Two New Papers on the German Patent Modernization Act

1. Judith Dany and Dr. Nicholas Hohn-Hein, LLM published an article titled The Recent Reform of the German Patent Act:  Improvements and Practical Considerations for Patent Disputes, 44 EIPR 377 (2022).  Here is the abstract:

 

            This article sheds light on important aspects of the latest reform of the German Patent Act in 2021. It discusses the practical implications for pending and future patent litigation in Germany as regards the synchronisation of infringement and invalidity proceedings, the principle of proportionality and trade secret protection.

2.  Mary-Rose McGuire published an article titled Zweites Patentrechtsmodernisierungsgesetz – Offene (prozessuale) Fragen (“Second Patent Modernization Act – Open (Procedural) Questions”) in the February 2022 issue of Mitteilungen der deutschen Patentanwälte (pp.  49-58).  Here is the abstract, in my translation from the German:

 

            Since the Second Patent Modernization Act was revised during the legislative process and-–at the last minute—substantially changed, no time remained to supplement its statement of legislative purpose (Begrundung) and to examine the new law’s procedural implementation.  This essay takes a procedural look at the synchronization of nullity and infringement proceedings, the limitation on claims for injunctive relief, the status of third parties in infringement and criminal proceedings as well as the protection of confidential information in patent disputes.  For it can only be shown in practice, whether the most recent changes really will contribute to the modernization and simplification of patent law.

Also in this issue of Mitteil. is an article at pp. 58-66) by Igor Nikolic titled Lizenzverhandlungsgruppen für SEP -Kollusives Zusammenwirken von Tecnologiekäufern:  Risiken und angemessene Alternativen (“Licensing Negotiation Groups for SEPs – Collusive Collaborations of Technology Implementers:  Risks and Reasonable Alternatives”). 

As mentioned in a couple of other recent posts (see here and here), it doesn't appear that the amendment is having any impact on injunctive relief thus far.

Dijkman on the Injunction Gap and Fair Trial Rights

This article actually came out about a year ago, but only recently was routed my way, so apologies for the lateness of the post.  The author is Léon Dijkman and the title is Does the Injunction Gap Violate the Implementer’s Fair Trial Rights Under the Charter?, 2022 GRUR 857-64.  It is a companion article to his previous Does the Injunction Gap Violate the Implementer’s Fair Trial Rights Under the ECHR?, 2021 GRUR Int. 215-27.  Here is the abstract:

  

           In a previous article, I examined the so-called ‘injunction gap’ from the perspective of the right to a fair trial enshrined in Article 6 of the European Convention on Human Rights.  This article extends the analysis to Article 47 of the European Union’s Charter of Fundamental Rights, which is the EU equivalent of Article 6.  The European Court of Justice has applied Article 47 Charter to procedural constellations where issues were divided over different proceedings before different courts.  These decisions offer insights for the application of Article 47 Charter to Germany’s bifurcated system of patent proceedings and, in particular, the safeguards that should be afforded to defendants in this system.  The article concludes that if the six month period for a qualified opinion by the Federal Patent Court, as per the new § 83 German Patent Act, fails to resolve the injunction gap problem in practice, a stay of proceedings as per § 147 German Code of Civil Proceedings remains the most promising tool to do so.   

Although the article was completed before the CJEU’s decision in Phoenix Contact GmbH & Co. KG v. Harting Deutschland GmbH & Co. KG, previously discussed here, the author correctly predicted that the court would find the practice of presumptively denying preliminary injunctions in cases in which the patent’s validity had not been determined in first-instance proceedings at odds with article 9(1) of the Intellectual Property Rights Enforcement Directive.  He further proposed that such an outcome would have “two important consequences,” first that it would “require infringement courts to make preliminary assessments of a patent’s validity in interim relief proceedings,” and second that “a greater availability of interim injunctions may make stays of merits proceedings more palatable to infringement courts” since interim relief would still be available “in truly urgent cases” (p.863).  

