The Patent Litigation Law Review: Germany
Germany is one of the most prominent European jurisdictions for patent litigation and remains the most frequented one. In 2019, the German patent courts recorded more than 700 new cases, which is slightly less than in previous years. The Regional Court Düsseldorf continues to attract the highest number of cases, followed by the courts in Munich and Mannheim. German courts are known for their technical expertise and predictability. Trials are relatively fast, and the costs are moderate. The German bifurcation system (separate trials for infringement and validity) remains attractive for patentees.
Types of patent
Two types of patents are available in Germany: national patents pursuant to the German Patent Act (GPA) and German parts of European Patents according to the European Patent Convention (EPC). German law also affords protection in the form of utility models and supplementary protection certificates (SPC).
National patents are granted for inventions in all fields of technology. The teaching must be new, involve an inventive step and needs to be industrially applicable (Section 1, Paragraph 1 GPA). The GPA provides for the typical exclusions from patent protection (e.g., violations of ordre public, inventions relating to the human body, procedures for cloning and modifying the genetic identity of human beings, plant and animal varieties). Discoveries, scientific theories, mathematical methods or business models are not considered inventions.
The German Patent and Trademark Office (GPTO) grants national patents. Following their grant, anyone can challenge the validity of a patent by filing an opposition within nine months as of the publication of the grant. Thereafter, a patent can only be challenged by filing a nullity action before the German Federal Patent Court (FPC). German opposition proceedings largely correspond to proceedings before the European Patent Office (EPO), as described in the European Patent Office chapter of this book. The term of a German patent is 20 years, beginning with the filing date.
Germany is a member of the EPC and the Patent Cooperation Treaty (PCT). Applicants can designate Germany in an EPC or PCT application. Once a European Patent has been granted, its German part is handled like a national granted patent.
ii Utility models
Protection for inventions is also available in the form of utility models. The maximum term of a utility model is 10 years from the application date. The requirements for protectability and the rights afforded by a utility model are in principle like those of a patent. Method claims are, however, excluded from utility model protection.2 Novelty requirements are less strict than for patents (e.g., oral disclosures are not relevant prior art). Public prior use is only considered prior art if such use is domestic. Utility models benefit from a six months' grace period for publications attributable to the applicant. This allows for securing utility model protection when patent protection would not be available.
The GPTO will review some formal requirements before registering a utility model. It will, however, not review the substantive requirements for utility model protection. As an unexamined right, a utility model can be registered in as little as three to four months. In the absence of a presumption of validity, it is more difficult to enforce a utility model than a patent. The defendant can raise lack of validity as a defence against an infringement claim based on a utility model, in addition to filing a cancellation request before the GPTO. The infringement court must be convinced of the utility model's validity before finding in favour of the holder.
The applicant can rely on granted foreign patents with the same scope to derive a presumption of validity. In such circumstances, the utility model can be an attractive and flexible enforcement option. Applicants can file a utility model divisional from a pending (national or European) patent application to quickly obtain an unexamined but enforceable right before the grant of the parent patent. A utility model can be enforced in a scope more limited than the scope of the registered claims.3 This allows 'tailoring' an infringement claim to the accused embodiment to reduce validity concerns.
iii Supplementary protection certificates
The term of protection for patents covering pharmaceutical or plant protection products that require a marketing authorisation can be extended for up to five years with the grant of an SPC. An SPC comes into force after the basic patent has expired. Regulation (EC) No. 469/2009 of 6 May 2009 applies to SPC protection in Germany, in addition to Section 16a GPA.
Procedure in patent enforcement and invalidity actions
i Competent courts
Germany has a bifurcated enforcement system. Infringement and nullity proceedings are heard before different courts. Civil courts are competent to hear infringement proceedings, and the FPC decides about nullity proceedings. Judges in infringement proceedings may and must determine the scope of the patent for the infringement assessment. They are, however, bound by its grant and any final decision of the FPC, GPTO or the EPO on validity. A defendant may, therefore, not raise an invalidity defence or bring a counterclaim for invalidity in the infringement proceedings. Infringement courts may merely stay the proceedings if a validity proceeding is pending.
The regional courts are competent to hear infringement proceedings in the first instance, irrespective of the value of the dispute. Appeals are heard at the higher regional court, and further appeals on questions of law are, in important cases, heard at the Federal Court of Justice (FCJ). Each state within the Federal Republic of Germany can determine a single competent regional court to hear patent cases in the state territory. The respective courts establish specialised patent chambers to ensure that experienced judges decide patent disputes. The chambers consist of three legally qualified judges and no technical judge. The same applies for the senates at the higher regional court. The FCJ decides with a panel of five legally trained judges. The most popular courts in Germany are the regional courts of Düsseldorf, Munich, Mannheim, Frankfurt and Hamburg. The regional court where the defendant is domiciled or where the infringement took place has jurisdiction. Infringing offers on the internet or other nationwide media amount to an infringement in all of Germany and allow the plaintiff to choose the venue.
German infringement courts prepare the trial with a fixed schedule of written submissions. The complaint should contain all relevant facts to substantiate the alleged infringement. A defendant needs to make all possible defence arguments in its statement of defence. This includes any arguments that could warrant a stay of the proceedings. The burden of proof for infringement is on the plaintiff. The plaintiff must specifically demonstrate and substantiate infringement. German procedural law has no counterpart to court-supervised fact-finding, such as disclosure or discovery.
