Patent Litigation 2020

Last Updated February 10, 2020

Germany

Law and Practice

Authors



AMPERSAND Partnerschaft von Rechtsanwälten mbB has a patent litigation team that consists of two partners and two associates. Ampersand has extensive experience in SEP litigation but has also a substantial industry client base, having worked for medium-sized companies as well as multinationals, covering sectors such as telecommunications, pharmaceuticals, mechanical engineering and electronics. All partners in the patent litigation team have seen 200-plus court cases in patent litigation. Ampersand is active in all German patent litigation courts, with a focus on Düsseldorf, Mannheim and Munich. If a case is preliminarily technical, but is handled as a design case or an unfair competition case or suchlike, the firm is happy to provide expert assistance. For antitrust issues, Ampersand involves boutique law firms with a focus on the particular area. Ampersand always works with external patent attorneys who are picked in accordance with the client’s needs.

In Germany, an inventor may obtain a national German patent and a national German utility model (a kind of ”small” patent) by applying, for either, to the German Patent and Trademark Office (GPTO). A European patent, leading to a bundle of national patents is available from the European Patent Office (EPO) as a one-stop-shop for patent applications. A European unitary patent that could be considered a "real European patent" may soon be established; however, the ratification process for this has been delayed, inter alia, due to German constitutional law and Brexit issues.

In appropriate cases, supplementary protection (wettbewerbsrechtlicher Leistungsschutz) under laws prohibiting unfair competition is available. However, the principle of "freedom of imitation" conflicts with this protection and therefore the courts decide about possible protection on a case-by-case basis. Even though this protection is not usually considered a "real IP right", it provides the "right holder" with similar legal remedies.

Furthermore, there is a new EU directive on the protection of trade secrets (EU 2016/943), which can be helpful in protecting inventions. Even though there are some mechanisms to protect know-how pursuant to unfair competition law, the new directive gives the know-how holder a much broader range of options. The implementation into German law is under way.

Antitrust law conflicts with the protection of intellectual property, German law only allows the protection of the specific intellectual property rights that are codified in statutes. In general, German law is statute-based and precedent is used mainly for interpretation of the statutes. In intellectual property law, almost all customary law rules that once existed have now been codified.

The granting procedure for German and European patents starts with an application to the GPTO or the EPO respectively. The application is published after 18 months. The patent offices evaluate the patenting requirements, especially with respect to novelty and inventive step, once this has been requested by the applicant.

The patent offices may raise objections and ask for replies. The offices may also schedule hearings on the patentability of an invention. Within the limits of the original disclosure, the applicant may change the application. Once the relevant office is convinced of the patentability of an invention, it informs the applicant and then publishes the grant in its journals. With this latter publication, the patent is granted.

The German utility model grant procedure is also initiated by formal application proceedings with the GPTO. However, the GPTO does not evaluate the "patenting" requirements before the grant of the utility model. Thus, the utility model is an unexamined right. Another major difference between a German/European patent and a German utility model is that if the inventor (or his or her successors) make the invention publicly available this does not destroy novelty if the application is then filed not later than six months after that first publication. Furthermore, only publications within the Federal Republic of Germany will be considered for evaluation of novelty should this requirement ever become an issue – eg, in infringement or revocation proceedings.

The supplementary protection of inventions in accordance with German unfair competition law does not require a formal grant procedure. If the requirements established by the courts in the interpretation of unfair competition statutes are fulfilled, the protection is given. As this is very much a case-by-case decision, it is not advisable to rely on, or plan on, protection of inventions by these rules. However, especially in cases where no IP right has been granted, considering supplementary protection could be worthwhile. 

According to the recent EU directive on protection of trade secrets, the person lawfully in control of information has to perform reasonable steps under the circumstances to keep the information secret. Only then can the information become a protected trade secret. Hence, no specific “grant procedure” has to be followed.

Due to the evaluation of the patenting requirements, the grant procedure for a German and/or European patent can last several years depending on the technical field, complexity and swiftness of the applicant. Representation by a patent attorney or lawyer is not required but is, in most cases, advisable. There is no meaningful average cost. The costs depend to a great deal on the complexity of the invention and the prior art found by the examiner. As a very rough figure, one may expect EUR4,000 for a German patent or EUR5,000 for a European patent up to approximately EUR7,000-8,000 as realistic figures. This includes office fees as well as patent attorney’s fees up to the point of the grant of a patent. 

