Patent News

German patent injunction reform process plagued by misconceptions, strawmen, and bogeymen

Juve Patent wrote last month that the patent reform bill the German government is currently drafting “will likely disappoint many experts and not include the major changes to the automatic injunction that have been called for by the German automotive and telecommunications industries.” I don’t think one can know for sure at this point that the process isn’t going to go in a helpful direction. The proposal might still end up being better than expected, and even if not, the legislative process in the Bundestag (Federal Parliament) could result in major improvements. But given how long major stakeholders such as Germany’s automotive industry and Deutsche Telekom have been lobbying for change, an article like the one I just mentioned is disappointing. What we should see at this stage is articles in which patent monetization-focused organizations like Siemens and its allies would spread FUD (fear, uncertainty, and doubt), such as warning against a decline in innovation.

What that Juve Patent article calls “major changes” (to patent injunction rules) would simply put German patent law in compliance with settled EU law. It’s not an overreaching demand; it should be viewed as an inevitable minimum outcome.

There hasn’t been much press coverage of the German patent reform process, and only last week did two members of the German federal parliament–both from the chancellor’s party, the Christian Democratic Union (CDU)–issue a public statement. The headline of the joint press release by Elisabeth Winkelmeier-Becker, the CDU/CSU group’s legal affairs spokeswoman, and Ingmar Jung, the group’s patent reform rapporteur, demands better protection of corporations from patent trolls.

Placing the emphasis in a patent reform debate on trolls is generally beneficial in the public debate as hardly anyone would want to stand up to defend the “trolls'” interests. Anyone who disagrees with measures against “trolls” would firstly have to insist on properly defining what a “troll” is versus a legitimate research-focused licensing business. The term “patent troll” can serve to frame a debate, and that’s what those center-right politicians apparently considered appealing.

But there’s a significant downside. Not only are “patent trolls” just one part of the problem (and still–despite some signs of increasing activity–a far smaller part in Europe than in the U.S.) but there’s a serious risk that even if German patent law was modified and required a proportionality analysis as opposed to practically automatic injunctions, the courts might end up denying injunctive relief only (or largely) to non-practicing entities (NPEs).

While both the Supreme Court’s eBay v. MercExchange ruling and the America Invents Act (AIA) made it harder for trolls to gain leverage over alleged infringers, the rules and tests they established aren’t NPE-specific (though there is a strong argument that eBay hasn’t had nearly as much of an impact on patent holders who can establish competitive harm than on NPEs). If Germany, contrary to Juve Patent’s current operating assumption, added a proportionality requirement to the injunction clause (§ 139) of its Patent Act, the statute itself wouldn’t be as specific as the four-factor test in eBay. It would be up to the courts how to interpret and apply the new statute, and in the initial absence of any German case law, they would try to understand the legislative intent behind the reform bill.

A press release by the larger one of the two parliamentary groups in the current government coalition would not, all by itself, prove or disprove any legislative intent. No irreparable harm has been done to the cause. However, when you get closer to the actual votes, there will be debates: in the legal affairs committee, possibly also in other committees (such as economic affairs), and in the plenary. What lawmakers say there about the underlying rationale and the objectives they pursue with the bill is likely going to influence the subsequent interpretation of the new statute by the courts. If judges conclude that the purpose came down to denying NPEs access to injunctive relief, they will rule accordingly–and nothing will change with respect to patent lawsuits brought by organizations like Qualcomm, Nokia, Ericsson, Siemens (who hold far more patents than trolls, and are no less aggressive).

There’s only one thing I do like about the CDU/CSU press release: they stress that there’s an urgent need to act in order to prevent that German companies would be permanently disadvantaged in the global economy. That is indeed a problem with respect to companies that manufacture and/or warehouse products (such as cars) in Germany. And trolls are a significant part of that problem, but not the largest part.

Mr. Jung’s quote is very soft and weak with respect to what legislative change is actually needed: he merely describes a proportionality requirement as “a/one [the indefinite article and the numeral are the same word in German] possible solution.” Again, considering that it’s simply dictated by the EU enforcement directive (the related passage of which has in fact been implemented by Germany in connection with other types of intellectual property than patents), it’s mandatory, not optional.

The debate should only be about what guidance the courts should get: what criteria to analyze, and their relative weight.

As a secondary demand, the two CDU/CSU politicians propose what the leading German automotive industry association demands as well: to close the injunction gap, which is the net effect of invalidation proceedings before the Federal Patent Court of Germany taking far longer than the initial infringement decisions by (at least) the Mannheim Regional Court and the Munich I Regional Court. (Even the Federal Patent Court has such a backlog that even the Dusseldorf Regional Court would order an injunction long before the validity determination.)

The injunction gap is definitely part of the problem–but closing it wouldn’t be enough. At this point there’s a high risk of the ultimate “compromise” just amounting to an enforcement stay between the conclusion of the first-instance infringement case and the Federal Patent Court’s validity determination.

The final sentence of that CDU/CSU press release is simply off-base. It says: “With a particular view to standard-essential patents, there is an observable increase in lawsuits leveraging patent injunctions to the detriment of producing companies.”

There was a time when German courts granted SEP injunctions almost as readily as non-SEP injunctions. But with the CJEU ruling in Huawei v. ZTE, that changed; in fact, courts were already somewhat hesitant during the European Commission investigations of Samsung’s and Motorola’s SEP assertions.

Further improvement with respect to SEP injunctions would be highly desirable, and there have been some worrying decisions by some courts recently. But SEPS are now the only category of patents over which even German courts don’t grant automatic injunctions. A key stakeholder said at a government roundtable in May: “We’re not here to talk about SEPs.” He didn’t mean that SEPs should be outside the scope of the reform bill, but that there’s a need for a more balanced patent injunction framework with respect to SEPs and non-SEPs alike.

Siemens, which doesn’t want any such reform to have teeth (until its own IoT products or medical devices get enjoined at some point), likes to frame the debate that way. They say those concerns are mostly over SEPs, and for SEPs the situation has improved after Huawei v. ZTE.

It’s positive to see some parliamentary engagement here at this stage (before the bill is officially introduced). It’s very good that a government party (though it’s not the one running the Federal Ministry of Justice) confirms there’s a sense of urgency for reform. But last week’s statement falls far short of what’s needed, and reflects the political clout of those who would like to maintain, to the greatest extent possible, the status quo.

Trolls are a bogeyman that can ultimately limit the impact of any reform. The portrayal of the problem as being SEP-related above all else is a strawman that some like to put up only because it’s not too hard to take down.

Share with other professionals via LinkedIn:

var addthis_config = {“data_track_clickback”:true};

View the original article here: German patent injunction reform process plagued by misconceptions, strawmen, and bogeymen

The article was originally posted on FOSS Patents.
Each article is copyrighted to their original authors. We do not own any rights to the news or the images used. Whilst every care is taken to ensure that the news posts published are accurate, we cannot guarantee the authenticity of the news article on every occasion. There’s no copyright infringement intended. The news is for informational purposes only and does not provide legal advice.