France's Cour de Cassation Rejects Appeal from Judgment Finding Abuse of Right

The decision is San-Ei Gen FFI Inc. v. Nexira SASU, PIBD 1 179-III-1 (Jan. 26, 2022).  The facts are as follows.  In June 2011, patent owners San-Ei and Phillips, a Japanese and a British firm, respectively, notified Nexira of its alleged infringement of European Patent 1611159, titled "Modified Gum Arabic from Acacia Senegal."  Discussions between the parties followed in January 2012, at which time Nexira informed the patent owners of its belief that the patent was invalid by reason of an amendment of claim 1 that (if I understand correctly) broadened the claim beyond what was supported by the international application.  In May 2012, Nexira filed an action to nullify the French portion of the patent, after which the patent owners sought a saisie-contrefaçon and, in March 2013, initiated infringement litigation against Nexira.  The court of first instance dismissed the infringement action in December 2013.  By judgment dated May 28, 2015, the court before which the nullification action was pending nullified the patent with retroactive effect, after which Nexira sought damages for abuse of right.  The Cour de Cassation rejects the patent owners' appeal from a judgment in favor of Nexira in the amount of €104,499.45,  noting that the patent owners were professionals in the sector of concern here; and that they proceeded with knowledge, which could only have been bolstered by the January 2012 meeting with Nexira and the latter's subsequent nullity action, that their claim was questionable.  The court concludes that this behavior could only be explained by a willingness to engage in unfair competition, which the Court of Appeals could consider to have degenerated into an abuse of right.

From Around the Blogs

1. EPLaw published a brief write-up of a Dutch decision in a case between Ericsson and Apple, holding that Ericsson was not entitled to a "freezing measure" pending a hearing.  According to the write-up, Ericsson had asked for the measure based on the possibility that Apple would file an antisuit injunction otherwise, but the court denied the request for lack of a concrete threat on Apple's part.  In particular, Apple's refusal to commit itself to not seeking an antisuit injunction was not a sufficient threat to justify the proposed measure.  (Compare with the position taken by the courts in Munich, which arguably view a failure to make such a commitment as tantamount to being an "unwilling licensee" (and all that flows from that), as discussed here.)

Update (10-26-2021):  More on this case on FOSS Patents this morning, suggesting that the differences between the Dutch and German courts' approach may not be all that substantial after all.

2. FOSS Patents has a three-post series (here, here, and here) on a recent conference on the amendment to Germany's patent law relating to injunctive relief (previously  noted, e.g., here).  The bottom line, according to these posts, is a depressing one:  don't expect German judges to be any more willing to deny or stay injunctions than they were before. 

3. Also relevant to injunctions in Germany, on IPKat Anselm Gripp recently provided a recap of a September 2021 program sponsored by GRUR on Germany's injunction gap (that is, the time, often a year or more, in between a court's finding of infringement and a decision by the Bundespatentgericht (BPatG) on validity).  The author notes that, in theory, the two proceedings could "be synchronized, either in terms of duration or in terms of outcome"--for example, by speeding up the BPatG's proceedings, having infringement courts grant stays more frequently, or by authorizing those courts themselves to determine validity (as is the case in many countries).  According to the author, speakers endorsed a range of possible responses or reforms; but if I'm understanding correctly, they didn't seem too confident that a recent amendment to the German Patent Act, requiring the BPatG to provide a non-binding indication (Hinweis) within six months of the initiation of the invalidation action, will have a huge impact on the stay rate.

4. On Law360, Joel Wacek and Brynna Smith published an article titled Fed. Circ. Micron IP Ruling Raises Damages Disclosure Bar.  The article discusses the August Federal Circuit decision in MLC Intellectual Property, LLC v. Micron Technology, Inc. holding that, as the authors put it, "the plaintiff's failure to disclose in its interrogatory responses certain documents and quantitative considerations related to the evaluation of license agreements merited the exclusion of its expert's reasonable royalty opinion."  The authors recommend the use of supplementary interrogatory responses to avoid problems down the road.  (I previously blogged about the August decision here, though I didn't focus on the discovery issue in that post.)

