With over 1,200 cases per year, Germany is the most frequently used jurisdiction for patent litigation in Europe. Most patent infringement cases are handled by the regional courts in Düsseldorf, Mannheim and Munich, which are widely recognised for their expertise in patent matters. Meanwhile, the Federal Patent Court has exclusive jurisdiction in patent nullity proceedings.
II TYPES OF PATENT
There are two types of patents effective in Germany:
- German national patents, granted by the German Patent and Trademark Office; and
- German parts of European patents, granted by the European Patent Office.
Both types of patents are granted only after a full examination by the respective patent office. Both types of patents give their owners the same rights and remedies and both can be renewed for a total term of up to 20 years from the application date. For patents claiming pharmaceuticals or plant protection products requiring marketing authorisation, 'supplementary protection certificates' can be issued, which effectively extend protection by up to an additional five years.
German patent protection is complemented by utility models. While they are faster to obtain, they are also usually more difficult to enforce. Utility models are registered with the German Patent and Trademark Office without prior examination of patentability, and can be renewed for up to 10 years from the application date. In contrast to patents, utility models are not admissible for method claims.
III PROCEDURE IN PATENT ENFORCEMENT AND INVALIDITY ACTIONS
i Overview: bifurcation
In Germany, there is a strict distinction between infringement and nullity proceedings. They are heard by different courts (bifurcation). Assertions of patent invalidity are not a valid defence in infringement main proceedings (different in preliminary proceedings). However, a promising invalidity action (opposition or nullity) can lead to a stay of the infringement proceedings.
In patent infringement cases, regional courts (first instance), higher regional courts (appeal) and the Federal Court of Justice (appeals on points of law) are competent. Although the judges of these courts have a legal background rather than a technical or scientific one, they are typically very experienced in patent matters. Nevertheless, if the court does not feel capable of assessing the relevant technical issue itself, it may appoint a neutral technical expert. It is therefore important to explain the technical facts in a manner comprehensible to an ordinary person without a technical background.
By contrast, for nullity proceedings against German patents and the German parts of European patents, the Federal Patent Court in Munich has exclusive jurisdiction. Nullity cases are decided by panels of five judges. Two of them are legally trained while three of them have a technical background. The decisions in nullity proceedings can be appealed to the Federal Court of Justice (five legally trained judges).
ii Infringement proceedings
Infringement proceedings can be initiated by the patentee or an exclusive licensee. Non-exclusive licensees can take legal steps if they have been authorised by the patentee.
First-instance infringement actions can be filed with a competent regional court in whose territorial jurisdiction the defendant is domiciled, or where the infringement took place. Offers on the internet usually result in any competent regional court having jurisdiction. In such cases, plaintiffs can freely choose between different regional courts. The parties have to be represented by an attorney-at-law in first and second instance proceedings. In an infringement appeal on points of law, representation by an attorney who is admitted at the Federal Court of Justice is mandatory.
First instance infringement actions usually take place according to the following steps (depending on local court practice):
- filing of the statement of complaint and advance payment of court fees by plaintiff;
- service of the complaint to the defendant by the court;
- statement of defence by the defendant;
- brief reply by the plaintiff;
- rejoinder by the defendant;
- oral hearing; and
- decision by the court.
The duration of these proceedings differs between venues. The duration of proceedings at the most popular courts usually ranges from about nine months (Mannheim and Munich) to 15 months (Düsseldorf). The court typically orders a fixed schedule for the submission of briefs at an early stage of the trial. If a technical expert is appointed by the court (which rarely happens), this can cause delays of about one year or more. Patent infringement appeal proceedings ordinarily last for about one year.
German patent infringement proceedings are 'front-loaded'. The initial statement of complaint shall already substantiate the alleged infringement. All relevant facts and defences shall be presented in the first-instance court since the admissibility of new facts in appeal proceedings is limited. The burden of proof regarding an infringement is on the plaintiff. The German Code of Civil Procedure has no counterpart to court-supervised fact-finding processes, such as discovery. However, under certain circumstances, it is possible to obtain an inspection order to gain access to otherwise inaccessible facts (see section VI.ii).