Infringement proceedings are 'front-loaded'. They heavily depend on written submissions and less on the hearing. Parties usually submit two rounds of briefs before the oral hearing: complaint, statement of defence, joinder and rejoinder brief. Parties often submit further briefs close to the oral hearing. Briefs after the oral hearing are rarely considered, unless the court has explicitly allowed a party to submit another brief. Oral hearings are short and focus on those issues that the court considers most relevant or still unclear. As a rule of thumb, hearings take between one hour in a standard case and up to three hours in more complex cases, in rare cases even a full day. A decision usually issues about four weeks after the oral hearing.
Infringement courts determine the scope of the patent (see Section IV.i). The parties must present the facts and the corresponding evidence to the court. The court may then take evidence, inter alia, by hearing witnesses or appointing neutral experts if necessary.
Invalidity proceedings are either opposition proceedings at the EPO or GPTO, respectively, or nullity proceedings at the FPC. For opposition proceedings, please see Section II.i.
The FPC will decide nullity actions against patents in the first instance. The senates at the FPC are comprised of five judges, two fully legally qualified judges and three technical judges. Decisions of the FPC can be appealed to the FCJ. The FCJ decides with a panel of five legally trained judges.
Anybody can file a nullity action. A specific legal interest is not required unless the patent that is challenged has already expired. The nullity action is not time-bound. It can, however, only be initiated after the opposition period has lapsed or a pending opposition proceeding (including proceedings before the EPO) has been concluded.
The nullity action may be based on the following grounds:
- lack of patentability;
- insufficient disclosure;
- usurpation; and
- added matter.
The FPC will investigate the facts of the case ex officio. The claimant must substantiate the grounds of invalidity. The parties usually file one or two rounds of briefs. The patentee must formally object to the nullity complaint within one month of service. To ensure timely proceedings, the FPC shall inform the parties as early as possible on the aspects that it considers relevant for its decision in a preliminary assessment. The court can order the parties to respond to its assessment within a specific time frame. According to Section 83, Paragraph 4 GPA, the respective party may be precluded if it submits new facts or files new auxiliary requests after the deadline set by the court. Nullity proceedings are, therefore, equally front-loaded as infringement proceedings. Oral hearings are, however, much more detailed and often last a full day. The decision usually issues immediately after the oral hearing. The written grounds are only provided two to five months thereafter.
iv Requirements for establishing standing in Germany
The patentee has standing for an infringement proceeding per se. The exclusive licensee may also assert claims resulting from patent infringement as its own right. Patent ownership or a valid exclusive licence need to be established on the day of the oral hearing. Standing to sue requires that the legal owner of a patent is registered in the patent register. Such registration is, however, not necessary for effectively assigning ownership.
A non-exclusive licensee has no own standing to sue. It therefore cannot claim own damages suffered because of patent infringement. Depending on the remedy sought, the non-exclusive licensee can derive a right to bring suit for patent infringement from the patentee: the patentee needs to authorise the non-exclusive licensee to bring the claim for an injunction and other claims with an injunctive character (e.g., recall and destruction). The non-exclusive licensee must, furthermore, have a legitimate interest to assert the claims on behalf of the patentee. Any economic interest is usually sufficient (e.g., if the infringing acts diminish sales revenue). The claims for damages, accounting and compensation can in contrast be freely assigned. The authorisation and assignment need to be completed on the day of the oral hearing.
v Stay of proceedings
Infringement courts may stay proceedings (Section 148 of the Code of Civil Procedure (CCP)) until a decision on patent validity. A stay allows aligning the infringement proceedings with the separate validity proceedings to avoid deviating decisions. The decision to stay the infringement proceedings is within the discretion of the court. It shall consider the interest of the patentee to enforce its exclusive right even before a decision on validity and the interest of the alleged infringer of not being wrongly enjoined because the patent is later found to be invalid. The patent right must not be undermined. Courts are, therefore, reluctant to stay the infringement proceedings in first instance.
Courts will stay the infringement proceeding in first instance if they believe that it is highly likely that the patent will be invalidated. The threshold is slightly lower in appeal instances. The court not only considers the likely outcome in the validity proceeding. Courts are more likely to stay infringement proceedings if the patentee merely asserts its claim for damages. Unlike the claim for injunctive relief, suspending a decision on a damages claim does not impact the right of the patentee to exclude others from making use of the patent. The case law also supports that the threshold for a stay is lower once the patentee defends the patent in the validity proceedings with only limited scope.4
vi Timing and cost considerations
The decision on infringement is usually issued much quicker than the decision on validity. The average duration of an infringement proceeding in the first instance ranges between 10 (for Mannheim), 12 (for Munich) and 16–20 (for Düsseldorf) months after the complaint was filed. The FPC currently needs at least 24 months to render a decision, often much longer. Because the FPC is more likely to invalidate a patent than an infringement court is likely to stay the case, this difference in timing often leads to provisionally enforceable first (or even second) instance infringement decisions based on patents that are subsequently invalidated.
In a litigation before a German civil court, the losing party bears the statutory costs of the litigation. These costs include court fees, statutory attorney (and patent attorney) fees and other reasonable expenses, such as travel and translation costs. The plaintiff in an infringement proceeding must advance the court fees after filing the complaint for the complaint to be served on the defendant. If the plaintiff prevails, the defendant must reimburse these court fees to the plaintiff. Statutory court and attorney fees both are calculated based on the value in dispute. The statutory maximum is €30 million. If the value in dispute is, for example, €1 million, statutory court fees amount to €16,008. The court fees are higher for appeals (i.e., €21,344 at this value for the appeal to the higher regional court). A further appeal to the FCJ in such case, if admitted, would trigger court fees in the amount of €26,680.
