For patent litigation, Germany is among the most frequented venues in Europe.Footnote 1 Both large, international law firms and highly specialized boutique firms are active before German courts. Not only the Federal Supreme Court (Bundesgerichtshof – BGH) but also a handful of major first- and second-instance venues, such as Düsseldorf, Hamburg, Mannheim and München, play an important role in shaping German patent law. Stakeholders, such as patentees, licensees, inhouse and outside counsel, scholars and non-German courts or lawmakers, therefore have a strong interest not only in the established legal framework for patent litigation in Germany, but also in shifts this framework is, of late, undergoing. At the same time, the language barrier complicates insights on these matters, not least for Anglo-American stakeholders, although a slowly increasing part of scholarship, and even of case law, is available in English. Against that background, this chapter sets out to explain basic structures and recent developments in German patent injunction law. It covers the main types of and requirements for such injunctions under German law (Section A), the injunction’s scope as claimed and granted (Section B), bifurcation and stays (Section C), defences and limitations (Section D), as well as alternatives to injunctive relief (Section E), before a conclusion and an outlook (Section G) round off the chapter.
A. Patent Injunctions: Main Types and Requirements
1. Main Types
As a rule of thumb, all acts infringing a patent can trigger injunctive relief under German law. This goes, hence, not only for direct infringements (Sec. 9 German Patent Act – GPA) but also for contributory infringements (Sec. 10 GPA), for acts that enable or promote the infringement, and for uses not falling within the literal scope of a patent claim but which are captured by the doctrine of equivalents.Footnote 2 Requirements for an injunction can, however, slightly vary depending on the type of infringing act (see Section A.2). Furthermore, decisions granting injunctive relief can differ in the parallel claims they award to the patentee, such as damages (Sec. 139(2) GPA), recall or destruction (Sec. 140a GPA).
Besides injunctions granted as part of a final court decision (“final injunctions”), interim relief is available in the form of “preliminary injunctions” (see Section A.3). Injunctions can also form part of a court settlement, based either on a court-recorded party agreement (Sec. 794(1) No. 1 Code of Civil Procedure – CCP, Sec. 779 German Civil Code – GCC) or on a court proposal (Sec. 278(6) CCP).
2. General Requirements and Specific Requirements for Preliminary Injunctions
Some requirements must be fulfilled for all types of patent injunctions. For instance, the patent, Supplementary Protection Certificate (SPC) or patent application at issue must not be exhausted and the defendant must have used it in the sense of Sec. 9, 10 or 14 GPA. Absent a contractual (Sec. 15(2) GPA) or compulsory (Sec. 24 GPA) licence and absent a (general) declaration of willingness to license (Sec. 23 GPA), there must be a risk of first-time (Sec. 139(1)(2) GPA) or recurrent (Sec. 139(1)(1) GPA) infringement.Footnote 3 To give a last example, an injunction is only warranted where the defendant cannot raise a defence, such as the free state-of-the-art defence (also called “Formstein” defence; cf. BGH, 29.04.1986, X ZR 28/85 – Formstein).
Some other requirements depend, however, on whether the injunction sought is of an interim nature. The injunction stipulated in Sec. 139(1) GPA is a final, as opposed to a preliminary injunction. “Final” is, however, not the same as “infinite” since it is, by definition, not possible to enjoin a defendant from the use of a patent beyond the patent’s protection period.Footnote 4 The duration of patent protection constitutes, hence, a built-in time limitation for injunctions.
Much more limited in time are injunctions granted as preliminary injunctive relief under Sec. 935, 940 CCP.Footnote 5 This limitation can be caused not only by the fact that the preliminary injunction is replaced by a final decisionFootnote 6 but also by a time-limited scope of the preliminary injunction itself,Footnote 7 or by a legal remedyFootnote 8 curtailing the injunction.
