In the post-eBay v. MercExchange era, patent holders seeking rapid injunctive relief basically have two choices: the USITC (provided that the accused products are imported into the U.S. and that the domestic industry requirement can be met) and Germany. And China is becoming more and more popular as a venue.
As a cross-jurisdictional patent litigation watcher I can tell that injunctive relief is what attracts plaintiffs to Germany more than anything else. That's why they tend to play the lottery: they assert a bunch of patents, most of which tend to be weak, just in hopes of securing an injunction that allows them to settle an entire dispute on their preferred terms. Until the Court of Justice of the EU handed down its Huawei v. ZTE opinion, it was hard to avoid injunctive relief in Germany even over standard-essential patents (SEPs).
This may change, and I'm one of those who hope it will. Last week I attended a really great conference entitled "Enforcing Patents Smoothly--From Automatic Injunctions to Proportionate Remedies" that was organized and hosted by the Friedrich Alexander University of Erlangen-Nuremberg, where academics, practitioners, and a Mannheim judge (Presiding Judge Dr. Peter Tochtermann) discussed this subject. I wish to thank Professor Franz Hofmann for chairing this conference, and the ip2innovate industry body for supporting it. It clearly exceeded my expectations. At that conference I learned about a legislative initiative in Germany that appears to be in its embryonic stages.
Meanwhile I've obtained official confirmation from the Federal Ministry of Justice and Consumer Protection of Germany that an "expert talk" will take place on May 20, 2019, for the stated purpose of preparing a legislative initiative in the area of intellectual property policy. Industyr groups, academics and judges will discuss one of the potential elements of said initiative: a potential reform of the legal framework governing patent injunctions, particularly in connection with SEPs and, more generally, complex products.
All of the presentations at the Erlangen conference were great, and most of them would actually deserve to be discussed in greater detail, which I may do at a different point in time. What I do wish to share here is the impression that those advocating a more eBay-like approach in Germany, which would require some proportionality principle to be enshrined in statutory law, likely have far more political clout than those opposing it. And they have EU law on their side: the IP enforcement directive comes with a proportionality paragraph, just that Germany transposed it into national law only in connection with other types of intellectual property rights than patents.
It's not just "Big Tech" from America or Asia that's interested in this. There are major German players such as the country's automotive sector (not just car makers but also their component suppliers) and telcos such as Deutsche Telekom. They're tired of facing the threat of disruption from the enforcement of injunctive relief all the time.
While Judge Dr. Tochtermann and his law professor wife both believe the status quo should remain unchanged, and companies like Qualcomm (not among the speakers, but actively asked questions) or Nokia have a vested interest in it, there simply are examples of situations in which a patent covering a minor feature of a complex product could be enforced with enormously disruptive effects for purely logistical reasons that are unrelated to the inventive step the patent is meant to protect.
Professor Christian Osterrieth, one of the name partners of the Reimann Osterrieth Köhler Haft (ROKH) firm that is now part of Hoyng Rokh Monegier, explained how eye-opening it was for him to see a case in which a single patent covering a secondary aspect of a technology could have had disruptive impact on Germany's highway toll collection system. The way Professor Osterrieth described the problem was reminiscent of Justice Kennedy's famous and influential eBay concurrence.
Professor Hofmann made a more theoretical argument for greater flexibility. Professor Thomas Cotter (University of Minnesota, and author of the Comparative Patent Remedies blog that I've recommended on various occasions) focused on the economics of patent injunctions. Simply put, injunctive relief creates a situation in which the parties will negotiate a price, and a court-determined ongoing royalty would be another, so the key question is which approach results in a more reasonable valuation. It's about avoiding overcompensation as well as undercompensation.
In my observation as a patent litigation analyst, there's a particular concern that overcompensation results from the early enforcement of injunctive relief over patents that are invalid as granted, but it takes longer for the nullity proceeding before the Federal Patent Court of Germany to unfold (the so-called "enforcement gap"). In this regard, Judge Dr. Tochtermann said something very encouraging. He told us about his experience from a temporary clerkship at the Federal Court of Justice. That's not to be confused for a straight-out-of-law-school clerkship like in the U.S.; Judge Dr. Tochtermann was a (side) judge on the Mannheim Regional Court by the time he went to the Federal Court of Justice for a few years. He said it really changed his perspective to see the outcome of patent invalidation proceedings at the highest court in the land that hears such cases, and since then he's actually more receptive to motions to stay cases pending the outcome of a parallel invalidation action than he used to be. In fact, Judge Dr. Tochtermann would like all other German patent judges to go through that instructive experience.
I'll attend another conference with a largely overlapping focus on April 4 and 5, entitled "Injunctions and Flexibility in Patent Law -- Civil Law and Common Law Perspectives," at the Ludwig Maximilian University of Munich. The debate will continue, and various stakeholders are gearing up for the Federal Ministry of Justice meeting on May 20. It's too early to be sure, but I think reform advocates are likely to have the upper hand. They have economic reason and logic on their side, and a proportionality-centric approach to injunctive relief would benefit Germany's major industrial companies.
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