The costs of a first instance nullity proceeding range between the costs of an appeal and a further appeal in an infringement proceeding for the same value in dispute. The FPC usually uses the value in dispute of the infringement proceeding and adds 25 per cent. The statutory fees of the nullity action are then calculated based on this increased value in dispute.
vii Preliminary injunctions
In urgent cases, a patentee may enforce its claim for injunctive relief within a few days or weeks. The courts that hear the main proceedings are also competent to issue preliminary injunctions (PI). The threshold for a PI to be issued is, however, high. The court must find that patent validity is beyond doubt, the patent is clearly infringed, and the matter is urgent.5 The court considers a matter urgent if the applicant requests a PI within a month of learning the facts that constitute the alleged infringement. The Düsseldorf court applies a more flexible test that considers the actual circumstances. Petitioners may even wait until a second instance decision on patent validity before taking action, if they have good reasons to wait.6 A reason would be if the decision on validity resolves an uncertainty as to whether the patent is infringed.
The burden of proof is with the petitioner, who must substantiate and show credibly all facts from which the infringement follows, why patent validity is beyond doubt and why the case is urgent. Unlike in main proceedings, the court does not take formal evidence (e.g., expert reports) but often relies on affidavits, which, unlike in main proceedings, are admissible in PI proceedings.
The court may issue an ex parte PI a couple of days after filing if the court is convinced that the patent is clearly valid and has been infringed and the matter is particularly urgent. A matter is highly urgent and warrants a PI to be issued ex parte if a further delay deprives the applicant of effective relief. This is usually the case only at trade shows and for short-term sales activities. In 2018, the Federal Constitutional Court (FCC) imposed stricter requirements for ex parte PIs to fully consider the 'principle of procedural equality of arms' and has continued to develop this strict approach ever since.7 Ex parte injunctions are now only permissible if the purpose of the proceedings would otherwise be defeated. These decisions likely limit the relevance of ex parte PIs in German patent law to rare exceptions (i.e., trade shows). Where the circumstances permit, German courts will only consider granting a PI ex parte if the applicant has sent a warning letter to the respondent to inform it about the infringement allegation and to provide the opportunity to reply. The alleged infringer should present all its arguments in detail. The applicant is required to submit this reply to the court to also inform the court about the other side of the 'story'. If the respondent does not reply or replies only superficially, the courts assume that the respondent does not have better arguments. This may support the argument of the applicant and work against the respondent.
If an alleged infringer anticipates a PI, the infringer may also file a protective brief to present its arguments on its own initiative. The protective brief is comparable to an anticipated statement of defence. This writ can raise doubts as to the merits of the claim and therefore prevent a PI from issuing ex parte. It may, however, also 'backfire' and enhance the chances of an ex parte PI if relevant details are provided. Moreover, the courts will assume that the respondent has presented its defence arguments and will be less inclined to schedule a hearing to hear the respondent's side. It must therefore be carefully considered whether to file this brief. If the applicant has sent a warning letter first and the alleged infringer has already replied, a protective brief may no longer be necessary.
viii Warning letter
The patentee may alert the alleged infringer of the infringement by sending a warning letter before filing a complaint or PI application. In the letter, the patentee usually describes why the recipient infringes the patent. The patentee furthermore requests that the alleged infringer signs a cease-and-desist declaration. The description of the patent infringement needs to be specific, allowing the alleged infringer to verify the allegations and to refrain from continuing the infringing acts. The patentee usually sets a contractual penalty for each violating act. This penalty may either be a specific amount, or the patentee may use a penalty model based on the 'New Hamburg custom'. According to the New Hamburg custom, the patentee does not have to specify the penalty. The patentee may leave the appropriate penalty to its own discretion, allowing for a court to review, in case of dispute between the parties, if the penalty is appropriate.
An unjustified warning letter triggers liability of the patentee for damages the recipient suffers because of the unwarranted warning. These damages are usually limited to the statutory attorney fees but may also include lost profits for lost sales, in particular if the warning letter was sent to customers of the infringer.
A warning letter also provides a reason for the alleged infringer to file a declaratory action of non-infringement. In a cross-border context, this may lead to a 'Torpedo action' in another EU Member State. As a result, the patentee could be hindered from filing an infringement action in Germany. Under Article 29, Paragraph 1 Brussels Ia Regulation, German courts must stay the subsequently filed infringement proceedings if proceedings are pending between the same parties on the same subject matter in another EU Member State, until jurisdiction of the first court is decided.
The patent claims determine the scope of protection. Under German law, patent claims must be interpreted in line with the understanding of the average skilled person in the relevant field of the art. The description and drawings must be considered in the interpretation. German courts put little to no relevance on the prosecution history of a patent when interpreting its scope.
ii Patent infringing acts
Pursuant to Section 9 GPA, the following acts directly infringe a patent:
- manufacturing, offering, putting on the market or using a patented product, or importing or possessing such product for the aforementioned purposes;
- using the patented method or offering the method for use in Germany, if the offering party knows or it is obvious from the circumstances that the use of the method is prohibited without the patentee's consent; and
- offering, putting on the market or using a product immediately manufactured with a patented method, or importing or possessing such product for the aforementioned purposes.