For a preliminary injunction, the patentee has to show an obvious claim to an injunction and a reason why the injunction ought to be granted as preliminary relief.Footnote 9 To fulfil the first requirement, both patent validity and infringement need to be evident to the court.Footnote 10 Unclear validity of the asserted patent may prevent the court from issuing a preliminary injunction.Footnote 11 As a general rule, courts do not issue a preliminary injunction where they would stay (Sec. 148 CCP) the main proceedings (on stays see Section C) because of pending validity proceedings and a high likelihood of invalidation of the patent.Footnote 12 The same is usuallyFootnote 13 true where a first-instance ruling has held the patent to be invalid, even though the decision is not yet final.Footnote 14 Conversely, a first-instance (although not final) confirmation of validity supports the justification for preliminary relief.Footnote 15
The second requirement is fulfilled where preliminary relief appears suitable and necessary to protect the applicant from substantial disadvantage (Verfügungsgrund – grounds for preliminary relief).Footnote 16 This usually requires that an element of urgency is present and that the interests of the patentee outweigh – in a balancing exercise – the interests of the infringer.Footnote 17 For the determination of urgency, both the pre-litigation conduct of the patentee and its conduct during the litigation are relevant.Footnote 18 For instance, the patentee must not, without good reason, allow an extended timespan to pass between learning of the infringement and its circumstances and the filing of the injunction.Footnote 19 Nor must it fail to litigate in an active and timely manner, e.g., by defaultingFootnote 20 or by delaying an injunction request until publication of the full-fledged reasoning of a decision in parallel nullity proceedings.Footnote 21 Factors relevant in the balancing of interests include the impact of an injunction on the infringer’s business, the likelihood for the patentee to successfully collect damages later on, and the question whether the patentee engages in patent-based production itself or merely collects royalties.Footnote 22
All in all, the requirements for a preliminary injunction are rather strict since this relief severely impairs the rights of the alleged infringer.Footnote 23 Consequently, preliminary injunctions are a well-established, but – at least traditionallyFootnote 24 – not a very frequent feature of German patent law.Footnote 25
B. Scope as Claimed and Granted: Enforcement
The usual patent infringement litigation in Germany includes an oral hearing and is decided by a judgment on the merits,Footnote 26 including a decision on costs and provisional enforcement.Footnote 27 The operative part (Tenor/Urteilstenor)Footnote 28 of such a judgment is based on the plaintiff’s motion, reflects its pleas,Footnote 29 and provides the legal basis for the enforcement of the ruling.Footnote 30 An infringement decision must state clearly the actions from which a defendant has to refrain.Footnote 31 Wording and interpretation of the decision’s operative part (Tenor) are crucial since they determine the (range of) acts which a defendant is not allowed to repeat/undertake.Footnote 32 The operative part must not be so abstract as to cover acts which were not in dispute.Footnote 33 By way of interpretation, the scope of an injunction is oftentimes delineated according to the so-called core theory: The infringer cannot evade an injunction by making minor changes to the infringing act/product if the core of the (form of the) infringement remains unchanged.Footnote 34
Whether and in which cases the patent claims can be used to identify the infringing acts is a complex and highly debated issue.Footnote 35 Although a plaintiff is not procedurally barred from asserting broad claims for patent infringement, even claims as comprehensive as the patent claims themselves,Footnote 36 the action will be dismissed unless the plaintiff specifies the infringement,Footnote 37 in particular the infringing product, in the initial complaint or duringFootnote 38 the proceedings. While the court may not award more than the plaintiff has requested (Sec. 308(1) CCP), it is possible for the court to reframe the claim, to grant less than requested, or to base the decision on different legal grounds than submitted.Footnote 39 Inadmissible actions will be thrown out by means of a procedural ruling.Footnote 40
As key means for the enforcement of patent injunction decisions, such decisions regularly impose both a penalty payment (maximum EUR 250,000) for each case of culpable non-compliance and custody (maximum two years) in case of repeated non-compliance or failure to make a penalty payment.Footnote 41
C. Bifurcation and Stays
In Germany, patent litigation is a civil law dispute subject, in principle, to the same procedural rules as other civil law cases.Footnote 42 As a very important exception to this rule, however, German patent litigation is “bifurcated”: Court proceedings are split into validity mattersFootnote 43 on the one hand and all other patent-related disputes, infringement disputes in particular, on the other hand.Footnote 44 As one of the reasons for this approach, the relatively thorough patent granting procedure is perceived to justify a presumption of validity of the patent, permitting the infringement court to grant relief without having itself assessed patent validity. Furthermore, the effectiveness of infringement proceedings would be reduced if the infringement court had to deal with validity matters because assessing validity would delay the grant of injunctions, damages or other remedies.Footnote 45
1. Stay of Infringement Proceedings Pending Validity Proceedings
Due to bifurcation, it is possible (and frequent) that injunction proceedings and validity proceedings run in parallel and that the infringement court awards an injunction before the validity court ascertains whether the patent in question is valid or not.Footnote 46 A key instrument for avoiding contradictory results in the two prongs of the bifurcated system – grant of injunction on the one hand, invalidation of the patent on the other – is a stay of the infringement proceedings according to Sec. 148 CCP.
