The Intellectual Property Review: Germany
Forms of intellectual property protection
Trademarks can be registered with the German Patent and Trademark Office (GPTO) as a national trademark or with the European Union Intellectual Property Office (EUIPO) as an EU trademark. In addition, there is the possibility of obtaining trademark protection for Germany via international registrations designating Germany. While a national trademark (and an international registration designating Germany) has effect only for Germany, the EU trademark has a unitary effect in the EU.
Irrespective of the difference in the geographical scope and the fact that national law allows non-registered trademarks, the legal situation is rather similar, as trademark law is strongly harmonised in the EU. Nevertheless, there are further differences in details so it is worth considering whether a German registered or non-registered trademark with its geographical limitations is the better choice.
Designs can be protected under the German Design Act, which was formerly known as Geschmacksmuster, but was renamed in 2014 to provide a more understandable name, although the scope of protection was not changed.
Similar to trademark law, designs can be registered in Germany with the GPTO as a national design or with the EUIPO as a European design, so that considerations similar to the trademark law apply. In addition, there is also the possibility to obtain design protection for Germany via international registrations designating Germany.
Copyright law protects works in the literary, scientific and artistic domain, in particular literary works and musical works, but also illustrations of a scientific or technical nature such as drawings, plans, maps, etc. (Section 2(1), German Copyright Act). In addition, software is protected under copyright law, to name examples for copyright protection with a strong economic impact.
Copyrights are non-registered rights and originate with the work. They are not transferable in Germany, as the work has a strong connection to the author and his or her personality. Thus, economic exploitation is only possible by granting licences, while the copyright itself, in particular the moral rights, remains with the author. This can be relevant if, for instance, the work becomes a blockbuster, as the author has a claim for further participation (Section 32a, Copyright Act). Other relevant moral rights are the author's right of publication, of recognition of authorship and the right to prohibit the distortion of his or her work.
iv Utility patents and Supplementary Protection Certificates
Patents are registered and fully proven rights for any inventions in all fields of technology, provided that they are new, involve an inventive step and are susceptible of industrial application (Section 1, German Patent Act, Article 52(1), European Patent Convention (EPC)). They are registered with the GPTO or with the European Patent Office (EPO). As for the scope of protection, see below.
A registration with the EPO does not lead to European protection similar to European trademarks or designs. The EPC rather grants a uniform examination proceeding before the EPO. Once the European patent has been granted, the competence of the EPO lapses. Then, the European patent has to be validated in each Member State of the EPC where protection is sought. Another difference to European trademarks and designs is that the EPC includes countries that are not part of the EU.
A peculiarity for pharmaceuticals is the possibility to extend the term of protection by a Supplementary Protection Certificate at the end of the patent's lifetime for a period of another five years. This compensates for a delayed market entry of the patented product owing to time-consuming approval procedures for obtaining the necessary marketing authorisations.
v Utility models
Utility models are registered but unexamined rights for any inventions that are new and are based on an inventive step. There is no parallel European protection.
The utility model is kind of a 'small patent', which has the advantage that the registration procedure is much quicker, since there are no examination proceedings. On the other hand, in infringement proceedings the proprietor has to prove that its right is valid.
vi Trade secrets
Trade secrets have always been protected under the German Act Against Unfair Competition and thus did not qualify as an IP right. In 2019, the Trade Secret Act entered into force and implemented the EU directive on trade secrets. Besides comprehensive regulations on how to protect trade secrets and (new) legal obligations for the secret holder, it has become unclear whether the protection of trade secrets is still part of competition law or whether it has become a new IP right.
i Federal Court of Justice on FRAND
In the matter Sisvel v Haier, the Federal Court of Justice (FCJ) rendered a decision on FRAND and decided that the implementer Haier did not act as a 'willing licensee', as Haier had submitted its declaration of willingness one year after Sisvel's first notification of infringement. The court focused on a 'patent hold-out' – i.e., the problem that the implementer intends to delay negotiations until the patent in suit expires – and in fact, the patent expired during the infringement proceedings.