The grant procedure for a German utility model is much quicker; normally from several weeks to a few months due to the fact that the GPTO does not evaluate patenting requirements. The costs are much lower too as discussion on protectability is shifted to a later point in time, usually in the case of enforcement only. Thus, a utility model may be obtained with an investment of EUR2,000 or possibly even less. 

The term of a German and a European patent is 20 years from the application date. The term of a German utility model is ten years from the application date. Supplementary protection in accordance with the statutes against unfair competition has no specific term.

Trade secrets are protected as long as they are commercially viable and as long as reasonable steps to keep them secret are taken.

The rights of an owner of a German or European patent and a German utility model against an infringer are, in particular, the right to an injunction, information about past infringing acts, damages, destruction of infringing products, recall and publication of the infringement judgment.

As regards obligations, renewal fees have to be paid from the third year after application onwards. The renewal fees are progressive and start with EUR70 for a German patent or EUR470 for a European patent and increase to, per year, EUR1,940 for a German patent or EUR1,575 for a European patent. As the European patent is divided into national patents once granted, annuities are only payable up to the point of granting. Thereafter the national rules on annuities apply. The renewal fees for a German utility model start with EUR210 from the third year and rise to EUR530 from the eighth year. 

In instances of supplementary protection according to the German Act Against Unfair Competition, the right holder first and foremost has claims for injunction, information and damages.

The claims of the owner of a trade secret will almost be the same as those of a patent holder according to the current draft of the German statute on trade secrets.

An application for a Supplementary Protection Certificate (SPC) for both German and European patents may be made. SPCs may be applied for human or veterinary medicaments and plant protection products. They are designed to compensate, at least in part, for longer administrative procedures before market entry and to allow reasonable amortisation of an invention. The SPC comes into force after the original patent expires and can give protection for a patent protected product for a maximum of five additional years.

From the publication of a patent application onwards, until the grant of a patent, any third party may file third-party observations with the relevant office (EPO or GPTO). The observations have to regard patentability – ie, in particular novelty and the inventive step of the invention (or just prior art in case of a German patent). Filing has to be done in writing (and reasoned in the case of a European patent). In the grant procedure of a European patent, the third-party observations may even be submitted anonymously and online. The third party has no further rights to participate in the proceedings or argue its point of view and is not party to the prosecution proceedings. The applicant however is informed about third-party observations and may reply. The office may use the provided information for its assessment of patentability. 

Where a German patent/German utility model is refused, the patentee receives a negative decision from the office first. German law then provides for opposition proceedings against the decision of the examiner. If the office does not change its decision, it forwards the opposition to the Federal Patent Court. The patentee may appeal to the Federal Court of Justice against a negative decision from the Federal Patent Court.

Where a European patent is refused, the patentee can appeal against a negative decision to the Board of Appeal. The patentee may appeal to the Enlarged Board of Appeal against a negative decision from the Board of Appeal.

Supplementary protection under unfair competition law does not require a grant procedure. Requirements are evaluated within infringement proceedings by civil courts.

For trade secrets, there will be no remedies if a court finds that the information in question is not secret – eg, because of lack of reasonable steps taken to keep such information secret.

When annual fees for a German patent are not paid, the application is deemed withdrawn and the patent expires. From the beginning of the third year after the application date, annual fees must be paid. The first fee is due two years after the application date (at the end of the respective month) in advance for the year to follow. Fees are payable within two months, and (for up to a further four months) a penalty of EUR50 is incurred for late payment. Early payment is allowed, but at the earliest one year before the fees are actually due. Once the six months have expired, the patent expires and no appeal against this expiration is permitted. If all deadlines are expired, only very special circumstances may justify a so-called re-establishment of the status quo before the due date (Wiedereinsetzung in den vorherigen Stand) where the payment of the fees was still in time. In particular, it is required that the due date has expired despite taking all due care.