A patentee may assert independent or dependent claims of the patent as granted. However, he or she may also choose to assert a claim with amendments, anticipating possible claim amendments in invalidity proceedings. In any case, amendments broadening the scope of a claim are inadmissible.
Oral hearings in infringement proceedings are mandatory and open to the public, while infringement court files are not open to the general public. However, third parties demonstrating a legal interest may be allowed to inspect the file. In practice, infringement courts are reluctant to grant file access.
German law prescribes the shifting of statutory litigation costs, which the losing party has to bear. This includes court fees, the winner's statutory attorney (and – if applicable – patent attorney) fees, as well as reasonable disbursements (e.g., travel costs and translations). Court fees and statutory prescribed attorney fees are calculated on the basis of the value in dispute. The court sets this value, which in patent litigation cases typically starts at €0.5 million, while the statutory maximum is €30 million. By way of example, for a litigation value of €2 million, regional court fees amount to about €27,000. In the appeal instance the costs tend to be about one third higher than the costs in the first instance. The statutory costs of an appeal on points of law before the Federal Court of Justice are about two-thirds higher than in first instance.
iii Invalidity proceedings
There are two applicable types of invalidity proceedings:
- oppositions with the office that granted the respective patent; and
- nullity lawsuits.
This chapter concentrates on (b), which is specific to Germany.
Anyone may file a nullity lawsuit against a German patent or the German part of a European patent with the Federal Patent Court. While the patent is in force, no particular legal interest is required, especially no relationship between the patentee and the nullity plaintiff. Once the patent expires, however, a nullity plaintiff has to demonstrate a legal interest in suing. Such interest may be the possible exposure to past damages. The defendant in a nullity suit is always the party registered as patent owner. This also applies if the patent was assigned to a third party without any registration on the official registers. Patent attorneys and attorneys-at-law are admitted to represent the parties in such proceedings.
The typical course of nullity proceedings is as follows:
- filing of the statement of complaint and advance payment of court fees by the plaintiff;
- service of the statement of complaint to the defendant by the court;
- the defendant has one month to object the nullity suit (no reasoning required); otherwise the court can decide right away;
- statement of defence by the defendant;
- the court submits a preliminary opinion about three to six months before hearing;
- further statements of the parties, especially the filing of auxiliary requests;
- hearing and oral announcement of the judgment; and
- the court submits a full written judgment with reasons about three months after the hearing.
In a preliminary opinion, the Federal Patent Court informs the parties about its view of the case and indicates the points that it considers most relevant. In most cases, it also attaches the summons for the hearing and sets a deadline for filing final submissions, including amendments to claims (usually submitted in the form of auxiliary requests). Post-deadline submissions may then be rejected. Apart from this, the parties may file submissions at any time.
The hearing typically takes from about a half to a full working day. The panels usually deliberate directly after the hearing and announce their decision on the same day. The written grounds for the decision are usually issued within about three months thereafter. The average duration of nullity proceedings in 2016 was 24.6 months.2
First instance nullity decisions by the Federal Patent Court may be appealed to the Federal Court of Justice on points of law and some facts. Appeal proceedings take from 15 months to two years.
Federal Patent Court files in nullity proceedings are open for inspection by the public upon request. Access is granted unless a party can demonstrate a special interest in confidentiality.
As is the case in infringement proceedings, court fees and statutory attorney fees depend on the value in dispute set by the court (with a higher factor for court fees). If there are parallel infringement proceedings regarding the attacked patent, the nullity litigation value is usually set to 125 per cent of the accumulated infringement litigation values. By way of example, based on a litigation value of €3 million, nullity court fees add up to about €55,000 for the first instance. For the second instance, the court fees would add up to about €75,000.
IV SUBSTANTIVE LAW
According to Section 9 of the German Patent Act (GPA), the following acts constitute a direct infringement:
- making, offering, placing on the market, using, importing or possessing a patented product for aforementioned purposes;
- using a patented process or offering a patented process for use in bad faith; and
- offering, placing on the market, using, importing or possessing a product obtained directly by a patented process for aforementioned purposes.
