Monday, June 28, 2021

BREAKING: Munich I Regional Court creates third patent litigation division under Presiding Judge Dr. Georg Werner

The Landgericht München I (Munich I Regional Court) just announced that its president (chief judge) Dr. Andrea Schmidt decided today to create a third Patentstreitkammer (patent litigation division). To be precise, this one is--for the time being--not a full-time division, but has one-half of the regular capacity.

The court already has two patent litigation divisions: the Seventh Civil Chamber under Presiding Judge Dr. Matthias Zigann, who is widely expected to take over the patent-specialized division of the Munich appeals court next year, and the Twenty-First Civil Chamber under Presiding Judge Tobias Pichlmaier. Presiding Judge Dr. Georg Werner will chair the third patent-specialized division, which will commence its operations on August 16, 2021. His side judges have not been announced yet.

Less than two weeks ago, when I noticed that Judge Dr. Werner had been promoted to Presiding Judge, I wrote that the Munich court would now be able to set up a third patent litigation division anytime. I had no inside track. I just know that ever more patent holders consider Munich their first choice for bringing infringement complaints. And indeed, the court's press release attributes this decision to "weiter ansteigenden Eingangszahlen in Patentstreitsachen" (continually increasing numbers of new filings in patent infringement matters).

Judge Dr. Werner is currently providing over a commercial law division and just last week enjoined the organizers of a Dubai knockoff of the Oktoberfest from promoting their event in Germany with an "Oktoberfest goes Dubai" slogan. It appears he's soon going to divide his time between commercial law and patent law.

Injunctions are the main attraction of Germany as a patent jurisdiction. A German patent injunction "reform" has been adopted by the Federal Parliament and not been vetoed by the Federal Council, meaning that it is now waiting to be signed by the Federal President and published in the country's Federal Law Gazette. However, patent infringers will be enjoined just as frequently as before. Patent-specialized judges from Munich, Mannheim, and Dusseldorf have already spoken out (albeit anonymously).

The Munich court's decision to open a third patent litigation division ensures that plaintiffs can still expect swift resolution despite a steady growth of the Munich patent docket. Speed is key. I am following these developments with great interest and will do my best to provide my future paying subscribers (to the premium service; there will still be some free content on this blog) with quality reporting on, and analysis of, how the case law of the patent litigation divisions in Munich and Mannheim evolves.

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Sunday, June 27, 2021

In its latest effort to dissuade Judge Gonzalez Rogers from allowing the Epic Games Store on iOS, Apple points to NCAA v. Alston Supreme Court opinion

On Friday, Apple filed the Supreme Court's recent NCAA v. Alston opinion in the Epic Games v. Apple case in the Northern District of California, as an exhibit to a statement of a recent decision. This is all that Apple says about why it considers NCAA v. Alston to strengthen its defenses of its App Store restrictions:

"The Supreme Court’s opinion provides guidance on several issues in this case, including the analysis of procompetitive business justifications, substantially less restrictive alternatives to challenged restraints, and remedies."

If the NCAA had won the case, or had at least achieved some improvement over the lower courts' decisions (Ninth Circuit and district court), that might have helped Apple at a high level: it would have been a partial or complete, in any event high-profile, success for an antitrust defendant in the nation's highest court. However, the Supreme Court unanimously decided the matter against the NCAA--and Justice Kavanaugh filed a concurrence only to note that multiple other NCAA rules than the one challenged in that particular case could also be meritoriously attacked on antitrust grounds.

Arguably, there hasn't been a similarly high-profile antitrust decision by the Supreme Court in a long time--and it may be the most significant one ever to have been made unanimously.

So what is Apple hoping to gain from this? That is unclear. The only thing that is very transparent here is that Apple--which has recently seen additional antitrust action being launched and Capitol Hill lawmakers taking aim at some fundamental App Store rules--is very afraid. Afraid of the remaining risk from Apple's perspective--and opportunity for app developers--that Judge Yvonne Gonzalez Rogers might order Apple to allow third-party app stores such as the Epic Games Store on iOS.

Apple mentions "procompetitive business justifications" in Friday's filing. It is true that the NCAA presented some. The Supreme Court affirmed the lower courts' rule-of-reason analysis to the extent it was challenged at all (the athletes who brought the case weren't trying to get a better outcome--they just wanted, and ultimately won, affirmance).

The other keywords Apple mentions in its filing are practically inseparable: "substantially less restrictive alternatives to challenged restraints, and remedies."

Apple's counsel stressed during the Epic Games v. Apple closing argument that "least restrictive means" was not the legal standard under the Sherman Act. Epic did not say that anyway. Epic's proposed conclusions of law even warn against elevating form over substance or focusing on "how the analysis is labeled." What Epic asks the court to do is to "weigh Apple’s procompetitive justifications in light of Apple’s alternatives." Epic does discuss, as any antitrust plaintiff would, "less restrictive" alternatives. Nowhere does Epic say "least."

In NCAA v. Alston, the Supreme Court "agree[s] with the NCAA’s premise that antitrust law does not require businesses to use anything like the least restrictive means of achieving legitimate business purposes." However, the district court in NCAA v. Alsto found the challenged restraints (relating to student-athletes' education-related benefits) "patently and inexplicably stricter than is necessary [to achieve the claimed procompetitive benefits)."

What's important to consider here is that the least restrictive means (which in the App Store case would mean opening up for third-party app stores and "sideloading") are not necessarily overreaching. It's just that the test is not whether the antitrust defendant has employed the least restrictive means. The test is whether there are restrictions that go too far. The result may very well be that the least restrictive means must be employed. That's going to be the outcome if any alternative would be "patently and inexplicably stricter than is necessary" (to quote the NCAA v. Alston trial court again).

Part of the concern that the Supreme Court also addresses in NCAA v. Alston is the risk of "judicial micromanagement": clarifications and potentially sanctions might be needed until an enjoined defendant actually implements the least restrictive means. That's why something that's within striking distance of "least restrictive" will be accepted--end of story. Epic Games v. Apple is a technology case, and Apple can always come up with something that renders an antitrust injunction much less effective than it is intended to be. By the standards of a major technology industry case, app store diversity and "sideloading" (direct installation) would actually be relatively easy to enforce. If Apple implemented anything that would discriminate against third-party app stores, such as APIs that only apps distributed through its own store could use (other than payment services that Apple elects to tie to its App Store), that could be proven.

Apart from Apple not being a cartel like the NCAA, there actually are some interesting parallels. I discussed the similarities from a competition perspective between app stores and sports leagues more than two months ago in connection with the European Super League (ESL). The ESL case is far from over. A Madrid commercial court referred to the CJEU (case no. C-333/21) several legal questions arising from the Super League's antitrust action against world soccer body FIFA and European soccer body UEFA. The Madrid court's April preliminary injunction is still in force and effect (UEFA is apparently appealing it now, after waiting until it was formally served in Switzerland before its counsel appeared in the Spanish case). A second preliminary injunction has been requested and will probably come down shortly and prevent UEFA from enforcing the material terms of the Club Commitments Declarations it obtained under the threat of even more draconian sanctions from the nine clubs that have publicly declared to "leave" the Super League but all of which are still formally shareholders of the Super League entity, as it would be extremely costly for them to breach that binding contract. UEFA's actions could be summed up as "monopoly maintenance"--but there's more room for procompetitive justifications than the NCAA enjoyed, as Article 165 TFEU gives sports bodies a special status under EU law ("specificity of sport").