Only an act in Germany can infringe a German patent. The courts are rather generous with finding domestic infringement. An offer that is directed to the German market is a domestic act regardless of where it originates. A product is put on the market in Germany if it is sent from Germany to a destination abroad or from a source abroad to a destination in Germany. The case law is stricter for method patents. Infringement either requires all process steps to be performed domestically, or the steps performed abroad must be attributable to the domestic steps. This attribution is not possible if the results of the method are commercialised in Germany, but the final process step takes place outside of Germany.8 The liability for immediate products of patented methods extends beyond the territorial scope of method patents. Marketing immediate products of a patented process in Germany infringes the German patent, regardless of where the protected manufacturing method was carried out. The FCJ has, however, found that the presentation of a diagnostic result derived from a patented diagnostic process is not an immediate product of this process because it merely represents information.9
The person that is committing the infringement is liable as infringer. Liability for infringement extends to third parties whose negligent behaviour enabled the infringement or who aided and abetted in the infringement of another person. The FCJ confirmed the liability for infringement in Germany of a foreign manufacturer who delivered the infringing product to a third party abroad but knew or had reason to know that the third party would later import the product to Germany.10 In addition to the company on behalf of which the infringement occurred, the management can be liable for infringement. This applies to the management personnel in whose area of responsibility the infringement occurred and to any management that knew of the infringement (or reasonably should have known) but failed to prevent it.
Mere preparatory steps do not constitute infringement. Patentees can, however, seek individual remedies for infringement even before the first infringement has occurred if there is a sufficiently high risk that an infringement will take place. Showcasing an infringing embodiment (medical device) that is not yet marketable because a required certification has not been granted (yet) does not meet the threshold that triggers liability.11 Obtaining a marketing authorisation that allows the individual to market a pharmaceutical product does not result in liability for intended marketing of the product, at least if the allegedly infringed patent will lapse before the authorisation becomes invalid for non-use.12
If the marketed product does not fulfil all elements of the relevant patent claim, but may do so in a subsequent manufacturing step, a third party may be liable for indirect infringement under Section 10 GPA. This applies if a third party supplies or offers to supply (in Germany) an unauthorised person with means relating to an essential element of the invention for implementation in Germany if the third party knows, or it is obvious from the circumstances that the means are suitable and intended to be used for implementation of the invention.
iii Doctrine of equivalents
If an embodiment or method does not fall within the literal scope of a patent claim (considering also the understanding of the skilled person), it may nevertheless infringe the patent under the doctrine of equivalents. Infringement under this doctrine is subject to the following requirements:
- the embodiment solves the problem underlying the invention with modified means having objectively the same effect;
- the person skilled in the art must have been able to come up with the modified means as having the same effect without any inventive effort; and
- the required considerations must be based on the meaning of the technical teaching such that the skilled person considers the modification as an equivalent solution.
Additionally, the accused embodiment, including the modified means, must have been new and inventive over the prior art at the priority date of the patent. This Formstein defence is an exception to the rule that validity considerations cannot be raised as defence in an infringement case.
iv Invalidity and other defences
Outside a claim based on the doctrine of equivalents, the German bifurcation system excludes challenges of a patent's validity as a direct defence against an infringement allegation. A defendant can only request to stay the infringement proceedings pending the outcome of a separate opposition or nullity action.
The defendant can, however, raise other substantive defences, the most important being as follows.
Section 11 GPA exempts a number of activities from patent infringement, namely private, non-commercial use, experimental use (provided that the experiment relates to the subject matter of the invention), the Roche-Bolar exemption (permits studies and trials required to obtain a pharmaceutical marketing authorisation in the EU or third countries), individual preparation of drugs in pharmacies based on a physician's prescription and use of the patent in vessels or vehicles that only temporarily enter the German territory.
Right of prior use
If a defendant had already begun to use the invention in Germany or had made the necessary arrangements for doing so at the date of the patent application or the relevant priority date, it is entitled to continue using the invention for purposes of its own business (Section 12 GPA). The right of prior use is specific to the respective business. In 2019, the FCJ found that a supplier of components of a patented product (who would qualify only as an indirect infringer) can later rely on its prior use for directly manufacturing the product itself if the only sensible use of the components had been to assemble them into the patented product. The supplier must, however, not use the patent in a different form than under the prior use. Embodiments according to dependent claims that have additional advantages are outside the right of prior use, while switching between alternatives that the patent considers fully equivalent is still covered.13
The patentee is precluded from enforcing its patent against a party having a valid licence in the patent.
If the patented product is placed on the market in the EU or EEA by the patentee or with the consent of the patentee, the patentee's rights of exclusivity with respect to that product are exhausted. German law currently shows no tendency that would support a worldwide concept of exhaustion. The most prevalent exhaustion cases relate to whether the replacement of parts of a device that is already on the market qualifies as (exhausted) intended use or as (non-exhausted) remanufacturing of the device.14
Statute of limitations
The general statute of limitations also applies to patent infringement. The remedies for infringement become time-barred after three years from the end of the year in which the claim arose and the claimant became aware (or grossly negligently did not become aware) of the identity of the defendant and the grounds giving rise to the claim. Irrespective of any knowledge about the claim, claims for patent infringement become time-barred 10 years after the claim arose. In practice, the effect of the statute of limitations is limited. If an infringement continues, each new infringement serves as recurring basis for the injunctive claim. Contrarily, damages can only be claimed for infringements that occurred within the limitation period. After the damages claim has lapsed, the patentee is still entitled to claim the unjust enrichment of the infringer as part of a 'residual damages claim', which itself does not become time-barred for 10 years from the infringement. This practically extends the damages claim for an overall period of 10 years.
The defence of laches/estoppel applies in Germany if the claimant has remained inactive for a longer period and thereby created the impression that it will no longer assert the claim. The requirements for this defence are high. In practice it rarely applies, also given the rather long limitation periods.
Patents are meant to create a monopoly, which leads to the conflict between patent and antitrust law. In recent years, most disputes in the context of the antitrust defence have revolved around determining whether a patentee claiming injunctive relief based on a standard-essential patent (SEP) abuses its rights. Having a dominant market position, which does, however, not automatically follow from holding an SEP, may require the patentee to offer a licence to the infringer on fair, reasonable and non-discriminatory (FRAND) terms. Failure to offer a licence on such terms precludes remedies with injunctive character.