Courts may grant a stay of infringement proceedings in the first, secondFootnote 47 or thirdFootnote 48 instance. They have some discretion based on a balancing of the parties’ interests.Footnote 49 As a general tendency, German courts use this discretion to take a rather patentee-friendly position; they are restrictive in the grant of stays.Footnote 50 According to one of the standard tests, an infringer requesting a stay must show a high likelihood that the patent will be invalidated.Footnote 51 A stay is considered appropriate if the patent scope has already been limited as a result of opposition (Sec. 21, 59 GPA) or nullity (Sec. 22, 81 et seq. GPA) proceedings in the first instance, at least where this restriction has the challenged form of execution no longer covered.Footnote 52 Some scholars argue that opposition proceedings suggest a stay more strongly than actions for revocation since, in opposition proceedings, it is the patentee who bears the burden of proof.Footnote 53 Generally speaking, a stay seems more likely where novelty of the infringed patent is questionable,Footnote 54 and less likely where opposition/revocation proceedings focus on inventiveness.Footnote 55 If one action for revocation has failed but a second action been filed (on similar grounds), infringement proceedings will usually not be stayed any longer, unless imminent success of the second action for revocation is evident.Footnote 56 The suspension will not be granted if the defendant has delayed in initiating the invalidity proceedings (Sec. 296 CCP).Footnote 57 Neither the mere possibility of destruction or revocation nor a threat of an action for annulment justify a stay.Footnote 58 The same goes for a compulsory licence action,Footnote 59 since such action can legitimate use of the patent for the future only.Footnote 60
As to the standards by which the infringement courts determine the likelihood of patent invalidation, there is no formal taking of evidence. However, the defendant should not be significantly worse off than if the infringing court also had the jurisdiction to decide on validity, and the courts do engage in a serious examination of the likelihood of success.Footnote 61 For instance, if a stay is requested on the grounds that the patented invention has been in use prior to the granting of the patent and that, therefore, the patent must be nullified, the infringer must produce conclusive and detailed evidence of the alleged prior use.Footnote 62 Stays may be decided without oral hearing, but this is not the rule.Footnote 63 The decision on a stay can be appealed (Sec. 252, 567 et seq. CCP) but review is limited by the principle that the appeal court is not supposed – at this stage – to question the first instance court’s preliminary view on whether an infringement has taken place.Footnote 64
Especially in recent times, bifurcation has drawn criticism,Footnote 65 not least because a considerable patent invalidation rate and substantial time gaps between the decisions in infringement and validity proceedings can harm alleged infringers who are enjoined from using a technology the patent on which is subsequently declared invalid.Footnote 66 The need to wait for the decision of the – usually slower – validity court delays the overall resolution of the caseFootnote 67 and alleged infringers may be forced into settlement by the costs and other disadvantages they would incur during this period.Footnote 68 On the other hand, the swifter decision on and termination of an infringement which bifurcation permits does generate strong patent protection and it certainly makes Germany an attractive venue for patentees.Footnote 69
2. Other Types of Stays and Procedural Reactions to Patent Invalidation
Usually, even a permanent injunction issued by a court of first instance is provisionally – i.e. until (and if) overturned by the second instance – enforceable on the condition that the plaintiff lodges sufficient security.Footnote 70 Enforcement of the injunction can, as an exception, be stayed until a final decision in the case at the request of the defendantFootnote 71 where (i) the defendant provides security (Sec. 719, 707 CCP), (ii) an enforcement threatens to inflict serious, irreparable damage upon the defendant, and (iii) a balancing of interests shows that the defendant’s interests outweigh the plaintiff’s interests given the facts of the case, including validity concerns.Footnote 72
Other reasons for delaying or staying injunctions in time are, in particular, so-called torpedo actions in other EU member states under Sec. 27, 30 of the Brussels I Regulation (recast),Footnote 73 a pending constitutional complaint against a ruling that grants annulment of the patent,Footnote 74 or a referral for a preliminary ruling to the Court of Justice of the European Union pursuant to Sec. 267 TFEU.Footnote 75
If the patent lapses during infringement proceedings, but without retroactiveFootnote 76 effect, the patentee must limit its claims to the period of patent validity.Footnote 77 If the infringement court issues an injunction and the patent is subsequently invalidated, the infringer may file an “action raising an objection to the claim being enforced” (Sec. 767 CCP) based on the grounds that the patent, the use of which has been enjoined, lacks validity. Furthermore, the infringer may file for an interim order staying enforcement (Sec. 769 CCP).Footnote 78 If the infringement decision is final and has already been enforced before the invalidation/lapse of the patent,Footnote 79 an action for retrial according to Sec. 580 No. 6 CCP (by way of analogy)Footnote 80 or claims based on undue enrichment (Sec. 812 et seq. GCC) may be raised. An action for retrial based on a decision (partly) invalidating the patent can, however, only be brought after the invalidating decision has become final.Footnote 81
D. Defences and Limitations
1. Considerations of Public Interest
a. Relevance and Types of Public Interest Considerations
Sec. 139(1) GPA itself, German patent law’s core provision on injunctions, does not foresee the consideration of public interest as far as the latter is not embodied in the requirements the provision establishes for the grant of an injunction. Nor does a strong tradition of wide judicial discretion existFootnote 82 which would enable courts to broadly introduce public interest considerations.
The balancing of interests required for an interim injunction, however, and in particular the provisions in Sec. 24(1) No. 2 GPA,Footnote 83 Sec. 11 GPA, and Sec. 13(1) GPA, are important settings in which public interest considerations can be brought to bear. The general concept of public interest, which is embodied in these provisions, changes over time and cannot be lumped into a single, general formula.Footnote 84 It is a broad and multifaceted concept, encompassing, for instance, technical, economic, socio-political and medical aspects,Footnote 85 which factor into an assessment of whether an injunction would be proportionalFootnote 86 under the circumstances of the case.Footnote 87 To give an idea, aspects hitherto considered (not only in interim injunction settings) were:
the patent holder did not satisfy or could not satisfy domestic needs;Footnote 88
improvement of the trade balanceFootnote 89 and promotion of exports;Footnote 90
improvement of the currency situation;Footnote 91
likely insolvency of the licensee and resulting increase in unemployment;Footnote 92
increase in workplace safety;Footnote 93
promotion of public health;Footnote 94
continuous availability of a particular medicinal product,Footnote 95 in particular one that has major advantages (therapeutic properties, efficacy, reduced side effects) over similar products;Footnote 96
the simultaneous pursuit of financial interests does not prevent presence of a public interest and the granting of a compulsory licence;Footnote 97
the mere promotion of competition is not sufficient as a public interest.Footnote 98
b. Compulsory Licences on Public Interest Grounds
Based on Art. 5A of the Paris Union Convention for the Protection of Industrial Property and Sec. 31 TRIPs almost all European countries have incorporated legal standards which provide for the right to a compulsory licence.Footnote 99 Under German law, if the patentee is unwilling to grant a licence for reasonable remuneration and if there is a public interest in such a licence, a compulsory licence shall be granted to the licence seeker (Sec. 24(1) No. 2 GPA). The presence of a public interest is determined according to the general criteria mentioned in Section D.1.a. So far, Sec. 24(1) GPA has gained traction mainly in the pharmaceutical fieldFootnote 100 and recent case law seems to indicate its relevance is growing there, although the provision is not applied regularly.Footnote 101 An abusive exploitation of the patent by the patentee is not a necessary requirement for the grant of a compulsory licence under Sec. 24 GPA.Footnote 102 Nor does the licence seeker’s unsuccessful offer of licensing conditions (Sec. 24(1) No. 1 GPA) have to meet the requirements for a compulsory licence (defence) under competition law (e.g., dominance, FRAND or Orange Book requirements regarding content and timeframe; see Section D.3).Footnote 103 A compulsory licence is not warranted, however, where equivalent ways exist to satisfy the public interest.Footnote 104
The compulsory licence is an exception to the principle that the patent holder remains free to decide whether and how to grant licences enabling use of the patented invention for the benefit of the public interest.Footnote 105 Hence, the burden of proving the prerequisites for a compulsory licence lies with the licence seeker.Footnote 106 If it can show they are fulfilled, there is no judicial discretion, the licence seeker has a claim to the compulsory licence (Sec. 24 (1), 81 (1), 84 GPA)Footnote 107 and the court has to grant it.Footnote 108
The licence seeker can enforce its compulsory licence claim by way of an action before the Federal Patent Court (Sec. 81 GPA). The Patent Act also allows, in case of urgency, for the grant of a compulsory licence as an interim measure (Sec. 84 GPA).Footnote 109 The result of the court decision granting a compulsory licence is not an outright licence contract between the parties but the legalization of the patent useFootnote 110 and a statutory, non-exclusive licence on the conditionsFootnote 111 – especially the royalties – determined by the court.Footnote 112 Hitherto, patent infringers could not use pending proceedings regarding a compulsory licence under Sec. 24 GPA as a defence against the patentee’s claim for an injunction.Footnote 113 This may change in the future given the case law on competition law-based compulsory licences (see Section D.3). A decision – including preliminary rulings – granting a compulsory licence can, however, be raised in the infringement proceedings and prevent an injunction.Footnote 114 Furthermore, the infringer can try to have the infringement court stay the injunction proceedings with regard to the pending compulsory licence proceedings if the compulsory licence is requested with retroactive effect and the court sees a sufficient likelihood – with regard to the requirements mentioned in Section C.1– that it will be awarded.Footnote 115
c. Expropriation Orders on Public Interest Grounds
Another key provision on public interest considerations is Sec. 13(1) GPA which states, in pertinent part:
(1) The patent shall have no effect in a case where the Federal Government orders that the invention is to be used in the interest of public welfare. Further, it shall not extend to a use of the invention which is ordered in the interest of the security of the Federal Republic of Germany by the competent highest federal authority or by a subordinate authority acting on its instructions. …
(3) In the cases referred to in subsection (1), the proprietor of the patent shall be entitled to equitable remuneration from the Federal Republic of Germany.
As to its legal nature, Sec. 13 GPA is – today mainlyFootnote 116 – considered not as a provision foreseeing a contract-based compulsory licence for the benefit of other market participants but as a provision permitting an expropriation of the patentee in the sense of Sec. 14(3) GC, by way of a state order and in exchange for an equitable remuneration. The expropriation order does not, however, invalidate the patent altogether; it is –and must strictly beFootnote 117 – limited to the timespan and forms of use necessary to achieve the public interest goals.Footnote 118 Sec. 13 GPA is considered to be coherent with Sec. 31 TRIPS.Footnote 119 Its practical relevance is quite lowFootnote 120 and the most interesting aspects regarding Sec. 13 GPA do (today) probably relate not so much to how the provision plays out in practice but to what it tells us about the possibility of and requirements for a limitation of patent exclusivity and property rights in the public interest, in particular from a constitutional and economic viewpoint.