'Indirect or contributory infringement' is defined in Section 10 of the GPA as supplying or offering means relating to an essential element of an invention, if it is known or obvious that the means are suitable and intended for the use of the invention. This does not apply to means that are staple products for general (i.e., not patent-specific) use.
'Equivalent infringement' is also recognised under German law. An alternative solution is considered equivalent to the patented solution if:
- it objectively achieves the technical effect of the invention in substantially the same way;
- it could be found by a skilled person without an inventive step; and
- it appears comparable to the patented solution based on the technical idea of the invention (parity).
The claims define the scope of protection of any patent. The respective description and drawings shall be used to interpret the claims. Relevant in this context is the understanding of an average person skilled in the respective art. In contrast to other jurisdictions, in Germany, the prosecution history of a patent is generally not relevant for the scope of protection of a patent once granted. In particular, the statements made by a patentee towards the patent examiner during examination do not limit the scope of protection. All in all, German infringement courts tend to interpret the claims in a broad (i.e., functional) manner.
Liable for patent infringement is the company committing the infringing act. While most recently the senate of the Federal Court of Justice, which is responsible for 'soft IP rights', has limited the liability of directors, the senate responsible for patent law, however, decided that the managing director of an infringing company is liable for patent infringement unless he or she can prove that he or she has established a sufficient patent compliance system.3
Furthermore, foreign suppliers of means that relate to an essential element of the invention and that are assembled to patented products in Germany can be held liable for contributory infringement. According to a far-reaching decision of the Federal Court of Justice, the delivery of such means in a foreign country can also cause liability in Germany provided that the supplier knew that the recipient would subsequently deliver these means on to Germany.4
Within the bifurcated system, patent invalidity is not a valid defence in main infringement proceedings (case on the merits). Defendants usually claim that the attacked embodiment is non-infringing, for example, by arguing a narrow claim construction (which is a question of law) or by challenging the factual assertions made by the plaintiff. Further possible defences include, in particular, prior use rights, research exemptions and the exhaustion of patent rights.
As infringement courts are not competent to decide on the validity of an asserted patent (again, due to the bifurcation system that is in place), there is a presumption of validity. If an infringement court comes to the conclusion that this presumption is most likely false in a particular case, it shall stay its proceedings until parallel invalidity proceedings are concluded. Court practice regarding the circumstances under which infringement proceedings have to be stayed differs between different venues. Particularly in the Düsseldorf courts, a stay will basically only be granted if:
- novelty-destroying prior art, which was not subject to the examination proceedings, is submitted; or
- there is already a straightforward preliminary opinion by the Federal Patent Court, or the German or the European Patent Office, or a first-instance decision finding that the patent is invalid.
The limitation period for claims based on patent infringement is three years, starting at the end of the year in which the claim accrued and the patentee became aware of the underlying facts. If the patentee does not become aware of the facts (without negligence on his or her part), claims expire after 10 years, except for claims on the restitution of unjustified enrichment, which expire 30 years after their accrual. However, cease and desist claims re-accrue with each occurrence of an infringing act.
When antitrust law and patent law collide, patent law usually prevails as a patent inherently grants a monopoly. However, this rule of thumb does not hold in case of a 'standard essential patent' (SEP). While in 2009, the Federal Court of Justice5 set forth strict requirements for a FRAND6 defence, stating that the defendant has to seek for a licence and to act like a licensee (so that he had to render accounts, deposit a security, refrain from challenging the validity of the asserted patent), in 2013, the Düsseldorf Regional Court – with a less strict view than the EU Commission7 – referred five questions to the Court of Justice of the European Union (CJEU).8 In 2015, the CJEU established in its Huawei/ZTE decision9 a pretrial procedure with specific criteria (in principle: notice of infringement, request for a licence, licence offer and counter offer), which have to be met by both the SEP holder and the alleged infringer, while unlike the previous German practice the SEP holder has to approach the alleged infringer. If the alleged infringer complies, while the SEP holder fails to comply the FRAND defence is successful and the SEP holder may not enforce his or her injunction, recall and destruction claim. In the aftermath of Huawei/ZTE, German courts have refined the criteria set forth by the CJEU and, inter alia, held that the criteria are consecutive, that security deposit is due once the counter-offer is rejected and that it may be based on the counter-offer plus a safety margin.10 For successfully relying on the FRAND defence in Germany, the infringer must be willing to take a worldwide portfolio licence if this is the standard in the respective industry. There are still open questions that will be answered in pending and upcoming SEP cases.
