Earlier this year, Germany’s Federal Supreme Court (BGH) issued a decision holding that a covenant not to sue (or a covenant to sue last) given by a patentee to a component manufacturer can give rise to the exhaustion of the patentee’s right to recover against the maker of the end product. A recent article by Stephan Reisner and Johannes Graf Ballestrem, Erschöpfungseintritt bei Vereinbarung eines ˶covenant not to sue‟ und einem Inverkehrbringen von Teilkomponenten: Zugleich Besprechung von BGH ˶CQI-Bericht II‟ (“Exhaustion through Agreement to a ‘Covenant not to Sue’ and the Placing on the Market of Components: Together with a Discussion of the BGH Decision “CQI-Bericht II”), Mitteilungen der deutschen Patentanwälten, July/Aug 2023, pp. 301-07, discusses the decision in some depth. Here is the abstract, in my translation from the German:
In its recent decision CQI-Bericht
II of January 1, 2023 (X ZR 123/20), the BGH addresses together two
exceedingly practice-relevant themes in connection with patent exhaustion. First, it clarifies whether and under what
conditions a covenant not to sue–specifically, a covenant to be sued last—can have
exhaustive effect. Second, for the first
time the BGH expressly comments on whether the consensual placing on the market
of a component (here, chipsets) can result in the exhaustion of rights with
respect to a larger product that incorporates the component (here, a smartphone)
(the so-called “broader exhaustion doctrine”).
The decision is welcome, though it also provides some room for criticism.
I should note as well that Florian Mueller published an insightful post on the possible implications of the decision back in February (see here), which I commend to readers’ attention, and Patricia Rombach will be discussing it in a chapter to be included in the forthcoming edited volume FRAND: German Case Law and Global Perspectives (Peter Picht, Thomas Cotter & Erik Habich eds., Edward Elgar Publishing, forthcoming 2024).
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