The NCAA's defeat shows, if anything, that the current Supreme Court is more willing than at least in a long time to enforce the antitrust laws, and that ideological divides of the past, where conservative justices were prepared to incur a high risk of underenforcement in order to eliminate a calculable risk of underenforcement, do not stand in the way anymore. That does not bode well for Apple. NCAA v. Alston is like an "American antitrust revival." It doesn't doom its defenses either (as there are some fundamental differences between the cases), but NCAA v. Alston is clearly better news for Epic than for Apple. Seen in that light, it would have been more logical for Epic to file it with the court, but Epic might have assumed that Judge Gonzalez Rogers had heard of, and was going to read, that landmark decision anyway.

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Friday, June 25, 2021

Federal Council approves German patent bill -- just one more formality (signing into law) needed, but new injunction statute dead on arrival

Today the upper house of the German legislature, named Bundesrat (Federal Council), waved the new patent legislation (which the Bundestag, or Federal Parliament, had voted on two weeks ago) through. This PDF document says that the Federal Council does not attempt to veto the bill. It would have been highly unusual to say the least if the Federal Council had exercised its veto powers in this case. Not only is the hurdle very high but this bill is simply too uncontroversial and, actually, unimportant.

Now the bill is awaiting the Federal President's signature. Unlike the President of the United States, the German head of state has a purely ministerial function unless a bill raises constitutional issues, which this one obviously doesn't. There's no question that this legislative measure will take effect during the summer, which formally requires its publication in the Bundesgesetzblatt (Federal Law Gazette).

As I had explained before, the injunction "reform" is dead on arrival. The legislature made it unmistakably clear that it's not meant to change a thing. The judiciary has already said so, not "in the name of the people" (which is how German judgments formally begin), but via anonymous quotes by the Juve Patent website, which I picked up and commented on.

It would be incorrect to say that the ink wasn't even dry on the new law when the judges already explained that the injunction regime was still the same. It happened before the bill was even sent to the Federal President, so there wasn't even any ink on it in the first place.

The new injunction statute merely codifies the case law of the Federal Court of Justice, as both the executive government and the largest parliamentary group clarified. At least after the Wärmetauscher (Heat Exchanger) decision by the Federal Court of Justice, no German court hearing a patent infringement case denied that injunctive relief might be an overreaching remedy under the most egregious of circumstances--but defendants failed to establish that their case was quite so exceptional.

Whenever a licensing offer is on the table that isn't completely absurd, the courts won't even have to take a closer look at proportionality. And if it's a SEP case, the defendant is entitled to a license on FRAND terms anyway, with no additional proportionality defense as some judges have clarified. Third-party interests won't tip the scales. They'll be irrelevant where there is a licensing option, and where there is not, the standard will be equivalent to that of a compulsory license, of which there have been only two in the entire history of post-war Germany, one of which was overturned.

About half of my readers are in the U.S., so I'd like to explain the situation with a fictitious analogy: a U.S. patent injunction reform bill. It's actually not 100% fictitious as some vested interests would like to overturn eBay v. MercExchange by means of new legislation, just that in Germany the pressure came from net licensees and in the U.S. it comes from net licensors.

So, let's imagine that Congress added the eBay language with the four factors to 35 U.S.C. § 283--the U.S. equivalent to Germany's § 139 PatG. And let's furthermore imagine that the majority in both Houses of Congress made it totally clear that this is a ringing endorsement of the Supreme Court's case law in this field.

What would the courts do? The same as before. They'd have no reason to decide differently. Same old same old.

Defendants will try to get mileage out of this, but even lawyers who more often represent defendants than plaintiffs don't really expect different results.

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Wednesday, June 23, 2021

German patent judges dispel any doubts that might have existed: injunctive relief continues to be readily available to prevailing patentees

An international IP-specialized publication that I've mentioned on a variety of more positive occasions was totally off-base with the following headline on June 11: "Germany's automatic injunction regime for patent cases looks set to end"

That headline is just as wrong as Dewey Defeats Truman was back in the day. There was a procedural juncture last September when I thought the pendulum had swung against the automatic patent injunction regime, but that impression didn't last long. By the time the German federal parliament held its final vote, we were long past the point at which one could doubt what the impact of the amended injunction statute (§ 139 PatG) would be.

I've never seen a reporter from that publication in or near a German courtroom. That may explain this misconception. To be fair, the second sentence below the headline at least nuanced the fundamental misconception by noting that "[this] does not mean that major changes in practical terms are guaranteed." That portrayal of the situation is not spot-on either, but a lot closer to accuracy than the headline.

I explained the fallout from the legislative decision the morning after the vote; in a podcast I published on Monday, you can hear from two very experienced and knowledgeable German patent litigators and from comparative patent remedies expert Professor Tom Cotter; and yesterday I translated a variety of quotes from the case law and, especially, the parliamentary process to show that the legislative intent is clear: there should be and will be no departure from the (near-)automatic patent injunction regime that made Germany the most popular jurisdiction among patentees seeking to enforce their rights against infringers.

If you still needed to see something more that would eliminate any residual doubt, let me point you to today's Juve Patent article entitled German patent judges predict few changes to automatic injunction.

Juve Patent anonymously quotes judges from the divisions hearing patent infringement cases in Munich, Mannheim, and Dusseldorf. They all basically tell the same story: in order for proportionality arguments to matter, you have to make a showing that your case is a very rare exception.

The Juve Patent article is recommended reading. Rather than quote excessively from it, I'd just like to highlight it because it's the final nail in the coffin of the spin doctoring some have engaged in, and the misconceptions a few have had, since the final parliamentary vote. But I do wish to add something to the quote of an unnamed Munich judge who said that a grace period prior to the actual enforcement of an injunction "should only be granted in extreme situations" such as "when banknotes can no longer be printed or no one can make phone calls." First, even in such cases they're not really thinking of the denial of an injunction, but mostly just a workaround period. Second, like in the Heat Exchanger opinion by the Federal Court of Justice, the availability of a license will be held against the infringer (unlike in the U.S., where it would weigh against inadequacy of monetary relief). And third, the scenario of no more phone calls normally means that it's a SEP. In a SEP case, however, implementers are entitled to a license under the antitrust laws anyway, and there won't be a proportionality defense on top of FRAND. So even delayed enforcement is going to be a very rare exception--and the wholesale denial of an injunction is probably not going to happen even once unless and until the law is amended again.

Don't believe the wrong sources. Some are clueless, and some just try to portray something as a political success within their organizations that's actually a complete lobbying failure. I've been telling it like it is, in a relentless pursuit of the truth, and I'm happy to have been vindicated by multiple judges who spoke to Juve Patent about this matter.

Come September, the new FOSS Patents Premium service will provide complete coverage of how the case law in Munich and Mannheim evolves. Plaintiffs and defendants alike will have to be prepared. Some things will change, but prevailing patentees are going to get their injunctions as long as they make a licensing offer that isn't facially absurd.

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Upcoming conference: Mannheim IP Forum on July 2 -- top-notch roster of speakers from judiciary and academia

For those interested in the world's most popular patent jurisdiction, I have a warm recommendation: on next week's Friday (July 2, 2021), the Interdisciplinary Center for Intellectual Property (in German "Interdisziplinäres Zentrum für Geistiges Eigentum" (IZG)) will hold its annual conference at Mannheim Castle, just across the street from the Mannheim Regional Court--one of the courts that almost everyone involved with patent litigation has already been to.

You can find the conference program on the IZG's homepage. If you don't want to settle for a simple HTML layout, a flashier option exists: the conference program flyer (PDF).

You can attend physically or over the Internet, and the registration form is here, but be aware that the conference will be held in German. I'm going to report on parts of it.

The primary organizer is Professor Lea Tochtermann. The first speaker--sort of a keynoter--will be Professor Peter Meier-Beeck, the Presiding Judge of an antitrust-specialized "senate" (division) of the Federal Court of Justice and previously a patent judge. He'll discuss his court's Sisvel v. Haier case law, which was the final one of the topics addressed by the podcast I published on Monday. One of my podcast panelists, patent litigator Dr. Christof Augenstein of Kather Augenstein, is also going to be among the Mannheim speakers next week. He'll discuss the protection of confidential business information with a particular focus on standard-essential patent (SEP) enforcement.

After Professor Meier-Beck, Judge Dr. Georg Werner will discuss the lower courts' current FRAND case law. Judge Dr. Werner is currently presiding over a commercial law division of the Munich I Regional Court but widely expected to succeed Judge Dr. Matthias Zigann as presiding judge of the same court's Seventh Civil Chamber, while Judge Dr. Zigann is going to preside over the patent-specialized division of the Munich Higher Regional Court as of next year. Judge Dr. Werner is also a part-time lecturer at a German university.

The final conference session will be a panel discussion moderated by Professor Tochtermann. The panelists include Judge Professor Meier-Beck, Judge Andreas Voss ("Voß" in German; the presiding judge of the patent-specialized division of the Karlsruhe Higher Regional Court, which hears all appeals from Mannheim), Judge Dr. Daniel Voß ("Voss" in German; presiding judge of one of the three patent-specialized divisions of the Dusseldorf Regional Court and arguably the most patentee-friendly Dusseldorf judge at the moment), and Judge Dr. Werner. The four judges will be joined by a fifth panelist: the aforementioned Dr. Augenstein.

The topic of the panel discussion is broadly defined as "the impact of current Federal Court of Justice case law on the lower courts' judicial practice."

In the conference program you can find several more presentations, but in this blog post I mostly wanted to focus on the speakers who had recently been mentioned on my blog.

This promises to be one of the most interesting German patent law conferences in quite a while--probably the most significant event of its kind since sometime prior to the pandemic.

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Apple withdraws from antitrust action against Fortress Investment and multiple Fortress-funded companies--now Intel is the sole remaining plaintiff

After reporting last week on Apple and Intel's response to Fortress Investment's motion to dismiss their second amended antitrust complaint in the Northern District of California, I noted on Twitter that "[t]his is that (nowadays quite rare) case in which Apple is an antitrust plaintiff, not defendant." Since then, Apple has had another antitrust investigation to add to the list of cases in which it's being investigated: the German Bundeskartellamt (Federal Cartel Office) is looking into the App Store's gatekeeper position.

At this point, Apple is exclusively an antitrust defendant. On Monday, Apple filed the following notice of dismissal with the United States District Court for the Northern District of California (this post continues below the document):

21-06-21 Apple Notice of Di... by Florian Mueller

The actual notice is so short--just two paragraphs--that I'll also provide it here:

"Plaintiff Apple Inc., pursuant to Federal Rule of Civil Procedure 41(a)(1)(A)(i), hereby gives notice that it (1) dismisses from this action with prejudice its claims against defendants Fortress Investment Group LLC; Fortress Credit Co. LLC; Uniloc 2017 LLC; Uniloc USA, Inc.; Uniloc Luxembourg S.A.R.L.; INVT SPE LLC; Inventergy Global, Inc.; and IXI IP, LLC, and (2) dismisses from this action without prejudice its claims against defendant VLSI Technology LLC.

"None of the defendants have filed an answer to the Second Amended Complaint (or as to any prior complaint) or for summary judgment as to these claims. Dismissal under Rule 41(a)(1)(i) is therefore appropriate."

The fact that only the claims against VLSI are dismissed without prejudice, but all others with prejudice, makes it a possibility that some infringement disputes have been settled. It could also be that Apple determined it simply had no antitrust claims against those other entities, but is not so sure about VLSI.

One important Fortress-funded company is presumably still suing Apple in Munich: VoiceAge EVS. But VoiceAge wasn't a party to the California antitrust case anyway.

For Apple, the key benefit from this strategic retreat is that it's now consistently an antitrust defendant that argues intellectual property right holders should not be restricted in how they exploit their assets. That's what we heard from Apple's lead counsel toward the end of the recent Epic Games v. Apple closing arguments. In that case, Apple attempts to draw an analogy to FTC v. Qualcomm, as does Fortress in the case from which Apple is now dropping out.

Intel was prepared to take on Fortress all by itself: it sued in October 2019. Then Intel withdrew that complaint only to refile a joint complaint with Apple the following month. Now Intel is the sole plaintiff again, more than a year and a half later.

Apple's withdrawal from the Fortress case is just the latest example of partnerships between Apple and Intel coming to an end. The two companies were the key U.S. complainants over Qualcomm's business model until Apple felt it couldn't rely on Intel's ability to deliver competitive 5G baseband chips in time. Intel still filed an amicus brief in FTC v. Qualcomm at a time when Apple had settled. Apple then bought Intel's baseband chipset division and many related patents. In late 2020, "Apple began the transition from Intel processors to Apple silicon in Mac computers."

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Tuesday, June 22, 2021

Legislative intent couldn't be clearer: availability of patent injunctions not compromised by new German legislation

Two renowned German patent litigators stated in the podcast I published yesterday that patent injunctions would remain just as available as before the German patent "reform" bill that was adopted earlier this month by the Federal Parliament. Dr. Dietrich Kamlah of Taylor Wessing pointed to the high hurdle that "disproportionate hardship" represents. Dr. Christof Augenstein of Kather Augenstein highlighted that the legislation is merely meant to codify the case law of the Federal Court of Justice, a court that rejected a proportionality argument in the only case of this kind it ever decided (Wärmetauscher, or Heat Exchanger).

In case you missed it, here's the podcast again:

Arguably, Daimler has lost that Heat Exchanger case--in which defended itself against an inventor--a second time by not achieving a German patent injunction reform that would make a practical difference. But perseverance sometimes pays off, and maybe they will succeed on a third attempt, if they and their allies figure out how to win a patent policy battle.

As Mr. Augenstein said in yesterday's podcast, the Federal Court of Justice told Daimler that it could still make cars--convertibles in that case--even without the "Airscarf" feature. I'd like to add something that relates to my previously-published explanations of a "Keep It Simple, Stupid" test, which checks whether a patent holder can simply pre-empt any proportionality arguments by making a licensing offer. In that Heat Exchanger decision, the Federal Court of Justice also pointed to the availability of a license. Twice, in fact--and both references to licensing are found on page 25 of the decision:

"Dass keine oder keine angemessene Lizenzierungsmöglichkeit bestanden hätte, ist nicht aufgezeigt."

Unofficial translation: "Defendants have not pleaded that a license was unavailable, or not reasonably available."

"Von der Möglichkeit, den Gegenstand des Streitpatents in Lizenz zu nehmen, haben die Beklagten keinen Gebrauch gemacht."

Unofficial translation: "Defendants did not avail themselves of the possibility to take a license to the patented invention."

The plaintiff in that case was an inventor, and he was interested in getting paid--not in shutting down factories. So there was a licensing offer on the table, and Daimler argued that the lower courts had not identified an infringement.

Not only do the new injunction statute (§ 139 PatG) and the official rationale stated by the German federal government (which made the original legislative proposal) suggest continuity, but the conservative CDU/CSU group in the German parliament, which consists of parliamentarians from Chancellor Merkel's CDU as well as the CDU's Bavarian sister party, the CSU) made its legislative intent clear at every single juncture of the process.

German courts do not analyze the legislative intent as systematically as their U.S. counterparts do. But statements by lawmakers always provide potential guidance to the judiciary.

