders, the Court of Appeal clarifies the strict timeline for challenging jurisdiction over counterclaims. The panel confirms that proceedings before the Court of First Instance will rarely be stayed for procedural appeals.
The procedural mechanics of staying proceedings before the Court of First Instance pending an appeal on a procedural objection have required ongoing clarification at the Unified Patent Court. The general rule that main proceedings must continue unhindered by procedural appeals was established in the MALA v Nokia order, but the precise threshold for exceptional circumstances continues to be tested. In three parallel orders, the Court of Appeal has now clarified how this strict standard applies when a third-party intervener faces a FRAND rate-setting counterclaim and contests the jurisdiction and competence of the Court.
Why did the Court of Appeal refuse to stay the FRAND counterclaim proceedings?
The dispute in UPC-COA-0000118/2026, UPC-COA-0000119/2026, and UPC-COA-0000120/2026 arose after Dolby sued Acer for infringement of EP 3 079 153. Vectis, which administers the Vectis Opus Patent Pool containing the patent at issue, applied to intervene. Acer subsequently lodged a counterclaim for FRAND rate-setting against both Dolby and Vectis. When the local division The Hague admitted the counterclaim against Vectis, the appellants sought a stay of proceedings pending their appeal of that procedural order.
The Court of Appeal rejected the request. Applying the principles underlying Rule 223 RoP and Article 74(1) UPCA, the panel emphasised that proceedings before the Court of First Instance must continue unhindered as far as possible. A stay of proceedings requires exceptional circumstances or a manifestly erroneous impugned order. The panel found no such circumstances here. Because the Court of First Instance would inevitably have to evaluate Acer's FRAND defence and the negotiation record between Acer and Vectis regardless of the appeal's outcome, proceeding without a stay of proceedings did not create an exceptional burden on the parties.
How does the timing of a Preliminary objection affect jurisdictional challenges?
A central argument raised by Dolby and Vectis was that the Unified Patent Court lacked jurisdiction and competence over Vectis, a UK-domiciled entity, for a third-party counterclaim. They argued that a stay of proceedings was the only means of preventing them from litigating the merits of a claim that might never have been properly before the Court.
The Court of Appeal focused strictly on procedural timelines. Dolby and Vectis obtained access to the counterclaim on 27 March 2026. They did not lodge their response until 17 June 2026, which was more than one month later. The panel held that the time limit for lodging a Preliminary objection in accordance with Rule 19.1 RoP had therefore expired. Because the appellants failed to raise the jurisdictional challenge within the strict one-month window, the local division was correct not to rule on jurisdiction and competence at the preliminary stage. The Court of Appeal confirmed that while a decision on jurisdiction and competence may form part of the final decision on the merits, it can no longer be decided as a preliminary matter.
Why was the local division permitted to conditionally add an intervener as a party?
The appellants also contended that the local division committed a manifest error by adding Vectis as a party "in as far as necessary" on the side of Dolby. They argued that Rule 305 RoP requires a specific application by a party, and that the court cannot add a party on its own motion.
The Court of Appeal found no manifest error in the Court of First Instance's approach. The local division had added Vectis as a party under Rule 305 RoP strictly under the condition that the Court of Appeal might later find that treating an intervener as a party under the Rules of Procedure was insufficient to establish the admissibility of the counterclaim. The panel concluded that this conditional order was not contradictory and did not constitute a factual or legal finding that was untenable on a summary assessment.
When is an appellant considered adversely affected under Rule 220.1 RoP?
The Court of Appeal also addressed the admissibility of Dolby's separate appeal. Pursuant to Rule 220.1 RoP, only a party adversely affected by a decision may lodge an appeal. The operative part of the local division's order only declared the counterclaim against Vectis admissible. It contained no corresponding ruling on the admissibility of the identical FRAND rate-setting counterclaim against Dolby.
Dolby argued that procedural economy and legal certainty required the admissibility of the counterclaim against it to be resolved alongside the closely related question concerning Vectis. The panel rejected this argument, noting that there had been no decision by the local division regarding Dolby that was currently open to appeal. Consequently, Dolby was not adversely affected, rendering its appeal inadmissible.
What must practitioners change when challenging jurisdiction over counterclaims?
These parallel orders establish a strict timeline for defendants to a counterclaim. If a party intends to challenge the jurisdiction and competence of the Unified Patent Court over a counterclaim, they must file a formal Preliminary objection within one month of service of that claim. Relying on jurisdictional arguments in a later substantive response, or attempting to raise them during an application for panel review under Rule 333 RoP, will result in the forfeiture of the preliminary procedure.
Furthermore, practitioners should not expect a stay of proceedings while appealing case management orders unless they can demonstrate that the Court of First Instance's order was manifestly erroneous. Where the underlying facts of the contested claim overlap heavily with a defence that must be heard anyway, such as a FRAND defence, the Court of Appeal will likely find that the balance of convenience favours continuing the proceedings unhindered.
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Further Reading
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