As to some details of the provision, “public welfare” (Sec. 13(1)(1) GPA) is interpreted in a narrower sense than “public interest” in Sec. 24 GPA, addressing natural disasters, epidemics, attacks using biological weapons, and similar gruesome events.Footnote 121 “Interest[s] of the security” (Sec. 13(1)(2) GPA) mainly addresses police or military concerns, as well as the protection of the population during catastrophic events.Footnote 122 The expropriating “order” must be cloaked in the form of an administrative act specifying the (extent of the) public use to be made of the invention.Footnote 123 Importantly, an order under Sec. 13 GPA may only be issued if use of the patented invention cannot be ensured by other means, such as a (compulsory) licence or less extensive administrative orders.Footnote 124
2. Compulsory Licence According to Sec. 24(2) GPA
Sec. 24(2) GPA provides for the grant of a compulsory licence in situations where “a licence seeker cannot exploit an invention for which he holds protection under a patent with a later filing or priority date without infringing a patent with an earlier filing or priority date”. Instead of a specific public interest, the provision requires that the dependent patent embodies an important technical progress of considerable economic potential compared with the invention underlying the earlier patent.Footnote 125 In addition, the conditions of Sec. 24 (1) No. 1 GPA must be fulfilled (except public interest), namely the licence seeker must have made unsuccessful efforts within a reasonable period of time to obtain the consent of the patentee to use the protected invention on reasonable commercial terms (see Section D.1.b). By way of compensation for the grant of a compulsory licence, the owner of the earlier patent may request a counter-licence from the licence seeker on reasonable terms (Sec. 24 (2)).
3. Competition Law
It is, meanwhile, a well-established principle in German and EU law that competition law rules can impact patent law, especially by limiting the claims and exclusivity rights of patent holders.Footnote 126 The focus of this chapter is, however, not on competition law as another part of this book deals with the topic.Footnote 127
4. General Abuse of Rights Doctrine, Sec. 242 GCC
In general German civil law, the abuse of a right is usually interpreted as one form of violating the duty to “perform according to the requirements of good faith, taking customary practice into consideration” (Sec. 242 GCC).Footnote 128 Courts have considered the exercise of patent rights to constitute such an abuse in a number of settings, including the enforcement of claims based on a patent which had been acquired by way of misrepresentations to the patent office;Footnote 129 contradictory positions the patentee defends in the infringement proceedings and in the validity proceedings respectively;Footnote 130 or the forfeiture of rights due to lapse of time.Footnote 131 On the relevance of Sec. 242 GCC in the context of recent discussions about injunction law reform, see Section D.6.
5. Personal Characteristics of the Patentee or Infringer
a. Infringers
In some cases, injunctions are not successful because of who claims them or against whom they are claimed. Indirect/contributory infringers and co-liable persons (Störer) cannot be targeted as long as the specific requirements for an injunction against them are not met. The same goes for other groups in the holding to which the infringing company belongs.Footnote 132 Furthermore, injunctions are not possible against civil servants who have committed an infringement, as long as the state takes liability (Amtshaftung – public liability).Footnote 133 The situation is similar for those protected by a licence contract (Sec. 15(2) GPA), (the right to) a compulsory licence (Sec. 24 GPA), or some other legal position as a result of which they are not considered to have committed an infringement. To the extent the economic effects of an injunction on the defendant are considered in gauging the proportionality of the injunction, characteristics such as the SME status of the defendant can become relevant. We will say more on this aspect in Section D.6.
b. Plaintiffs
On the side of the plaintiff/patent owner, a focus in case law and literature is on the treatment of so-called non-producing entities (NPEs).Footnote 134 It follows from the almost “automatic nexus” between infringement and injunction (on limitations see Section D.7) in German statutory patent law, as well as from a relatively patentee-friendly tradition in German case law,Footnote 135 that – so far – courts do not systematically deny injunctive relief to a certain type of plaintiff.Footnote 136 Some decisions have been restrictive in granting injunctions to NPEs in the context of temporary reliefFootnote 137 or the provisional enforcement of first-instance decisions.Footnote 138 However, with regard to NPEs enforcing patents in the particularly sensitive field of SEPs regarding Information and Communication Technologies (ICT-SEPs), the Düsseldorf Higher Regional Court has underscored, in a high-profile FRAND case, that they should not a priori be treated differently from other patentees.Footnote 139
In a more recent decision,Footnote 140 though, the same court has established some boundaries regarding the enforcement of SEPs acquired by an NPE from the original patent holder. It is of vital importance, in such cases, whether a FRAND declaration made by the previous patent owner obliges the acquirer to offer licences on FRAND conditions to standard implementers as well, or whether the acquirer remains free to seek an injunction even though an implementer proves willing to take such a licence. Sometimes, an acquiring NPE will have made its own FRAND declaration, for instance because the relevant standard was set only after the patent acquisition or because the acquirer contractually undertook to do so, but there is no guarantee and implementers may, hence, have to seek refuge from an injunction in the previous patentee’s FRAND declaration. Coming to their rescue, the Düsseldorf court held that the acquirer of a SEP is directly and necessarily bound to the FRAND declaration of its predecessor, even absent an express or implied declaration to this effect.Footnote 141 In the court’s view, the FRAND licensing commitment has the effect that the patentee no longer holds an exclusivity right which would allow its holder discretion to permit or prohibit use of the patent. Instead, as a result of the FRAND declaration, the rights from the patent are now limited by the obligation to allow access on FRAND terms. Very importantly, the court seems – the language of the decision is somewhat ambiguous regarding the doctrinal