Springboard Remedies in Germany

The 9/2022 issue of GRUR includes a lengthy excerpt from a March 2021 decision of the OLG Karlsruhe (GRUR 2022, 641 - Polsterumarbeitungsmachine "Cushioning Conversion Machine").  The decision authorizes the removal of certain features from products the defendant made during the term of patent protection, even though the patent in suit has now expired  (see pars. 237-39; see also this short write-up here, in English, from the plaintiff's attorneys).  It also authorizes an inquiry into the profits the defendant made on what would be referred to in U.S. law as convoyed or derivative goods and services—in other words, nonpatented goods and services that are complementary to a patent-protected product—as long as these losses are caused by conduct that infringed the patent during the term of patent protection.   The 9/2022 issue also includes two articles about the decision, one supportive and another more critical.  The supportive one is by Dr.  Benjamin Raue and is titled Ansprüche des Patentinhabers nach Ablauf des Patentschutzes (“Patent Owners’ Post-Expiration Claims”).  The more critical one is by Dr. Matthias Leistner and is titled Relevanz von Geschäftsereignissen nach Schutzdauerablauf für den patentrechtlichten Schadensersatzanspruch (“Relevance of Commercial Developments following Patent Expiration for Patent Damages Claims”). 

Among the relevant considerations I perceive in thinking through these issues are the following:

1.  There is a 1990 German Federal Supreme Court decision (GRUR 1990, 997 - Ethofumesat) that affirmed a Beseitigungsanspruch (a claim for the removal of infringing effects) post-expiration.  Specifically, as explained by Judge Kühnen in the English-language translation of his German patent litigation treatise (at pp. 358-59 of the 7^th edition):

The defendant had acquired knowledge in the form of test reports and examination reports through patent-infringing field tests in order to exploit this by applying for a license for its plant protection project.  The resulting disruption to the patent proprietor consisted in the defendant being able, as a result of the patent-infringing tests, to obtain the official licence needed to import and distribute the plant protection product immediately after the expiry of the patent  .  .  . In order to remove the on-going disruption, the German Federal Supreme Court refused to allow the defendant to use the knowledge obtained by infringing the patent as a basis for any application for a licence for the length of time would have taken it to acquire the relevant know-how by carrying out field tests begun after expiry of the patent.

In a similar vein, other countries sometimes may permit springboard injunctions.  (For discussions relevant to the U.K. and Spain, see here and here).  The U.S. does not award springboard injunctions in patent cases, however, the rationale being that § 283 of the U.S. Patent Act only authorizes injunctions “to prevent the violation of any right secured by patent.”  See Spine Solutions, Inc. v. Medtronic Sofamor Danek USA, Inc., 620 F.3d 1305, 1320 (Fed. Cir. 2010).  On the other hand, in trade secret litigation a court may enjoin a defendant from using misappropriated information, even if it is no longer secret, for the period of time it would have taken the defendant to acquire the information lawfully through reverse engineering or independent development.

2.  Second, as for damages:  if the generally-applicable principle is that the law of patent damages should ensure that the patentee is no worse off and the infringer no better off as a result of the infringement, it would seem that the patentee should be able to recover lost profits on lost sales of complementary goods or services that the patentee would have made, absent the infringement, subject to the normal application of the doctrines of cause-in-fact and proximate cause.  Dr. Raue points to U.K. and French law that appears  to be in accord with this position.  He doesn’t mention U.S. law, however,  which is only partly in accord with it.  In particular, in Rite-Hite Corp. v. Kelley Co., Inc., 56 F.3d 1538 (Fed. Cir. 1995), the Federal Circuit held that, where the infringement causes the patentee to lose sales of unpatented complementary products that it normally would have sold along with its patented products, the patentee cannot recover lost profits on lost sales of these complementary products unless they “function together” with the patented product. 

3. Third, springboard damages, intended to compensate plaintiffs for the lingering, post-expiration effects of infringing acts committed during the term of protection, also might seem appropriate if the general principle is that patent owners should be rendered no worse off, and infringers no better off, than they would have been absent the infringement.  (There is some discussion of the related or overlapping topic of "accelerated entry" in my book at pp. 187, 262 n.160, 314 n.110, 320–21.)  These lingering effects could include the profits earned on sales of products that were made without authorization during the patent term and sold after patent expiration.  But in principle, they could include other advantages as well, for example from customers returning for repeat business, or profits from sales of service contracts or convoyed goods, again as limited by general principles of causation-in-fact and proximate cause. 

4.  On the other hand, one might object that awarding any damages for lost sales of nonpatented goods or for losses accruing after patent expiration is wrong, because in effect such awards extend the technical or temporal scope of patent protection.  On this reasoning, awarding damages for lost sales of nonpatented products occurring after patent expiration, as in the case above, combines both errors. 

5.  Dr. Leistner’s position is more nuanced than the position I have described in paragraph 4, insofar as I understand him to approve of permitting patentees to recover damages for (say) losses resulting from post-expiration sales of convoyed goods or services where the contract for the delivery of such goods or services was entered into during the patent term.  What he objects to, if I understand correctly, is the principle that damages should be recoverable for lost sales of goods or services that the patentee "necessarily" or "typically" would have made, which he views as a principle without a sufficient normative grounding.

Although I respect this position, I am inclined to disagree with it insofar as limiting the plaintiff’s recovery in this fashion makes infringement profitable and therefore risks being underdeterrent.  To be sure, I am somewhat worried, as I take him to be, about error costs--courts might be overly generous in awarding compensation for post-expiration harms (or, I suppose, they might have to devote more resources to adjudicating such claims than would be socially optimal, in view of the likely benefits)—but it’s not clear to me that these risks are necessarily more significant than the potential underdeterrent effect, and we generally expect (or at least hope) that courts will apply causation doctrines appropriately.  Moreover, as a matter of substance, I don't think that such recoveries meaningfully extend the patent’s scope, even if it might seem from a purely formal perspective that that is their effect, since others are free to use the patented technology once it expires (and to sell complementary products during or after the patent term).  These are difficult issues, however, and I will continue thinking through them as I gear up to teach patent remedies again in January.