Patent Injunctions Update: German Ministry of Justice publishes draft amendment to Patent Act and Hague Court of Appeal decides in further Philips FRAND cases

Here's a post for the patent afficionados among the IPKat's readers, combining two important developments from Germany and the Netherlands, respectively.

Proposed amendments to German Patent Act

Hot off the press is the eagerly awaited [at least by this Kat] draft bill to amend the German Patent Act [link here; earlier Katpost on the subject here]. The draft has already been discussed on various patent-specific blogs, for instance on Professor Thomas Cotter's Comparative Patent Remedies blog, so it will not be discussed in detail here. Cotter's analysis is highly recommended reading for those wanting to learn more.

Briefly, then, the most significant aspects of the draft bill are that: (i) it contains recommendations to better align infringement and invalidity proceedings in Germany's bifurcated system; and it (ii) would also add to § 139 section 1 of the German Patent Act, which states that injunctive relief can be granted in the case of infringement [in practice this is read as "must" by German courts], the following sentence:

Der Anspruch ist ausgeschlossen, soweit die Durchsetzung des Unterlassungsanspruchs unverhältnismäßig ist, weil sie aufgrund besonderer Umstände unter Beachtung des Interesses des Patentinhabers gegenüber dem Verletzer und der Gebote von Treu und Glauben eine durch das Ausschließlichkeitsrecht nicht gerechtfertigte Härte darstellt.

My translation:

The claim [for injunctive relief] is precluded to the extent that the request of the injunction is disproportionate because the right of exclusion would cause unjustified harm in light of special circumstances, having regard to the interests of the patentee vis-à-vis those of the infringer, as well as the requirements of good faith.

This Kat's preliminary take is that the addition is both desirable and sufficient. It confirms the 2016 decision of the Bundesgerichtshof (BGH) in Heat Exchanger. There, the BGH stated that a transition period before an injunction can take effect is allowable in case the consequences of the injunction, singularly and in light of the special circumstances of the case, would cause harm to the infringer to such an extent "that the unconditional injunction appears unreasonable" (at 45). Some commentators have criticized this decision for being too restrictive. However, one must not forget that a patent is, after all, an exclusive right and that exceptions to this principle have always been applied with reservation. It will now be up to lawyers and scholars to argue which cases warrant application, and for courts to further crystallize this young but crucially important doctrinal exception to patent exclusivity – but first let's see how the proposal will fare.

In light of the decision in Heat Exchanger and case law of the Court of Justice of the European Union (CJEU) on the proportionality principle in Article 3(2) of Directive 2004/48 (the Enforcement Directive), strictly speaking an amendment to the Patent Act seems superfluous. But some German judges have expressed the opinion that the German patent law as it currently stands does not allow them to take into account considerations of proportionality [see, for instance, this article by Judge Uwe Scharen, formerly the president of the 10th Senate of the BGH, which specializes in patent litigation]. The amendment should dispel such hesitations and so fully open the door to the development of a proportionality doctrine in German patent law, which would be a welcome development

Keeping up with the patent news (Credit: Paint By Numbers)

Philips v. ASUS/Wiko FRAND litigation in the Hague: new decisions

As readers may know, Philips is currently engaged in pan-European litigation against ASUS and Wiko for infringement of its FRAND-patents relating to Universal Mobile Telecommunications System (UMTS) technology. In the spring of 2019, the Court of Appeal of the Hague issued an injunction against both parties on the basis of one patent [see Katpost here for the decision against ASUS; an English translation of the decision against Wiko is forthcoming in GRUR-Int]. In October, the Oberlandesgericht Karlsruhe decided against Philips in a case concerning a parallel patent [Katpost here]. The Philips UMTS case highlights differences in the European approaches to FRAND and both in the Netherlands and in Germany, the cases are now pending before the supreme courts. It is therefore worth keeping an eye on.
Just before Christmas, the Court of Appeal in the Hague handed down decisions in cases that Philips had initiated on the basis of two others patents, also against Wiko and Asus.

European Patent (EP) 1 440 525

This patent was upheld and found infringed by the Court of Appeal [see here for decision against Asus and here for decision against Wiko]. It then further discussed both parties' FRAND defences.

In the case against ASUS, the Court of Appeal referred to its earlier decision and then addressed ASUS additional arguments. It reiterated that [under the CJEU's decision in C-170/13 Huawei/ZTE] after notification by the SEP-holder, a SEP-implementer must show willingness to take a licence before an obligation to make a FRAND-offer on the part of the SEP-holder arises. According to the Court of Appeal, this is consistent with the UK approach, as set out in the decisions in Unwired Planet [see [2017] EWHC 711 (Pat) and [2018] EWCA Civ 2344, Katpost here].

The Court of Appeal also reaffirmed that it will not always be necessary to submit claim charts as part of the notification to the implementer, but that it depends on all circumstances of the case whether sufficient notification is given. What is decisive is whether the SEP-implementer knows which rights are invoked against is, which products are alleged to infringe them and in what manner.

As for willingness, the Court of Appeal clarified that mere attendance of licensing negotiations is not sufficient: to be considered willing, a licensee must actively engage in them. It may also oblige licensees to inquire after the relevant licensing terms if it considers these unclear. In the absence of such willingness, it will not be inappropriate for SEP-holders to request an injunction, even if they did not make a FRAND-offer – since under the Huawei/ZTE framework, they are under no obligation to do so until a licensee has proved to be willing.

In the decision in proceedings against Wiko, the Court of Appeal did not explicitly differentiate between Wiko's FRAND-arguments in the present proceedings and those that led to the earlier decision. Its discussion of the FRAND-issues in the case was entirely along the lines of its July 2019 decision and the Court of Appeal did not add significant new points to its earlier reasoning.

European Patent (EP) 1 685 659

In the cases concerning this patent, the Court of Appeal rejected Philips' appeal and upheld the nullity of the patent as per the District Court's findings [see here for decision against Asus and here for decision against Wiko]. According to the Court of Appeal, this patent lacked inventive step.

The closest prior art was considered a proposal by Nortel Networks for a working group in October 2003, which comprised a solution to a problem in the High Speed Downlink Packet Access (HSDPA) protocol. Philips had argued that its patented invention differed from the Nortel proposal in three non-obvious ways. However, the Court of Appeal disregarded one of these differences because it did not contribute to the solution of the objective technical problem. As regards the other two, it held that the skilled person would not require any inventive effort to derive these technical measures when combining the Nortel proposal with one of Nortel's earlier proposals to improve the HSPDA protocol.