level but it may draw on a similar proposal in the literatureFootnote 142 – to derive this limitation not from a contractual promise, the lack of which could remove the limitation, but from a modification of the patent in rem due to a waiver contained in the patentee’s FRAND declaration. Hence, the owner can transfer its patent only together with the FRAND “encumbrance” and the presence or absence of an additional FRAND declaration by the acquirer has no impact on the FRAND licensing obligation. Nor, according to this Düsseldorf decision,Footnote 143 can the acquirer usually claim an injunction if an implementer refuses to license the SEP on terms incompatible with those offered by the previous patentee. This is because the court finds, based inter alia on Sec. 15(3) GPA,Footnote 144 that the previous FRAND commitment binds the acquirer not only in a general way, but also regarding the licensing practice of the previous patent holder. Existing licence agreements, in particular, do not end or alter their terms and conditions only because of the transfer. As another – and, for once, patentee-friendly – implication of these findings, the Düsseldorf court perceives no competition law violation where the contractual arrangements between patent seller and buyer do not explicitly oblige the buyer to make or honour a FRAND commitment since the FRAND obligation travels with the patent anyway,Footnote 145 arguably even if the purchaser is unaware of the FRAND declaration. In consequence, an implementer, especially one who is not willing to take a FRAND licence, cannot raise the absence of such a contractual obligation as a competition law defence against the acquirer’s injunction claim.
6. Proportionality
a. Traditional Legal Framework
German courts do take proportionality into consideration where they have judicial discretion, such as in the granting of interim injunctions or in the decision on provisional enforceability of injunctions.Footnote 146 However, according to German statutory patent law, the claim to an injunction was, hitherto, not subject to a general proportionality requirement or a balancing of the parties’ interests.Footnote 147 While proportionality is explicitly mentioned in Sec. 140a GPA (claim for destruction of products) and Sec. 140b GPA (claim for information), Sec. 139 GPA, as the core provision on injunctions, did not explicitly establish a proportionality threshold.Footnote 148 Nor is there anything like a broadly available, US-style “eBay” balancing test.Footnote 149 Apart from the settings just mentioned, German courts tended – and may well continue to tend – to create an almost automatic link between the establishment of a patent infringement and the granting of an injunction.Footnote 150 Many scholars agree that there was no such thing as a general, effective proportionality threshold in traditional German patent injunction law.Footnote 151 This has, as noted, made Germany an attractive venue to patentees. Recent developments and a revision of the GPA may, however, increase the relevance of proportionality notions, as we will discuss in the following Section.
b. Revision of Sec. 139 GPA
In August 2021, a revised version of the Patent Act took effectFootnote 152 and modified German patent injunction law in mainly three respects. First, the bill adds flexibility to Sec. 139(1) GPA by stating in Sec. 139(1)(3) GPA that the claim to injunctive relief is precluded to the extent it would, due to the special circumstances of the individual case and in view of the principle of good faith (Gebote von Treu und Glauben), lead to disproportionate hardship on the infringer or third parties which would not be justified by the patent exclusivity right.
Second, in case and to the extent an injunction is thus precluded, the injured party is entitled to appropriate monetary compensation (angemessener Ausgleich in Geld, Sec. 139(1)(4) GPA). Such compensation leaves “unaffected” (unberührt) a claim for damages, Sec. 139(1)(5) GPA.Footnote 153
Third, in bifurcated proceedings, the Federal Patent Court is supposed to send a qualified opinion on the validity of a patent to the parties and the infringement court within six months from the filing of an action for annulment (Sec. 83(1)(2), (3) GPA), a timeframe that did not hitherto exist.Footnote 154
To a certain extent, the wording of and rationale behind Sec. 139(1)(3) GPAFootnote 155 implements a proportionality limitation introduced by the Federal Supreme Court in its Heat Exchanger (Wärmetauscher) decision.Footnote 156 In this decision, the BGH firmly settledFootnote 157 that, in principle, injunctions can be subject to a use-by period during which the infringer has, in particular, the opportunity to sell off infringing products before the injunction takes effect.Footnote 158 The court drew this limitation from the general principle of good faith (Sec. 242 GCC) and from similar unfair competition case lawFootnote 159 and perceives it to be in line with Art. 30 TRIPS, Art. 3 of the Enforcement Directive, and the case law of the UK courts.Footnote 160 At the same time, the BGH defined a rather restrictive threshold for the granting of such a use-by period, stating that it can only be considered if the immediate enforcement of the injunction would, due to special circumstances of the individual case, constitute a hardship that is disproportionate and therefore contrary to good faith even in view of the patentee’s interests, of the exclusivity of the patent right, and of the regular consequences of its enforcement.Footnote 161 Aspects relevant for this test are, inter alia, whether the infringing item constitutes an essential component of a complex product, whether there was an acceptable option for licensing the infringed patent, whether the remaining protection period for the patent is long or short, whether an immediate injunction would have a grave and disproportionate impact on the (entire) business of the infringer, and whether the infringement was a culpable one.Footnote 162 Importantly, the fact that the lower instances did not consider the challenged embodiment to infringe the patent does not – according to the BGH – give rise to an assessment more favourable to the infringer as it cannot legitimize the expectation that these decisions will not be overturned.Footnote 163
While the revised Sec. 139(1) GPA is clearly rooted in this case law, it goes a step beyond it. In particular, it arguably introduces a somewhat more general proportionality requirement, allows for the consideration of third-party interests (see also below in this section), and grants a claim to financial compensation without the need for the patentee to show damages or, in fact, any of the requirements for a claim to damages.