On June 2, after the CDU/CSU group had reached a political agreement with its coalition partner, the center-left SPD, on the patent bill, the legal affairs spokesman of the CDU/CSU group, Dr. Jan-Marco Luczak a member of parliament from a Berlin district), placed the emphasis on the intent to keep patent enforcement in Germany as strong as before. Here are some passages from what he said, and my translations:

"Ein starker Patentschutz ist für Deutschlands Wirtschaft zentral, um unsere enormen Potenziale bei Innovation, Kreativität und Erfindergeist zu heben."

Unofficial translation: "Strong patent protection is paramount for the German economy in order to exploiit our enormous potential in innovation, creativity, and inventorship."

"Diese Innovationskraft zu schützen, das stand bei der Reform des Patentgesetzes für uns als Union im Mittelpunkt. Deswegen haben wir im parlamentarischen Verfahren sichergestellt, dass das hohe patentrechtliche Schutzniveau mit einem robusten Unterlassungsanspruch erhalten bleibt."

Unofficial translation: "For our parliamentary group of the CDU/CSU, it was the central objective in connection with this patent reform bill to protect this innovative capacity. Therefore we have ensured in the parliamentary process that the high level of patent protection would be preserved in the form of a robust right to injunctive relief."

"Damit kodifizieren wir die Rechtsprechung des Bundesgerichtshofes [...]"

Unofficial translation:"This way we codify the case law of the Federal Court of Justice [...]"

I've found another statement by the CDU/CSU group that plaintiffs seeking injunctions can point to (if needed at all, which is doubtful). The plenary of the Federal Parliament voted to adopt the Legal Affairs Committee's report. That was the lead committee on this bill. The CDU/CSU statement I mean starts on page 59 of the committee report, and ends after five lines on page 60. I'll quote and translate it sentence by sentence:

"Die Fraktion der CDU/CSU betonte, dass die Synchronisierung der Verletzungsverfahren vor den Zivilgerichten und dem Nichtigkeitsverfahren vor dem BPatG gerade in Fällen des Missbrauchs von Patentrechten zu einer erheblichen Verbesserung beitrage."

Unofficial translation: "The CDU/CSU group stressed that synchronization infringement proceedings before the regional and higher regional courts with nullity proceedings before the Federal Patent Court brings substantial improvement particularly in cases of patent abuse."

"Hinsichtlich der Verhältnismäßigkeitsprüfung im Rahmen des Unterlassungsanspruchs bekräftigte sie, dass in der Änderung des § 139 Absatz 1 PatG in der Fassung des Änderungsantrags der Koalitionsfraktionen keine Aufweichung der geltenden Rechtslage zu sehen sei."

Unofficial translation: "With respect to the proportionality test relating to injunctive relief, [the CDU/CSU group] stressed that the modification of § 139 para. 1 PatG as proposed by the government coalition is not to be interpreted as a dilution of the legal status quo."

"Vielmehr werde die Rechtsprechung des BGH für besondere Ausnahmefälle kodifiziert."

Unofficial translation: "Much to the contrary, the case law of the Federal Court of Justice concerning rare exceptions is codified."

"Die Einbeziehung von Drittinteressen in die Verhältnismäßigkeitsprüfung bedeute kein Hinausgehen über die Wärmetauscher-Entscheidung."

Unofficial translation: "The consideration of third-party interests with respect to the proportionality test does not mean to go beyond the Heat Exchanger decision."

"Der BGH habe sich nur deshalb nicht mit Drittinteressen befasst, weil an dem Rechtsstreit kein Dritter beteiligt gewesen sei."

Unofficial translation: "The Federal Court of Justice did not address third-party interests [in its Heat Exchanger opinion] because no third party was involved with that dispute."

"Selbstverständlich umfassten die Grundsätze von Treu und Glauben jedoch auch Drittinteressen."

Unofficial translation: "It goes without saying that the obligation of good faith also extends to third-party interests."

"Auch in Zukunft könne der Unterlassungsanspruch nach den ausdrücklich normierten Grundsätzen von Treu und Glauben nur in absoluten Ausnahmefällen nicht durchgesetzt werden."

Unofficial translation: "Just like before, enforcement of the right to injunctive relief will be precluded only in absolutely exceptional cases in accordance with the explicitly stated principe of good faith."

"Ein Patentrechtsinhaber, der bspw. einen Impfstoff entwickelt habe, werde diesen auch zukünftig exklusiv nutzen und Dritten untersagen dürfen, ihn zu produzieren oder ohne Lizenz zu nutzen."

Unofficial translation: "A patent holder who invented e.g. a vaccine is still going to be able to exclusively use the invention and to prohibit third parties from making or using it without a license."

"Selbst noch so starke Drittinteressen, wie bspw. die Betroffenheit der gesamten Allgemeinheit, führten nicht zur fehlenden Durchsetzbarkeit des Unterlassungsanspruchs; anderes sei nur in absoluten Ausnahmesituationen denkbar."

Unofficial translation: "Even the strongest third-party interests one can imagine, such as when the entire general public is affected, do not render the right to injunctive relief unenforceable, except under absolutely exceptional circumstances."

"Bei Vorliegen einer solchen außergewöhnlichen Situation bestehe ein Anspruch auf angemessenen Ausgleich."

Unofficial translation: "Should such an unusual situation arise, there will be a right to adequate compensation."

"Insoweit werde die grundsätzliche Ausschließlichkeit des Unterlassungsanspruchs nicht angetastet."

Unofficial translation: "Therefore, the fundamentally exclusive nature of the right to injunctive relief is not compromised."

Tbe above statements are also found, in an almost identical form, in the speech that Ingmar Jung, the member of parliament who was the CDU/CSU group's rapporteur on this bill, filed on June 10. You can find his speech on page 274 of this PDF document.

Some may still delude themselves into believing that German courts would deny prevailing patentees, on proportionality grounds, the injunctions they request. Neither the statute nor the well-documented legislative intent support that view. Heat Exchanger has a simple message: take a license. There's absolutely no way that a statute that isn't meant to change the situation would result in non-SEP enforcement all of a sudden being more difficult than, or even just equally difficult as, SEP enforcement. That would be a nonsensical outcome.

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Monday, June 21, 2021

Podcast on key patent injunction developments: new German patent injunction statute, ECJ referral regarding preliminary injunctions, and standard-essential patent injunctions

It's time for another FOSS Patents podcast. I don't do these very often, but from time to time I see great value in letting experts share their views on important developments.

The topics of today's podcast are all related to patentee's access to injunctive relief, also known as the King of Patent Remedies, with a particular focus on developments in Germany:

I'm grateful to the three panelists--a law professor and two practitioners. They've all provided very thoughtful answers to my questions:

It's fair to say that none of the information in the podcast will discourage patent holders from filing infringement actions in Germany. Whether you're more likely to enforce patents or to defend yourself against infringement allegations, I hope you'll find this podcast a useful source of information.

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Sunday, June 20, 2021

Apple and Google are partly to blame for Europe's problems with hypercontagious Delta variant, should stop putting privacy over human lives and public health

There's a host of issues with how Apple and Google abuse their mobile app distribution monopolies. The 30% "tax"--which actually peaks at 35.25% (plus Search Ads and developer fees)--gets most of the attention, but what those two companies are doing with respect to governmental contact-tracing apps is exacting an infinitely higher price in the form of human lives. Apple and Google are obstructing governmental efforts to combat COVID and have contributed to the rise of the Delta variant in the UK. That deadly and hypercontagious strain is now spreading to mainland Europe.

The Delta variant of SARS-CoV-2, scientifically known as B.1.617.2, "has shown to be more contagious and more lethal both in South Asia and in the UK," University of Chicago infectious disease expert Dr. Anu Hazra told CBS. In fact, studies have shown it to be about twice as infectious as the original variant, or "wild type." Other viruses mutated into irrelevance: as they got more contagious, they also got less pernicious. SARS-CoV-2 might still do us that favor, but so far it hasn't. It gets worse and worse.