The fact that the court mentioned the strategy of a patent hold-out is even more relevant in Standard Essential Patent (SEP) matters, where the patentee holds a portfolio with a large number of patents, but has sued the implementer on only a few patents. With these delaying tactics, the implementer can avoid a licence regarding the whole patent portfolio.
Besides the fact that Haier reacted too late to Sisvel's notification, the FCJ decided that Haier in addition did not clearly declare – with its late-submitted declaration – that it was in fact willing to conclude a FRAND licence.2 Furthermore, the FCJ decided that it is not sufficient to declare its willingness to take a licence under the condition that the patent is declared infringed and valid by a court.
According to the FCJ, the duties according to the European Court of Justice (ECJ) decision Huawei/ZTE apply to a patent portfolio as well, as long as the SEP holder does not misuse the infringement proceeding to force the implementer to licensing negotiations on a non-standard essential patent.
Last but not least, the FCJ decided that it is not discriminatory if the SEP holder has granted discounts to third parties (in this case, Chinese public authorities). 'Non-discriminatory' does not mean that the patentee must grant a licence at the same royalties to all willing licensees in the sense of a 'uniform tariff'. The holder of an SEP has room for negotiations and thus may grant discounts.
ii Submission to the ECJ regarding FRAND
The Regional Court (RC) Dusseldorf decided on 26 November 2020 to refer several questions concerning FRAND matters to the ECJ, which had not yet been decided in the matter Huawei/ZTE. The RC Dusseldorf raised questions concerning two issues: how to deal with FRAND matters in supply chains, and specification of the requirements set in the matter Huawei/ZTE.
In this matter, Nokia sued Daimler before the RC Dusseldorf due to the infringement of an SEP, and some of Daimler's suppliers joined the proceeding. The court stayed the proceeding and submitted its questions to the ECJ, including its preliminary opinion. The RC Dusseldorf holds that a supplier has a right to claim for a FRAND licence as well, since the SEP holder has declared against the European Telecommunications Standards Institute to grant a licence to everybody. Furthermore, it is in the interest of suppliers to act on the basis of their own licence and not only on the basis of a right derived from the car manufacturer's licence. In addition, it is a market standard in the automobile industry that car manufacturers request their suppliers to deliver products free of third parties' rights. This applies to SEP patents owned by SEP holders as well. In addition, the obligation to grant a licence to the supplier does not have negative economic effects for the SEP holder, as the worth of the invention is the relevant pricing factor for the royalty, which is therefore the same amount at each stage of the supply chain.
In the second issue, the RC Dusseldorf wants a clarification of the requirements of the ECJ decision Huawei/ZTE, in particular whether the steps have to be carried out prior to the court proceedings. That is problematic, as the meaning of a FRAND licence is still rather unclear, and the crucial points often come up during the proceedings. If the steps have to be taken prior to the proceedings, it would not be possible to find a FRAND licence later, when the real issues arise. The court rather has to grant an injunction and therefore puts the implementer under pressure.
In addition, the RC Dusseldorf asked the ECJ under which prerequisites a court may deny that an implementer is to be considered as a willing licensee. The RC Dusseldorf intends to apply high hurdles. As the submission of the RC Dusseldorf deals with similar issues to the FCJ in the matter Sisvel v Haier, there are high expectations of the ECJ.
iii Submission to the ECJ regarding preliminary injunction matters
The RC Munich I decided on 19 January 2021 to refer to the ECJ the question as to whether a court has to refuse a preliminary injunction (PI) if the patent in suit did not survive first-instance opposition or nullity proceedings.
The RC Munich I intends with its submission not only a reassessment of the case law by the Higher Regional Court (HRC) Munich stipulated in its decision Electrical Connecting Terminal and another yet unpublished decision, but also of the nationwide practice regarding validity of patents (and utility models) in PI matters.
