Keeping up with German patent litigation: Half-year case law review 2020

The German Kat takes a bite
out of the meaty, German patent decisions
from the first-half of 2020

Finding it difficult to keep up with an ever-changing world in the midst of a health, environmental, social and political crisis, while keeping up with patent law?  Do not worry, the IPKat is doing a series of half-yearly "catch-ups" of the main European patent law jurisdictions before we all start a new "school year".  In this post, the Kat's friend Arnold Ruess in Germany in the form of Dr Lisa Schneider report on the first half of this year's patent cases in Germany.  

Over to Lisa for her view from Germany:  

"Like in the Netherlands and the UK, COVID-19 also impacted the German courts.  After being closed for some time and only conducting essential oral hearings, the courts are now trying to catch up. The German courts are becoming increasingly familiar with video conferencing tools.  Even if counsel can be physically present in the hearing, the parties themselves may not be able to travel and therefore follow the hearing from abroad using video conferencing tools.  

2020 definitely is a FRAND year also in Germany. In Sisvel v. Haier the Federal Court of Justice gave its first FRAND ruling since Huawei v. ZTE. It does seem that SEP-holders are making up ground in Germany.   Several injunctions have been granted this year and there may be more to come. On the other hand the German patent law is under legislative review, with the role of proportionality in injunctive relief being highly controversial.

Patent law also keeps the Federal Constitutional Court busy. Eventually the UPC ratification was found unconstitutional and has to start from the beginning. Haier filed a constitutional complaint against the Federal Court of Justice ruling and last but not least the Federal Constitutional Court raises concerns on ex parte injunctions in IP law.

#1: Efforts to modernise and further develop German patent law

On 14 January 2020 the Federal Ministry of Justice published a draft act to modernise and simplify German patent law in order to maintain Germany's role in patent litigation worldwide. Companies, associations and individuals were invited to comment on the draft by 16 March 2020. Almost forty statements were filed within that period. The Ministry considered those and published a second (only superficially amended) draft on 1 September 2020 that has to pass through the cabinet before the Bundestag has its say.

The Ministry claims that there is only a selective need to modernise and simplify the law. The draft aims at simplifying procedures, clarifying provisions and deleting obsolete regulations, in particular taking into account advanced digitisation and alignment with international procedures.

The most significant and controversial amendments of the draft are: the streamlining of proceedings before the Federal Patent Court, a proportionality criterion when granting injunctions and the application of trade secret provisions in patent litigation.

#2: Constitutional court declares UPC ratification void – new draft bill on the way
Federal Constitutional Court, 13.2.2020 – 2 BvR 739/17, GRUR 2020, 506

German decision here | English press release here | IPKat report here

One of the most prominent decision in the first half of the year was the long awaited Constitutional Court ruling on the UPC ratification.

The ratification act was passed in the German parliament, Bundestag, and the only remaining step was for the president to sign the bill. However, in spring 2017 a constitutional complaint was filed and the Federal President refrained from signing the bill in order not to create unrevisable facts. In the meantime 16 states ratified the UPC, among them France and the UK. However, without the German ratification the entire project could not move any further.

On 13 February 2020 the Constitutional Court pronounced its decision that the bill was unconstitutional. The judges held that the act confers sovereign rights on the UPC and therefore entails an amendment of the Constitution in substantive terms. Such acts have to be approved by the Bundestag with a two-third majority. In fact, the act was passed unanimously. However, only 35 Members of the Bundestag were present at the time.

Only a few weeks earlier the UK Government had announced that it no longer intends for the UK to participate in the UPC. Nevertheless, the German Ministry of Justice has issued another draft bill and continues to pursue the ratification without any material amendments. In the draft it says that the unforeseeable withdrawal of one party shall not hinder the entry into force. The deadline for public comments on the draft ended on 3 July 2020 and things could move quickly.

#3: New FRAND ruling gives implementers new homework to do – Sisvel v. Haier

Federal Court of Justice, 5.5.2020 – KZR 36/17, GRUR 2020,961; GRUR-RS 2020, 14872

English translation here | IPKat report here

In May the Federal Court of Justice handed down the long awaited first decision on FRAND rules since the groundbreaking CJEU ruling on Huawei v ZTE.

In 2017 the Higher Regional Court Düsseldorf found for infringement of Sisvel's EP 08 52 885 but did not grant an injunction. The court held that Sisvel's offer was not FRAND-compliant and therefore sentenced Haier to damages and rendering of information and account.

The Federal Court of Justice overruled that decision and mostly reinstated the first instance decision in favour of Sisvel. Since the patent-in-suit has already expired, the dispute only affects the damages to be paid by Haier.

The court emphasised that the infringer is obliged to do whatever it takes to take a FRAND license rather than simply declaring willingness. When assessing willingness the overall conduct in negotiations with the SEP holder has to be considered.

Yet, this will not be the end of the case. In August, Haier filed a constitutional complaint with the Federal Constitutional Court arguing that the Federal Court of Justice ruling violates Haier's constitutional rights.

#4: Pemetrexed

Federal Court of Justice, 7.7.2020 – X ZR 150/18
Regional Court of Munich, 21 O 8568/20, 21 O 8569/20, 21 O 8570/20

The German courts were busy with pemetrexed (again) in 2020, even though strictly speaking only in the second half of the year. I take the liberty of including the proceedings into this roundup nevertheless.

On 7 July the Federal Court of Justice upheld EP 1 313 508 in full and thus overruled the Federal Patent Court decision nullifying the patent in 2018.

