14 May 2020

German Federal Ministry of Justice and Consumer Protection plans to amend the German patent law

The German Federal Ministry of Justice and Consumer Protection (GFMJCP) plans to amend the German patent law and has recently published a first draft of the amended law on the GFMJCP’s website. The amendment would be the first big one for more than ten years. With the amendment, some rulings should be adapted to requirements of patent law, which has changed over the years.

However, two topics, which were hotly debated among the patent community over years and address two German peculiarities regarding patent infringement – the automatic injunction and the so-called injunction gap – are only slightly amended in the draft.

The automatic injunction

Section 139 of the German patent law as currently in force determines that

“Any person who uses a patented invention contrary to sections 9 to 13 may, in the event of the risk of recurrent infringement, be sued by the aggrieved party for cessation and desistance. This right may also be asserted in the event of the risk of a first-time infringement”.

The injunctive relief may be seen as a kind of compensation for the relative moderate damage compensation amounts, which are usually awarded a patent proprietor in German infringement proceedings compared, for example, to the US.

However, this injunctive relief poses problems for infringers of patented technologies, which are used in complex technical systems. A prominent example is the so-called Heat Exchanger case of the highest German Civil court, the Bundesgerichtshof, where a single German inventor tried to enforce his patented neck heater using a heat exchanger for open-top convertible cars against Daimler and won after a year long court battle. The verdict of the Bundesgerichtshof forced Daimler to immediately stop selling its already produced cars, in which the patented technology was implemented. Thereafter, the German car industry faced further patent disputes regarding the implementation of connectivity modules with holders of patent portfolios for the related technologies like Broadcom (against Volkswagen) and Nokia, Sharp and Conversant (against Daimler).

It was clear that the powerful German car industry tried to weaken the injunctive relief, which was a thorn in their side and forced the manufacturers to either sign expensive license agreements or to risk the immediate stopping of the car production lines in case of a lost patent infringement suit.

Many patent experts however expressed concerns regarding a weakening of the injunctive relief, arguing that the current provisions are sufficient, the patent infringement judges have the discretion to suspend the injunctiverelief in cases of hardship and that the balancing of the injunctive relief and relatively low compensation of damages for patent holders would be disturbed.

Despite the concerns, it appears that the lobbying of the German car industry was successful at least at little bit in weakening the injunctive relief. The draft of the amended German patent law now contains a new sentence in section 139, which should implement case law relating to the injunctive relief, particularly based on the Heat Exchanger case, and can be considered as a compromise for balancing the car industry’s demand with those of patent holders. The new sentence reads as follows:

“The right to injunctive relief shall be excluded if its enforcement is disproportionate because, due to special circumstances, taking into account the interests of the patentee vis-à-vis the infringer and the requirements of good faith, it constitutes a hardship not justified by the exclusive right.”

Even if this reads as only a small change of the law, it might have severe consequences, particularly due to the used terms “disproportionate” and “special circumstances”, which gives judges a great range of discretion. No wonder that many patent experts argued against this new sentence and any amendment of section 139.

The injunction gap

The second topic, which was expected to be addressed by the draft amendment of the German patent law, is the injunction gap, which is caused by the bifurcation between infringement and validity proceedings in Germany.

German patent law does not allow a civil court deciding about infringement to examine validity of a German patent. The validity can only be examined by the German Federal Patent Court in nullity proceedings. So, defendants in infringement proceedings usually file a nullity suit at the Federal Patent Court to attack the enforced patent. However, the civil courts are usually quicker in their decision than the Federal Patent Court, sometimes only several months, but more often a year or even longer.

Due to the injunctive relief that is automatically awarded to a winning plaintiff, the defendant and infringer may be put into a situation, where the nullity proceedings are still pending and which may result in a (part) removal of a patent, but the plaintiff can already enforce the injunctive relief based on a protective right with maybe questionable validity. Even if an infringement court can suspend infringement proceedings in doubts of validity of the enforced patent, the judges of civil courts do this usually only when they have received a qualified opinion on the validity of the enforced patent from technical judges of the Federal Patent Court. However, qualified opinions are sometimes not at all and often too late issued in nullity proceedings so that most judges of civil courts decide not to suspend infringement proceedings and to issue a decision about infringement as soon as possible.

This imbalance between infringement and nullity proceedings is seen among patent experts as a severe drawback of the German patent system, which normally has a high reputation.

In order to at least mitigate this imbalance, the draft amendment of the German patent law introduces a sentence in section 83 determining that the judges of the Federal Patent Court should send a qualified opinion on the validity of a patent in suit to the infringement court within six months after notification of the nullity suit.

This is, among German patent experts, appreciated as a suitable measure to mitigate the negative consequences of the imbalance. However, some experts fear that this timeline will not be met in all nullity proceedings where parallel infringement proceedings are pending, due to a lack of qualified judges at the Federal Patent Court.

The draft amendment of the German patent law is now open for a public discussion between the GFMJCP and patent experts. It may take some time, probably a further year until the amendment is put into force, and it is not yet certain if the above two amendments will be contained in the final amendment or not. Therefore, the German car industry must still hope.