According to the standards of the Dusseldorf and Mannheim courts, a preliminary injunction based on a patent requires a positive contradictory (first-instance) validity decision if the patent will be the basis for a preliminary injunction.
In the landmark decision Sets for Urinary Catheters, the HRC Dusseldorf allowed exceptions from the requirement of a positive contradictory (first-instance) validity decision, as otherwise the patentee would be treated disadvantageously in various constellations. The case law of various courts has allowed further exceptions. Nevertheless, the HRC Munich took an even stricter line in its recent decisions.
The RC Munich I has doubts whether this is in line with the European Enforcement Directive, which requires that Member States ensure that the competent courts have the possibility to render preliminary measures if requested by the appellant in order to hinder the infringement of intellectual property rights.
Although it cannot be predicted how the ECJ will decide in this matter, it can be expected that the ECJ will take a closer look at the practice in other EU Member States. Most important jurisdictions in the EU for patent infringement (such as France and the Netherlands) do not recognise the requirement of a 'confirmed decision to grant the right'. Thus it would not be surprising if the principles of the decision Sets for Urinary Catheters have to be newly adjusted.
As stated above, patent protection can be provided by the EPO as a European patent, which is validated in Germany or as a (purely) German patent granted by the GPTO. The scope of protection under the EPC and the German Patent Act are identical.
In addition to the principles above, patents will be granted if they concern a product consisting of or containing biological material or a process by means of which biological material is produced, processed or used. The specific requirements can be complicated in each individual case.
Furthermore, the Patent Act and the EPC explicitly exclude some categories. Some of these are protected by other IP rights, such as aesthetic creations or computer programs, which fall under the protection of the copyright law, while some, such as doing business, are not protectable under IP law at all (but may be protected to a certain extent by unfair competition law).
As for genetic material, the German Patent Act contains a specific and differentiated regulation in Section 1a. It stipulates that the human body at various stages of its formation and development, including germ cells including the sequence or partial sequence of genes, cannot constitute patentable inventions. On the other hand, an element isolated from the human body or otherwise produced by means of a technical process, including the sequence or partial sequence of a gene, may constitute a patentable invention even if the structure of that element is identical to the structure of the natural element.
Plants or animal varieties are excluded from protection under patent law. However, protection can be obtained under the Plant Variety Act. The specification on what is protectable under patent law can be complicated in each individual case.
Irrespective of potential differentiations in the eligibility of protection under national patent law and European patent law, the EPO and the GPTO apply different standards in the grant procedures on what they understand as novel and inventive. These differences may have an impact on the specific case at hand.
With regard to the latest developments, artificial intelligence (AI) is a highly discussed issue in patent law, which leads to several effects. On the one hand, it might change the examination process on the state of the art. If certain solutions can be found easily with AI, they might qualify as obvious.3 In addition, it remains unclear who owns an invention made by AI: the software programmer or its proprietor?
Thus far, the EPO has refused the grant of two patent applications that list Dabus, an AI tool, as the inventor. The EPO stated that AI systems or machines have no rights at present because they have no legal personality comparable to a natural or legal person and thus cannot be considered as an inventor. The applicant lodged an appeal on 27 May 2020, which is still pending.
This matter also played a role before the UK Intellectual Property Office, which came to the same results. An appeal was not successful. Against this background and the fact that the US Patent and Trademark Office refused a patent application of Dabus as well, currently AI cannot be considered as an inventor.
Enforcement of rights
i Possible venues for enforcement
In Germany, patent (and utility model) rights can be enforced in legal proceedings before the regional courts, either by way of preliminary injunction proceedings or main proceedings on the merits.
In order to ensure that there is a group of judges with a frequent workload of patent cases and thus adequate competence and technical expertise, patent infringement matters are concentrated by law on the specific patent chambers of 12 regional courts: Munich I, Nuremberg, Mannheim, Frankfurt, Saarbrucken, Erfurt, Leipzig, Magdeburg, Dusseldorf, Braunschweig, Berlin and Hamburg.