The court followed Eli Lilly's arguments that it was counterintuitive to combine the chemotherapy drug with folic acid and vitamin B12. The skilled person would have expected an antagonistic effect on pemetrexed rather than an improved tolerance. Also the available trials did provide reasonable expectations of success.

However, the Federal Court of Justice also mentioned that the Federal Patent Court's line of argumentation was justifiable but did not convince the court eventually. At the time of writing the full judgement is not available, yet.

Immediately after the nullity hearing, Eli Lilly filed for preliminary injunctions against generics. Hikma, Stada and Zentiva, who were using pemetrexed diarginine in their product, argued that they did not make use of the patent that explicitly protects pemetrexed disodium. The Regional Court in Munich decided to have an oral hearing, but eventually issued the injunctions.

#5: Requirement of further trials does not exclude obviousness - Tadalafil

Federal Court of Justice, 21.01.2020 – X ZR 65/18, GRUR-RS 2020, 5711; GRUR-Prax 2020, 373

The German person skilled in the art already used to be more knowledgeable compared to the skilled person in other jurisdictions and the EPO case law. In a recent decision from January 2020, the Federal Court of Justice held that a medical dosage was obvious because at priority date the person skilled in the art had reason to conduct certain trials that would have led to the invention. It was irrelevant at what time he would have made those trials. The court therefore invalidated the EP 1 173 181 on the use of tadalafil in dosage of up to 5 mg. 

The court reasoned that due to the significant economic success of sildenafil (marketed as Viagra®) the skilled person would have been prompted to further examine tadalafil as possible alternative drug. The positive outcomes of phase I trials would have been reason for the skilled person to move on and even explore lower dosages and daily administration. The court confirmed its earlier ruling that a surprising effect does not establish validity.  

Similar decisions, yet with other reasoning, have been handed down in other European courts (among them the UK and the Netherlands). Other European courts e.g. in Finland and Denmark upheld the patent, which expired in April 2020.

#6: HEVC v. MAS

Regional Court of Düsseldorf, 7.5.2020 – 4c O 44/18, 4c O 56/18, 4c O 69/18

In another SEP case HEVC Advance patent pool members won against MAS Elektronik in Düsseldorf. The Regional Court of Düsseldorf confirmed that the HEVC/H.265 compliant products infringed patents by Dolby Labratories, GE Video Compression and Koninklijke Philips N.V. The judges discarded MAS' compulsory license defence and held that the HEVC Advance video pool license offers were FRAND.

#7: Harnkatherset standard for injunctions also in Munich

Higher Regional Court of Munich, 12.12.2019 – 6 U 4009/19, GRUR 2020, 385; GRUR-Prax 2020, 106 – Elektrische Anschlussklemme

Even though the decision was handed down last year, it is worth mentioning here particularly because the reasoning was only available in January 2020.

Munich used to be one of the courts of choice when seeking a preliminary injunction in respect of a patent that hasn't been upheld in opposition or nullity proceedings. But times have changed. The Higher Regional Court of Munich decided to adopt the long established Harnkatheterset standard, developed by the Higher Regional Court of Düsseldorf already back in 2010.

According to this well-known decision, a preliminary injunction based on a patent can only be granted if the validity of the patent is beyond doubt. This usually requires that the patent has been upheld in opposition or nullity proceedings. Mainly three exemptions from that general rule are accepted: (1) the defendant was heard in the prosecution proceedings; (2) the patent is commonly accepted as valid by competitors; (3) extraordinary circumstances that make it unreasonable for the patentee to wait for proceedings on the merits. The latter covers mainly "at-risk" market entries by generics.

The Munich courts used to be more liberal in their approach. However, the Higher Regional Court has departed from this approach, setting aside the first instance PI in this case. The court reasoned that PI proceedings do not provide the framework to appropriately assess validity.

Courts that frequently decide patent cases and have not explicitly adopted the Harnkatheterset ruling seem to be Hamburg and Brunswick...

#8: Federal Constitutional Court on ex parte injunctions – some clarity and lots of uncertainty

In several press law cases the Federal Constitutional Court has criticised courts for issuing preliminary injunctions without hearing the defendant. Two decisions were already handed down in 2018 (1 BvR 1783/17 and 1 BvR 2421/17). Three more decisions followed this year (1 BvR 1246/20, 1 BvR 1379/20, 1 BvR 1380/20). In two cases the court even lifted the PIs.

The Federal Constitutional Court established that for reasons of "procedural equality of arms" (zivilprozessuale Waffengleichheit) an injunction in general must not be issued without hearing the defendant. The civil procedure rules allow for making decisions without having an oral hearing in urgent cases. However, this does not justify that the defendant is not heard at all.

So far there is no decision on whether the same applies in patent law cases. The second decision this year was an unfair competition case and the court actually decided not to accept the constitutional complaint. It held that established principles generally also apply in unfair competition law and that there is no need for further guidance by the Federal Constitutional Court. With regard to Art. 9(4) of the Enforcement Directive (2004/48/EG) and whether it requires the availability of ex parte relief the court held that there is no need for a decision on the issue in this case either, since the directive does not apply to §3a Act against Unfair Competition (Breach of law).

It is also uncertain whether a protective letter can constitute a "hearing of the defendant". In one of the press law cases, the applicant sent a warning letter before filing for a preliminary injunction. The defendant responded to this warning letter and also filed a protective letter. The court lifted the PI and argued that the application went beyond the warning letter and was much more detailed. A procedural involvement of the other party may only be replaced by a pre-litigation warning letter, if this warning letter and the PI application are identical (and any reply by the other party is made available to the court)."