V FINAL REMEDIES FOR INFRINGEMENT
If an infringement court finds for infringement of a patent in main proceedings, it usually awards, upon the request by plaintiff, a (permanent) injunction, a claim for information and rendering of accounts, and declares that the infringer is liable for damages and shall bear the statutory litigation costs. In principle, damages and rendering of accounts are owed only if the infringer acted negligently. However, it is usually assumed that a business infringing a patent was acting negligently.
In addition, the infringer may be ordered to recall and destroy infringing products, and to bear the costs for publishing the decision in relevant journals. However, the remedy of bearing the publication costs is rarely awarded, as courts tend to see it as disproportionate.
The rendering of accounts is intended to enable the claimant to calculate his or her damages. The latter can be calculated at the claimant's choice on three independent bases. These are: lost profits,11 the infringer's profits12 or reasonable royalties.13 Unlike in other jurisdictions, in Germany damages are not intended to have a punitive effect. Therefore, the intentions and conduct of the infringer do not directly influence the amount of damages awarded. The enforcement of an order to render accounts can be a lengthy process and cause considerable unease for both parties. On the one hand, it may take many reiterations until a non-cooperating infringer provides true and genuine information. On the other hand, if the information given is particularly hard to believe, an affirmation in lieu of oath on the truthfulness may be claimed. What is more, the infringer is ultimately forced to reveal internal information that would otherwise remain secret. These scenarios are the reason why many cases are settled after an infringement ruling becomes final, thereby dismissing the formal enforcement thereof.
As long as an appeal can be lodged or while it is pending, first-instance (regional court) infringement decisions are enforceable only against the provision of a security. This is intended to cover defendant's damages caused by the enforcement of the decision if it is revoked upon appeal. Once the decision is served on the defendant and the security is made (normally in the form of a bank guarantee), the infringer has to abide by the court orders, that is, to cease and desist, render accounts and provide information.
Intentional patent infringement qualifies as criminal conduct. In practice, however, there are very few criminal proceedings and decisions related to patent infringement. Nevertheless, patentees sometimes strategically file a criminal complaint with prosecutors in order to make them secure evidence, or inspect suspected infringing goods or business rooms.
VI OTHER TYPES OF PATENT PROCEEDING
i Preliminary infringement proceedings
Preliminary injunctions against patent infringement can, in some cases, be obtained within a few days or weeks. Thereby, a patentee can enforce some of its rights (mainly this applies for injunctions, but not for recall, destruction or damages) quickly in urgent cases, for example, at trade fairs. This requires that the court finds that the patent is likely to be both valid and infringed; and that the matter is urgent. Court competence is the same as in case of main infringement proceedings – that is, with regional courts. Urgency is usually assumed if the petitioner filed its motion within a certain period upon learning about the facts constituting the infringement. This period is one month with some relevant courts, but varies according to local practice.
In practice, there is a good chance of obtaining a preliminary injunction if infringement and validity of the patent are obvious. However, the threshold for obtaining ex parte preliminary injunctions is high. To lower the risk of being surprised by an ex parte injunctive relief, it is possible to file a protective brief. This can be seen more or less as an anticipated statement of defence. However, such a protective brief bears the risk of actually increasing the likelihood of an injunction being granted ex parte as opposed to a hearing being scheduled, as the court may come to the conclusion that it already heard the defendant's arguments by taking the protective brief into account. Therefore, whether or not to file a protective brief and if so, which arguments to make (or not) has to be carefully considered on a case-by-case basis.