In general, each federal state has at least one patent infringement court; however, some federal states share courts.
The most prominent – and busiest – courts are Dusseldorf, Mannheim, Munich I and Hamburg.
As further outlined below, all venues differ a little with respect to timelines, the number of oral hearings and technical competence. Depending on the case, it might be favourable to file the complaint with a court that allows a fast track to an infringement judgment but offers less opportunity to discuss the case orally. However, in another case it might be better to choose a court that customarily runs two oral hearings to allow for a deeper oral discussion on the relevant aspects (e.g., cases where a more sophisticated technical discussion is required).
ii Requirements for jurisdiction and venue
The patent owner and a licensee (exclusive and non-exclusive) may file a motion for patent infringement. With respect to the latter, the extent of the right to sue and the respective remedies depend on the scope of the licence.
An accused infringer may bring a declaratory action of non-infringement.
First-instance patent infringement proceedings must be tried before one of the 12 regional courts.
In principle, the patent infringement court of the region in which the defendant is domiciled has jurisdiction. In addition, under Section 32 of the Code of Civil Procedure, any court has jurisdiction if the infringement was committed in its district. This is the case if the infringement (i.e., the making, offering, placing on the market or using of the product) was committed in the district of the regional court. In cases of nationwide infringement via the internet, all German patent infringement courts have jurisdiction.
Also, the parties can agree that a specific patent infringement court will have jurisdiction. This agreement is binding for the court.
If the patent owner files a complaint with a patent infringement court that has no jurisdiction and the defendant does not object to this choice in the first oral hearing, the court is also awarded jurisdiction.
iii Obtaining relevant evidence of infringement and discovery
The concept of discovery is unknown in German procedural rules.
However, in order to obtain evidence, the initiation of inspection proceedings pursuant to section 140(c) of the Patent Act is available. The inspection can also be enforced with a preliminary injunction. The requirements for obtaining a preliminary injunction for an inspection are low. It is sufficient merely to demonstrate a probability of patent infringement and to substantiate why it is necessary to carry out the inspection.
Usually, prior to initiating any inspection proceeding, the use of private investigators is a common, helpful and accepted tool to obtain evidence.
iv Trial decision-maker
There are no jury trials in Germany.
Disputed issues are decided by a panel of three (non-technical) judges (one presiding judge and two assessors). The presiding judge conducts the proceedings and is the primary decision-maker. The decision is prepared by the rapporteur, who usually also makes a concrete proposal for a decision to the presiding judge. Although the judges are lawyers, not technicians, they are familiar with technical matters. However, owing to the varying workload of the courts, they have different levels of experience in different technical fields.
v Structure of the trial
Germany runs a bifurcated system of infringement and nullity proceedings.
German patent infringement trials are front-loaded. The proceedings on the merits therefore commence with the filing of a statement of complaint with the court. The statement of complaint contains the requests and a detailed account of the infringement. After the court fees have been paid by the plaintiff, the statement is then formally served on the defendant, usually with a summons to an early oral hearing, which may also be a case management conference in which only the deadline regime is set and the motions are made. Some courts use this hearing to try to negotiate a settlement between the parties, structure the further proceeding and give guidance on and clarify procedural aspects (e.g., Dusseldorf) or give a first sight on infringement (Munich I).
Before the main oral hearing, each party usually files two briefs:
- the plaintiff – a statement of complaint and a rejoinder; and
- the defendant – a statement of reply and a counter rejoinder.
Owing to this detailed preparation, cases are often tried in one main oral hearing before the first-instance decision is rendered.
In general, each party must set out and prove the actual features of the legal rule favourable to this party. The plaintiff must prove the conditions on which its claims are based, and the alleged infringer must prove the facts that deny the claims, whereas the concrete distribution and extent of the burden of proof in the course of the proceedings depend on the submissions in the specific case. The more detailed the submission with respect to one fact, the more detailed must be the response.
