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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