The order issued by the Düsseldorf Local Division on 31 October 2024 granting the preliminary injunction requested by Valeo Electrification against some entities of the Magna group (available here) may seem one of the several ordinary PIs issued to date by the UPC, but actually includes interesting statements by the Court on the need to apply the general principle of proportionality when issuing provisional measures that may cause significant damages to the enjoined defendant.
The case at hand concerned the alleged infringement of EP 3 320 602 (a parallel case was also brought on EP 3 320 604, decided with an almost identical PI order, available here). The applicant belongs to Valeo Group and is a manufacturer of transmissions and transmission components. Defendants belong to the Magna Group and are also manufacturers of transmissions and transmission components. The parties had recently become competitors in the field of manufacturing and distributing mild hybrid technologies for motor vehicles, specifically electric motor generators.
The order issued by the Düsseldorf Local Division addressed in detail all issues typically dealt with when assessing a request for provisional measures, concluding that the patent in suit is more likely than not to be found valid, is more likely than not to be infringed by the defendants, and there was no delay in seeking relief by the applicant.
The Court lastly addressed the balancing of interests of the parties against each other, taking into account in particular – as per R. 211.3 RoP – any harm that might be caused to one of the parties by the granting of provisional measures or the dismissal of the application. The Court reasoned that under circumstances the interests of the Applicant outweigh those of the Defendants and is therefore justified to grant a preliminary injunction. However, the interests of the defendants still make it necessary in the case at hand, as a “very special” exception, to limit the scope of the preliminary injunction.
Defendants have indeed explained in detail that they would suffer enormous damages in the event of an injunction, since the car manufacturers they supply the infringing embodiment to (including in particular BMW) would not be able to easily replace it with other non-infringing components, including Magna’s or Valeo’s, due to the necessary modifications of the entire mechanical design and the lack of regulatory approval. Car manufacturers would thus be forced to interrupt production and would claim compensation for the resulting damage. The Court also noted that threatened damages in the event of a preliminary injunction covering the defendants’ supply obligations to BMW would be so high that an order to the applicant to provide security would not be a suitable instrument to adopt, as the amount of security required would be so high that the injunction would be practically impossible to enforce for the applicant.
All considered, the Court thus concluded that “The present order takes account of the potentially significant harm identified by the Defendants as being caused by a preliminary injunction by allowing Defendants to fulfil their existing obligations to their customer BMW notwithstanding the preliminary injunction. This is a narrowly defined exception which takes account of the particularities of the automotive industry supply market in general and the harm specifically identified in the present case in the event of an unlimited preliminary injunction. The order preserves the status quo while ensuring at the same time that the Defendants cannot expand their business activities in relation to the challenged embodiments. In particular, the preliminary injunction prohibits the Defendants from offering or distributing the challenged embodiments I and II to other customers than BMW. An increase in the quantities supplied to BMW beyond the existing contracts is also excluded. In order to minimise the disadvantages for the Applicant associated with such a strictly limited possibility of further use, Defendants are obliged to provide security in return” (emphasis added).
The landmark order by the Düsseldorf Local Division marks one of the very first cases where the UPC had the chance to apply the principle of proportionality weighing up the interests of both parties, as provided for under R. 211.3 RoP. We can expect that with the increase of cases and PI requests put forward to the UPC, addressing complex factual constellations, the Court will more and more often find itself carrying out a careful balancing exercise between the conflicting interests of the parties.
A further step will then be assessing whether and how the Court can take into account the interests of third parties as well (e.g. the interests of patients in pharma cases), following in the footsteps of existing national case law that had already established such principle (see e.g. the various decisions by Italian courts that issued PIs tailored to safeguard the interests of third parties in life sciences cases, carving out existing supplies to health authorities or setting a grace period for the injunction to take effect – which we commented on here and here).