As for European patents, the patent application is similarly deemed withdrawn if annual fees are not paid in time. From the beginning of the third year after the application date, annual fees must be paid. The first fee is due two years after the application date (at the end of the respective month) in advance for the following year. The annual fees may be paid with a penalty of 50% of the respective annual fee within six months of the due date. Early payment is also possible for European patents but at the earliest three months before they are actually due (apart from the first annual fee for the third year, which may be paid six months in advance). If all deadlines are expired, only very special circumstances may justify a re-establishment of the status quo before the due date where the payment of the fees was still in time. In particular it is required that the due date expired despite taking all due care.

The German legal system provides several approaches for the patentee to reach an out-of-court solution for an infringement case.

A relatively moderate way to approach an alleged infringer to obtain an out-of-court solution is the request for authorisation (the Berechtigungsanfrage). The patentee does not yet threaten legal action with this letter and does not request a cease-and-desist declaration, but invites the possible infringer to present non-infringement arguments.

If this approach does not work due to ignorance or non-convincing arguments, a warning letter sent subsequently may be used to reach a settlement. This measure is often used in IP issues and aims to obtain a cease-and-desist declaration from the infringer. However, this measure has to be considered carefully because of very strict case law regarding liability risks in the instance of unlawful warning letters. In addition, both a request for authorisation and a warning letter may trigger counter-measures – eg, Torpedo actions. An infringer may be aggressive, so these factors should be borne in mind.

As regards court proceedings, there are also several available remedies. German law provides for preliminary injunctions, which may even be obtained ex-parte, if the circumstances allow for it. However, recent decisions of the German constitutional court indicate that the cases of preliminary injunctions that follow an oral hearing, or at least the supply of information and the possibility of responding in writing, will likely become the rule.

Furthermore, the grant of a preliminary injunction according to German case law procedurally requires that:

  • the matter is urgent – ie, the patentee has not known of the patent infringement for more than approximately one or two months; and
  • that the patent is clearly valid – ie, was upheld at least within first instance nullity proceedings.

Both requirements can be subject to exemptions – eg, the first requirement can be subject to exemption if the evaluation of infringement is extraordinarily time-consuming; the second requirement can be subject to exemption in cases of imminent market entry of the infringer – eg, with a generic pharmaceutical product.

In addition, it is of course possible to initiate main proceedings enforcing all claims given by the German Patent Act (injunction, information/rendering of accounts, damages, revocation, destruction, etc). For example, the Munich courts established a special possibility for "patent litigation mediation" where specialised judges from the Patent Infringement Chambers act as mediators. This procedure, however, has met with some criticism.

If the infringement is not yet clear, the patentee can initiate proceedings solely designed to gather proof for an alleged infringement.

If the infringing product is imported, the customs authorities offer border seizures of infringing products also in patent cases.

If, for example, an alleged infringer believes a patent to be invalid (eg, due to lack of novelty or inventive step) there are several remedies available to contest a patent. It is important to take note of the German bifurcation system. This means that infringement proceedings and nullity proceedings are handled separately by different courts (and in cases of nullity also by the Patent Offices).

Within nine months of the publication of the grant of the patent, any third party can initiate opposition proceedings against both a German and a European patent. The opposition has to be submitted with the GPTO or EPO respectively.

Nine months onwards from the grant of a patent, any third party can initiate nullity proceedings before the Federal Patent Court against German patents and the German part of European patents. Exceptionally, the second instance of these nullity proceedings is handled by the Federal Court of Justice, which normally only handles third instance cases.

Actions for compulsory licences are possible in Germany but are very rarely seen. An exception has been a recent case regarding HIV medication.

If one party claims that another individual (natural person or corporate entity) infringes upon his or her patents, that other individual can initiate a negative declaratory action before the patent infringement chambers of the civil courts. However, in Germany such an action is only admissible if there are no active infringement proceedings initiated by the patentee yet. Negative declaratory actions can also be used as so-called "torpedoes", often initiated in countries with slow(er) working courts. This is due to European Law Regulations, which hinder a national complaint if there is a negative declaratory action pending anywhere else in Europe.

To nullify a patent that is in force, it is not necessary to show any special legal interest. If the claimant is not based in Europe, he or she may be required to provide security for legal costs. This depends on various international treaties and is, in particular, true for claimants from the US and China, for example. The security is set by the court and has to be paid within a deadline set by the court. It shall be high enough to cover the reimbursable costs of two instances of litigation. For a value in dispute of EUR1 million, for example, one may expect to be ordered to pay about EUR110,000 as a security bond (by way of bank guarantee or deposit).