Those who have been vaccinated only once enjoy very limited protection against severe symptoms if they contract the Delta variant. In a few months from now, colder temperatures will exacerbate the situation. The threat of a major pan-European Delta wave--which has already occurred in India and in the UK--is real.

Apple and Google would not have to "do" anything. They'd just have to be more reasonable and allow governments to do their job. I know it sounds absurd that companies should allow governments something--not the other way round--but unfortunately it's an accurate portrayal of the situation: in April, Apple and Google rejected an update to the official contact-tracing app for England & Wales that would have made the app more effective.

Yesterday, the BBC explained why the Delta variant has been able to spread so quickly in the UK that it is now the dominant strain. In that article (scroll about half-way down) you can find a chart that shows how this happened over a period of only about two months. Total COVID infection numbers were down to about 2,000 in the UK by mid April. At that point, the British government relaxed restrictions. The most significant change was that restaurants and bars were allowed to reopen. In order to be able to warn people who were in such a place at the same time as people shortly thereafter diagnosed with COVID, the UK's contact-tracing app would have encouraged and enabled people to scan a QR code at the entrance of a restaurant or bar. Apple and Google, however, completely disallow even the voluntary (!) transmission of location information in contact-tracing apps. Theoretically, that feature could have been implemented in an app that would not have used the contact-tracing API, but that would have required people to install and use two apps for essentially the same purpose. That would not be an acceptable solution. Such apps heavily depend on a high usage rate or they can't fulfill their purpose at all.

Apple and Google didn't create the Delta variant; nature did, most likely in India, where it was first discovered. But Apple and Google are partly to blame for the problem. The point at which they rejected that important app update (shortly before April 12) is almost identical to when the Delta variant started to spread in the UK. In that BBC chart I just mentioned, you can see that the orange area starts just a little bit to the right of the "8 Apr" mark. At that point, the improved version of the contact-tracing app could already have been in use, if not for Apple and Google's unreasonable restrictions. A little later, the UK faced infection rates at a level with mainland Europe, despite being far ahead in terms of vaccination rates.

Just today, Reuters reported that the Delta variant accounts for more than 60% of COVID cases in the capital of Portugal.

On Thursday, the University of Minnesota's Center for Infectious Disease Research and Policy reported on two studies that look at this worrying development. The first of them notes "that young people are helping drive the exponential growth of COVID-19 cases in England." More specifically, "[y]oung people are behind the surge, with a 5-fold higher rate of COVID-19 test positivity among children 5 to 12 years (0.35% prevalence) and adults 18 to 24 (0.36% prevalence) than in those 65 or older." Young people are far more likely to go to restaurants, bars, clubs, and pubs. That's exactly where the venue check-in feature would have helped. The other study "describes reduced COVID-19 vaccine and antibody efficacy against the more transmissible variant." Reduced antibody efficacy means an increased risk of reinfection.

When you hear Apple and now also Google utter the word "privacy" (such as when Apple CEO Tim Cook in a recent interview said that climate change is one of the most important issues of this century, "as is privacy"), it's not just about brand reputation. Privacy comes in handy as a pretext for abusive conduct, such as Apple's ad tracking rules, which I'll talk about more on another occasion. For the moment, suffice it to say that only a minority of users would seriously have a problem with an ad network knowing whether and how often they play Candy Crush or Hay Day. There are some privacy fanatics out there who either don't understand or don't care to understand that Apple is interested in shifting app revenues to IAP (where it imposes its tax) and in regaining control over how users discover apps.

Stopping the spread of new and clearly dangerous COVID strains is a legitimate reason for location tracking. Furthermore, the UK's democracy is intact. Unless one is worried about a military coup, there's no reason to assume that the collected data would be used in any harmful ways.

Some degree of privacy is a basic human right, but life and health are undoubtedly more important. Even if a government required citizens to check in with a contact tracing app before entering a restaurant, that would be perfectly appropriate during a pandemic. The UK did not even want to go that far. Ultimately, kneecapped contact-tracing will result in more deaths, more mourning familiy members, more hospitalizations, and more partial lockdowns (which in turn take an economic toll). All of that just because of the "Grapple" tyranny over mobile devices.

Apple and Google need to get out of the way of effective contact-tracing. The UK, from which the Delta variant is spreading to mainland Europe, should immediately be enabled to publish its improved contact-tracing app. Other countries should add a location check-in feature to their apps in time for the colder season. Virus propagation is exponential, so whatever slows down the spread makes an important difference. The alternative is that many people will die or suffer irreversible damage to their health who would not be infected if contact-tracing was more effective.

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Thursday, June 17, 2021

Munich may become the circuit with the most consistent patent case law in Germany if Judge Zigann is promoted and Judge Werner succeeds him

In 2019, on the occasion of its 10th anniverary of its Patent Local Rules, the Landgericht München I (Munich I Regional Court) commissioned an evaluation by the Max Planck Institute. The results became known last year. For the most part, they were pretty positive, but in my view, the respondents underrated the legal and technical competence of the Munich judges as compared to other German patent infringement courts, and I said so at the time.

Many respondents to the survey criticized inconsistencies between the lower court's decisions and those handed down by the Oberlandesgericht München (Munich Higher Regional Court), the regional appeals court--comparable to a U.S. appeals court for a particular circuit, though regional and higher regional courts in Germany are run by the states, not the federal government.

Consistency may already be on its way.

At the end of my post on the promotion of Judge Dr. Georg Werner to Presiding Judge, I mentioned that "[Presiding] Judge Dr. [Matthias] Zigann might move up to the appeals court in the not too distant future, and then Judge Dr. Werner could replace him as the Seventh Civil Chamber's presiding judge."

That scenario is more than plausible. Presiding Judge Konrad Retzer of the patent-specialized senate of the Munich Higher Regional Court will--based on what I've heard--retire by the end of the year. German judges can't "go senior" and still serve. When they reach the statutory age limit, their judicial career comes to an end. Just like Judge Retzer used to preside over the lower Munich court's patent-specialized panel before he moved up to the appeals court, his most plausible replacement is Judge Dr. Zigann, who brings a great depth of patent law expertise to the table--almost a decade thereof as the Presiding Judge of the court's Seventh Civil Chamber.

It's the opposite of a daring assumption that this will happen. In that case, the Seventh Civil Chamber will need a new Presiding Judge, and the court won't have to look far now that Judge Dr. Werner--previously Judge Dr. Zigann's deputy--has been promoted.

Today I've seen a clear sign that many German patent litigators are preparing for this scenario: a webinar organized by Munich's Center for Intellectual Property Law Information and Technology (CIPLITEC) drew a pretty large audience. To be fair, Zurich-based Professor Peter Picht is a gifted speaker who always has interesting information to share. But many listeners presumably wnated to learn about Judge Dr. Werner's views. He's not hearing patent cases at the moment, as he is presiding over a commercial law chamber that deals with other issues (such as design rights, if I understand correctly), yet took the time to deliver today's speech. Presumably he knows he's going to be a patent judge again in the very near term.

Today's presentation was a chance to find out where Judge Dr. Werner stands. To be honest, that's what I was primarily trying to figure out when listening. And the answer is very simple: Judge Dr. Werner stands 100% behind the Munich approach to standard-essential patent (SEP) injunctions as well as anti-antisuit injunctions.

As a side, Judge Dr. Werner previously had voting rights when he was a member of a judicial panel, and quite often he was the judge-rapporteur who authored the per curiam. This includes last September's Nokia v. Daimler SEP injunction.

