Thursday, April 4, 2019

UK judge alleges breach of EU law by countries whose courts grant automatic patent injunctions: presumably meant Germany

Today was the first day of a two-day conference on "Injunctions and Flexibility in Patent Law - Civil Law and Common Law Perspectives" organized and hosted by the law school of Ludwig Maximilian University in Munich, Germany. A conference held 100 miles up north, in Erlangen, two weeks ago had practically the same focus, and that's where I learned that the German government is working on a legislative initiative tha may represent a departure from the principle of non-standard-essential patent infringements automatically resulting in injunctions. However, the earlier-held conference was more political in the sense of speakers taking pretty clear position on what they'd like the law to be (or to remain), while the ongoing Munich conference is more academic than political.

Despite the apolitical nature of the conference as a whole, one of today's panels constituted an outright clash of legal cultures, with a UK judge insinuating that the approach German courts take to patent injunctions constitutes a blatant and incontrovertible breach of European Union law. Mr. Justice Richard Arnold of the England & Wales High Court (previously mentioned on this blog for his invalidation of a Motorola junk patent and a Nokia v. HTC decision--certainly didn't mention Germany (or any other country). However, he did give his interpretation of European Union statutory and case law, according to which any country whose courts grant patent injunctions without applying the principle of proportionality are in breach of EU law (the IP enforcement directive as well as various CJEU decisions relating to different intellectual property rights):

"There are no ifs or buts.

"There is no room for debate.

"It is crystal clear."

When citing to CJEU case law, Justice Arnold emphasized several times that the enforcement directive as well as certain CJEU decisions referrednot merely to the transposition of the directive into national law by the Members States' legislatures but also to the obligation of Members States' courts to take the proportionality principle into account.

Most of the time, judges speaking at conferences focus on abstract questions and on their own jurisdiction. It's highly unusual that judges would publicly tell colleagues serving on other courts what to do, with exceptions such as a U.S. Supreme Court justice calling the Eastern District of Texas a "rogue jurisdiction" proving the rule. And again, Justice Arnold didn't specifically name Germany--but he did make an unequivocal statement on what his colleagues in all EU Member States are supposed to do, and he was doing so in Germany, which is simply known for granting automatic injunctions in non-standard-essential patent cases.

The next speaker was one of Germany's highest-ranking patent judges: Judge Dr. Klaus Grabinski of the Federal Court of Justice. Almost five years ago I had the honor to be on a panel with him at another German university, and he's been a key player in preparations for the future Unified Patent Court (UPC).

Last time I heard Judge Dr. Grabinski speak, he was much more soft-spoken. Today, he was about as energetic as Justice Arnold, and without referring to the previous speaker, he was fighting hard to defend the current German perspective on patent injunctions.

First, Judge Dr. Grabinski argued that "proportionality" is just a term and he'd like to know more precisely what it's supposed to mean.

Second, he explained (in other words) that injunctions simply are the standard remedy for the exclusionary right that a patent is.

Third, Judge Dr. Grabinski described as applications of the principle of proportionality certain limits to the automatic grant of patent injunctions in Germany, such as enforcement stays, grace periods (he focused on "use-by" periods), security required for the enforcement of an injunction while it is being appealed, etc.

Despite an interesting and persuasive presentation, I still believe that what Justice Arnold meant is actually right: it's not just about the specifics of an injunction, or an exception for outright antitrust violations, but EU law mandates a proportionality analysis before granting any injunction whatsoever.

Of course, it would take a specific decision by the CJEU, with someone appealing a German court's approach to the top EU court, to have greater clarity as to whether the concept of proportionality begins with the binary question of whether an injunction issues in the first place. But I do subscribe to Justice Arnold's reading of the statute and of EU-level case law.

Those two judges obviously came from different starting points. In common law, injunctive relief is an equitable remedy; in civil law, it's a legal remedy. Also, common law makes a clearer distinction between property rights and liability regimes (as Professor Thomas Cotter from Minnesota explained again today, as he already did at the other conference the week before last). Unfortunately, German patent judges very much take a property-centric approach to IPR enforcement as I stated a few days ago in connection with an Unwired Planet v. Huawei decision that I think is right for the wrong reasons.

But I think there's something more fundamental to it. Common law judges have a different approach to statutory interpretation, and they're used to following applicable case law. By contrast, continental European judges have greater liberties, and they take them.

Any German patent reform seeking to address the issue would have to make it absolutely clear that proportionality-based considerations may result in a wholesale denial of injunctive relief in a given case, not just some tailoring ot the injunction or an exception for cases where another law would otherwise be violated.

What I can say from my vantage point is that German patent decisions, at least by the regional courts with which the original complaints must be filed, generally don't reflect any proportionality analysis. At least I've never seen one, and I've seen many such decisions (though they don't all get published).

Whether the European Commission would at some point fine Germany for non-compliance with the EU IPR enforcement directive is doubtful. But Germany can avoid that problem altogether through a patent reform that will protect companies making highly multifunctional products (automotive, telecommunications etc.) against patent holdup.

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