5. Both Patently-O and IP Watchdog have had some coverage of a pending bill that, inter alia, would prevent the owner of an assigned patent from recovering enhanced damages if the assignment was not recorded in a timely fashion.  I believe that encouraging the recordation of assignments would be a good thing, in that it would assist accused infringers of understanding the relationship between the original owner (which may still have some sort of beneficial interest in the patent or in the outcome of litigation) and the patent-asserting party--particularly in light of the fact that NPE suits, according to a recent RPX report as discussed on Law360, have increased substantially this year.

6. On Sufficient Description, Norman Siebrasse published a short post titled NOC s 8 Regime Is Still a Complete Code, discussing a Canadian decision which agrees with other Canadian case law that a generic drug manufacturer who fails in its bid to invalidate a drug patent and therefore recover damages under Canada's patent linkage law cannot recover damages, if the patent is subsequently invalidated in some other proceeding, by asserting some other type of claim.

From Around the Blogs

1.  On Bloomberg Law, Perry Cooper published an article titled Six Recent Decisions Show Fees More Obtainable, discussing some recent Federal Circuit cases on fees.  For previous discussion on this blog of these cases, see here, here, here, here, and here. She also published an article titled Arctic Cat Wants Justices to Eye Who Bears Onus of Patent Notice, discussing a cert petition recently filed regarding patent marking (see also item 3 below).  For previous discussion of this case on this blog, see here.

2.  On IPKat, Dr. Lisa Schneider published Keeping up with German patent litigation: Half-year case law review 2020.  The article discusses the proposed amendment to the German Patent Act (see item 4 below), Sisvel v. Haier, and some recent cases on preliminary injunctions.

3. On IPWatchdog, Eileen McDermott published an article titled Packet Intelligence Asks CAFC to Rehear Panel Analysis on Patent Marking Under Arctic Cat.  As the title indicates, patent owner Packet Intelligence argues that the Federal Circuit's interpretation of the U.S. patent marking statute is unsound.  For the record, I don't have a firm opinion about the merits of the legal issues involved (about the burden of proof, and whether licensees must comply with the requirement).  But I have long been of the view that it's dumb to condition the patent owner's ability to obtain the full measure of its damages on the owner (or its licensee) complying with the technicalities of the patent marking law.  For previous discussion of the case on this blog, see here.

4. On JUVE Patents, Mathier Klos published an article titled German Industry Remains a Battlefield Over Automatic Injunctions.  The article discusses the debate over the second draft of an amendment that would expressly introduce the proportionality concept into article 139 of the German Patent Act.

5.  On the EPLaw, Tobias Wuttke published an article titled DE-Divisional Game, discussing (and linking to a slightly longer discussion about) a recent decision of the Munich court holding that "abandoning patents and patent applications may amount to unfair competition, if the proprietor unduly exploits the German bifurcated system, in particular the complex interplay between the invalidity proceedings at the Federal Patents Court and the EPO on the one hand and the German litigation trial courts on the other hand."  If I understand correctly, the concern is that an owner whose patent has survived an opposition, but who fears a reversal on appeal, may wish to abandon the patent pending that appeal, while asserting a patent from the same family in infringement litigation--hoping that the first instance decision upholding validity of the abandoned patent will suffice for purposes of obtaining a preliminary injunction.  The author argues that the result is inspired by the U.K. courts' use of "Arrow" declarations.

6. On Law360, Tiffany Hu published an article titled Justices Asked to Ax 'Unprecedented' Ban in Software Fight.  The article discusses a cert petition filed by World Programming Ltd., a U.K. firm, challenging the Fourth Circuit's entry of an injunction forbidding WPL from selling products in the U.S. until it pays a $79 million judgment to its adversary, SAS.  The lower court also enjoined WPL from enforcing a U.K. ruling that refused to enforce 2/3 of the judgment because of its punitive nature.  This is not a patent case, but it seems relevant to the ongoing debate over antisuit injunctions. Copy of the cert petition here.

