GERMANY: An Introduction to Intellectual Property: Patent Attorneys: Contentious

Navigating the Evolving Landscape of German and European Patent Law: A Guide for Innovators

Over the last years, our firm’s approach to IP strategy has been to emphasise the strategic value of making IP assets robust for litigation, which makes them more effective as a deterrent or an asset for licensing. This approach stems from our extensive experience with patent litigation in Germany, where we have seen the benefits of having a well-prepared portfolio.

There have been two significant trends affecting this strategy. The first is the opening of the Unified Patent Court (UPC), which has introduced a more streamlined process for enforcing patents across multiple countries, which is both time- and cost-efficient. The second is Germany's recent Patent Law Modernisation Act (in 2021), which has introduced significant amendments that impact patent proceedings, sparking a change in how to utilise the country's legal framework for intellectual property.

As a leading patent law firm that is now also involved in UPC matters, we are here to guide you through these changes and help you understand their implications for your IP strategy.

UPC: tight procedural timeline 

The establishment of UPC marks a significant stride in European intellectual property law, aimed at harmonising patent litigation processes among participating nations. Since the court officially opened on 1 June 2023, there have already been hundreds of lawsuits filed. Cases brought before the UPC cover a wide range of technologies, with the information and communication technology (ICT) sector leading in numbers, followed by medical technology and consumer goods. Although there are fewer cases in the pharmaceutical and biotech sectors, those that exist are part of significant international disputes, such as that relating to PCSK-9 inhibitors, and actions over biosimilars. Early rulings are providing important insights into the interpretation of the unitary patent and the scope of injunctions issued by the court.

By providing a unified framework for handling patent disputes, the UPC facilitates efficiency and consistency in resolving legal conflicts. Central to its effectiveness are the procedures governing infringement actions and nullity proceedings, pivotal in upholding patent integrity and ensuring swift dispute resolution.

To enhance efficiency in both time and cost, the UPC consolidates infringement and nullity proceedings within a single chamber, in contrast to the bifurcated proceedings in Germany where the defendant cannot invoke the invalidity of the patent in suit before the litigation courts but needs to engage in separate nullity proceedings before the German Federal Patent Court. So far, more than half of the infringement actions before the UPC have included a counterclaim for revocation.

This consolidation is guided by strict timelines outlined in the Rules of Procedure of the Unified Patent Court (RoP), with the aim of achieving a final oral hearing on infringement and validity issues within one year, as stipulated in the preamble of the RoP. Current figures indicate that the average time to close of a case stays within that ballpark, with about 405 days for infringement actions, 383 days for revocation actions and 301 days for counterclaims for revocation.

To achieve this goal, the procedural timeline is meticulously structured, comprising a six-month written phase, a three-month interim phase, an oral phase with a two-month summons period, and a decision rendered within six weeks following the oral proceedings.

The written phase commences with the submission of a Statement of Claim, followed by the respondent's Statement of Defence within three months (RoP R. 23), a subsequent Reply within two months (RoP R. 29 lit. (a)), and finally, a Rejoinder within one month (RoP R. 29 lit. (e)). Should the respondent's statement of defence include a counterclaim for revocation, that counterclaim must indicate the extent to which revocation is requested and be accompanied by supporting legal arguments, factual statements, evidence, possibly witness testimonies, and relevant documents, with associated fees paid (RoP R. 25, 26). In response, the reply to the counterclaim addresses these assertions and may additionally include requests for patent modifications (RoP R. 29A, 30). Further submissions addressing the counterclaim for revocation may follow with both reply and rejoinder stages specifically targeting this aspect (RoP R. 32).

Germany: streamlining nullity proceedings 

The core of the recent amendments to Germany’s Patent Law lies in the modifications to Sections 82 and 83 of the Patent Act (PatG). These changes are designed to streamline the process of challenging a patent's validity, making it more efficient and predictable. A key feature is the requirement for defendants in nullity actions to submit their written defences within a tight two-month window from the initiation of proceedings. This change underscores the need for readiness and swift action in defending patent rights.

Moreover, the Federal Patent Court is now mandated to issue a preliminary judicial notice within six months of a nullity action's initiation. This early notice aims to provide all parties with a clearer understanding of the patent's legal standing, facilitating more informed decision-making in the early stages of litigation.

The legislative intent behind these amendments is clear: to reduce the legal uncertainty that often clouds patent validity. By providing early judicial guidance, the amendments help infringement courts make more informed decisions.

For patent holders and competitors alike, this means a more predictable legal environment. Early judicial notices serve as a crucial reference point for claim interpretation and legal status assessment, potentially streamlining litigation and reducing the likelihood of drawn-out disputes.

While the amendments aim to enhance procedural efficiency, they also introduce challenges, particularly due to the tight timelines for issuing judicial notices. This compressed schedule puts pressure on the Federal Patent Court to address complex technical and legal issues swiftly, and it requires parties involved in nullity actions to be highly responsive and well prepared. So far, the Court has kept up with the new regime, and the duration of proceedings has seen a significant reduction in recent years, with case averaging only 21.3 months in 2023 compared to 29.4 months in 2021.

One of the most consequential aspects of the new rules lies in their impact on parallel infringement proceedings. The preliminary judicial notice issued by the Federal Patent Court carries significant weight, particularly if it raises concerns about the patent's validity. In such instances, infringement courts may choose to halt proceedings, awaiting a final determination on the patent's validity. An unfavourable claim interpretation in the preliminary opinion could potentially lead to the dismissal of the infringement complaint. Conversely, a Preliminary Opinion indicating a favourable claim interpretation and patent validity clears the path for early injunctive relief granted by the infringement court.

This intricate dance between nullity and infringement proceedings underscores the critical importance of a well-crafted IP strategy that proactively anticipates and mitigates risks throughout the patent life cycle. For businesses and innovators, this underscores the necessity of collaborating with seasoned patent attorneys adept at navigating these complexities and safeguarding their interests adeptly.

Adapting to the new legal landscape 

The stringent schedule of UPC and the accelerated timeline for issuing preliminary judicial notices in German patent litigation cases pose challenges not only for the courts but also for parties involved in nullity proceedings. These factors immediately thrust the question of patent validity into the spotlight of the patent dispute, emphasising the critical need for meticulous attention and timely responses to nullity actions.

This is all the more true in view of the more restrictive practice of the UPC to require the parties to set out their full case as early as possible in the proceedings (RoP R. 7), while later-filed evidence and arguments may be disregarded. This is all the more challenging in view of the tight schedule imposed by the UPC RoP. The German system, on the other hand, offers somewhat greater flexibility in this regard, even after the above-mentioned amendments to Germany’s Patent Law.

Either way, it is imperative to anticipate the potential impact of nullity proceedings on parallel infringement cases well in advance. Understanding the intricacies of patents, including fallback positions such as claim limitations that distinguish the claimed subject matter from prior art while still maintaining infringement, is essential. Identifying key patent assets suitable for litigation early in the process is highly beneficial. By recognising them during the prosecution phase, many potential pitfalls in future litigation can be sidestepped, and their value can be maximised.

Conclusion 

The UPC and the amendments to the German Patent Act are more than just procedural changes; they represent a shift towards a more streamlined, predictable legal framework for patents. This shift offers both opportunities and challenges for patent holders and those seeking to challenge patents.