It is an open secret that one of the main requests for an amendment in the patent law came from the automotive industry. German automobile manufacturers are increasingly exposed to attacks by NPEs in the field of telecommunication patents due to connected car applications. This is why the car industry quickly made a demand to the politics to soften the ‘hard’ legal provision on injunctive relief by adding an explicit proportionality test.
The draft act proposes the following main amendments to the German Patent Act:
During nullity proceedings, the Federal Patent Court (“BPatG”) issues a preliminary opinion on its view of the validity of a patent in a so-called ‘skilled note’ (“qualifizierter Hinweis”). Under the current law, the Federal Patent Court should give such preliminary opinion ‘as early as possible’ in the proceedings. The draft act now suggests adding a soft deadline for the skilled note, which is six months after service of the nullity action. This additional deadline is an attempt to reduce the long duration of patent nullity proceedings in Germany and therefore avoid the resulting injunction gap. The injunction gap is caused by the time gap between a first instance decision in patent infringement proceedings and in nullity proceedings because of the German bifurcated system. While the Germany infringement courts regularly need about 9 to 15 months – depending on the individual case and the workload of the court – for a first instance decision, the senates in the Federal Patent Court render their decision only after more than two years (currently approx. 26 months). Therefore, if a plaintiff is successful in the litigation part and obtains a quick judgment on infringement, the plaintiff can put the defendant under considerable pressure, because the defendant will have a reliable statement of the Federal Patent Court on the validity of the relevant patent only during the appeal infringement proceedings. Then, it may already be too late if the plaintiff forced the defendant into an unfavourable out-of-court settlement.
Therefore, by introducing the six-month deadline, it is the intention of the Ministry of Justice to ensure that at least one technical judge at the Federal Patent Court reviewed the legal status of the patent in dispute before the oral hearing in the first instance infringement proceedings takes place. Thus, the preliminary opinion of the Federal Patent Court would play a major role in a discussion about a stay of the infringement proceedings. It remains to be seen whether the Federal Patent Court can meet such six-month deadline at all – since it is only a soft deadline, because the draft act reads that the preliminary opinion “should” be given within six months after service of the nullity action. It further remains to be seen what will be the quality of these opinions that were probably quickly cobbled together.
As mentioned above, the injunctive relief under Sec. 139 (1) of the German Patent Act shall be put under an additional proportionality test. The draft act therefore proposes the following wording:
“The [injunctive relief] claim is excluded to the extent that the enforcement of the injunctive relief is disproportionate because, due to special circumstances and taking into account the patentee’s interest towards the infringer and the requirements of good faith, it constitutes a hardship not justified by the exclusive right.”
In a number of presentations, German judges already pointed out that even without this additional provision, there are possibilities to deal with cases of hardship. First, the principle of proportionality as a general principle of law applies to all claims in civil law anyway. Second, e.g. a high security deposit can create a higher threshold for the provisional enforcement of a first instance judgment. Third, in case of hardship, there is also the possibility that the court orders a temporary suspension of enforcement.
Nevertheless, the Ministry of Justice still identified the need for “legislative clarification”, as mentioned in the reasoning of the draft act, because in its eyes, the infringement courts are too strict in granting an injunction. A few years ago, the Federal Court of Justice (“BGH”) pointed out that the plaintiff’s right to injunctive relief can be limited due to good faith in cases of hardship (judgement of 10 May 2016, docket no. X ZR 114/13 – “Wärmetauscher”). The federal Court of Justice specifically discussed the option to grant a period of permitted use. However, the courts of first instance have so far been very reluctant to take such considerations of proportionality into account.
In the reasoning of the draft act, the Ministry of Justice emphasized that a limitation of the right to injunctive relief on the grounds of disproportionality may be considered in very few cases only. Such potential cases could be complex products (e.g. a patent-infringing telecommunication chip in a vehicle), a claim for injunctive relief brought forward by an NPE, or cases of particular economic hardship for the defendant. It is already foreseeable that such an explicit proportionality test will open up a whole new field of discussion in the parties’ pleadings. At the same time, it is surprising that an according “legislative clarification” is not inserted in the Utility Model Act.
The new German Act on the Protection of Trade Secrets provides for different possibilities of the courts to take procedural measures in order to preserve secrets in according infringement cases (please do also see the article “German Act on the Protection of Trade Secrets – Part III” in the December 2019 issue of our newsletter). Such measures shall also be adopted in patent litigation by means of a cross-reference to according provisions in the Act on the Protection of Trade Secrets. In this way, the patent courts would be able to i.a. restrict the access to files, to exclude the public from court hearings or to restrict access to specific documents to a certain number of reliable persons.
With these measures, the Ministry of Justice responds to the practical need for better protection of information disclosed in patent litigation cases (for example a special manufacturing process that must be discussed with the court). In the past, the courts dealing with patent cases have already been creative when it comes to the protection of information, see for example the so-called “Düsseldorf proceedings” regarding the inspection e.g. of a defendant’s production site or the (non-)disclosure of existing license agreements in FRAND proceedings. Legal practice will nevertheless welcome this amendment in the Patent Act. Here, too, a corresponding provision should be provided for in utility model cases, even though many provisions of the Patent Act are applicable in utility model law anyway.
When publishing the draft act, the Ministry of Justice asked the associations and institutions interested in industrial property rights to submit their comments by 10 March 2020. So far, 27 statements were given by the industry, associations and other stakeholders (e.g. the Patent Attorneys’ Association and the German Federal Bar). These statements were published on the website of the Ministry of Justice. It will be interesting to see how the discussion about the draft act evolves. We will report which amendments to the German patent law will eventually be accepted.
