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Patent developments in Germany

The UPC is coming

In the advent of the Unitary Patent patent holders, in Germany and elsewhere in Europe, ask themselves what the future will bring. It's not the continuing uncertainty about the fee schedule, but first and foremost the question of the right choice. Some patentees have gotten so tired of the perceived formality and unpredictability of EPO opposition proceedings already that they are now going national and discontinuing European filings altogether. But most are unsure whether or not to submit their patents to the still somewhat unpredictable Unitary Patent Court (UPS) system. There are a number of unique concerns that future potential users of the Unified Patent Court have to consider, in particular during the transitional period. These include the decision as to whether to opt-in or opt-out key patents and (for putative infringers), whether and how to start a revocation action. Further aspects to consider include the availability of interim injunctions, the potential cost of a wrongly granted injunction, the requirements for seeking a declaration of non-infringement, exceptions to infringement and obtaining evidence to prove your case.

Key Advantages of the German System May Get Lost

German industry is among the tentative supporters of the new system although some key advantages of the current German system may get lost, including its most prominent advantage, bifurcation. Bifurcation, that is to say, the separation between infringement cases in the civil courts and validity cases in the Federal Patent Court in Munich, has made the German courts very attractive to plaintiffs. Infringement cases are often adjudicated within less than one year with an injunction available where the patent is found infringed, whereas the corresponding nullity actions, like EPO opposition cases, require two years and more to be resolved. German infringement courts have a long history of respecting the presumption of patent validity which they derive from the grant act in the (national or European) patent offices. The only way to stop a German court from issuing an injunction following a finding of infringement is to convince it that the patent is likely to be found invalid in the co-pending nullity proceedings. The hurdles for that are high and as a result defendants often find themselves under enormous settlement pressure even with respectable invalidity attacks.

That situation is likely to go away in the new system: While the UPC and its local and regional divisions will have the ability to bifurcate and refer a validity case to the central division, it is clear that the current German practice will not survive, because under the applicable UPC provisions the bifurcation is the exemption, not the rule. Specifically, for example, the court will have the power to issue a decision on infringement on the condition that the patent is held valid, or can stay the proceedings while an EPO opposition is ongoing.

Changes in German Case Law

But more importantly, perhaps, than the UPC, users of the patent system in Germany are looking at developments in the German courts where increasingly there is a feeling that times are getting tougher for patent owners. Some examples highlight that:

A Farewell to Equivalence

In Germany, patentees used to be able to rely on a broad application of the doctrine of equivalents by the courts in the interest of "fair protection". While two decisions by the German Bundesgerichtshof, the highest civil court in Germany, had introduced a "waiver" concept under which embodiments that the patentee recognized in the specification as in line with the concept of the invention but then did not claim were excluded from the application of the doctrine of equivalents, it used to be common understanding that where there was no basis for assuming such a "waiver", the doctrine of equivalents could apply. In a recent decision, however, the influential court of appeal in Dusseldorf (I-2 U 16/14) revoked a decision by the lower court granting a finding of equivalent patent infringement on the basis that where a summary formula was used in the specification anything that fell under that formula and that was not claimed could not be reclaimed under the doctrine of equivalents. The conclusion for patent owners particularly in the chemical and pharmaceutical industries must be that equivalence is potentially "dead" for any patent using a "summary" way of describing the area of the invention where less than the "summary" description is claimed.

Use of the Prosecution File

In the same decision, the court relied heavily on the prosecution file in approaching claim construction. While the court restates the general principle that the prosecution file is not an admissible means of interpretation under Article 69 EPC, the court concludes that statements made by the patentee during prosecution have the same quality as a technical dictionary that illustrates how the skilled person understands the patent. This position, if confirmed by the Bundesgerichtshof, will have far reaching consequences for future cases in Germany, and potentially, elsewhere in Europe and the UPC. The position is the same at which the UK High Court [2014] EWHC 1511 (Pat) arrived in proceedings between the same parties.

Infringement of Use Claims

Another important development in Germany is how the courts deal with use claims, in particular where pharmaceutical patents claim second medical uses of a known substance. Here, the German courts have adopted a position that the infringing activity must include each and every feature of the patent claim in direct association with the product. This is illustrated by, for example, the advertising of a certain medicament with all but one feature of a claim (for example, a certain specified disease) missing, but where the product has now become the "gold standard" for the treatment of the disease. The German courts have held that the advertising and distribution of the medicament in those cases is plainly within the public domain and therefore not an infringement of the patent. The courts have not offered solutions to patentees to deal with such obvious gaps in protecting valuable pharmaceutical research.

FRAND Litigation

Finally, patentees are awaiting the conclusions by the Court of Justice for the European Union (CJEU) in the case between Huawei and ZTE (C-170/13) regarding the enforcement of standard essential patents. While it is clear that the CJEU will only answer the questions put before it by the Dusseldorf lower court, the Landgericht, many are hoping for clarification regarding the difficult relationship between standards and patents - a decision is expected this year. It will hopefully resolve the current divide between those German courts that still apply the "old" German rules as stated in "Orange Book" and the more recent positions taken by the European Commission and the Attorney General in the Huawei case that take account of the position of the alleged infringer and the practical realities of modern standardized industries.