In Germany, because of the bifurcated system one has to differentiate between infringement and nullity proceedings as regards court competence. Nullity proceedings are handled by the Federal Patent Court in the first instance and the Federal Court of Justice in the second instance. There is no third court instance. 

Infringement proceedings are handled by specialised chambers of the District Courts in the first instance. There are over a dozen patent infringement chambers, although only the patent infringement chambers of the District Courts of Düsseldorf, Mannheim, Munich and Hamburg are commonly used. The second instance is handled by the respective specialised senate of the Higher Regional Courts. The Federal Court of Justice handles third instance patent infringement actions.

Germany does not have specialised bodies or organisations for the resolution of intellectual property disputes.

There are no prerequisites to filing a lawsuit. However, if there has not been an out-of-court approach to the patent infringer, and if the infringer then immediately acknowledges the complaint (partly or in full) without hesitation, the plaintiff may have to bear the corresponding court and reimbursable lawyers' fees. Since fees are reduced in such a case of immediate acknowledgement, the costs are relatively low and some practitioners believe it is always worth suing without a warning, because one can obtain an enforceable decision quite economically. For a value in dispute of EUR1 million, for example, this may be approximately EUR29,000 in court fees and reimbursable costs.

Infringement proceedings in German courts need to be initiated by a lawyer. Also, infringement proceedings are usually handled by a team of lawyers and patent attorneys.

Within nullity proceedings, it is the contrary. While in theory a lawyer could also act in nullity proceedings, it is standard practice in Germany that nullity proceedings are led by a patent attorney. However, cases are mostly handled with the assistance of a lawyer.

Interim injunctions are available in Germany and relatively often granted. If the matter is urgent (ie, the patent owner has only known about the infringement for less than one to two months) and if the patent has survived a first instance validity decision, the chances of getting an interim injunction are good. In exceptional cases the, courts even accept exceptions from these requirements.

In general, the patent infringement has to be clear enough to be presented and understood easily, and the validity of the patent has to be beyond doubt. Moreover, it may be possible to obtain a preliminary ex-parte injunction, where the alleged infringer is only informed about the proceedings after the injunction is issued. However, recently constitutional law concerns have been raised and these may make ex-parte injunctions less easy to obtain in the future.

Protective briefs are accepted by German courts against the possible grant of interim injunctions, but not against normal court proceedings.

There are also several measurements regarding the stay of the enforcement. Some of these measures require the alleged infringer to pay a bond, others do not – eg, if the enforcement of a court decision could lead to the bankruptcy of an alleged infringer.

There are no special limitation provisions for intellectual property matters. However, supplementary protection claims, according to the German Unfair Competition Act, are time-barred after six months, which is a significant exception.

There is a mechanism developed by German courts that combines preliminary proceedings with inspection proceedings. These special proceedings allow the patent owner, for example, to perform an unannounced on-site visit to the infringers’ premises to evaluate potentially infringing acts. Products may be seized, experts may be allowed onto the premises to examine the products and production method, and to write a report, and lawyers may also be permitted onto the premises. These proceedings require a certain probability of patent infringement but there is no need for definite proof in advance. The courts may also order measures to secure confidential information obtained against the patentee. 

Initial pleadings in Germany have to provide sufficient information to the court to allow judges to understand the allegation of infringement. The non-technical judges need to be in a position to check if all preconditions for the requests made with the complaint are met. Usually this requires a clear identification of the parties, a description of the patent and what it protects, a description of the attacked embodiment and an explanation of why that falls under the patent in question. Offers to provide proof shall be included in the initial pleadings. The actual formal proof (witness statements, expert opinions, etc) will only be required if the defendants contest the truth of the facts provided by the plaintiff. These principles apply in all German civil law proceedings. In patent cases, the burden of proof may partially shift to the defendant as he or she is usually more aware of the design of the products.

Representative or collective actions are not permitted within the German legal system.

