In the specific case, the defendant manufactured and distributed patent-infringing machines that upholstery convert a flat material (e.g. paper) into cushions. Such cushioning products are used in the packaging industry of goods to fill the empty spaces in transport containers and to protect the goods during transport. The defendant did not sell the infringing machines, but leased them to the customers, with leasing contracts that had an average term of 10 years. In addition, the defendant regularly concluded additional long-term maintenance contracts for the machines with the customers and frequently supplied them with the paper for the manufacture of the cushioning products. The plaintiff requested the rendering of accounts by the defendant regarding not only the leasing contracts, but also the maintenance contracts and deliveries of paper material. According to the plaintiff, these additional business transactions were also relevant for the calculation of damages.
The Supreme Court confirmed the plaintiff’s view. In its judgement, the court stated that profits realised by the conclusion of leasing contracts should also be taken into account. This is no surprise and in line with prior case law, because leasing contracts are a distribution channel through which patent-infringing devices are offered and placed on the market. Therefore, the conclusion of a leasing contract constitutes a direct – and thus damages-triggering – act of infringement. The revenue generated by the leasing contacts is therefore turnover that is relevant for calculating profits, possibly with deductions based on the usual factors under German case law (e.g. transport costs etc.). However, it is interesting that the Supreme Court considered the entire revenue from the leasing contracts to be relevant, even if a contract – with its term of 10 years – was concluded only 1 year before the expiry date of the infringed patent. The Supreme Court stated that since the revenue from the leasing contract was generated still during the term of the patent, that the expiry of the patent after conclusion of the leasing contract is irrelevant.
Besides that, the court found that additional business transactions (i.e. the maintenance contracts and deliveries of paper material) must also be taken into account. The Supreme Court refers to its old judgement “Dia-Rähmchen” (“mounted slide”; 29 May 1962; docket no. I ZR 132/60; GRUR 1962, 905) and consequently considers any acts to be relevant for damages which (i.) have a causal connection to the patent infringement and (ii.) have a sufficient connection to the infringing apparatus. According to the Supreme Court, the damages claim covers all profits that the infringer has generated by taking advantage of a business opportunity that was available to him just because of the patent infringement. In the specific case, the conclusion of a maintenance contract for a patent-infringing machine, as well as the supply of material intended for use with this machine, fulfil these requirements. Without placing the infringing machines on the market, the infringer would not have been able to provide such additional services and generate additional business. The claim for infringer’s profits would also cover profit that was only made after the expiry of the patent, i.e. even if the underlying contracts were concluded after the expiry of the patent. This statement of the Supreme Court is quite surprising, but the court considers it to be in line with the law, because such infringer’s profit is nevertheless linked to the acts of infringement prior to the expiry of the patent.
The decision of the Supreme Court described in this article has caused considerable controversy even directly after its publication. However, it will nevertheless have a considerable impact on patent practice. The Supreme Court emphasises that it is the plaintiff’s task to argue the causal link to the patent infringement and the sufficient connection to the infringing apparatus, and – if necessary, to present according evidence. Otherwise, the plaintiff cannot claim damages from additional business transactions. After this decision by the Supreme Court, plaintiffs and defendants will have to check very carefully which business transactions are still permissible, even in the case of judgements that were issued in the past. If a court finds patent infringement (in cases where there are “additional transactions”), such finding now has a much broader scope than before. Plaintiffs in patent infringement proceedings are well advised to always adapt their claims for the rendering of accounts and for the payment of damages to an extended scope (including additional transactions such as maintenance contracts, consumables, spare parts). Otherwise, there is a risk that such claims are time-barred or there is the need to bring a new action for additional information on the additional transactions. For the defendants, the question of an early workaround to mitigate the risks coming with the potential infringement of the attacked device will have to be at the centre of their attention even more than before. This is of high relevance in order to avoid jeopardizing any profits made with additional business transactions with a patent infringement.
