Network System Technologies LLC v. Volkswagen AG, Audi AG, Texas Instruments Incorporated, and Texas Instruments Deutschland GmbH

This case concerns an infringement action (Act. no. 597691/2023, UPC CFI no. 513/2023) brought by Network System Technologies LLC (NST) against Volkswagen AG, Audi AG, Texas Instruments Incorporated, and Texas Instruments Deutschland GmbH before the Local Division Munich of the Unified Patent Court, regarding European Patent EP 1 552 669 B1 (integrated circuit and method for establishing transactions).

On 4 March 2024, Volkswagen and Audi filed identical preliminary objections (App. no. 11854/2024 and 11857/2024) under rule 19 RoP, requesting dismissal of the infringement action as inadmissible, inconclusive, or manifestly unfounded. On the same date, Texas Instruments entities filed a separate preliminary objection (App. no. 11787/2024) seeking declarations that the UPC lacked international jurisdiction over claims relating to the UK designation of the patent and over damages claims against TI. On 5 March 2024, Volkswagen and Audi filed further applications (App. no. 12106/2024 and 12118/2024) under rule 361 RoP seeking dismissal as manifestly unfounded.

The defendants raised several grounds: (1) The Court lacked jurisdiction because the patent was opted out under Art. 83.3 UPCA and the opt-out withdrawal was allegedly filed on 20 December 2023 by Xingye Huang of Simmons & Simmons LLP, who was neither the proprietor nor a registered representative at that time, with no evidence of authority provided. (2) NST lacked standing, as it provided no evidence of the patent transfer from the previous proprietor (Philips), and could not assert claims for the period 19 September 2007 to 24 June 2022 without evidence of assignment. (3) The infringement allegations were overly broad, covering 10 vehicle models for Volkswagen and 17 for Audi, but only properly detailed for one IC model (TI DRA79x SoC). (4) The UPC lacked jurisdiction over UK damages claims under Art. 71b no. 3 of Regulation EU no. 1215/2012, since Art. 71b no. 2 did not apply to defendants domiciled in Germany. (5) The UPC lacked jurisdiction over damages claims against TI in Germany, France, and the UK due to lis pendens, as NST had already brought an infringement action against TI in the United States District Court for the Eastern District of Texas on 19 December 2022 concerning the US counterpart of the patent.

NST submitted its comments on 5 April 2024, arguing that the opt-out withdrawal was validly filed, that it had standing as the registered proprietor, and that it was sufficient at this stage to provide a detailed infringement analysis for one device (the TI DRA79x SoC) as a representative example, with the mapping to other devices to be shown later if needed.

The Court, presided by Judge Matthias Zigann with judges Tobias Pichlmaier and Pierluigi Perrotti, issued its order on 8 May 2024. The Court dismissed the rule 361 RoP applications, finding that NST's infringement allegations, while concise, were not manifestly unfounded at this stage. The Court held that it was sufficient to provide a detailed outline of infringement and a feature-by-feature mapping for one specific device by way of example, with the extension to other devices to be assessed later if necessary.

Regarding the rule 19 RoP preliminary objections, the Court partially dismissed them and deferred the remaining jurisdictional questions to the main proceeding under rule 20.2 RoP. The Court found sound reasons of case management efficiency to defer decisions on lack of jurisdiction, particularly given pending counterclaims for revocation (CC no. 24451/2024 and CC no. 24753/2024) and a separate revocation action before the Central Division in Paris (Act no. 19134/2024). The Court noted that the entire UPC system aims at efficiency under Art. 41.3 UPCA.

The Court ordered that the rule 361 applications be dismissed, the rule 19 preliminary objections be partially dismissed with the residual part to be dealt with in the main proceeding, costs to be addressed with the main proceeding, and leave to appeal granted to the extent of the dismissal. The order could be appealed within 15 days of service pursuant to Art. 73.2(b)(ii) UPCA and rules 220.2 and 224.1(b) RoP.