As regards the enforcement of IP rights, the most common and relevant restriction applies to Standard Essential Patents (SEPs). The European Court of Justice has set special requirements that have to be fulfilled by the SEP owner in order to be able to claim for an injunction in court. In particular, the SEP owner needs to first inform the alleged infringer and is obliged to ask whether the alleged infringer is willing to take a licence. If so, the SEP owner is required to make a fair licence offer (offer referred to as fair, reasonable and non-discriminatory – FRAND). Only if no FRAND counter-offer is made and the original offer is not accepted may the patentee ask for an injunction.

There are very few further scenarios where the enforcement of IP rights is restricted. One exception is made if the requirements for compulsory licences are fulfilled. However, these cases are very rarely seen. 

The patent owner and exclusive licensees are able to initiate infringement proceedings, and both have almost the same rights regarding their right to sue. Non-owners, non-licensees and non-exclusive licensees are only allowed to initiate infringement proceedings where they are contractually allowed to do so. This usually requires an assignment of the respective rights that the non-exclusive licensee shall enforce in court. The German law mechanism for such third-party action is called gewillkürte Prozessstandschaft and roughly translates as authorised litigation in one’s own name on another’s behalf.

Direct infringement under German law requires that the attacked embodiment fulfils all features of the asserted patent claim.

Indirect infringement may be found if the attacked embodiment is only a part of the patent protected invention but an essential one.

In cases of direct infringement, the patentee has a claim for an injunction, damages, information about past infringements, etc. In cases of indirect infringement, this may be almost the same where the product can only and exclusively be used for an infringement. This is often the case when a patent protects a process and the attacked embodiment has to perform the process (by way of example: the patent protects a process performed on each mobile phone; here the provider of the mobile phone does not perform the process but the end-user does – selling the phone is selling a product that is an essential element for performing the process and the mobile phone can only be used in a way that the process is performed). However, if the product can also be used in a non-infringing way in the instance of indirect infringement, the patent owner only has a claim for the mildest possible way to avoid infringing use. This may be a warning sign as to possible infringement. Likewise, the claim for information is restricted to infringing uses and damages are only due for infringing uses. This often leads to an empty claim for the patentee.

The scope of protection of a patent is defined in the claim construction. The claim construction has to start with the wording of the claim. The courts will identify how a person skilled in the art would understand the patent claim. In doing so a functional construction is applied (ie, a construction that tries to identify the function of a feature in a patent claim for the whole invention), the description and the drawings of the patent as well as the general knowledge of the person skilled in the art are considered in particular. Only to a very limited extent may German courts look into the file history – eg, if ambiguities can be removed by looking at prior published documents of the same patent. Other prior publications are only examined if they are named in the patent as prior art.

An alleged infringer may commence a negative declaratory action in another EU member state with slower courts to block positive infringement proceedings based on the same facts in Germany. This may delay enforcement of a patent in Germany substantially.

A defendant may also defend himself or herself by claiming a private prior use right if he or she has already begun marketing the attacked embodiment before the application date of the patent.

A defendant may be co-owner of the patent and as such is entitled to use the patent without the consent of the other owner. Alternatively, he or she may be a licensee.

The enforcement and initiating litigation in particular to achieve an injunction may be in violation of antitrust laws in cases of enforcement of SEPs.

The product may have been brought onto the market with the consent of the patentee, which could lead to an exhaustion of the rights of the patentee.

Due to the German bifurcation system that gives the patent offices and the Federal Patent Court exclusive jurisdiction in first instance nullity proceedings, the alleged infringer cannot successfully claim the patent was not valid and therefore not infringed in the proceedings. Rather, he or she has to file nullity proceedings and can only then apply for a stay in the infringement proceedings. This stay, as a rule of thumb, is only granted if the patent is obviously invalid – eg, because novelty-destroying prior art, which had not yet been considered in the prosecution of the patent, is submitted.

Other defences are rarely raised and need to be evaluated carefully on a case-by-case basis. 

One has to differentiate between an expert used by the parties and a court-appointed expert. The former is used by the parties to give their argument more weight. Experts may be used by the parties at any time and may support the lawyers in writing their briefs or they can write opinions that are filed as exhibits for the case. Whatever they say or write is regarded as facts provided by the party, and as such is not proof of what the parties submit.