Every single time Judge Dr. Werner took a position today on SEP case law, not only in connection with Nokia v. Daimler but also the availability of anti-antisuit injunctions, that is not only materially, but totally, consistent with Judge Dr. Zigann's views.

Presiding Judge Tobias Pichlmaier of the Munich I Regional Court's Twenty-First Civil Chamber is perfectly aligned with Judges Dr. Zigann and Dr. Werner. He granted the first Munich anti-antisuit injunction, and I've seen how he approaches SEP cases. There was a time when plaintiffs viewed the Munich I Regional Court as a bit of a lottery: if their case got assigned to the Seventh Civil Chamber, they were optimistic and they knew the case would be decided within about a year; but if the Twenty-First Civil Chamber got the case, everything would take longer and patentees faced an uphill battle. Not so now. Both the Seventh and the Twenty-First Civil Chamber are consistent and comparably efficient.

Very soon, Munich will have a "triumvirate" between the appeals court (then under Presiding Judge Dr. Zigann) and the lower court (with Presiding Judges Pichlmaier and Dr. Werner).

On the appeals court, Judge Dr. Zigann could be outvoted by his two side judges. But presiding judges have a lot of influence and authority. Judge Dr. Zigann won't be bound by precedent shaped by Judge Retzer. If he gets at least one sidge judge to vote with him, he can simply overrule any earlier decisions, such as the amount of security deposits required for the provisional enforcement of patent injunctions. This works differently in the U.S., where it would require an en banc decision (full-court review).

Munich's popularity as a patent litigation venue is likely to grow as a result of these likely developments.

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Wednesday, June 16, 2021

Former Assistant Attorney General Makan Delrahim, fighting for his legacy, says yet-to-be-named successor should have 'regulatory humility' in face of court rulings

As the keynote speaker of a Concurrences webinar held today (and ongoing as I write this post), former Antitrust Assistant Attorney General--and now UPenn professor--Makan Delrahim gave an impassioned speech. He's trying to dissuade his successor, who (as Mr. Delrahim noted) has yet to be named almost eight years after the elections, from undoing his patentee-friendly policies.

The result of a poll of webinar participants will have done nothing to soothe Mr. Delrahim. A majority of the panel, including the moderator, is on the same side as Mr. Delrahim (which obviously does not apply to Judge Fabian Hoffmann of the Federal Court of Justice of Germany and Orrick Herrington Sutcliffe's Jay Jurata), but 68% of participants responded with "yes" to the following question:

"Is there a role for antitrust to play in the debate over component-level licensing where all implementers of the standard are assured of their ability to practice the standardized the technology?"

When Mr. Delrahim was in charge of DOJ-ATR (the Antitrust Division of the United States Department of Justice), the opinion of the "United States" (as the federal government is called when filing amicus curiae briefs) was a resounding "never."

In today's webinar speech, Mr. Delrahim mostly focused on access to injunctive relief over SEPs, but he twice referenced the Ninth Circuit's FTC v. Qualcomm decision, in which case Qualcomm's refusal to grant exhaustive SEP licenses to chipset makers played a key role. The former U.S. antitrust chief also lauded a couple of European high-court rulings: the UK Supreme Court's Unwired Planet v. Huawei and the German Federal Court of Justice's Sisvel v. Haier opinions.

Mr. Delrahim's position is that the "ability to exclude" is a key "incentive" for filing for patents, and this right should not be limited except by the legislature. He does say--as he could hardly claim the opposite--that FRAND commitments should be enforced under contract law. That works in the U.S., which recognizes third-party beneficiaries' rights, but in some jurisdictions it would not even be an option. Judge Hoffmann noted toward the end of today's webinar that in Germany the courts have no problem applying the antitrust laws to a duty to extend licenses, and Germany's seminal Orange-Book-Standard case involved a de facto standard without a FRAND commitment. Microsoft v. Motorola Mobility is an example Mr. Delrahim mentioned for the enforcement of contractual rights. But violations of a FRAND pledge "do not somehow conjure up an antitrust violation," said Mr. Delrahim. He went on to stress that a breach of a FRAND contract "should NEVER be a violation of the antitrust laws." And this line of thought culminated in the view that "using antitrust law with its triple damages and hammers in [his] view is a misuse."

In the first part and again toward the end of his speech, Mr. Delrahim basically addressed his former government agency via a prime-time (shortly after the usual start of business in DC) webinar. He described the new U.S. Attorney General (and former circuit judge) Merrick Garland as "very thoughtful" on antitrust. But he does take issue what he sees happening below, such as the downgrading of his IEEE threat letter and recent comment by the Acting Assistant Attorney General at an IAM event that they were "rethinking [their] policy on SEPs." He didn't specifically mention those activities, but he asked the rhetorical question of why there should be "change in policy without debate, real argument, why do that?" And Mr. Delrahim said this made no sense "given recent legal decisions in the US" (besides FTC v. Qualcomm, he may also mean Continental v. Avanci in the Northern District of Texas). He also defended himself against some article that apparently said enforcement of SEP-related obligations "went to the wayside" under him.

Mr. Delrahim reinforced that message to the Biden (or Garland) DOJ by saying he "can't imagine" the DOJ would depart from his SEP policies "given the strength of the Ninth Circuit decision" in FTC v. Qualcomm. Admittedly, that decision gained weight when the Ninth Circuit declined to hold a rehearing en banc and the FTC didn't file a petition for writ of certiorari (request for Supreme Court review). Those circumstances make the decision stronger within that circuit, which is the economically most important one, but do not make it broader, nor does FTC v. Qualcomm become binding precedent on a nationwide basis.

The final message to his future successor was that "for an executive agency not to factor in [court rulings, particularly FTC v. Qualcomm] lacks the regulatory humility antitrust enforcers should have." This begs the question of whether Mr. Delrahim himself acted with "regulatory humility" as he filed countless amicus briefs, even in support of foreign-owned patent assertion entities...

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Tuesday, June 15, 2021

Apple, Intel reject Fortress Investment's criticism that their second amended antitrust complaint lacks plausibility, want to proceed to trial at long last

Intel and Apple demonstrate what perseverance can mean in litigation. They've been trying since 2019 to strike back against Fortress Investment's patent assertion business (which is just one of various fields in which Fortress invests) with an antitrust action in the Northern District of California. Had they not done this, the dispute would have been a one-way street, with Apple and Intel always being on the receiving end of litigation campaign after litigation campaign. Sometimes a good offense is the best defense. So Intel, which was joined by Apple early on, alleged that Fortress and the multitude of patent assertion entities it has funded engaged in anticompetitive conduct.

Fast forward to 2021, and the case is still at the motion-to-dismiss stage. It's already the second amemded complaint. All in all, that it makes it the third version of the joint Apple-Intel complaint, and the fourth version if one includes the original filing Intel made alone. The case got narrower and narrower, and the legal theory at its heart is now "the unlawful mass aggregation of patents, including substitutes, thereby eliminating competitive constraints that existed before the aggregations," as last night's response by Apple and Intel to Fortress's renewed motion to dismiss says (this post continues below the document):

21-06-14 Apple Intel Respon... by Florian Mueller

Let's take a bird's-eye view here. Assuming for the sake of the argument (not in the sense of a prediction) that the court finally lets this version of the complaint go to trial (and on the way there, a lot of work would still have to be done), would this offense be the best defense?

