Thursday, February 4, 2021

The most pathetic lobbying campaign in the history of patent policy: from the far left to the far right, the German legislature opposes serious injunction reform

It's been almost 17 years since I first became involved with IP policy, and I was fortunate to need only about a year to make history in that field--not a modest way to put it, but backed up by facts. I thought I had already seen everything in that space. Creative campaigns and uninspiring ones. Authentic and fake grassroot movements. Smart and not so smart people. Suits and hoodies. Shaved faces and long beards. University students and professors. Winners and losers. Narrow and unanimous votes. But with all that active and passive experience I just couldn't believe my eyes when I read the transcript (PDF, in German) of a January 27 plenary debate in the German Bundestag (Federal Parliament) on patent (and particularly patent injunction) reform.

What follows is not even an exaggeration: if those pro-reform companies (the ones who want a proportionality check before courts issue patent injunctions) had never contacted a single person in that parliament, or if they had asked their pets to place phone calls to the parliament, the outcome couldn't have been much worse; it might even have been better. Those companies actually represent a fairly significant part of the German economy--but clout doesn't matter if you don't know how to use it, or if you are so misguided that you shoot yourself in the foot every step of the way.

Terms like "failure" or even "disaster" would have too positive a connotation to describe what has happened. It's more appropriate to call it an insanity.

So here's a summary of what the speakers said about an injunction reform proposal that the German judiciary has already rendered ineffectual before it's even enacted (worse than dead on arrival):

  • Christian Lange, a social democrat and parliamentary state secretary spoke on behalf of the Federal Ministry of Justice and Consumer Protection, which drafted the bill. Mr. Lange said the new injunction statute would "clarify that proportionality considerations may lead, in exceptional cases, to a limitation of injunctive relief in accordance with current law and Federal Court of Justice jurisprudence." He then goes on to describe the proposal, twice more, as a mere "clarification" and to assure his colleagues that "the value and the enforceability of patents is not called into question."

    What the ministry's representative said here is consistent with the German government's portrayal of this measure: they say they're not going to change anything, just clarifying. If this was truly a reform, you'd hear something else. The government would say: "There's a pressing problem we've identified. And here's our solution."

  • The next speaker, after the government's represenative, always comes from the largest opposition party, which is presently the right-wing Alternative for Germany (AfD; the only corona-denier party in the German parliament). No other party wants to be associated with them in any way, and most lobbyists wouldn't want to talk to them. The AfD's Mr. Peterka took a variety of patentee-friendly positions. While he acknowledged that proportionality should be a statutory criterion for injunctions, even he spoke out against third-party interests (specifically, the interest of customers in the availability of a product, which he called "overreaching").

  • The most important speaker in this debate was Ingmar Jung, the rapporteur of the chancellor's party on this bill. Given that Germany is a parliamentary (not presidential) democracy with hardly anyone ever crossing the aisle, the government coalition uses its parliamentary majority to pass laws. There's no way anyone could build a majority in that parliament for a patent reform proposal unless the chancellor's party backs it.

    Mr. Jung said that even the government's proposal (which was drafted by the junior coalition partner, the Social Democratic Party) goes too far for his taste. Mr. Jung would accept a statute along the lines of the Federal Court of Justice's Heat Exchanger decision, which basically said that patent injunctions are automatic but under the most egregious of circumstances one could talk about time-limited, minor enforcement restrictions (which even in that particular case weren't deemed to be warranted). In his plenary speech, Mr. Jung criticized that the "bona fide" criterion had been dropped since the ministry's very first draft while third-party interests made it into the statute, and said: "This, I must admit, we'd really like to discuss again in terms of its practical implications. That's what the parliamentary process is for." This means that the most powerful party in that parliament--without which there just won't be a majority--is not only opposed to serious injunction reform: they even hope to further dilute the statute.

