If you noticed the allusion to a band name in the headline, you might have grown up in the 80s, in which case you may also remember the famous line "I pity the fool." Otherwise you might know the proverb "curiosity killed the cat". Whatever, those opposing German patent injunction reform are now on the winning track as I explained in my previous post, and in the losing camp, three companies are particularly responsible for a monumental f..kup:
Google, SAP, and Daimler.
Volkswagen deserves credit for having started the push for patent injunction reform in Germany. The three companies listed above will go down in history as the main culprits unless there's a second reversal of fortune. I'd like things to work out, but I increasingly doubt it. The anti-reform movement is just too sophisticated for a pathetic bunch of amateurs.
The documents that prove what went wrong and who's to blame are all public. So let me explain, but again, I'd like nothing more than to be proven to have been too pessimistic. Until the last moment I'll hope that the broken German patent litigation system will be fixed.
So, here's the chronology of events:
In January, the Federal Ministry of Justice and Consumer Protection published a first draft reform bill that Germany's leading patent litigators said was going to change nothing, or at least wasn't going to have significant impact. It then gave stakeholders until mid March to submit comments.
A lobby group named ip2innovate, which is based in Brussels and mostly focuses on EU patent policy, made a submission (PDF, in German) that I largely agreed with, though I expressed concerns about their statutory proposal. Back then I commented on dozens of statements, so I didn't go into detail.
Here's a screenshot of the worst blunder in this whole reform debate (click on the image to enlarge; this post continues below the image):
The first sentence of their proposed amendment to the patent injunction statute is this (in German):
"1Der Anspruch nach Absatz 1 ist ausgeschlossen, soweit die Inanspruchnahme im Einzelfall unverhältnismäßig ist." (emphasis added)
This means that injunctive relief shall be unavailable to the extent that its enforcement would be disproportionate "im Einzelfall." What does "im Einzelfall" mean? That's the problem. The term can be understood in two ways, neither of which reflects favorably on those who proposed it:
non-judgmental interpretation: "in the individual case to be decided"
with a quantitative connotation: "only in rare/outlier cases"
It was an utter stupidity at any rate to use a term that simply isn't a well-defined legal term. I can't remember ever having seen a German statute that contained the word. Therefore, the first thing courts will turn to when trying to make sense of the term is, besides the context, what the legislative rationale (the official commentary provided along with the law) says. I'll get to those two determinants--context and legislative rationale--in a moment.
Anyway, if the plan is to inject a new term into the law that wasn't there before, a lobby group (unless someone inside the group seeks to sabotage the effort or people don't know what they're talking about) would at least pick a term that has framing value. You'd want to use a term that has a connotation that suits your agenda. The last thing you'd want to do is shoot yourself in the foot like ip2innovate did.
Even in a neutral context and without the risk of a legislative rationale ascribing a particular meaning to the term, "Einzelfall" was the equivalent of an own goal in certain sports, or unforced error in others. That's because the non-judgmental interpretation would not be as persuasive a proposal as the quantitative one. Let's face it: the law is always used to decide individual cases. It's the single most fundamental principle of statutory interpretation (which some of the people working for ip2i's members may have learned about a loooong time ago, maybe too long) that if a term can be given one meaning that makes sense and one that doesn't, you pick the former, not the latter. Interpretation 101. With "individual case" being nonsensical, no judge could be blamed for interpreting "Einzelfall" in the sense of "rare outlier, or singularity." One could debate just how rare. But there could be no reasonable argument over whether at least some degree of rarity is implied.
To be clear, I'm not "Monday-morning-quarterbacking" here. I actually made a hands-down superior statutory proposal that I sent to a variety of companies (some of which were and are ip2i members) and select academics in January. When the German reform process is over, I'll publish it. Or maybe before. We'll see. Dozens of witnesses can confirm I shared it with numerous industry players in January 2020. So I don't just pretend to know better with the benefit of 2020 hindsight. I already did back then. And among the proposals that were officially submitted, I supported the one by the Max Planck Institute, which didn't contain any crap like "Einzelfall" either.
Now, fast forward to early September, when the ministry finally published its second draft. It already incorporated the term "Einzelfall"--and did so in connection with a reference to "besonderen Umständen." That term, just like "Einzelfall", can be interpreted in two ways:
non-judgmental interpretation: "specific" = "under the given circumstances"
with a qualitative connotation: "special" = "only under extraordinary circumstances"
Here, again, the non-judgmental interpretation would be devoid of any meaning as any case is decided based on its facts. And then, when you have in the very same, narrow context the combination of two terms (grammatically related to each other in the statute) that can be interpreted judgmentally or non-judgmentally, with the judgmental interpretation making sense while the other doesn't, you'd really need the legislative rationale to support a non-judgmental interpretation--or a mildly judgmental one, meaning that it would suffice for the circumstances to be somewhat special and that injunctive relief wouldn't be abolished entirely, or in a vast majority of cases.
When ip2i submitted its feedback to last month's draft (PDF, in German), it complained that "besondere" (special/specific) was "redundant" in the context of "Einzelfall". They started to realize they had botched this by proposing a term that renders the whole reform statute pointless--even without "besondere Umstände" (though even more so in that context, which basically doubles the problem).
Too late. When you're trapped, you're trapped. The proposal that the executive government adopted today (which still doesn't pass it into law, but that's what the executive officially submits to the legislature) contains the same problematic passage, has made two other terms in the statute less favorable to the interests of defendants, and the draft legislative rationale has deteriorated sharply.
On page 64 of the early September draft ("Referentenentwurf"), the ministry wrote:
"Eine dauerhafte Versagung des Unterlassungsanspruchs wegen unverhältnismäßiger Belastung des Schuldners wird hingegen nur in sehr wenigen Fallkonstellationen in Betracht kommen."
"A permanent denial of an injunction due to a disproportionate burden on the infringer will, however, only be part of the consideration in a very few case patterns."
At the time, I was being optimistic and assumed that the rationale had not been updated yet. But today's version leaves no more room for such wishful thinking:
"Eine dauerhafte Versagung des Unterlassungsanspruchs wegen unverhältnismäßiger Belastung des Schuldners wird hingegen nur in sehr wenigen besonders gelagerten extremen Fallkonstellationen in Betracht kommen. Sie setzt voraus, dass unbilligen Härten für den Unterlassungsschuldner nicht durch eine Umstellungs- und Aufbrauchfrist hinreichend Rechnung getragen werden kann." (emphasis added to highlight what was inserted in October)
Here's my translation:
"A permanent denial of an injunction due to disproportionate hardship on the infringer will, however, be part of the consideration only in a very few, specially-structured, extreme case patterns. It would be a requirement that inequitable hardship on the infringer could not be sufficiently addressed through a workaround and use-up period." (emphasis added to highlight what was inserted in October)
This is like the postmortem of an abysmal failure. With this official commentary, the bill would provide a dictionary to the courts:
"Einzelfall" = "very rare, extreme case" ("singularity")
"besonderen Umständen" = "there must be something out of the ordinary about the circumstances, the circumstances must stand out in a structural sense"
This means the courts will rarely even have to take a closer look at proportionality arguments--unless, as I'll say now for the last time, the pro-reform camp manages to turn this around.
The more realistic assumption is that there won't be any truly helpful developments. If any of the people representing their companies had to report to me, I'd want to know who proposed or supported "Einzelfall" and who opposed it, as that would tell me whether or not I could trust those people to vigorously defend their companies' interests.
The largest U.S. company among ip2i's longstanding members (Microsoft just joined recently) is Google. The search and Android company's European in-house patent litigator, Ralf Uhrich, may actually even benefit from this mess. While he manages Google's patent cases in other European jurisdictions as well, he is admitted to practice in Germany, and may very well return to private practice, such as to Quinn Emanuel, where he left as an associate. In Germany, becoming in-house counsel is typically a one-way street and not considered an upgrade. But Google is an American company, and the relationship between Google and QE is special. As a future QE attorney, Mr. Uhrich would be much less busy if Germany actually reformed its patent injunction regime. Near-automatic patent injunctions are a boon for German patent litigators.
Ip2i's largest European member is SAP. SAP actually hasn't been sued over patents in Germany in a long time (at least that was the case last time I checked). If SAP really had a problem with German patent injunctions, they'd presumably have entrusted someone more senior than Ina Kock, an in-house patent prosecution counsel, with this reform project. While SAP is a great employer in some other fields, it's a rather unpopular one among German patent attorneys. The company is HQ'd in the middle of nowhere, and patent attorneys at other major tech companies working in Munich (Europe's patent capital) make at least 50% more because they have more opportunities. Her background is patent prosecution, not litigation, and unlike in-house patent counsel of companies that regularly get sued, she hasn't even had the opportunity to really figure out how things actually work in German courts. Then, participating in ip2i conf calls may spice up her professional life, as she'd otherwise just be spending eight hours a day to get software patents granted in contravention of a subject-matter exclusion under the European Patent Convention. I guess that's far more important than achieving a positive outcome.
This was just come color that may explain why ip2i has performed so poorly. But I still hope they're going to get this reform effort on track, alongside some other organizations such as the German automotive association (VDA).
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