This means that it is first the plaintiff's duty to substantiate all facts relevant to the decision (e.g., the right to sue, infringement acts, features of the patent claim, etc.), so all facts should be presented precisely and, if possible, with indication of the source of knowledge.
It is then the responsibility of the defendant to respond to this submission conclusively and substantively and, in case of dispute, to provide proof for his or her allegations. This includes also any defence he or she may rely on (e.g., invalidity of the patent).
Only in the case that specific facts of the submission of one party are substantially disputed by the other party is it the burden of the party to provide sufficient proof for this fact, either by way of documents, witnesses or experts.
Documents, affidavits and live testimony are used as evidence to prove or rebut the infringement. Further, expert witnesses are an important means of evidence. However, if the court deems that an expert witness opinion is necessary to hand down a judgment, it will appoint its own expert witness. Such expert witnesses are the most common means of providing evidence in patent infringement cases. Expert witnesses appointed or submitted by the parties have less importance. The court will carefully consider the expert opinion rendered by its appointed expert witness. However, it is not bound by this opinion and may deviate from it.
In general, the German infringement courts can be considered to be patent owner-friendly owing to their generally very broad functional interpretation of claims. There are some slight differences between the infringement courts. The current tendency is that the Dusseldorf courts follow the most liberal claim interpretation.
Furthermore, the German infringement courts also apply the doctrine of equivalents, albeit in very rare cases. The requirements are as follows:
- the accused product must solve the problem of the invention with objectively equal means;
- the skilled person must be able – based on his or her specialist knowledge – to find the technical solution of the altered version of the accused product as objectively equal; and
- the skilled person must determine that the altered accused product is equivalent to the objective (literal) solution of the patent.
A typical defence to an infringement allegation (e.g., by a cease-and-desist letter or an infringement complaint) is filing a nullity action before the German Federal Patents Court or opposition proceedings with the GPTO or EPO if the opposition window of nine months is still open. If an opposition (or a nullity action) is already pending, the alleged infringer may intervene or join in the pending proceedings. Such a party will be a full independent party to those proceedings. The infringement court, if a nullity action or an opposition is pending, will only determine the likelihood of whether or not that action will be successfully based upon a summary examination of the main attacks against the patent. Therefore, obviousness and inventiveness play only a subordinate role in the infringement proceedings.
There are are a number of further available defences against an accused infringement, such as:
- no right to sue (e.g., no proper assignment of IP rights);
- lack of jurisdiction;
- exhaustion of rights;
- compulsory licence defence or FRAND; and
- right of prior use
viii Time to first-level decision
Depending on the court, it currently takes approximately 10 months (e.g., Mannheim RC and Hamburg Court) to 15 months (e.g., Munich I and Dusseldorf RC) from the service of the statement of complaint on the defendant until a first-instance decision is handed down by the court.
With respect to pre-trial remedies, there is the option to issue a warning letter, including the request to sign a cease-and-desist declaration with a penalty clause. Attorney fees in relation to this are reimbursable from the other side.
The most prominent remedies are:
- injunctive relief;
- recall and removal of the infringing products from the distribution channels;
- destruction of the infringing products;
- claims for information and rendering of accounts; and
- publication of the judgment (which is, however, almost never granted).
Damages can be calculated in three ways:
- lost profits of the patent owner;
- licence analogy – damages calculated on the basis of the amount that the infringer would have paid as an appropriate licence fee if it had obtained permission to use the infringed right; and.
- infringer's profit – the profits that the infringer made as a result of the infringement (product-related costs incurred specifically through the manufacture or distribution of the infringing products are deductible; overhead costs are not).
The patent owner may choose between the above calculation methods. It may alternate between these methods until a final decision on the damages is handed down; the plaintiff may even split it and choose one method for past use of the patent and another for future use. Lost profit of the patent owner is seldom chosen owing to the difficulty of proving what profits the patent owner would have made absent the infringement. Damages do not tend to be punitive in nature.
