GERMANY: An Introduction to Intellectual Property: Patent Litigation

GERMANY: An Introduction to Intellectual Property: Patent Litigation

Two recent remarkable preliminary injunctions and two referrals to the ECJ

In the last one and half years, some remarkable German court decisions have been published, which potentially have an impact on all German courts in the future. Two of these decisions relate to preliminary injunctions in Germany, while two others contain referrals to the CJEU.

PI on Anti-anti-suit injunctions 

In the field of multi-national patent disputes, the involved parties sometimes try to block court proceedings before courts in other countries. One example is the so-called Anti-Suit Injunction (ASI) which is widely accepted in common law jurisdictions. Such Anti-Suit Injunctions have the purpose of blocking the initiation of court proceedings in another country or the continuation of already pending foreign proceedings. In a nutshell, with an ASI, the applicant requests a court to render a decision prohibiting the other party from filing a suit in another jurisdiction.

Such ASIs are not accepted and recognised by German courts. Nevertheless, parties usually are forced to respect such ASIs even in Germany considering the threat of substantial penalties and coercive measures (“contempt of court”) in the jurisdiction in which the ASI has been granted.

Against this background, Munich courts recently granted a so-called Anti-Anti-Suit Injunction in order to prevent an ASI. As a consequence, the applicant of an ASI has to withdraw its motion for an ASI and is not allowed to continue the respective proceedings in the foreign country. The ground-breaking decision was rendered by the Munich Regional Court (21 O 9333/19) as a preliminary injunction (PI) ruling and confirmed upon appeal by the Higher Regional Court of Munich (6 U 5042/19).

As the German Federal Supreme Court has no competence to decide in PI proceedings, the Munich Higher Regional Court is the final instance, which makes said decision final and binding. In consequence, the Munich courts have given the owners of a protective right a tool with which they can at least try to avoid being blocked from pursuing their rights in Germany.

PI on Anti-divisional game 

Following the remarkable grant of Anti-Anti-Suit injunctions, the Munich courts established another unique type of PI for avoiding a so-called “divisional game” strategy.

With a “divisional game” strategy, the patent holder creates uncertainty for competitors by holding and/or asserting granted patents of a patent family against an infringer. If the competitor attacks such patents in invalidation proceedings, the patentee avoids a possible invalidation by waiving the respective patent prior to a decision thereon. Instead of defending the patent, the patentee takes one of the still pending further divisional applications of the patent family and drafts slightly amended claims which essentially correspond to those of the “abandoned” patent. This divisional is then usually quickly prosecuted and granted. The “game” begins again.

In such a situation, it is not possible for the competitor to clear the way for its own competitive products as the patentee prevents a decision by the competent courts/offices on validity.

Therefore, anti-divisional game injunctions are not directed to blocking the initiation of court proceedings but to hindering the patentee from dropping patents under dispute with the purpose of avoiding a negative decision on validity, while at the same time continuing the infringement threat with similar patents from the same patent family.

In its decision of 24 February 2020 (7 O 1456/20), the Munich District Court, by way of a preliminary injunction based on an abusive behaviour of the patentee in violation of unfair competition rules, prohibited the patentee from dropping patents.

It remains to be seen whether the new court practice of the Munich court will be adopted by other courts. In any case, the Munich court might be a venue of first choice for the defendants being confronted with such a “divisional game” situation.

CJEU referral: Proven validity as a requirement for the grant of a PI

At the end of 2019, the Munich Higher Regional Court explicitly gave up its former practice and instead adopted the practice of the Düsseldorf courts regarding the requirements for validity of a patent in preliminary injunctions proceedings. As a consequence, preliminary injunctions in patent matters shall, also before the Munich courts, only be granted if the validity of the patent has been confirmed in invalidation proceedings. Thus, newly granted patents should no longer be enforceable by way of a preliminary injunction.

Following said decision of the Munich Higher Regional Court, on 19 January 2021, the Munich Regional Court, in the preliminary injunction proceedings (21 O 16782/20), referred the following question to the Court of Justice of the European Union (CJEU):

Is it compatible with Article 9(1) of Directive 2004/48/EC for Higher Regional Courts having jurisdiction at last instance in proceedings for interim relief to generally refuse to grant interim measures for infringement of patents where the patent in suit has not survived opposition or revocation proceedings at first instance?

Applying the new case law of the Munich Higher Regional Court, the Munich Regional Court would have had to refuse the grant of provisional measures in the pending case. However, the Regional Court had doubts whether said case law of the Munich Higher Regional Court is in line with EU law (namely Article 9 (1) of the Directive 2004/48/EC which ensures the possibility of provisional court measures in case of patent infringements).

It will be exciting to see how the CJEU will answer the referred question as this will not only affect the practice of the Munich courts but might also declare the established practice of most of the German courts, such as the Düsseldorf and Mannheim courts, inadmissible.

CJEU referral: FRAND game 

In one of the proceedings in the patent litigation between Nokia v. Daimler, the District Court Düsseldorf referred several questions, inter alia on licensing of standard essential patents (SEP) for the supply of components, to the Court of Justice of the European Union (CJEU) for clarification (request for a preliminary ruling under Article 267 TFEU). In the past, SEP holders refused, for economic reasons, to grant licences under the FRAND rules to suppliers as the end customers usually were willing to pay higher royalty rates for the use of SEPs.

The referred questions cover two separate complexities of potential FRAND issues, i.e. (a) whether component manufacturers also have a direct and independent right to an exhaustive component-level SEP licence, and (b) clarification of some of the general FRAND requirements set forth by the CJEU in the Huawei v ZTE case (Decision of 16 July 2015, C-170/13).

Interestingly enough, together with the referral, the court already presented its view on these questions as follows:

1. SEP holders should be obliged to grant licences to suppliers.

2. “Willingness” to negotiate is to be assumed unless the reaction of the infringer to the infringement allegation clearly indicates an unwillingness to negotiate. Here, the defendant’s overall conduct is the decisive factor.

3. Courts shall be obliged to assess the SEP owner’s offer first, rather than the alleged infringer’s counter-offer. If that first offer is not FRAND, the defendant’s willingness to meet FRAND conditions is irrelevant. 

4. Parties may still fulfil FRAND conditions in the course of litigation.

The answers of the CJEU will not only affect the German situation but will also provide guidelines for all other European jurisdictions.