If the other side contests the truth of the facts provided by the side that has the burden of proof and if this is substantiated (ie, is detailed enough) the court may decide, upon request, to appoint an expert to prove that the party with the burden of proof is in the right. Such a court-appointed expert is a formal way of proving facts and if this expert confirms the arguments of one or the other parties, the court will have to assess if the expert is correct. If the court comes to that conclusion, sufficient proof is provided.

Expert witnesses are rarely summoned before German IP infringement courts, since infringement judges are highly specialised.

There is no separate procedure under German law for construing the terms of the patent’s claims.

Intellectual property rights can be disputed post-grant in different ways:

Within nine months of the publication of the grant of a European patent, the patent can be disputed with opposition proceedings before the EPO. The same deadline of nine months exists for initiating opposition proceedings against national German patents before the GPTO.

After the expiry of the nine-month deadline for filing opposition proceedings, the German part of a European patent and the national German patent may be disputed by way of a nullity action before the German Federal Patent Court. Where opposition proceedings are pending, a nullity action cannot be filed before the German Federal Patent Court. However, a defendant in an infringement action is entitled to join the pending opposition proceedings in this case and attack the validity of the patent.

There are some differences regarding the grounds on which an opposition or nullity action can be based before the EPO, GPTO and German Federal Patent Court. The main grounds for revocation of a patent are the following:

  • lack of patentability (ie, the subject matter of the patent is not new or does not involve an inventive step);
  • lack of enablement;
  • inadmissible extension of the patent’s subject matter in comparison to the application’s version;
  • the subject matter is not suitable for industrial application or is not patentable (ie, non-technical business methods, mathematical methods, inventions whose exploitation is contrary to the ordre publique or morality, plant or animal varieties); or
  • the invention has been usurped, which may, however, only be claimed by the aggrieved party.

A partial revocation or cancellation of a patent is possible where either only part of the respective intellectual property right is disputed by a revocation/cancellation action and, thus, a part is not subject to the proceedings, or where the intellectual property right is defended only with a limited scope of protection. This is usually done by way of auxiliary requests, which limit the scope of protection of the respective claims in view of the relevant validity attacks.

During the revocation or cancellation proceedings it is possible to limit the scope of protection and defend the respective intellectual property right with limited claims, which is done regularly by filing auxiliary requests.

The revocation of a patent can only be achieved by way of the proceedings mentioned above in 4 Revocation/Cancellation.

German infringement proceedings are usually significantly faster than opposition proceedings or nullity actions. Depending on the particular court and the workload of the competent chamber, enforceable first instance infringement decisions may be expected after 10-15 months. In contrast to that, oppositions or nullity actions typically last about two years or more. Thus, a gap (also called an "injunction gap") of one year or even more may occur between the enforceable first instance decision in the infringement proceedings and a first instance decision in the respective validity proceedings.

One procedural interaction between the infringement proceedings and the validity action is the possibility of the infringement court staying the infringement proceeding until a decision on validity is rendered in the parallel revocation action. However, a decision to stay the proceedings requires not only a corresponding request by the defendant in the infringement proceedings and pending validity action, but also that the court concludes that it is likely that the respective patent will be revoked. German infringement courts regularly apply a high standard in this regard. Thus, a successful request to stay the infringement proceeding normally requires the submission of strong new prior art documents, which are not part of the prosecution history of the respective patent.

The situation for German utility models is slightly different to that of patents. Utility models are registered by the GPTO without examining the eligibility for protection and only formal aspects are reviewed.

Anyone may file a request for the cancellation of a utility model with the GPTO. There is no requirement for a particular legal interest. Reasons for cancellation of a utility model are similar to the reasons for revocation of a patent. The most relevant grounds for cancellation are as follows:

  • lack of protectability – ie, lack a technical nature;
  • lack of novelty;
  • lack of inventive step or no industrial application;
  • inadmissible double-protection (an identical, older intellectual property right exists); or
  • inadmissible extension.

A cancellation action before the GPTO is decided by a panel of one lawyer and two patent examiners from the relevant technical field. The decision of the GPTO may be challenged by an appeal to the Federal Patent Court.

Unlike patent infringement litigation, infringement litigation allows the non-protectability of a utility model to be asserted as a defence. The infringement court has to examine the validity of the utility model even if a parallel cancellation request has been filed. The decision on the validity of the utility model in infringement litigation only has effect on the parties in the relevant proceedings.

The enforcement of IP rights follows the general procedural laws of the German Civil Procedural Code. There are special competencies of some civil courts for certain intellectual property matters, but the proceedings themselves are covered by general procedural rules.

The trial panels in infringement proceedings in the first instance consist of three judges with a legal background. However, because patent cases are heard by specialised chambers, at least in the most popular German infringement courts, the judges are highly experienced in patent matters and technical issues.

The trial panels of the Federal Patent Court, with regard to German invalidation actions, consist of five judges, two of whom have a legal background and three judges who have a technical education and expertise (often as patent examiners) in the relevant technical field.

The appeal panel in infringement proceedings consists of three judges with a legal background. At the Federal Court of Justice, competent for the appeals from the Federal Patent Court and revisions from the infringement appeal courts, the panel consists of five judges with a legal background. The parties do not have influence over the choice of judges for the respective courts.

As regards settlement, the parties to German proceedings are free to settle the litigation at any time. There are no additional formal requirements for settling the case. The parties may also jointly request a stay of proceedings, if additional time for settlement negotiations is required. German procedural law provides for court settlement and mediation to enable parties to settle formally. However, these are non-mandatory options that to date have been less relevant in intellectual property matters.

Other court proceedings do not have an influence on revocation and infringement actions, other than the potential stay of the infringement proceedings in view of the revocation action, as described in 4.4 Revocation/Cancellation and Infringement.

The main remedies for the patent owner in infringement cases are injunction, damages, provision of information/rendering of accounts on infringing acts, and recall. With respect to the injunction in cases of direct infringement in particular, the judge has no discretion and has to grant the injunction. Enhanced damages are not known in Germany. However, if the amount of damages is calculated as the infringer’s profit, the damage calculation by German courts may be regarded as a penalty because the result is far from what accountants would regard as profit.

Where the alleged infringer prevails in the infringement litigation, he or she has a claim for reimbursement of necessary legal costs against the right holder.

The following remedies are available where a court finds infringement of an intellectual property right and apply to all intellectual property rights:

Permanent Injunction Against the Infringer

This is probably the most important remedy. At the claimant's request, the court will grant a permanent injunction if it finds the patent to be infringed. There is no requirement for irreparable harm, no weighing of interests or other aspects, which need to be fulfilled. The injunctive relief is available for practising and non-practising entities. The injunction generally extends to all embodiments that are identical or essentially identical to the attacked embodiment.

Damages

In addition, the patent holder is entitled to damages if the infringer acted at least negligently. As the duties of care for avoiding negligence are very strict, the infringer is regularly liable for damages. No punitive damages are available and only actual damages may be recovered. According to established German case law, the right holder can choose between three ways of calculating the damages:

Calculation on the basis of the right holder’s loss of profits

This method is rarely chosen as it requires disclosure of extensive information (eg, the patentee’s revenue, costs and margins) as well as proof that the respective sales would have been made by the right holder and not another competitor.

Calculation of a reasonable royalty, which is applied to calculate the damage

This amounts to what would have been agreed between the parties for the use of the relevant intellectual property right.

Claiming the infringer’s profit as damages

The infringer’s profit is defined as the revenue, from which the directly attributable costs are deducted. Profits made with an infringing product or process are not attributed exclusively to the benefits provided by the invention, but also to other factors (eg, technical features unrelated to the infringed patent and a strong brand name). The contribution of additional factors must be deducted from the overall profits made with the infringing product or process and only the attributable profit has to be paid as damages. The courts have a relatively wide discretion in quantifying the necessary deductions. However, in practice this is often a complicated and time-consuming exercise that leads to the highest calculated damages.

The right holder may request that the infringer provide information about past infringements, including origin and a distribution chain of infringing products, the number of infringing products manufactured, supplied, obtained and ordered, plus prices paid for and profits made with the infringing products.

Destruction and Recall

In addition to injunctive relief and damages, the right holder may request the infringer to destroy all infringing products in its possession, unless destruction would be unreasonable. Notably, the claim for destruction extends to equipment that is exclusively or almost exclusively used for manufacturing the infringing product. The right holder may also request that the infringer recall the infringing products and remove them from the distribution chain, unless this would be unreasonable. These claims for destruction and recall are available regardless of negligence or intent on behalf of the infringer.