The envisaged modification to Sec. 139(1) GPA triggered a broad range of reactions. Some criticized the new provision as a measure cementing the status quo instead of raising the bar for injunctions.Footnote 164 Those who suggested, in view of the initial draft, taking third-party interests into consideration and relaxing the link between an injunction stay and the fulfilment of the Heat Exchanger criteriaFootnote 165 were sympathetic towards the reform bill’s subsequent modifications.Footnote 166 The Max Planck Institute welcomed the introduction of a proportionality test but criticized the precedence it grants the patentee’s interests.Footnote 167 Other commentators deemed the new provision to strike a good compromise between firmness and flexibility in the granting of injunctive relief, not least by dispelling German judges’ hesitations to take into account considerations of proportionality in Sec. 139 GPA.Footnote 168 There were, however, also those who denied any need for a modification of Sec. 139 GPA, for instance because they deemed it to inappropriately weaken patent protection and Germany’s attractiveness as a patent (litigation) venue, to violate the TRIPS and the EU Enforcement Directive, or to be unnecessary in view of the EU Enforcement Directive’s proportionality precept.Footnote 169
Given the intense, controversial debate over whether and how a proportionality defense should be introduced into German patent injunction law, it is worthwhile to look at what the legislature has to say in the legislative materials:Footnote 170 It considers the modifications to be, first and foremost, a legislative clarification of a principle rooted in the German constitution, in civil law provisions on good faith and relief from unreasonable obligations, as well as in the EU Enforcement Directive. According to Art. 3(2) of said Directive, measures, procedures and remedies for the enforcement of intellectual property rights must be not only effective and dissuasive, but also proportionate. The legislative materials concur with the view that the principle of proportionality – at least by way of an interpretation in conformity with EU law – already applies to the claim for injunctive relief and that the reluctance of German (lower instance) courts to apply it renders a clarification to this effect worthwhile. At the same time, a proportionality defence must be restricted to exceptional settings as it interferes with the core of patent exclusivity rights. In line with such a restrictive application, the patent infringer bears the burden of proof for the disproportionality of the claim and the court must engage in a thorough weighing of all relevant circumstances, taking into account also the paramount, legitimate interest of the patentee in enforcing its right to an injunction. While the recast Sec. 139(1) GPA refrains from listing exemplary settings or criteria for a proportionality defence, the legislative materials identify as relevant (i) the legitimacy of the patentee’s interest in an injunction, depending inter alia on whether the patentee manufactures patent-based products itself or merely monetizes the patent, and on whether the patentee’s royalty claims seem exaggerated; (ii) the severity of the injunction’s economic effects on the infringer, resulting for instance from substantial R&D that went into the infringing product; (iii) the complexity of the infringing product, especially where an injunction based on the infringing nature of one of its many patented components would – possibly in combination with market approval requirements for the product – necessitate the infringer to invest much time and resources in a design-around and to suspend production for a longer period of time; (iv) “subjective” aspects, for instance the nature and extent of the infringer’s culpability, including whether it undertook a freedom-to-operate analysis and made sufficient efforts to obtain a licence, as well as the patentee’s compliance with good-faith principles, which may for instance be questionable where the patentee deliberately delays the assertion of its injunction until the infringer has made considerable investments in the infringing product; (v) severe harm to fundamental third-party interests,Footnote 171 for instance where an injunction would endanger the supply of vital drugs or the maintenance of important infrastructure.
As to the consequences of a successful proportionality defence, the legislature underlines that, instead of denying the injunction entirely, use-by or work-around periods may be the appropriate remedy. To the extent an injunction is denied, the patentee must usually receive monetary compensation, to be determined in the court decision. In addition to this compensation, the patentee remains free to claim damages under Sec. 139(2) GPA.
It remains to be seen whether these changes will profoundly alter the course of German patent injunction law. As to the proportionality requirement, this will very much depend on whether the courts interpret the provision as a prompt to stay, or even refuse, injunctions more frequently and whether they limit its application to a narrow set of casesFootnote 172 displaying facts similar to the Heat Exchanger case. Initial reactions by the judiciary do, indeed, indicate such a restrictive approach.Footnote 173 As to the claim for financial compensation, some judges and scholars have already arguedFootnote 174 that, for the sake of deterrence, the level of compensation should be substantially higher than a reasonable royalty rate, while others consider the reasonable royalty as the appropriate starting point, to be complemented by damages claims and augmented in appropriate settings, for instance where third-party interests are the main basis for the proportionality defence and, hence, the infringer seems not entitled to any profits from the continuing use of the patented invention.