The litigation value for preliminary injunction proceedings is lower than that for infringement proceedings. Depending on local practice, courts usually set the litigation value of preliminary proceedings to between one-quarter and one-third of the value they would assign to the same case in main proceedings.
ii Inspection orders
The German Code of Civil Procedure, as applicable to infringement proceedings, does not provide any counterpart or equivalent to discovery. However, an infringement court may, upon a patentee's request, order the inspection by a court-appointed expert of the alleged infringer's place of business or place of production. The patentee's patent attorney and attorney-at-law may participate in the inspection, but not the patentee itself. The aim is to gain or secure evidence of the infringement if such infringement is at least likely and the patent owner has no reasonable alternative for gathering the evidence. In order to protect technical know-how and trade secrets of the alleged infringer, the attendees are obliged to keep the gathered information confidential (even regarding their own client) as long as the court has not ordered the disclosure of the (possibly redacted) expert opinion.
A motion for an inspection order can be made during infringement proceedings or pretrial.
iii Border detention
A patentee may apply for a border detention to be executed by customs authorities by filing a respective application with the customs authorities. Such may either be based on EU14 or German law.15 In practice, most requests are based on EU law. For a border detention based on EU law, the patent holder has to demonstrate a likelihood of a patent infringement by the imported goods.16
The application shall include the information that customs officers need to distinguish between the attacked products and other products, such as the names of unlicensed manufacturers, products, model numbers and typical importers. It is advisable to provide samples and pictures of the infringing goods, a 'white list' of known licensees and a 'black list' of known infringers or routes. All in all, the better the quality of information that is provided to customs, the higher the chance that customs officers will be able to successfully identify and seize infringing products without 'false positives'.
iv Declaratory judgments of non-infringement
Declaratory judgments of non-infringement are available in Germany (regional courts are competent). The plaintiff has to show a special legal interest in obtaining such judgment. Actions for negative declaratory judgments are commonly used in order to prevent a patentee from (publicly) making assertions of infringement without seeking a court decision. If such action is filed, the defendant may, however, counter-sue for infringement, which results in a dismissal of the claim due to a lack of interest in the negative declaratory decision.
v Compulsory licensing
In principle, compulsory licensing is possible under Section 24 GPA (the Federal Patent Court is competent). The licence seeker is required to demonstrate that:
- he or she has primarily failed to be granted a licence by the patentee; and
- it is in the public interest to grant a compulsory licence.
Such public interest needs to prevail over the patentee's interests in the exclusive commercial exploitation of the patent. This is rarely the case. As recently as 2016, a compulsory licence was granted in preliminary proceedings by the Federal Patent Court with respect to a patent for an AIDS drug for risk patients (e.g., pregnant women that were already under treatment).17 In July 2017, this decision was confirmed by the Federal Court of Justice. As the patent was subsequently revoked by the Boards of Appeal of the European Patent Office, the main proceedings before the Federal Patent Court revolved only around questions regarding the amount of licence fees for the time of the use of the compulsory licence and the effects of the revocation on the proceedings. However, to date, this case is the only one of a compulsory licence being granted and maintained in appeal since the foundation of the Federal Republic of Germany.18
vi Challenging patent ownership
German law generally also provides for the right to challenge the ownership of the patent (regional courts are competent). In accordance with Section 8 GPA, the entitled person in respect of whose invention an application has been filed by a non-entitled person or a party aggrieved by an usurpation can require the patent applicant to assign to him or her the right to the grant of the patent. Where the application has already resulted in a granted patent, he or she can claim the transfer of the patent. The burden of proof is on the plaintiff, who has to demonstrate that the invention was made by the plaintiff or that the plaintiff had sufficient knowledge of the invention to put into practice. Therefore, it must be proved that the invention described in the patent application is identical to the plaintiff's invention and that the invention was causal for the defendant's patent application.
i Infringement proceedings
First instance decisions in infringement proceedings can be appealed. The respective higher regional court acts as appeal court, and hears arguments on law, but new facts only within certain limits. A further appeal on points of law to the Federal Court of Justice is possible if allowed in the decision by the appeal court or upon a non-admittance complaint. For both ways, appeals on points of law are very rarely admitted.
ii Nullity proceedings
For nullity decisions by the Federal Patent Court, the Federal Court of Justice acts as appeal court. In this case, no particular admission of the appeal is required, and the Federal Court of Justice hears points of law and – within limits – facts.