The leading European case on antitrust-related defences against SEP enforcement remains the European Court of Justice (ECJ) Huawei v. ZTE decision from 2015,15 which was based on a referral from the Regional Court Düsseldorf. German courts are still working to specify the details of the process that the ECJ requires for enforcing SEPs, namely consisting of a notification of infringement by the patentee, the implementer's request of a licence showing its willingness to licence, a licence offer by the patentee, potentially followed by a counteroffer from the implementer.
In 2020, the FCJ finally issued its first FRAND ruling since Huawei v. ZTE.16 The decision provides guidance on at least some FRAND issues, however, leaving various points undecided. The FCJ ultimately ruled in favour of the patentee because it found the defendant not to be a willing licensee. The court applied a strict standard to the defendant's obligations in reaction of the notification of infringement. In essence, the defendant must show that it is willing to license at FRAND terms, whatever such terms are ultimately determined to be, and engage in actual good faith negotiations instead of delay tactics. The decision, however, provides little insight into the substantive questions of determining FRAND terms (see Section VIII.i for further details).
Further key developments from the appeal courts were as follows:
- The Higher Regional Court Düsseldorf held that a FRAND declaration by the previous holder of the patent has a binding effect on the acquirer of the patent. The acquirer must adhere to the terms of the original FRAND declaration and cannot use the sale of the patent to claim higher royalties. The acquirer must also present relevant information on its past licensing practice to allow the implementer to assess the offer against the FRAND standard.17
- The Higher Regional Court Karlsruhe held that approaching the company that is responsible for licensing within the implementer's group of companies is sufficient for sending an infringement notification, and that the implementer generally must respond within two months to such notice, but that its obligations to negotiate can in principle be remedied during the proceeding. The patentee must demonstrate why it considers the licence offer to be FRAND, which includes providing information on the key terms of any licence agreements concluded with third parties. The implementer can, however, not demand the actual licence agreements for review.18
Despite these recent decisions, key questions still remain unanswered. Among these are whether only one specific offer or a range of terms can be FRAND, whether a FRAND offer requires patentees to license the SEP at a certain level in the manufacturing chain – for example, the component manufacturer as opposed to the end-product manufacturer – and whether German courts will determine royalty rates for the non-German parts of patent portfolios. Apart from litigation on patents declared standard-essential together with FRAND commitments, there is increasing attention on patents on de facto standards. The FCJ's Orange Book decision,19 which governed the antitrust defence before Huawei v. ZTE and imposed much stricter requirements on the implementer, still seems to be good law in this context, but not only there. The FCJ held in its recent FRAND decision that if a patentee acts abusively under the Orange Book rules, this will limit the enforcement of the patent also under the Huawei v. ZTE framework.
Final remedies for infringement
i Non-monetary remedies
Once an infringing act has been committed or there is a risk of first violation, the patentee can request an injunction and require the infringer to cease and desist from further infringing activities. The statute does not set out additional requirements to secure an injunction. The injunction will remain in force until the judgment is lifted or the patent has lapsed. The injunction covers not only the infringing embodiments accused in the litigation but all other infringements that are identical at their core (i.e., that equally infringe the patent claims). For such additional embodiments, the claimants must demonstrate the infringement as part of the enforcement proceeding. Restrictions of the injunction in terms of scope or time (grace period) are hardly relevant in practice.
Recall and destruction
The patentee is entitled to require the infringer to recall infringing products from its commercial customers and to destroy infringing embodiments in its possession. The destruction claim extends to materials and machines that are primarily used for manufacturing infringing products. Recall and destruction do not require negligence but are subject to a proportionality requirement.
Information and rendering of accounts
The patentee can seek information with a view to the infringer or with a view to third parties. Third party information relates to the origin of the infringing products and their distribution channels. This information allows the patentee to enforce its rights against suppliers or purchasers of infringing products in further proceedings. Information about the infringer includes details on the scope of the infringement and rendering of accounts. This process is intended to allow the patentee to calculate its damages claim, which the patentee cannot do without access to this information.
Publication of judgment
The judgment in favour of the patentee can be published at the request of the patentee and at the cost of the infringer. The decision to publish the judgment is non-discretionary but requires the patentee to demonstrate a legitimate interest in the publication. The standard for such interest is high. The publication of a judgment, therefore, has little practicable relevance.
ii Monetary remedies
The infringer is liable for damages if the patent was intentionally or negligently infringed. The courts apply a strict negligence standard, generally requiring manufacturers (and distributors) to review the relevant patent landscape and identify patent infringements. Infringers are hardly found not at fault. The courts do, however, grant a one-month grace period after the grant before damages can be requested.
The patentee can choose between the following three methods to calculate damages. Punitive damages are not available.
- Patentee's lost profits: this method is rarely used. It is often difficult to prove and requires the infringer to disclose its own confidential profit structure.
- Licence analogy: the patentee can claim the amount of reasonable licence royalties that reasonable parties would have hypothetically agreed on from an ex ante perspective. In practice, this will be a running royalty, not a lump-sum payment.
- Restitution of infringer's profit: the patentee can claim the profit that the infringer has made because of the infringement. Courts only allow deducting costs that are specifically attributable to the production of the infringing products, for which the infringer has the burden of proof. General overhead costs are not deductible.