Furthermore, there is the option to file for a preliminary injunction. The threshold for granting preliminary injunctions varies from court to court. However, the standard of proof is generally lower than that in proceedings on the merits. Additional means of proof (e.g., sworn affidavits) are admissible.
The patent owner must show that the patent has been infringed and that the matter is urgent (i.e., that awaiting a decision on the merits is not justified).
The patent owner must initiate the preliminary injunction proceedings without undue delay on positive knowledge of the patent infringement (i.e., it must show that it has taken appropriate measures to obtain a speedy decision). Case law varies from court to court regarding what constitutes an undue delay. In general, if the preliminary injunction proceedings commence within four to six weeks following knowledge of the infringement, there is no undue delay.
The validity of the disputed patent must be beyond reasonable doubt. The hurdle has recently been raised: a patent should have survived opposition proceedings or nullity proceedings already to be suitable for an injunction proceeding. As described above, the Munich I RC recently had doubts with regard to this practice and has asked the Court of Justice of the European Union whether it is in line with the Enforcement Directive.
x Appellate review
An adverse (or partly adverse) decision on the merits in the first instance can be appealed to the Higher Regional Court, which will be a full legal review of the case. Therefore, generally, the appeals court has to base its review upon the facts and evidence determined by the first-instance court. However, under very narrow circumstance new facts and evidence are allowed:
- in the case of doubts in relation to the correctness and completeness of the facts determined by the first-instance court based upon concrete indications; or
- if explicitly allowed by law, in particular by Section 531(2) of the Code of Civil Procedure, if:
- the court has apparently overlooked one aspect or inaccurately determined it as not relevant;
- the new facts were not considered due to a procedural error; or
- the delayed submission of the new fact is not due to negligence.
xi Alternatives to litigation
Some of the patent infringement courts particularly foresee mediation processes for suitable cases; the Munich courts, for example, propose an internal court mediation in order to use the time between the dates of the oral hearings to achieve an amicable, appropriate and interest-based solution. The preliminary view of the case given by the chamber in the early first appointment often gives the parties reason to try mediation.
Besides that, it is possible to resolve patent matters by (out-of-court) mediation or arbitration proceedings.
Trends and outlook
Besides the ongoing discussion on the Unified Patent Court, German legislators are currently discussing a law to modernise the German Patent Act. The most relevant topic is modifying the automatic injunction in Germany.
The background was the heat exchanger decision of the FCJ where the court acknowledged the proportionality in infringement matters, but then denied it for several reasons in the specific case and thus remained within the strict line of German courts. This decision has led to pressure from the automobile industry on the legislator to explicitly implement the principle of proportionality in the German Patent Act. The background of this lobbying effort is that the patent situation in the automotive sector is becoming more and more unclear and complicated. Usually, car manufacturers face injunctions owing to an alleged patent infringement by a small but technically complicated part (e.g., chips), where the technical details of such a part are unknown to the car manufacturer. In this case, a patentee could claim injunctive relief regarding the whole car, which allows him to put the manufacturer under huge pressure in potential licensing negotiations.
This problem is even more significant for manufacturers with regard to FRAND matters, as modern cars are connected to mobile networks to provide high-speed internet access. If the principle of proportionality does not apply, the discussion of non-practising entities with mobile phone manufacturers could have a second round with a much stronger impact.
1 Markus Morgenroth, Michael Munsch and Tobias Wuttke are lawyers at Meissner Bolte Patentanwälte Rechtsanwälte Partnerschaft mbB.
2 A licence on terms that are fair, reasonable and non-discriminatory.
3 Nägerl, Neuburger, Steinbach, Künstliche Intelligenz: Paradigmenwechsel im Patentsystem [Artificial Intelligence: paradigm shift in patent law], GRUR 2019, pp336, 338.