It could make a useful contribution to Intel's and Apple's defensive efforts, and it could serve as a warning to litigation-funding or other companies engaging in patent aggregation. However, the best defense is still to be cleared of infringement. Intel achieved that in April. That was the second of three patent infringement cases by Fortress-funded VLSI Technology against Intel. And in the first case, where a record damages verdict ($2.175 billion) came down in the Western District of Texas, Intel is raising a host of issues with the decision and the way it was reached. There are reasons to believe that Intel will get that verdict vacated or adjusted massively--well before anything could come out of the NorCal antitrust case even in the most optimistic scenario for Intel and Apple.

What about the other scenario, in which Judge Edward Chen would still find the pleadings, fundamentally lacking and wanting? In that case, Intel and Apple would have to take this up with the appeals court. FTC v. Qualcomm is controlling Ninth Circuit law. Apple itself points to it all the time in its App Store antitrust dispute with Epic, as does Fortress in defense against Apple and Intel's antitrust lawsuit. FTC v. Qualcomm is a patent-related antitrust case in which a three-judge panel essentially said, among other things, that if someone overcharges for patents and you can address the problem under patent law (such as by not taking a license and instead defending yourself against an infringement action, which gives you the chance to challenge the economic value of the patents in question), it's not an antitrust issue. However, patent law does not have scope for defenses against "the unlawful mass aggregation of patents, including substitutes, thereby eliminating competitive constraints that existed before the aggregations" (this is the passage I quoted further above). Patent law is not about reinstating competitive constraints. Antitrust law can do that.

The FTC's motion for rehearing en banc against the Qualcomm panel decision failed. That lends that decision more weight. But it doesn't mean that anything to do with patent licensing and assertion is beyond reach for antitrust law. Intel and Apple v. Fortress would be an opportunity for the appeals court to clarify that.

Apple and Intel argue that their case is now, finally, ripe for further proceedings in the trial court. They point to the low bar for a complaint to survive a motion to dismiss (and conversely high bar for such motion to succeed). When a complaint is as detailed as this one is by now, there comes a point at which the issues a defendant can raise are likely more about triable facts than about the pleading standard. Intel and Apple note that the factual allegations on which their theories are based merely have to be plausible, which is more than "possible"--but not a whole lot more. And they say that the complaint's own factual allegations matter, and if Fortress disagreed with those facts, it would have to present its own facts later--at the summary-judgment stage at the earliest.

Judge Chen wanted to see actual anticompetitive effects, but also wanted the two plaintiffs to plead facts according to which those effects are truly caused by the alleged patent aggregation. Apple and Intel point to patents that prior owners, even including litigious ones, did not assert in court. They highlight discrepancies between the valuation of certain patents or portfolios and what some Fortress-funded entities later demanded in damages. One could paraphrase Fortress's position on this as suggesting between the lines that they're simply damn good at what they're doing and identify gems that others fail to see--and/or that they're first-rate patent monetizers. It's not going to be easy for Intel and Apple to prove that aggregation--and not some other factors, such as the aforementioned ones--resulted in price increases. But where we are now, the question is whether Apple and Intel will get their day in court.

As for the agreements between Fortress and other entities, Apple and Intel note that "an anticompetitive agreement is illegal, even if only one party thereto intended an anticompetitive result." In this case, it's about whether Fortress entered into agreements with a certain agenda, not whether both parties did. The other party to any given agreement might have done so for whatever reason.

Technically, there's also a separate motion by one Fortress entity, INVT (Inventergy). Apple and Intel argue that it's based on the court's prior holding concerning standard-essential patents, but the complaint is about non-SEPs.

Before we see the next major development in this California case, I wouldn't be surprised to see some key post-trial decisions in the Western District of Texas (VLSI v. Intel).

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Monday, June 14, 2021

Munich I Regional Court well-placed to create third patent litigation division should need arise: Judge Dr. Werner is now a Presiding Judge

Germany is the world's most popular patent litigation venue, and last week's legislative decision does nothing to dissuade patent holders from enforcing their intellectual property rights in the largest EU member state. If anything, there may be a further shift from Dusseldorf, where I've only attended one patent trial so far (Huawei v. ZTE in 2013) and covered another (in 2020) from a distance. What happens there is usually uninspiring. The judges presiding over the two patent appeals divisions of the Dusseldorf Higher Regional Court made statements last year that suggest they may interpret the new injunction statute in a divergent way from the case law of the Federal Court of Justice, against the clear legislative intent. I don't think the risk there is high, but who would want to be the first patent holder to be denied an injunction after prevailing on the technical merits of a non-standard-essential patent? Or worse still, who would want this to happen as counsel?

In a way, others are beating Dusseldorf at its own game. What made Dusseldorf popular was not the quality of its judges but their plaintiff-friendly inclinations. I remember a conversation with a patent litigator who, back in 2007, described the tilted playing field he found there when trying to defend clients against infringement complaints. Judge Dr. Thomas Kuehnen ("Kühnen" in German) was the one who set the bar so high for staying infringement cases over invalidity contentions that he largely vitiated the invalidity defense. The rest of the country followed. But by now, other venues are more en vogue than the state capital of North Rhine-Westphalia. Some of the best Dusseldorf-based patent litigators attend more hearings and trials in Munich and/or Mannheim now than in their hometown. Second- and third-tier litigators still get a fair amount of Dusseldorf business from cases pitting small and medium-sized enterprises against each other, but the exciting cases are filed in Mannheim and Munich.

The lower court in Dusseldorf has three patent litigation divisions (4a, 4b, and 4c Civil Chamber), plus two patent appeals panels called "senates." Mannheim and Munich each have two patent-specialized chambers at the lower level, plus one appellate division above them (the appeals court for Mannheim is in Karlsruhe, and Presiding Judge Andreas Voss ("Voß" in German) is one of the most brilliant patent judges you could imagine). I would not be surprised if Munich and/or Mannheim started a third patent litigation chamber at some point in the not too distant future. The Chief Judge of the Munich I Regional Court, Dr. Andrea Schmidt, and the government of the state of Bavaria, which runs this court (unlike U.S. district courts, which are federal courts), are clearly committed to Munich's growing relevance as a patent litigation forum.

If and when the time comes for the Landgericht München I (Munich I Regional Court) to start a third patent litigation division, it won't have to look far to find a presiding judge for that new panel: Judge Dr. Georg Werner, who used to be Presiding Judge Dr. Matthias Zigann's deputy while serving on the Seventh Civil Chamber, was promoted in March and is now presiding over an IP-specialized commercial law panel. He won't get to hear patent infringement cases there. Those commercial law chambers have a special structure and modus operandi, so he's now dealing with other IPRs (presumably mostly trademarks). Still, his patent-related expertise is broad and deep. His doctoral thesis discussed the patenting of human body substances, and for three years he was a research assistant to the patent-specialized senate of the Federal Court of Justice.

I became aware of his promotion only by coincidence. A webinar program described Judge Dr. Werner as a presiding judge, and I thought they had confused him for Judge Dr. Zigann (or for Judge Tobias Pichlmaier of the Twenty-First Civil Chamberr). I checked with the court, and the press office told me they haven't opened a third patent litigation division, but they can confirm Judge Dr. Werner's promotion.

Over the years I had seen him in action on so many occasions that I find it hard to imagine he's not hearing patent cases now. It may take him a while to get used to it, too. At least he's still a part-time lecturer on patent law at the University of Bayreuth. But I'm sure he'll have the opportunity again to decide actual patent cases, and Munich is the place to be when it comes to patent enforcement. Two other judges serving on the Munich court's patent-specialized panels also have a fairly high profile in the patent law community: Judges Dr. Ann-Kristin Fricke (who also has significant antitrust expertise) and Dr. Hubertus Schacht.

Then, if the lower court created a third patent litigation chamber, the appeals court might have to set up a second patent-specialized senate, just like in Dusseldorf. Alternatively, Judge Dr. Zigann might move up to the appeals court in the not too distant future, and then Judge Dr. Werner could replace him as the Seventh Civil Chamber's presiding judge...