The calculation requires information on the scope of the infringement and the infringer's cost structure. The patentee can obtain this information through the claim to render accounts. Procedurally, patentees enforce the damages claim in two steps. The first is a request for a declaratory judgment, together with an obligation to render accounts. In most instances, the court will issue the injunction at the same time. Once the calculation is made, the patentee must file a second action to claim payment of the specific amount of damages. The court has already confirmed the obligation to pay damages in the first action. In practice, many parties settle afterwards. Specific damages claims are, therefore, an exception.
In addition to damages claims, including in cases where the defendant did not act negligently, the patentee can claim the unjust enrichment that the infringer has obtained from the infringement. In practice, the unjust enrichment claim is most relevant in the form of the residual damages claim that applies after the three-year limitation period for damages has lapsed but before the absolute limitation of 10 years after the infringement applies. The residual damages claim is based on the principle that an infringer should not be allowed to retain any benefit from having acted unlawfully. The claim is, therefore, not limited to a hypothetical licence fee. The patentee can also claim the infringer's profit after the limitation period for the 'full' damages claim has lapsed.20
Use of the patented invention before the grant of the patent does not constitute infringement. The patentee can, however, claim adequate compensation for the use between the publication of the application and the grant if such use falls within the scope of the application, the defendant was at fault and (for European Patent Applications) if the application was made in German or a German translation of the claims was published by the GPTO or sent to the defendant. Compensation usually corresponds to the amount of a hypothetical licence fee.
iii Provisional enforcement
First instance judgments are provisionally enforceable pending an appeal against the provision of a security. Upon request, the courts will set separate securities for the individual remedies. Second instance judgments are provisionally enforceable without security. The defendant can request suspension of the provisional enforcement (e.g., a stay of the injunction). Such requests are, however, granted only in exceptional cases. Courts do not consider potential negative effects of the enforcement for the defendant to be sufficient.21 Courts will, however, suspend the enforcement, for example, if the patent gets revoked in a (not necessarily final) decision in a parallel validity proceeding.
If provisional enforcement turns out to be unwarranted, because the first instance decision or the appeal decision are subsequently lifted, the enforcing patentee will be liable, in some cases even strictly liable, for damages pursuant to Section 717 Paragraphs 2 or 3 CCP.
Other types of patent proceeding
i Inspection proceedings
If a patentee has indications of an infringement, it can seek to gather additional information, allowing it to substantiate a complaint for patent infringement through an inspection proceeding. The information can relate to both, the details of the product or method to confirm whether it falls within the scope of the patent and whether a third party commits infringing acts. After a respective court order, the patentee can conduct an onsite inspection through its attorney and patent attorney together with a bailiff and a court-appointed expert, or the patentee can demand production of documents. Orders for inspection proceedings are generally granted ex parte. The defendant's confidentiality interests are protected by excluding the patentee from the inspection, requiring confidentiality from its counsel and only allowing the patentee access after a separate review process and redaction of sensitive information. While not as far reaching as the French saisie-contrefaçon, the German inspection remains a useful tool to investigate local defendants.
ii Declarations of non-infringement
An alleged infringer can request a declaratory judgment of non-infringement (DNI) if it can show a legitimate interest in such declaration (e.g., after it received a warning letter). Unlike in a cross-border context, a DNI in Germany does not prevent a separate infringing action before another court that has jurisdiction. A DNI becomes inadmissible once the patentee can no longer unilaterally withdraw its separate infringement action after the first oral hearing.
iii Compulsory licences and governmental authorisations for use
The GPA provides for the grant of a compulsory licence if an implementer failed to obtain a consensual licence and the public interest requires a licence. The FPC is competent to issue compulsory licences and will hear both, main actions and actions seeking the provisional grant of a licence. These licences have hardly been relevant. Between 1949 and 2016, only one compulsory licence was granted in the first instance and later revoked. With the 2016 grant of a compulsory licence for an HIV drug, which was confirmed by the FCJ,22 one may have thought that the practical relevance may increase. The FPC and the FCJ have, however, denied a request for a preliminary compulsory licence in 2018 and 2019,23 and no compulsory licences have since been granted.
The GPA further provides for the right of the federal government to authorise the use of a patent. The authorisation can be based on general public welfare reasons, in which case the entire government must issue the decision, or security interests of the Federal Republic of Germany, in which case individual ministries are competent to authorise the use. The authorisation, as a result of which the patent does not take effect within the scope of the authorisation, can be exercised by the government itself or be delegated to third parties. The patentee is entitled to adequate compensation. This provision received heightened attention in the course of the covid-19 pandemic when the legislator broadened the right of individual ministries to issue such authorisations in pandemic situations. Nevertheless, no such authorisation has ever been granted to date.
iv Challenge of ownership
Germany applies a first-to-file principle, awarding the patent to the first person who files a respective application. There is no examination of the substantive ownership of the invention. Pursuant to Section 8 GPA, if a person without title files for a patent, the entitled person can demand the assignment of the right in the patent (application). The claim must be asserted within two years of the grant of the patent, unless the applicant acted in bad faith. Typical ownership challenges relate to employees claiming rights in inventions they made but that their employer registered for patent protection. The employer is entitled to inventions of its employees under the German Act on Employee Inventions but must follow a certain process to secure ownership. In return, the employer must pay adequate remuneration for the invention in addition to the salary. Disputes on the amount of the remuneration can be adjudicated before a special arbitration board for employee inventions at the GPTO.
v Customs seizures
If infringing goods are imported into or exported out of Germany, patentees may apply to custom authorities to seize the infringing products at the border. Imports and exports into non-EU states are governed by European Regulation No. 608/2013. The alleged infringer (i.e., the proprietor of the seized goods) can object to the custom authority's action to seize the products. Seizures of imports and exports into the customs area of the EU are governed by Section 142a GPA. Such seizures require an obvious infringement of the patent. Ultimately, a court must determine whether the products infringe. A customs seizure can nevertheless be an effective tool to quickly interrupt a competitor's marketing efforts. Some customs authorities will even conduct seizures at trade shows and remove infringing products on display. The success of a customs seizure critically depends on providing customs authorities with detailed information about the points of entry and a description of the infringing products.
