Wednesday, January 26, 2022

Patent holders don't have to be afraid of proportionality defense to injunctive relief in Dusseldorf, much less in SEP cases: judges outline their thinking

I have good news for patent holders who like to enforce their rights in Germany, and not only in Munich and Mannheim but (at least in some cases) also in Dusseldorf. Based on what two of the three judges presiding over patent-specialized divisions of the Landgericht Düsseldorf (Dusseldorf Regional Court) said in a joint presentation today, patent injunctions are going to be just as available in Dusseldorf as before last year's "reform" bill. This was certain for Munich and Mannheim, but I must admit there were some residual doubts on my part concerning Dusseldorf, which in some contexts made defendant-friendlier decisions in recent years than other German courts. Not anymore after today's presentation.

Other than the risk of outlier decisions in Dusseldorf, the situation was already clear last year:

Today the Heidelberg Academy, a major organizer of patent conferences, hosted a webinar on the hypothetical disproportionality of patent injunctions in particular cases. The two speakers were Presiding Judge Dr. Daniel Voss ("Voß" in German) of the Dusseldorf court's 4b Civil Chamber and his counterpart from the 4c Civil Chamber, Presiding Judge Sabine Klepsch. I've mentioned both judges very recently: Judge Klepsch and her side judges made a landmark decision against the Access Advance video codec patent pool (from which Access Advance is not really drawing the appropriate conclusions), and I thought Ericsson was fortunate to have two patent infringement complaints against Apple assigned to Judge Dr. Voss, whom I described as particularly patentee-friendly and jokingly called "Dusseldorf's answer to the Munich and Mannheim judges."

The joint presentation by those two judges left no doubt whatsoever:

  • The new injunction statute is materially consistent with the Federal Court of Justice's Heat Exchanger case law.

    There may be some exceptional cases (which have yet to be identified) where use-up or workaround periods are warranted.

  • An outright denial of injunctive relief is, however, next to inconceivable. The presentation said: "Dauerhafter Ausschluss des Unterlassungsanspruchs nur in absoluten Ausnahmefällen" (translation: "permanent denial of injunctive relief only in absolutely exceptional cases")

  • Third-party interests are realistically only going to be relevant if some patients' lives depend on pharmaceutical products or if a fundamental threat is posed to critical infrastructure. Even in such cases, third-party interests are not a get-out-of-jail-free card for infringers: they have to act reasonably. In practice, this means "license or die." Take a license and no third party is harmed. It's what I've been saying for a long time: the "Keep It Simple, Stupid" test.

    Third-party interests ultimately won't matter in the vast majority of cases (in which the patent holder just wants to get compensated and doesn't really want to shut down infrastructure or remove products from the market). Where there is a licensing offer on the table, there is no hardship unless the terms of the license are downright insane.

  • In standard-essential patent (SEP) cases there's a FRAND defense, which is all about an infringer's access to a license. There is no disproportionality defense on top of the SEP-related antitrust defense as the implementer can simply take a license.

    If a declared-essential patent turns out not to be actually essential (i.e., in a case involving an overdeclaration) and if, as a result, the implementer is not deemed to be entitled to a license on FRAND terms, the disproportionality defense may come into play (with the hurdle then being as high as previously discussed).

    I've talked to a Dusseldorf-based patent litigator with tremendous expertise in SEP cases, and what I learned is that since that German patent "reform" bill entered into force in mid-August 2021, the Dusseldorf Regional Court has consistently declined to entertain a disproportionality defense on top of a FRAND defense. So those judges not only talk the talk, but actually walk the walk.

One of the things I've been telling people in the legal community and the technology industry for about two years is that the first German court to deny an injunction on disproportionality grounds is going to scare away all plaintiffs. They're just going to sue elsewhere, and that court can close its patent divisions. The Dusseldorf court is not going to be an outlier. Just like Munich and Mannheim, it's going to stay the course. German patent litigation is all about leverage from injunctions.

It's been more than five months since the "reform" bill was published in the Federal Law Gazette. Not a single case has been reported from any German patent infringement case in which the outcome was impacted in the slightest by the reworded injunction statute. The ones who advocated reform would have had to push for a true paradigm shift. That effort could have failed. It would have seemed exceedingly ambitious. But at least it would have been worth fighting for. What those losers got out of the whole reform process--by contenting themselves with a solution that fails to address the actual problem--was editorial in nature. In legal terms, they got nothing other than making it even more expensive to defend.

Today's presentation by the Dusseldorf judges also validates what I stated in an article I contributed to a recent Wolters Kluwer publication.

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