A Recent German Judgment on Awards of Infringer's Profits

The December 2013 issues of both GRUR and Mitteilungen der deutchsen Patentanwälte report a German Federal Supreme Court decision on an award of infringers’ profits.   See BGH Sept. 3, 2013, X ZR 130/12, 2013 GRUR 1212, 2013 Mitt. 553—Kabelschloss.   (The decision is also available, in German, here, and there is a write-up by Dr. Christian Zeyfert, also in German, here.)  The plaintiff is the owner of European Patent 0 361 155, which claims a combination of a support and a cable lock for a bicycle.  The defendant was found to have infringed, and the lower court awarded 10% of the infringer’s profit from sales of the infringing product.  The BGH rejected the plaintiff’s claim to an additional 30%.  

The plaintiff’s principal argument was that the lower court erred in assuming that the defendant’s profit attributable to the infringement could be based only on features that customers would have been aware of and that therefore would have influenced their purchasing decisions.  The BGH disagreed, stating that the lower court had not based the award exclusively on this assumption; and it properly had accorded importance to the fact that the invention was only a nonessential improvement over the state of the art.  Citing the court’s opinion in Flaschenträger, which I blogged about earlier this year (here), the BGH stated that in estimating the infringer’s profit it is appropriate to consider whether and to what extent that profit is based on use of the invention’s technical features or on other factors influencing customers’ purchasing decisions.   It was therefore not error for the lower court to take into account that the inventive feature was not observable at the time of purchase or specifically promoted by the infringer--though it might have been error had the court given this factor exclusive weight in its analysis, since there are many factors that might ultimately influence the market success of a product.

Also in the December 2013 GRUR is an article (pp. 1177-85) by BGH Judge Dr. Peter Meier-Beck on the leading patent and utility model decisions of 2012, including Flaschenträger.  Dr. Meier-Beck states again his view, which I blogged about (and critiqued) here, that infringer's profits, plaintiff's lost profits, and a reasonable royalty are not really three different damages calculation methods, but rather different approaches for determining reasonable compensation.  Citing paragraph 35 of Flaschenträger, he also states that "the objection of the infringer, that he could have earned the profit even by noninfringing conduct, is thereby insignificant. A noninfringing product design, which during the period of infringement was not actually available, is irrelevant for the evaluation of the market prospects associated with the use of the protected right during this time and thereby also for the determination of the scale of the infringer's profits to be disgorged."  (In the original, "Der Einwand des Verletzers, er hätte den Gewinn auch bei einem nicht das Schutzrecht verletzenden Verhalten erzielten können, ist dabei unbeachtlich.  Eine nichtverletzende Produktgestaltung, die im Verletzungszeitraum tatsächlich nicht zur Verfügung stand, ist für die Beurteilung der mit der Benutzung des Schutzrechts verbundenden Marktchancen in diesem Zeitraum und damit auch für die Bestimmung des Umfangs der herauszugebenden Verletzergewinns unerheblich.")