Friday, October 14, 2022

After ECJ ruling on availability of preliminary injunctions in patent infringement cases, PIs are presently far more likely to be granted in Munich than in Dusseldorf

This is a caselaw update further to my April 28, 2022 post, European Court of Justice opens floodgates to preliminary patent injunctions in major victory for Munich I Regional Court's patent-specialized judges. As the German law firm of Loeffel Abrar noted on Twitter, my prediction that Munich would henceforth be Ground Zero for preliminary injunctions against patent infringement is playing out so far.

In a September 29 ruling, the Seventh Civil Chamber (Presiding Judge: Dr. Matthias Zigann) of the Munich I Regional Court laid out a perfectly logical application of the above-mentioned ECJ ruling to German patent PI cases. You can find the full text of the decision, including the syllabus ("Leitsätze"), in German on a website operated by the State of Bavaria. Rather than a verbatim translation, I'll just paraphrase in a condensed form the four key principles:

  1. The starting point of a patent PI analysis is a presumption of validity of any European patent based on the mere fact that it was issued. The alleged infringer bears the burden of making a showing to the contrary.

  2. That burden is normally met if a defendant presents a validity forum's preliminary opinion or final decision deeming the patent invalid. In principle, this also applies to prelimininary or final invalidity opinions from domestic or foreign proceedings concerning parallel patents claiming priority to the same original application.

  3. After a convincing showing by a defendant that the asserted patent is more likely than not to be invalidated, the burden shifts to the moving party, which has to make a showing that the (preliminary or final) decision presented by the defendant is erroneous ("diagnosis") and will be reversed ("prognosis").

  4. Doubts concerning the validity of an asserted patent will normally be relevant only if the patent is challenged by means of an opposition or nullity complaint or, in cases in which the preliminary injunction hearing takes place very shortly after the defendant was put on notice of the infringement allegation, if an opposition or nullity complaint is undoubtedly foreseeable. Furthermore, the defendant has to provide its invalidity contentions in writing in a self-sufficient, intelligible, complete, coherent, and legally convincing form.

The only expression here that may be easily misunderstood is "more likely than not." That is the verbatim translation of "überwiegende Wahrscheinlichkeit"--which German patent infringement courts, however, apply in a way that is closer to (if not even more exacting a standard than) clear and convincing evidence, as opposed to a mere preponderance of the evidence.

At any rate, the Munich court's take is consistent with para. 41 of the ECJ ruling in Phoenix v. Harting:

"In that context, it must be borne in mind that filed European patents enjoy a presumption of validity from the date of publication of their grant. Thus, as from that date, those patents enjoy the full scope of the protection guaranteed, inter alia, by Directive 2004/48 [...]"

A few days ago, Juve Patent reported on the Dusseldorf Regional Court's denial of PIs in three parallel cases brought by Biogen against generic drug manufacturers. Those decisions have been appealed.

According to Juve Patent, "[i]n view of the EPO’s decision on the parent patent [which was revoked by an opposition panel, and that decision was affirmed by an appellate panel], Düsseldorf Regional Court also considered the validity of divisional patent EP 873 insufficiently secured to justify handing down a preliminary injunction." That decision per se would actually be consistent with the second part of the Munich court's approach summarized further above.

But there is a major divergence in the form of a dictum. The Dusseldorf court wrote:

"Selbst dann, wenn man die Ausführungen des EuGH in seiner Entscheidung [Phoenix v. Harting], wonach für europäische Patente ab dem Zeitpunkt der Veröffentlichung ihrer Erteilung eine Vermutung der Gültigkeit bestehe (EuGH, GRUR 2022, 811, Rn. 41), derart begreifen möchte, dass damit eine Vermutung im rechtlichen Sinne gemeint ist – woran die Kammer Zweifel hat –, [...]."

That passage translates as follows:

"Even if one were to interpret the ECJ ruling in Phoenix v. Harting as establishing a presumption of validity for European patents from the moment of the publication of their issuance [...] in the sense that it is a legal presumption of validity--which this [Dusseldorf] Court doubts-[...]" (emphases added)

Well, Flat-Earthers also "doubt" something, but that doesn't mean they have reasonable doubt.

What would a non-legal presumption of validity look like? I don't drink alcohol or smoke anything, so my imagination unfortunately isn't up to this challenge.

The term is pretty common in U.S. patent law. There's a presumption of validity (which in district court has to be overcome by clear and convincing evidence), and there can even be an enhanced presumption of validity if additional circumstances are present.

The Munich stance makes a lot more sense than that Dusseldorf dictum. The only way to read Phoenix v. Harting is that national courts must not require parties moving for patent PIs to earn their presumption of validity: they deserve it based on the EPO's decision to grant the patent, period. Whatever happens thereafter may change the picture, as the Munich court makes clear. But the ECJ deemed it contrary to EU law to require something more than the issuance of a patent in the first place.

Obviously, we need to see how it plays out at the appellate stage. Simply put, if only one of the appeals courts (Munich, Karlsruhe (for Mannheim), Dusseldorf, Hamburg, or even one in a less popular venue such as Berlin) adopts the Munich I Regional Court's approach (in my opinion, they all should), all patentees can just file their PI motions there and don't have to care about the other appellate circuits. Theoretically, even a patent PI case could reach the Federal Court of Justice, but it would require the parties to keep litigating way beyond the final adjuciation of the PI motion. Not going to happen anytime soon, and quite possibly never going to happen. It's another question what will happen at the UPC, but presumption of validity means presumption of validity means presumption of validity.

In all fairness, there is a policy argument that the high post-grand invalidation rate of European patents warrants some caution at the PI stage, from a balancing point of view. However, the ECJ in Phoenix v. Harting didn't take that into consideration at all. That is a failure of the lobbying departments and organizations of companies who frequently have to defend against patent infringement claims. Those organizations proved their worthlessness in connection with German patent injunction reform as I explained again a few days ago. If they weren't as uncapable as they are, they'd have lobbied the governments of many EU member states to make submissions to the ECJ that would have made an impact. Now it's too late.

I also wouldn't adopt the take on the ECJ decision that a lawyer espoused at a recent conference. In particular, I disagree with any suggestion that the Munich court's preliminary reference question was unhelpful. It's better to ignore that, especially as it comes from someone who's suffered some major defeats--not only, but particularly--in Munich lately and has recently been on the receiving end of a patent PI motion.

So far, my view that Munich is a great choice for patent PIs has been validated. While the Dusseldorf Regional Court has at least refrained from taking an outlier position on the proportionality defense to patent injunctions, and has become a lot faster than it was a few years ago, it's still not the best venue for patent holders in such fields as smartphones and connected vehicles, for which Munich is the go-to venue, followed by Mannheim. Most Dusseldorf plaintiffs are small and medium-sized companies. Many patent litigators who are based in Dusseldorf want to maintain the importance of their home venue, but the Dusseldorf judges don't make it particularly easy to justify that forum choice to clients.

Dusseldorf is a wild card, Munich is pretty predictable, and I would like to see patentees give Mannheim a try if they have enough patents-in-suit to hedge their bets.

[Update] After my post I became aware of the following Bardehle Pagenberg video on the subject: