The ECJ has recently ruled on the minimum and maximum rates in the German statutory schedule of fees for architects and engineers (‘HOAI’). This decision was also received in the legal profession, where possible effects on the minimum fee regulation for attorneys are discussed. A further question leads to the possible impact on the remuneration of German patent attorneys.
The specific decision of the European Court of Justice (judgment of 4 July 2019, Case C 377/17) essentially deals with the question of whether binding fees in accordance with the German HOAI, including the minimum and maximum rates stipulated therein, are not in accordance with the freedom to provide services in Europe. According to Article 15 of the Services Directive (Directive 2006/123/EC on services in the internal market), national provisions on minimum and/or maximum prices for services are only permissible if (1) they are not discriminatory, (2) they are necessary to implement an overriding reason relating to the public interest and (3) they are proportionate. The objectives of public interest discussed before the ECJ included quality assurance of planning services and construction safety, but also consumer protection (transparency of fees).
In its ruling, the European Court of Justice has stated that the determination of minimum rates in particular can be suitable to limit the risk of a deterioration in the quality of services (here: planning services). However, this is only the case if also minimum requirements apply to the provision of these planning services, which would accordingly guarantee the quality of the services. As an example, only experts with proof of their professional competence should carry out planning services. However, such a restriction does not exist in Germany. It was therefore not a coherent and systematic approach to determine minimum prices on the one hand, but not to require professional qualifications from the providers of these services on the other. Therefore, the EJC found that the minimum price rules in the HOAI were not suitable for ensuring the quality of planning services. Furthermore, the maximum rate restrictions in the HOAI were not proportionate either, because there are more moderate measures (e.g. the publication of price orientations) which would be sufficient to ensure price transparency.
As a consequence of the judgment, the Federal Republic of Germany must amend the regulations on minimum and maximum rates in the HOAI. The specific steps to be taken are in the discretion of the German legislator. It is possible that the binding nature of the minimum and maximum rates will simply be abolished and converted into a merely non-binding fee recommendation.
The legal profession is currently discussing possible effects of the ECJ ruling in other professions. The discussion particularly revolved around the minimum fee for advisory services provided by attorneys. However, it is important to know that not all areas of legal advice are subject to a minimum fee: The so-called “prohibition to undercut fees” according to Sect. 49b of the Federal Lawyers’ Act (BRAO) only relates to the representation of a client in court. For both out-of-court representation and the general advice of attorneys, there are no statutory fees – including minimum fees – for many years now. In addition, the provision of legal advice is limited to a group of professionally qualified persons, unlike planning services under the HOAI. The fee regulations in the Federal Lawyers’ Act (BRAO) and the related Act on Attorneys’ Fees (RVG) are therefore not really comparable with the regulations discussed in the HOAI.
The fees for patent attorneys are even one step further away. In Germany, there was once a fee schedule for patent attorneys, which was abolished almost 50 years ago. Since then, there is no legal regulation on the level of fees for patent attorneys. Nevertheless, the civil courts still use the old fee schedule in disputes about the appropriate amount of patent attorneys’ fees. This helps to determine a “usual remuneration” within the meaning of Sect. 612 (2) or Sect. 632 (2) of the German Civil Code (BGB) in accordance with Sect. 315, 316 BGB (fees of the patent offices and expenses remain separately reimbursable). A distinction is made as follows:
– Certain activities are charged with a basic fee, which is based on the old fee schedule plus inflation surcharges, regardless of the value of the matter. Most recently, in a decision on certain patent attorney services provided in the years up to 2011, the District Court of Düsseldorf assumed an inflation surcharge of 355% (judgment of 3 May 2016, docket no. 4b O 84/15). Newer decisions have not been published, so that further inflation surcharges can only be guessed. Adding-up on the basis of previous surcharges leads to a current inflation surcharge of approx. 400%.
– In addition, the old fee schedule for patent attorneys listed additional fees for the technical and legal processing of a case for which the Düsseldorf courts – depending on the scope, difficulty, economic significance, etc. – have so far regarded hourly rates of between EUR 200 and EUR 600 as appropriate. In a decision of the Higher Regional Court of Hamburg, however, reference is made to an expert opinion of the Patent Attorneys’ Chamber, which considered an hourly rate of EUR 250 to EUR 350 to be usually appropriate because of statistical surveys (judgment of 8 January 2015, docket no. 5 U 3/11).
All these considerations on the appropriate level of remuneration for the work of a patent attorney show that the subject of “minimum rates” does not play a major legal role. In any case, the fees can be freely negotiated between the patent attorney and the client. Maximum rates do not exist either, but exceeding the above-mentioned fees by more than 20% leads to an ‘unfair fee’ (and an automatic reduction thereof) in the eyes of the courts involved.
As a cross-check, the same courts also decide on the costs of the patent attorney eligible for reimbursement in court proceedings under the Act on Attorneys’ Fees (RVG). Such a cross-check helps to see which part of the fees are refundable from the opponent and which part has to be settled internally between the Patent attorney and his/her own client.
The preliminary ruling of the ECJ “United Video Properties/Telenet” (judgment of 28 July 2016, Case C 57/15) on the interpretation of Article 14 of the Enforcement Directive (Directive 2004/48/EC on the enforcement of intellectual property rights) points in the same direction. In its ruling, the ECJ found that a national regulation (here: in Belgium) with flat-rate tariffs for the reimbursement of costs for legal services infringes the Enforcement Directive if these flat-rate tariffs are too low and the winning party is thus not reimbursed at least a substantial and reasonable part of the necessary legal costs. The ECJ specifically states that a national rule providing for an absolute upper limit on the costs relating to the representation by an attorney must ensure (1) that this upper limit reflects the actual tariffs applicable to legal services in the field of intellectual property, and (2) that at least a substantial and reasonable proportion of the reasonable costs actually incurred by the winning party are borne by the losing party. Applying this thought on the German system does also cast doubts on the flat-rate remuneration system under the Act on Attorneys’ Fees (RVG). Also in Germany, the reimbursable costs often represent only a certain part of the fee billed to the client.
Against this background, it is possible to determine that a direct effect of the ECJ ruling on the HOAI on attorneys’ and patent attorneys’ fees does not exist simply because of the different conditions for the provision of services in these professions. However, it has been discussed in politics and the legal profession for quite some time whether the remuneration system according to the Act on Attorneys’ Fees (RVG), which at least indirectly also affects the remuneration of patent attorneys, is still up to date. A reform of the RVG and the adjustment of attorneys’ fees have been pushed ahead for some time, but without much outcome. In any case, the latest ruling of the European Court of Justice will ensure that this issue remains on the political agenda.