i Infringement proceedings
First instance decisions of the regional courts are appealable to the higher regional courts. The appeal can be based on questions of law and questions of fact. New facts can, however, only be introduced in the second instance if admitted. The deadline for filing an appeal is one month after the written judgment of first instance has been served. The grounds for the appeal must be submitted within one additional month. The appeal procedure is equally front-loaded as the first instance proceeding. Generally, two rounds of briefs are exchanged before the oral hearing. Appeal proceedings take between one to two years, with statutory costs slightly increased over the first instance.
The decision of the appeal court can be further appealed to the FCJ. This further appeal is limited to questions of law and requires leave to further appeal from the second instance court. In the absence of this leave, the losing party may seek permission to a further appeal from the FCJ. Most of such requests are, however, denied. The deadlines for the further appeal are like those of the appeal. The parties must be represented by attorneys that are only admitted before the FCJ.
ii Nullity proceedings
Judgements of the FPC in nullity actions can be appealed directly to the FCJ. Permission for appeal is not required. The appeal can be based on questions of law and – with certain limitations – questions of fact. The deadline for filing an appeal is one month after the written judgment of first instance was served. The grounds for the appeal must be submitted within two additional months. Parties in a nullity appeal before the FCJ can be represented by any attorney or patent attorney.
The year in review
i First FRAND decision from the FCJ since Huawei v. ZTE
One of the key decisions in the past year relates to the requirements for an implementer to be considered a 'willing licensee' in the context of the antitrust defence in FRAND cases. The decision of the FCJ24 is the first judgment of the highest German civil court in a FRAND case since the ECJ's landmark decision in Huawei v. ZTE in 2015. With the decision, the FCJ set out the rules on how the alleged infringer must act to be considered a willing licensee: The implementer must clearly and unambiguously declare its willingness to take a licence at FRAND terms, whatever those terms are ultimately determined to be. In the particular case, the court found that the defendant had only reacted reluctantly to the patentee's licence offer (e.g., by answering to the patentee's licence offer too late or by making only half-hearted offers). Because the patentee does not need to make a FRAND offer to an unwilling licensee, the FCJ did not provide conclusive answers on highly relevant substantive questions for FRAND licences in Germany. The court only hinted at the fact that it considers portfolio licences to be FRAND, provided that they include only SEPs. Moreover, the FCJ indicated that reasonable grounds can justify different treatment of licensees and that such differences do not necessarily make an offer discriminatory. Significant questions, however, remain about how this position will play out in practice. The dispute is still pending, after the defendant filed a constitutional complaint with the FCC against the FCJ decision.
ii Anti anti-suit injunction available in Germany
The Regional Court and Higher Regional Court of Munich have issued, respectively confirmed, an 'anti anti-suit injunction' for the first time in Germany.25 Such a measure enjoins a party from seeking an 'anti-suit injunction' before a foreign court (typically in the US) that seeks to prevent the patentee from asserting its patent rights in Germany. The Munich courts found that the request for an anti-suit injunction impairs the patentee's property-like rights of asserting the patent against an infringement. Technically, anti-suit injunctions are not available in Germany because courts are not allowed to enjoin anyone from initiating court proceedings ('procedural privilege'). If a party, however, seeks such a measure in another jurisdiction, and this will effectively prevent the patentee from exercising its rights in Germany, the German court can resort to the very measure it seeks to prevent and in turn enjoin someone from initiating a court proceeding (i.e., seeking the anti-suit injunction). Because the injunction was preliminary and issued ex parte, it was effective and led to the US application for an anti-suit injunction being withdrawn.
iii German Ratification Act to the UPC declared void
In March 2020, the FCC declared the Act of Approval to the Agreement on a Unified Patent Court (UPC) void because the German Parliament did not pass it with the necessary quorum of a two-thirds majority.26 The court based its decision solely on formal reasons: with only 35 of 709 members of the German Parliament present at the vote, the required two-thirds majority was not reached. The court rejected the other grounds for the constitutional complaint as inadmissible, although some parts of the decision could imply that the court thinks the challenges potentially have merit, had they been presented differently. This came as a further shock to proponents of the UPC system, shortly after the UK had announced its intention not to participate. Ratification by Germany is a requirement for the UPC to come into effect. The German government, however, continues to support the UPC and intends to re-ratify the UPC agreement with the required quorum. A minimally revised draft ratification act was introduced into the legislative process in late July 2020. At this point, it is, however, unclear whether and when Germany will ratify the UPC Agreement and what shape the UPC would take without the UK's participation.
In the coming year, the legislator is expected to drive the biggest developments of patent law in Germany. The second attempt at ratifying the UPC Agreement (see Section VIII.iii) is only one of the currently pending legislative initiatives.