Also on Law360, Ryan Davis published an article titled High Court Told $268M Hearing Aid Patent Award Flouts Law, discussing a cert petition recently filed in Cochlear Corp. v. Alfred E. Mann Fdn., addressing several damages questions, including  reasonable royalties, the book of wisdom, and apportionment.

Some More Commentary on Germany's Proposed Amendment to Its Patent Law

1. Matthew Bultman has published a piece on Bloomberg News titled Pressure Grows to Stop Automatic Product Bans in EU Patent Rows.  The article quotes several commentators, including me, on the proposal to delay the entry of injunctive relief "when it would be disproportionate and cause unjustified harm," and to close the "injunction gap" by requiring the Patent Court to render a preliminary assessment of validity within six months.

2. Matthieu Klos has published a piece on JUVE Patent, titled No hot air: industry considers German bifurcation update, which quotes a range of commentators arguing variously that the proposal goes too far, doesn't go far enough, or is just right.  On the "goes too far" end of the spectrum is one commentator who argues that the current system works because "the feared shutdown of entire production lines due to the patent infringement of a product part practically never occurs."  The obvious response is that, just because implementers find it in their interest to pay a royalty to avoid shutdown doesn't mean that the royalty is proportionate to the value of the invention.  In fact, there's every reason to think that the threat of an injunction ex post will cause an implementer to pay an excessive royalty, which is good for neither consumers nor innovation.  That's the patent holdup concept in a nutshell. 

3.  Florian Mueller, who is clearly of the "doesn't go far enough" view, published a third post on the amendment on FOSS Patents, titled Without eBay factor #2, German patent reform movement is left with nothing but Kremlinology, spin, and self-delusion: licensing vs. injunction.  He calls attention to the fact that neither the proposed amendment nor the Ministry's rationale for it discusses "the second eBay v. MercExchange factor: the requirement for an injunction that monetary relief (= a damages award) be 'inadequate' to make the patentee whole. That includes, but is not limited to, the intrinsic value of the invention at issue and its relevance to the accused product."

Bechtold, Frankenreiter & Klerman on Forum Selling Abroad

Stefan Bechtold, Jens Frankenreiter and Daniel Klerman have posted a paper on ssrn titled Forum Selling Abroad, 93 Southern California Law Review __ (forthcoming 2019).  Here is a link to the paper, and here is the abstract:

Judges decide cases. Do they also try to influence which cases they decide? Clearly plaintiffs “shop” for the most attractive forum, but do judges try to attract cases by “selling” their courts? Some American judges actively try to enlarge their influence by making their courts attractive to plaintiffs, a phenomenon known as “forum selling.” This article shows that forum selling occurs outside the U.S. as well, focusing on Germany, a country that is often held up as the paragon of the civil law approach to adjudication. As in the U.S., German courts attract cases primarily through the pro-plaintiff manipulation of procedure, including the routine issuance of ex parte injunctions in press cases and refusal to stay patent infringement proceedings when the patent’s validity is challenged in another forum. A critical difference between forum selling in Germany and the U.S. is that court administrators are more actively involved in Germany. As state officials, German court administrators have the incentive to consider the effect of caseloads on government revenue and the local economy, and they use their power to allocate judges to particular kinds of cases in order to make their courts attractive. They also use their power over promotion, case allocation, and resources to reward judges who succeed in attracting cases. Based on an extensive set of interviews with attorneys, judges and court officials, this article describes evidence of forum selling in German patent, press, and antitrust law. It also analyzes how German courts compete internationally with courts from other countries.

This is a very interesting paper.  The authors conclude that the prevalence of patent litigation filed in Düsseldorf, Mannheim, and Munich. is attributable not only to the quality and speed of decisions, but also to such matters as the courts' reluctance to issue stays of judgments pending invalidity proceedings (coupled with the perceived inadequacy of damages for wrongful enforcement in the event the patent is subsequently invalidated), and their reluctance to appoint expert witnesses (which, when it occurs, slows things down considerably).