The time limit for filing an appeal is one month upon the service of the written decision including reasons. The appealing party must provide reasons for the appeal within two months (or, in nullity proceedings, three months) upon the service of the written decision, including reasons. However, in any case, the deadlines for filing an appeal and reasons ends after five months from the rendering of the decision, be it with or without reasons, and served or not.
VIII THE YEAR IN REVIEW
The Higher Regional Court of Düsseldorf recently had to decide on the scope of a prior use right (Section 12 GPA) arising from the indirect use of the patented teaching. The main issue in dispute was the question, if the indirect prior use performed by a supplier (i.e., the delivery of the components of a product) could also legitimate a later performed direct use (i.e., the assembly of the product) by the same supplier. The court found that a supplier that had delivered all of the components of a product could not only continue to deliver, but also assembly such product himself. However, the conditions for such prior use right depend on the kind of the patented claims. In case of a product claim, the assembly of the patented product by the supplier is only covered by the prior use right, if the assembly by the prior purchaser that received the corresponding components from the supplier was reliably foreseeable and easy to do. If the method of assembly is also patented, it is further required, that the patented method for the assembly of the delivered components is the only technically feasible and economically reasonable way to assemble such components. This decision is not final and could still be set aside by the Federal Court of Justice. Nevertheless, this decision of a higher instance court strengthens the rights of suppliers and minimises the considerable uncertainties regarding the scope of prior use rights.
Besides ongoing SEP litigation in Germany, the establishment (or not) of the Unified Patent Court is another development to watch:
Whether and when the Unitary Patent and the Unified Patent Court (UP/UPC) will enter into force remains to be seen. Apart from the unsolved issues caused by the upcoming exit of the UK from the EU (Brexit), the ratification in Germany is further delayed by a constitutional complaint. As of August 2018, the further timeline of these proceedings is still unclear. Especially, no oral hearing has been scheduled. Even if the Federal Constitutional Court rejects the complaint, the timeline of the complaint and the deadline for the Brexit could put further obstacles in the way of UK's participation in the UPC system.
1 Jochen Herr is principal, Alexander Ritter is a senior associate, and Moritz Meckel and Johannes Druschel are associates at Baker McKenzie.
3 Federal Court of Justice, GRUR 2016, p. 257 – Glasfasern II.
4 Federal Court of Justice, GRUR 2015, p. 467 – Audiosignalcodierung.
5 Federal Court of Justice, GRUR 2009, p. 694 – Orange-Book-Standard.
6 Fair, reasonable and non-discriminatory.
7 Press release of 21 December 2012 (IP/12/1448).
8 Düsseldorf Regional Court, GRUR 2013, p. 614 – Huawei/ZTE.
9 Court of Justice of the European Union, GRUR 2015, p. 764 – Huawei/ZTE.
10 For example, only Higher Regional Court of Düsseldorf, BeckRS 2016, p. 21067 – SISVEL/Haier.
11 Hardly ever chosen because the patentee is required to disclose his or her own financial information.
12 Infringer's profits = (revenues – costs) x causality factor [as a percentage].
13 Damages based on licence analogy = basis (i.e., sales or products sold) x licence fee.
14 Product Piracy Regulation (EU/6087/2013).
15 Section 142a GPA.
16 Section 142a GPA requires an 'obvious infringement'; however, it appears that this requirement is in practice handled in the same manner.
17 Federal Patent Court, GRUR 2017, p. 373.
18 Federal Court of Justice, BeckRS 2017, p. 120779.