  • Speaking for the second-largest opposition party, the libertarian Free Democratic Party, Roman Mueller-Boehm conflated bifurcation and the risk of companies being extorted by the enforcement of injunctive relief, but then emphasized that "small inventors, who make a significant contribution to technological progress, could be bullied or simply ignored by large corporations." That's the "intelligent infringement" type of rhetoric of those advocating strong IP enforcement. And with a view to those small innovators, Mr. Mueller-Boehm said that his party is "concerned" about proportionality and whether it will be a targeted response to the problem of "patent trolls": "We believe some modification or different solutions are needed. For example, we think that proportionality considerations shall only benefit someone who proves that he has previously performed a meticulous patent clearance and hasn't just tried to get away with an infringement."

    That is, of course, unrealistic in light of millions of patents. In some industries it may still work, but certainly not in information and communications technologies.

  • What comes now is something I had never seen in a patent policy debate in Europe: even the far-left (post-communist) Left Party (the legal successor to the communist party that ruled East Germany) sided with patent holders all the way and opposed proportionality. On the Left Party's behalf, Mrs. Gökay Akbulut supported the libertarian FDP's demand that infringers should only be able to benefit from a proportionality consideration if they met their obligations to perform patent clearance. She also supported the Federal Council's position, which is anti-reform. And she called on her colleagues in the legislature to heed the concerns of research entitites, small and medium-sized companies and others who "need strong and differentiated patent protection for their innovations" with particular emphasis on "individual inventors."

  • The Green Party is normally also receptive to balanced positions on IP enforcement, to almost the same extent as the Left Party. And their speaker, Tabea Roessner ("Rößner" in German), was one of the most eloquent critics of EU copyright reform ("upload filters"). But in last week's debate, she stressed that "innovation depends on strong patent protection" and--lo and behold--reminded everyone that "the heart of [Germany's] high level of patent protection is the entitlement to injunctions" and she believes that "softening" it "threatens Germany's innovation economy." She went on to argue that proportionality should not make it into the statute, and cases in which a complete product range could be enjoined as a result of an injunction over a single patent were "very, very rare in reality."

  • For the junior coalition partner, the Social Democratic Party, Dr. Nina Scheer, warned against "abuse" of patent injunctions, but even she merely proposes enshrining the Heat Exchanger case law in the injunction statute.

  • The most reform-friendly speaker came last: the Christian Social Union's Alexander Hoffmann. The CSU is the CDU's regional sister party (only in the state of Bavaria) and, therefore, also a member of the government coalition. Mr. Hoffmann indicated that automotive companies and other defendants could be harmed by the enforcement of injunctions. But there's no reason to assume that Mr. Hoffmann can counterbalance Mr. Jung's reform-hostile positions, given that the CDU is far larger, and even Mr. Hoffmann's own party, which governs the state of Bavaria, apparently supported anti-reform positions in the Federal Council.

I had to follow patent policy for almost 17 years to learn about a debate in a parliament in Europe where even a far-left party and the Greens had been lobbied successfully by the likes of Siemens, Nokia, and Ericsson. That's like hell freezing over, but in the most negative sense.

Those advocating patent injunction reform in Germany are so incredibly uncapable that they've lost the lobbying battle from the far left to the far right, at all levels. They've wasted money and time, especially in and on industry associations of all sorts. For nothing.

Those opposing reform (BASF, Bayer, Nokia, Qualcomm, 3M, Panasonic, the German chemical industry association, the German research-focused pharmaceutical industry association, and Fraunhofer wrote an open letter to politicians ahead of that parliamentary debate, warning against injunction reform (see this German-language press release by the chemical industry). But that's just them pretending to be worried. They know they have nothing to fear. They have the judges on their side, and they have the most inept opponents they could possibly have: their own dogs would probably instill more fear in them than this reform process. Nevertheless, they know how to play the game, and they don't leave anything to chance. They shed crocodile's tears over a dilution of patent protection. And they keep on winning. It's a farce. But the miserable failure of those pro-reform companies does not even deserve to be called a farce.

An organization like ip2innovate should draw the appropriate conclusions and dissolve itself. And the German automotive industry association should stay focused on other policy areas (such as emissions standards). They've all delivered conclusive proof they're not up to the challenge. They couldn't persuade the far left, the Greens, the libertarians, the conservatives. Patent abusers are laughing now--all the way to the bank. I'm not laughing, but I've just reopened that PDF (the transcript of the parliamentary debate) and there aren't enough facepalms in the world to express my feelings about it.

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