Daedalus Prime LLC v. Xiaomi Inc., Xiaomi Communications Co., Ltd., Xiaomi Technology Netherlands B.V., MediaTek Inc. (Headquarters), Xiaomi Technology Germany GmbH

Daedalus Prime LLC, a New York-based company, filed a patent infringement action before the Court of First Instance (Hamburg Local Division) concerning EP 2 792 100 against five defendants: Xiaomi Communications Co., Ltd. and Xiaomi Inc. (both in Beijing, China), Xiaomi Technology Netherlands B.V. (Xiaomi NL), Xiaomi Technology Germany GmbH (Xiaomi DE), and MediaTek Inc. (Hsin-Chu City, Taiwan). Daedalus requested that service of the Statement of claim on the Chinese Xiaomi companies be effected via Xiaomi DE, and service on MediaTek via MediaTek Germany GmbH, pursuant to Rule 271.5(a) RoP, which governs service on a party with a place of business in a Contracting Member State.

The Hamburg Local Division dismissed Daedalus's request, holding that Rule 271.5 RoP was not applicable because the Chinese Xiaomi companies and MediaTek are domiciled outside the territory of the Contracting Member States of the UPCA, and Daedalus was not arguing that these companies had their statutory seat, central administration, or principal place of business within the Contracting Member States. The Local Division concluded that service must be effected in accordance with Rules 273 and 274 RoP, requiring at least a first attempt of service on the Chinese Xiaomi companies under the Hague Convention (Rule 274.1(a)(ii) RoP), since China is a party to the Hague Convention but not covered by Regulation (EU) 2020/1784. For MediaTek in Taiwan, which has not acceded to the Hague Convention, service must be attempted through diplomatic or consular channels from Germany (Rule 274.1(a)(iii) RoP). Daedalus was instructed to submit the necessary documents, including translations into Chinese.

Daedalus appealed, arguing that the German subsidiaries constituted 'permanent places of business' under Rule 271.5(a) RoP, pointing to the Xiaomi Group's uniform business strategy and the fact that Xiaomi DE is a wholly owned subsidiary of Xiaomi NL, which is in turn controlled by the Chinese parent companies. Daedalus argued that the Chinese parent companies determine the global business of the Xiaomi Group and use Xiaomi DE as an extension of the Chinese parent company.

The Court of Appeal rejected the appeal. It held that a defendant company in China or Taiwan cannot, as a starting point, be served via a company within the same group in a Contracting Member State. Such a group company cannot automatically be seen as a statutory seat, central administration, or principal place of business of a defendant in China or Taiwan, nor a place where such defendant has a permanent or temporary place of business. The Court emphasized that the concept of 'place of business' requires a minimum degree of stability and a suitable infrastructure, and that the mere fact that a subsidiary acts as an extension of the parent company does not transform the subsidiary into a place of business of the parent. The Court also noted that the EU Service Regulation (Regulation 2020/1784) does not apply to defendants in China or Taiwan, meaning the conditions for Rule 274.1(a)(i) RoP are not met.

The Court of Appeal further dismissed Daedalus's auxiliary requests, which were first raised at the oral hearing, finding that Daedalus could not justify why they could not reasonably have been made earlier and that allowing them would have contravened the interests of the other party (Rule 222.2 RoP). The Court clarified that its ruling did not preclude the possibility of service by other or alternative methods at a later stage under Rules 274.1(b) and 275 RoP. No decision on costs was made, as the order was not a final order concluding the proceedings.