In 2019, the discussions around the 'automatic' issuing of injunctions for patent infringement and the role of proportionality considerations have received the attention of policymakers in Germany. The statutory provisions of the GPA do not provide for additional requirements for the grant of an injunction other than the infringement of the asserted patent. The German bifurcation system, combined with the timing differences between infringement and invalidity proceedings and a practically automatic grant of an injunction, gives patentees a powerful remedy against infringers that is even available for preliminary enforcement and before a full validity assessment has been carried out. After having consulted with industry representatives in 2019, the German Ministry of Justice released a Draft for Discussion on the modernisation of the Patent Act in early 2020. The draft includes provisions on proportionality considerations for the grant of an injunction (in exceptional cases), a closer interplay between infringement and validity proceedings and protection of trade secrets in patent infringement proceedings. Various institutions and companies have already commented on the draft.27 In September 2020, the Ministry of Justice released a Draft Act, which after a last round of comments will next need to be submitted to the full Cabinet of the government to begin the formal legislative process. The draft contains some modifications over the previous one, including language adjustments in the proportionality considerations for the grant of an injunction. This would likely make such considerations more relevant. The draft expressly mentions third-party interests as a relevant factor for proportionality. Moreover, the draft now provides for the possibility of a German nullity action progressing even while an opposition is pending, when a party has been sued for infringement in Germany.
1 Julia Schönbohm is a partner, Bolko Ehlgen is a managing associate, and Natalie Ackermann-Blome is an associate at Linklaters LLP.
2 Section 2 No. 3 German Utility Model Act. The Federal Court of Justice, ruling of 27 March 2018, X ZB 18/16 – Feldmausbekämpfung affirmed the constitutionality of this provision.
3 Federal Court of Justice, ruling of 13 May 2003, X ZR 226/00 – Momentanpol.
4 Higher Regional Court Karlsruhe, ruling of 2 January 2019, 6 W 69/18 – Empfangsanordnung; Higher Regional Court Munich, ruling of 8 December 1989, 6 W 3050/89 – Regal-Ordnungssysteme; Regional Court Munich, ruling of 21 September 2017, 7 O 15820/16 – Maskensystem.
5 See, for example, Higher Regional Court Munich, ruling of 12 December 2019, 6 U 4009/19 – Elektrische Anschlussklemme. This decision confirmed this general rule and brought the practice of the Munich courts, which was previously less strict, in line with the approach of the Düsseldorf and Mannheim courts. There are, however, exceptions, such as for generics cases, see Regional Court Hamburg, ruling of 10 September 2019, 327 O 263/19 – Methylphenidat.
6 Higher Regional Court Düsseldorf, ruling of 29 June 2017, I-15 U 4/17 – Vakuumgestütztes Behandlungssystem.
7 Federal Constitutional Court, ruling of 30 September 2018, 1 BvR 1783/17; ruling of 3 June 2020, 1 BvR 1246/20; ruling of 27 July 2020, 1 BvR 1379/20.
8 Higher Regional Court Düsseldorf, ruling of 23 March 2017, I-2 U 5/17 – Pränatale Diagnostik. Regional Court Düsseldorf, ruling of 28 July 2020, 4a O 53/19 – Online-Sehtest, confirms this ruling but holds that not only the final process step is relevant but also where the technical benefit of the invention is realised.
9 Federal Court of Justice, ruling of 27 September 2016, X ZR 124/15 – Rezeptortyrosinkinase II.
10 Federal Court of Justice, ruling of 16 May 2017, X ZR 120/15 – Abdichtsystem.
11 Regional Court Hamburg, ruling of 24 October 2013, 327 O 326/13 – Koronarstent.
12 Higher Regional Court Düsseldorf, ruling of 20 September 2012, I-2 U 44/12 – HIV-Medikament.
13 Federal Court of Justice, ruling of 14 May 2019, X ZR 95/18 – Schutzverkleidung.
14 Federal Court of Justice, ruling of 24 October 2017, X ZR 55/16 – Trommeleinheit.
15 European Court of Justice, ruling of 16 July 2015, C-170/13 – Huawei v. ZTE.
16 Federal Court of Justice, ruling of 5 May 2020, KZR 36/17 – FRAND-Einwand. The defendant filed a constitutional complaint against this decision with the FCC, asserting, inter alia, a deviation from the rules set out by the ECJ.
17 Higher Regional Court Düsseldorf, ruling of 22 March 2019, 2 U 31/16 – Improving Handovers. Further appeal pending before the FCJ.
18 Higher Regional Court Karlsruhe, ruling of 30 October 2019, 6 U 183/16 – Datenpaketverarbeitung.
19 Federal Court of Justice, ruling of 6 May 2009, KZR 39/06 – Orange-Book-Standard.
20 Federal Court of Justice, ruling of 26 March 2019, X ZR 109/16 – Spannungsversorgungsvorrichtung.
21 Federal Court of Justice, ruling of 25 September 2018, X ZR 76/18 – Werkzeuggriff: Irreparable negative effects of disclosing information about the buyers of the infringer do not warrant suspension of enforcement even if the patent has expired and the patentee can no longer bring injunctive claims against the buyers.
22 Federal Patent Court, ruling of 31 August 2016, 3 LiQ 1/16 (EP) – Isentress, confirmed by Federal Court of Justice, ruling of 11 July 2017, X ZB 2/17 – Raltegravir.
23 Federal Patent Court, ruling of 6 September 2018, 3 LiQ 1/18 (EP), confirmed by Federal Court of Justice, ruling of 4 June 2019, X ZB 2/19 – Alirocumab.
24 Federal Court of Justice, ruling of 5 May 2020, KZR 36/17 – FRAND-Einwand.
25 Regional Court Munich, ruling of 2 October 2019, 21 O 9333/19 and Higher Regional Court Munich, ruling of 12 December 2019, 6 U 5042/19 – Anti-suit injunction.
26 Federal Constitutional Court, ruling of 13 February 2020, 2 BvR 739/17 – Nichtigkeit des Gesetzes zum Abkommen über ein Einheitliches Patentgericht - EPGÜ-ZustG.
27 See Schönbohm/Ackermann-Blome, GRUR Int. 2020, 578 for a more detailed analysis.