7. Further Limitations
There are some further limitations to injunctions worth mentioning. According to Sec. 712(1) CCP, a patent infringer can, in its capacity as addressee (debtor) of the claim to an injunction, file a petition for protection “insofar as the enforcement would entail a disadvantage for the debtor that it is impossible to compensate or remedy … The court is to allow him, upon a corresponding petition being filed, to avert enforcement by providing security or by lodgement, without taking account of any security that the creditor may have provided”. Sec. 712(2) CCP states that “the petition filed by the debtor shall not be complied with if an overriding interest of the creditor contravenes this”. In practice, hurdles for success of such a petition are quite high in the patent injunction field.Footnote 175
The infringer can raise a complaint based on a violation of their right to be properly heard in the infringement proceedings (Anhörungsrüge, Sec. 321a CCP, Sec. 103(1) FL). If successful, the complaint results in a continuation of the (infringement) proceedings and the infringer can request that the enforcement of the injunction be stayed (Sec. 707 CCP).
Failure to send a warning/cease and desist letter prior to filing for an injunction will, in principle, not limit the patentee’s right to an injunction. The main legal consequence (strategic disadvantages aside) of not sending such warning/cease and desist letter can be that the patentee has to bear the litigation costs if the infringer acknowledges the infringement (Sec. 93 CCP).Footnote 176
Enforcement of an injunction under Sec. 890 CCP can become problematic if the infringer subsequently modifies the contested embodiment (angegriffene Ausführungsform) against which the injunction has been issued: While it is admissible to work around the patent, to develop and sell a non-infringing product, the infringer must not continue to market products which have been modified only to such a slight extent that the core of the enjoined infringing Footnote 177 conduct remains the same (kerngleiche Handlung).Footnote 178
General patent protection requirements obviously have an impact on patent injunctions as well. Examples are acts of use permitted under Sec. 11 GPA,Footnote 179 priority rights (Sec. 12 GPA), lapse (Sec. 20 GPA) or exhaustion of the patent, usurpation of the invention by the patentee vis-à-vis the “infringer”, (Sec. 8 GPA), or the free state-of-the-art defence.Footnote 180 At least some German scholars contend that an injunction, being a future-oriented remedy, should not be granted where the patent is about to expire.Footnote 181
Use-by periods, permitting an infringer to sell or use infringing products within a certain time period after the injunction has been granted, were arguably always possible under German patent law, but the option remained a rather theoretical one as courts were reluctant to grant such deferrals.Footnote 182 However, use-by periods may become somewhat more frequent due to the modification of Sec. 139 GPA (see Section D.6).
E. Alternatives to Injunctive Relief
The injunction is a core remedy in case of patent infringement, but it is by no means the only one. The patentee can combine its injunction claim with other civil and criminal patent infringement claims.Footnote 183 These include, in the case of intentional or negligent infringement, claims for compensation according to Sec. 139(2) GPA. Additionally, patentees may – subject to a proportionality test (Sec. 140a(4) GPA) – request reparative measures in the form of claims for destruction (Sec. 140a(1), (2)GPA), “for recall of the products which are the subject-matter of the patent[,] or for definitive removal of the products from the channels of commerce” (Sec. 140a(3) GPA).Footnote 184 In specific situations, these reparative measures may be granted although the patentee is not entitled to an injunction. In particular, the German Federal Court of Justice has held that destruction of infringing products can be requested even after expiration of the infringed patent.Footnote 185 Furthermore, a patentee can – if the respective requirements are fulfilled – claim the provision of information (Sec. 140b GPA), the “production of a document or inspection of an item which lies in [the infringer’s] control or of a process which is the subject-matter of the patent” (Sec. 140c(1) GPA), the production of or access to bank, financial or commercial documents (Sec. 140d(1) GPA), as well as the publication of a judgment in its favour (Sec. 140e GPA). In addition to the GPA claims, the patentee may have claims under general civil law.Footnote 186 Such GCC claims are declared applicable by Sec. 141a GPA. Last but not least, an infringement can trigger criminal and customs sanctions according to Sec. 142 GPA and Sec. 142a GPA. These additional claims are distinct from and parallel to the injunction, i.e. they are not merely a facet and consequence of the claim for an injunction and the patentee can petition for them independently. For a long time, it had been firmly established in German case law that other infringement remedies do not constitute an alternative to injunctions in the sense that courts would award them in lieu of injunctive relief. Instead, injunctions were, and largely still are, regarded as an almost indispensable consequence of patent infringement.Footnote 187 Of late, however, a discourse has evolved on whether German injunction rules ought to be more flexible, including the award of other remedies in lieu of an injunction. As described in Section D.6., this has even induced changes to the German Patent Act, the practice impact of which remain, however, to be seen.
Open access