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Friday, June 11, 2021

German legislature just voted to amend patent injunction statute -- jurisdiction as attractive as ever to patent holders bringing infringement lawsuits

A few hours ago, at midnight local time, the German Bundestag (Federal Parliament) voted to amend the country's Patentgesetz (Patent Act). The plenary rubberstamped the version of the bill (PDF, in German) that came out of the legislature's Legal Affairs Committee on Wednesday.

Munich and Mannheim will remain the world's top venues for patent injunctions. If you're not worried about the new bill, you can also sue in Dusseldorf, where the appeals court likes to take extreme outlier positions (including public statements on this legislative measure) that are at odds with any other German court; if you don't want to take any risks that you can avoid taking, go to Munich or Mannheim (your "Swiss francs" of patent enforcement in Germany).

As I announced last week, FOSS Patents will offer a premium subscription service with a focus on those two venues and access to injunctions over standard-essential patents (SEPs) and non-SEPs alike. I'm going to monitor developments closely for my paying subscribers. There will be some new questions coming up in those cases; my prediction about the answers is known, but litigants will need to be prepared, and I'll help my customers in that regard. For SEPs, the legislature changed nothing in the opinion of some of the most prominent judges. My first (and free) advice to non-SEP enforcers is not to forget to make a formal licensing offer (almost as if you were asserting a SEP) in time for the trial. That's going to weigh against any claims of "hardship" on the defendant(s) or on third parties. Unlike eBay, a licensing offer won't be held against you: inadequacy of monetary relief is not, and after last night's vote still won't be, a requirement in Germany.

With a view to my future premium service, I've already had some good initial conversations with parties on both sides of the patent enforcement debate, and some more calls and video conferences have been scheduled. In a jurisdiction where there are no transcripts (and as one of my counterparts accurately noted, even transcripts of U.S. court proceedings sometimes miss important information such as demonstratives), and where there is no PACER for downloading the pleadings, one simply has to send someone to a courtroom to find out what happens. In addition to systematic coverage of the injunction-related aspects of each and every Munich and Mannheim case, I may also offer special reports for individual clients. Those special reports might also address the technical aspects of a case, provided that I receive the information I need to properly prepare. Law firms have asked me to do this on some occasions (as early as 2012).

Also, I will very soon produce a one-off podcast to discuss this amendment to the Patent Act, the evolution of SEP injunction case law in the wake of two Sisvel v. Haier cases, and the Munich I Regional Court's preliminary reference to the European Court of Justice concerning preliminary injunctions over battle-untested patents. I've invited three panelists who would represent a wide spectrum of opinions particularly on the amended Patent Act. I will merely be the facilitator and steer clear of voicing my own opinions on that occasion.

My perspective on this "patentDEform" bill is no secret. Rather than reiterate it, I'd like to just add a few observations here:

  1. A few years ago, Volkswagen's chief patent counsel Uwe Wiesner brought up the problems his organization experienced with patent holders' unfettered access to injunctions in Germany. That presentation started the whole debate. Without Mr. Wiesner's initiative, it's doubtful anything would have been undertaken by now. At the time, it was the next best thing to heresy by the standards of the German patent law community to call into question the #1 feature that makes Germany such a popular litigation venue: the ability to shut down an infringer's sales in such a large market.

    Seen in that light, it's very significant--and back then it would have been considered a dream or a miracle--that § 139 (the injunction statute) was touched at all.

  2. On the bottom line, however, defendants to patent infringement claims are even worse off now (even after that legislative measure) than they were when the process started. A couple of years ago, it still seemed that SEP injunctions were under control thanks to Huawei v. ZTE, and that companies could afford the luxury of addressing non-SEP issues. Now there is a bill that changes nothing about SEPs and, I predict, non-SEP injunctions will continue to be granted, just that there'll be some additional discussion with an outcome that is a foregone conclusion unless a patent holder makes a terrible mistake. SEP injunction case law, however, has gotten out of hand with the two Sisvel v. Haier rulings (the lower courts are simply doing what the Federal Court of Justice fully intended). And the Munich court's preliminary reference may very well lower the bar for preliminary patent injunctions.

  3. In § 83 of the Patent Act, the Federal Patent Court is now asked to hand down preliminary opinions after six months. Theoretically, that could lead to more stays. But it's merely an objective, not a hard requirement. If the court can't deliver, it can't--and that it takes more time won't be a defense to an infringement complaint.

    Even if that goal is met (which it may or may not be in any given case), it will come at the expense of thorough prior art search. Defendants will have to identify their prior art references and define their invalidity contentions extremely early. If a patent is ridiculously weak, that won't be an issue. But sometimes it takes a lot of work, and there have been patents (such as one of Microsoft's File Allocation Table patents) against which it was not easy to field suitable prior art (in the end, an email posted by Linux inventor Linus Torvalds to a mailing list turned out to be the strongest one, but by the time someone unearthed that prior art reference, the patent was already on the verge of expiration).

  4. There is some unfinished business here: the six-month goal applies to nullity actions before the Federal Patent Court, but "fresh" patents will firstly be challenged in opposition (revocation) proceedings before the European Patent Office (EPO) or the German Patent and Trademark Office (DPMA). That's going to be a big issue in, for example, 5G litigation, where patents will be asserted pretty shortly after they issue. The non-binding six-month target is then simply not going to come to bear.

    The incoming government after the September elections will be informed by the Federal Ministry of Justice that this problem still needs to be addressed. And the moment they touch the Patent Act again, it's likely that at least one "camp" will seek a further amendment to the injunction statute. My prediction is that net licensees are going to conclude that this a case of "plus ça change" and that something more is needed. In that scenario, they will try to build on the ultrafine crack in the shell that last night's modification of § 139 (which is officially meant to endorse the case law of the Federal Court of Justice) represents.

  5. When the rubber hits the road is what matters. We'll get there shortly, as the formal publication of the amended law is going to happen in a matter of days, weeks, or a couple of months at the most. It must be signed by the Federal President, but unlike the President of the United States, he merely notarizes laws unless they raise clear constitutional issues, which won't be the case here.

  6. In this new phase, my focus is not on what I believe went wrong last time, but on what exactly the courts and the lawyers make of it. I'm open-minded. I have no problem with concluding that this here does help defendants should it actually happen. I don't have a crystal ball. I can't imagine it today, simply because I can't see how non-SEP holders--who have neither an antitrust duty to deal nor a FRAND licensing pledge to honor--would be treated worse by the courts (if they make a licensing offer) than SEP holders. It was far harder for some German courts (and took them a few years) to vitiate Huawei v. ZTE than it will be to continue to grant injunctions under the new § 139, also considering that the official rationale for the bill (and the indisputable legislative intent, as documented by speeches given and press releases issued throughout the process) has more to do with continuity than with anything else.

  7. Let's come full circle back to Volkswagen, the company that started this. In a Handelsblatt article earlier this week (when it was clear what lawmakers were going to do), Volkswagen is quoted as welcoming this "clear signal" to patent trolls and important step toward a German patent law less prone to abuse, but very realistically notes that judicial practice will have to show whether the courts "seize this opportunity" to deny injunctions in certain cases.

    Of all the statements I've read in recent days, that one appears most balanced to me. A wait-and-see approach. I'm going to wait and see very actively. I'll track the developments for my future customers so they can get the best result under whatever the circumstances will be.

[Update] Heise online, Germany's leading information & communications technology news website, has a great headline: it translates literally as "Federal Parliament puts pebbles [using the diminutive of "stones"] in patent trolls' way." [/Update]

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