I am presently researching the most appalling miscarriage of justice that ever occurred in a German patent case: dozens of people lost their jobs over a patent--held by a publicly-traded U.S. corporation--that later got invalidated by the Federal Patent Court of Germany (a problem commonly referred to as the "injunction gap"). That patent-in-suit is either (if construed broadly) clearly invalid or (if construed narrowly) not infringed by the accused product, but could not reasonably be held valid and infringed at the same time. The case raises questions not only about the outcome but also about the reasoning and the circumstances that led to it. There's even a secondary question that reminds me of why Federal Circuit Chief Judge Rader resigned. But as the issues are so very serious, and the fallout from the facts being published might be massive and lasting, I'm making every humanly possible effort to analyze the matter with utmost diligence. That's why it's too early to provide names, but when the time is right, I will. The case number contains "39."
Germany needs patent reform badly. The German patent litigation system is not just broken: it was ill-conceived and it's been prone to abuse all along, but abuse has become so rampant that the time is ripe for change. The situation is unsustainable, and the system doesn't really deliver justice.
Right now there's only one leading German patent infringement court of first instance that I believe does a stellar job under the circumstances, and that's the Landgericht Mannheim (Mannheim Regional Court). Many years ago I thought the court was too plaintiff-friendly, but by now it's my favorite one. To a far greater extent than their counterparts in other German venues, the Mannheim judges--whose understanding of technical issue is unsurpassed--have realized just how irresponsible it is to let patent holders enforce invalid patents all the time. In Mannheim, there are judges who deserve an honorary doctorate in (at least) radio frequency electronics and have the expertise to figure out when a patent is likely invalid as granted, coupled with the backbone to stay such cases (while we're on this subject, I found out they recently also stayed one Broadcom lawsuit against BMW and one against Daimler, both over non-standard-essential patents). It will be interesting to see how they address the issue of component-level licensing in Nokia's automotive SEP cases.
The appeals court in Munich also impressed me on a couple of occasions this year, but can't really solve the problem that too few cases (only about 10%, which is an insanity considering that the vast majority of patents are invalid as granted) get stayed by the lower court there pending a validity determination. Dusseldorf--where the aforementioned tragedy occurred--is a near-total disaster at both levels, except on certain FRAND issues, where it's recently been a thought leader and more balanced than ever. Fortunately, Dusseldorf is a slow venue, which is why the kinds of cases I watch hardly ever get filed there.
As part of my research into the (most likely) unprecedented miscarriage of justice mentioned further above, I've come across a symptomatic decision by the Federal Court of Justice, the top German court for patent infringement cases (as only a very few issues, such as due process, go up to the Federal Constitutional Court). The Bundesgerichtshof (Federal Court of Justice) decision in the Kreuzgestänge (cross-linkage) case is nothing short of a declaration of structural and moral bankruptcy of the German patent litigation system. It's a mystery to me how one of the five judges who reached that decision could heap tons of praise on the German patent judiciary with a straight face in a closed-door government meeting in May instead of advocating much-needed reform.
In that case, the Federal Court of Justice pronounced the following doctrine:
"The court adjudicating a patent infringement lawsuit has to independently construe the patent-in-suit and neither legally nor factually bound to this Court's claim construction in a nullity [= invalidation] action relating to the same patent."
Let me provide some context on bifurcation first:
Unless a patent is so fresh it can still be challenged at the patent office (a scenario I'll ignore for the remainder of this post), one needs to bring a validity challenge before the Federal Patent Court of Germany. That's the court of first instance for nullity (= invalidation) actions.
The Federal Patent Court is typically far slower to resolve a nullity action than the Munich and Mannheim regional courts--and even sluggish Dusseldorf--are to rule on infringement. In the infringement cases, defendants can merely seek a stay pending resolution of (or a key milestone in) the parallel nullity action, but they don't have a full invalidity defense. The decision on a stay is based on some superficial (summary) analysis. The most problematic part is that the courts are largely receptive to non-novelty arguments but not obviousness contentions (and when they do evaluate obviousness, all but Mannheim apply an unreasonably high standard).
From a Federal Patent Court decision on a nullity complaint, parties can appeal (of right) to the Federal Court of Justice. However, infringement determinations by a regional court are appealed to a higher regional court (in Munich and Dusseldorf, cases stay in the same city; from Mannheim, they go to Karlsruhe). In most cases, that's the end of the journey for infringement cases, though the higher regional courts sometimes allow a further appeal to the Federal Court of Justice--or, if they don't, one can bring a Nichtzulassungsbeschwerde, which is practically the equivalent of a U.S. cert petition (a request for top-court review) and denied in most cases.
If the infringement case is brought in Munich or Mannheim, a nullity action will rarely reach the Federal Court of Justice (second nullity instance) soon enough that the above-cited doctrine would play a role. In Dusseldorf, it's more of a possibility, but even in Munich and Mannheim/Karlsruhe there might be an infringement determination by the appeals court after the Federal Patent Court ruled on validity, however, practically only imaginable if the nullity action was launched as a pre-emptive strike ahead of the infringement complaint or if the patent previously got challenged by another party.
Everywhere else in the world, there's a basic rule: you must apply the very same claim construction to the infringement analysis and the validity determination.
Only one country does it differently, and that's Germany.
The result is that a patent holder may benefit from a broad claim construction in the infringement proceeding and a narrow one with respect to validity. The system is (deliberately) asymmetrical: A defendant would never ever benefit, as the above-cited doctrine relates to a case where the nullity action has been fully resolved (all appeals--just one available anyway--exhausted) and the patent has been upheld (otherwise the infringement case would also be terminated immediately).
The Federal Court of Justice explained that--and this is per se correct--the infringement proceeding, if slower, may actually result in facts entering the record or legal theories being advanced that warrant a deviation from the (earlier) claim construction in the nullity action. That is conceivable, but the problem is that they drew a conclusion that results in the asymmetry I just outlined: if the infringement court finds that the claim construction should be broader than the one used in the (concluded) nullity action, the defendant can't get a new validity determination.
It's a tilted playing field. It's all meant to give leverage to those owning patents that should never have been granted in the first place. It's high time the legislature enacted reform.
If Congress wanted to introduce bifurcation in the U.S. by depriving defendants of a full invalidity defense, and if it then promulgated a rule allowing an inconsistency that can only benefit those enforcing--but never those defending against--patents, I'd predict that the Supreme Court would hold it unconstitutional. The incurable inconsistency of rulings would possibly be sufficient grounds for a holding of unconstitutionality--but, at a minimum, the asymmetry of the inconsistency's impact would be. Even Germany's Federal Constitutional Court might arrive at that conclusion, but it's unlikely that a challenge will be brought anytime soon--and even if it happened, that court is nowhere near as strong and principled as the SCOTUS.
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