Publication

The right holder may further request the infringer to publish the decision confirming infringement at the infringer's expense if he or she has a legitimate interest in the publication. The nature and scope of the publication will be specified in the judgment. This remedy is hardly ever granted by German courts.

Legal Costs

Finally, if the right holder prevails, he or she will have a claim for the reimbursement of the necessary legal costs against the infringer. Calculation of these costs is based on statuary law, which depends on the so-called value in dispute, which is set by the court. The reimbursement covers the court fees and normally a significant portion of the actual lawyer and patent attorney costs incurred.

The first instance decision is preliminarily enforceable. Also, where an appeal is filed, the enforcement is not automatically stayed. The court of first instance will usually declare its judgment preliminarily enforceable, subject to the provision of security by the enforcing party. If the first instance judgment is enforced but later repealed, the enforcing party is liable for damages, including lost profits.

The appeal proceedings in infringement litigation are governed by the general provisions of the German Civil Procedural Code. There are no additional requirements with regard to intellectual property rights proceedings. In nullity cases before the German Federal Patent Court, however, the appeal is heard by the Federal Court of justice in a rare case where this court may still be involved in fact finding and assessment.

Appellate courts are only bound to the facts established in the first instance to a certain extent and are not limited to a review of errors in law. However, new facts may be submitted in appeal proceedings only within certain limits and preconditions, in particular if it was not the party’s fault that the facts were not provided earlier.

From the plaintiff’s side, there are costs for lawyers and/or patent attorneys. These are normally calculated on an hourly rate or as statutory fees. The latter are the minimum fees for court proceedings. Fees for warning letters or protective briefs will also be reimbursed to the amount of statutory fees if the claim is justified. The court fees for filing a protective brief online with all German courts are approximately EUR100.

German statutes on court fees are complex but in general the fees are calculated on the basis of the value in dispute. The value in dispute essentially reflects the economic interest of the patent owner in enforcing his or her patent according to German case law. 

In Germany, the losing party bears the costs of litigation up to a maximum calculated on the basis of the value in dispute. The maximum amount which reimbursable statutory fees can reach is EUR30 million. For a value in dispute of EUR1 million, the reimbursable (patent) lawyer fees and court fees will be approximately EUR40,000 (plus travelling costs and possible costs for expert witnesses) at first instance. 

Due to low litigation costs in Germany, hardly any cases are resolved by way of alternative dispute resolution.

Assignment of intellectual property rights may be made orally, although naturally it is advisable to do so in writing. The assignment may (but need not) be registered with the relevant offices.

To assign an intellectual property right the owner has to offer the assignment and the assignee has to accept the offer. Ideally, but not necessarily, this is done in writing.

Licensing of intellectual property rights with a few exemptions (eg, unknown types of use according to copyright law) can be done orally in Germany, although naturally it is advisable to do so in writing. An exclusive licence may (but need not) be registered with the offices. It is rarely done.

To license an intellectual property right in Germany the owner has to offer the licence and the licensor has to accept the offer. Ideally, but not necessarily, this is done in writing.

AMPERSAND Partnerschaft von Rechtsanwälten mbB

Widenmayerstr. 4
80538 Munich
Germany

+49 0 89 242955 0

+49 0 89 242955 29

info@ampersand.de www.ampersand.de
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Law and Practice

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AMPERSAND Partnerschaft von Rechtsanwälten mbB has a patent litigation team that consists of two partners and two associates. Ampersand has extensive experience in SEP litigation but has also a substantial industry client base, having worked for medium-sized companies as well as multinationals, covering sectors such as telecommunications, pharmaceuticals, mechanical engineering and electronics. All partners in the patent litigation team have seen 200-plus court cases in patent litigation. Ampersand is active in all German patent litigation courts, with a focus on Düsseldorf, Mannheim and Munich. If a case is preliminarily technical, but is handled as a design case or an unfair competition case or suchlike, the firm is happy to provide expert assistance. For antitrust issues, Ampersand involves boutique law firms with a focus on the particular area. Ampersand always works with external patent attorneys who are picked in accordance with the client’s needs.

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