UPC Service On Defendants: A Discrepancy In Approach Between Local Divisions?

April 18^th saw the release of the third in a series of decisions concerning the Xiaomi family of companies, highlighting a potential divergence between the behaviours of some of the UPC divisions. 

Panasonic filed independent infringement actions against a group of ten defendants including a number of members of the Xiaomi family of companies, in the Munich Local Division based on EP2197132, EP3024163, and EP2584854, and in the Mannheim Local Division based on EP2568724. All four infringement actions were brought at the same time. Meanwhile, Daedalus Prime LLC filed an infringement action in the Hamburg Local Division based on EP2792100 against a group of five defendants, including three members of the Xiaomi family.

In their actions, Panasonic brought applications under Rule 275.2 of the Rules of Procedure, requesting that the service of the statement of claim on defendant 3 (Xiaomi Technology Germany GmbH) be accepted as service on defendants 1, 2, 7 and 8 (Xiaomi Inc., Beijing Xiaomi Mobile Software Co. Ltd., Xiaomi H.K. Limited, and Xiaomi Communications Co., Ltd, respectively). Panasonic argued that all five companies were entirely owned by the same parent company either directly or indirectly, and that the companies deliberately presented themselves to the outside world as a unit. Counsel for the defendants disagreed that this qualified as effective service, and additionally requested a uniform extension of deadlines for the defendants on whom the service had been effected.

Meanwhile, in their action, Daedalus requested that service on Xiaomi Technology Germany should be accepted as service on Xiaomi Communications and Xiaomi Inc, under Rule 271.5(a). Daedalus argued that as the German branch company of Xiaomi is represented by two managing directors from China, Xiaomi Technology Germany is more than “an extended arm” of the parent company, and hence the German office could be considered a place of business for the Chinese companies.

In a decision issued in late November, Presiding Judge Dr Zigann of the Munich Local Division appeared to view Panasonic's request as reasonable and in the best interest of efficiency and cost reduction. While they viewed an extension requested by the defendant as overly generous, they did offer such an extension to the defendant as a concession, should they be willing to accept the service on defendant 3 as service on the remaining defendants. On this occasion the parties agreed along these lines, and so service on defendants 1, 2, 7 and 8 was accepted by defendant 3. 

However, in a decision issued by the Manheim Local Division in early December, Presiding Judge and Rapporteur Dr Tochtermann took a somewhat different view. Judge Tochtermann refused Panasonic's request, highlighting that Rule 275.1 of the Rules of Procedure explicitly set out that alternative service can only be considered in the event that it has not been possible to effect normal service, specifying that “it is therefore a mandatory requirement that an attempt at service was made in accordance with Rules 270-274 of the Rules of Procedure”. Further, Judge Tochtermann also held the view that even if this was to be ignored, Panasonic had not provided sufficient evidence that the third defendant could be considered a branch of all four companies. The plaintiff was ordered to submit the documents and translations required for service on the remaining defendants.

These parallel actions show an interesting direct comparison between the approaches taken by the Munich and Mannheim Divisions. The Munich division seemed to recognize the advantages afforded by streamlining the service procedure, whilst the Mannheim division appeared to favor much stricter adherence to the letter of the Rules. 

Following this, April 18^th saw the issuance of the response by the Hamburg Local Division to Daedalus' request, and it appears that their view is broadly similar to that of the Mannheim Division. The Mannheim Panel argued that Rule 271.5 does not apply to the Chinese Xiaomi companies, as Rule 271 specifically applies where an entity's principal place of business is within the Contracting Member States of the UPC. The Panel decided that it is Rules 273 and 274 which must be applied in the present case, requiring that service must first be attempted under Rule 274, before service at an alternative place under Rule 275 could be considered. This coherence between the Mannheim and Hamburg Divisions highlights the different view of the Munich Local Division - however, with Panasonic appealing the Mannheim decision, it appears the Court of Appeal will be weighing in on this matter soon enough and may provide some much needed clarity.

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Mr Thomas Prock
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