[Conference report] Whither will bifurcation go? A critical discussion on Germany's bifurcated patent proceedings

The AmeriKat enjoying the slower paced
validity track...

Ahhh, the German injunction gap. 
A topic of interest in the UK courts at the moment (see the various applications to expedite trials because of it here).  But turns out the German patent litigators are also talking about it.  From September 15 to September 17 2021, the annual meeting of the German Association for Intellectual Property (GRUR) took place in Bonn. Part of the program was an analysis of Germany's bifurcated patent procedure and ways to better synchronize nullity and infringement proceedings. Katfriend Anselm Gripp provides the following write-up of the session.  

Over to Anslem:


"Diverging paths – Infringement of invalid patents

"Two roads diverged in a yellow wood"… but the critical road for implementers in German patent proceedings is long and windy.

This is the situation the implementer faces in the system of bifurcation. Although validity objections are often of paramount importance to the implementer in infringement proceedings, such objections will generally not be considered. Not only is the choice limited but the open road is also much slower than the infringement one.

First instance judgements in validity proceedings take much longer than judgments in infringement proceedings (>24 months as compared to 9-15 months). As the infringer can await a decision much earlier in infringement proceedings than the implementor in validity proceedings, he is on the faster road. It seems to be clear that the patent holder is better off.

The question is therefore how these two proceedings can be synchronized, either in terms of duration or in terms of outcome. That is precisely the question that occupied the panel.

One possibility for synchronization is already provided by the law: the infringement court could stay proceedings while awaiting a decision by the BPatG. However, as the discussion again highlighted, only a small percentage of the proceedings are stayed. This is true, although in most cases these patents - if challenged before the BPatG for validity reasons during infringement proceedings - are in the end partially or fully declared invalid by the BPatG. This leads to a considerable number of judgments for infringement although the patent is later declared invalid.

Another option would be to come to a quicker decision on validity. In this regard, Sec. 83 of the German Patents Act (GPA) is of particular interest. According to this provision, the BPatG informs the parties about the aspects which will presumably be of particular significance in respect of its decision. However, as to now this provision has rarely been applied, because in most cases the indication was made after an infringement judgement had already been rendered. As a reaction the Second Patent Modernization Act (2. PatMoG) has modified Sec. 83 GPA so that the indication "shall" (not must) occur within six months after initiation of the nullity proceedings. In addition, not only the parties but also the infringement court must be notified. This provision amendment will enter into force on 1 May 2022.

Part 1: potential problems

The first speaker was Léon Dijkman, who is no stranger to this debate. Dijkman sought to emphasize that there is no fair trial if there is no equality of arms, a principle going back to the Middle Ages.

In his presentation, Dijkman outlined the scope of principle of equality of arms as substantial part of the right of fair trial set forth under Article 47 of the EU Charter of Fundamental Rights and interpreted by the European Court of Justice (ECJ). This article applies also to the Enforcement Directive and consequently to patent injunctions. According to Dijkman, the ECJ's case law on Article 47 Charter suggests that patent procedure that allows for an "injunction gap" might constitute a violation of the equality of arms principle.

As a potential solution Dijkman proposed to lower the threshold for a stay under Sec. 148 GCPC by denying a stay only if the validity is more probable than the invalidity of the patent. When assessing the probabilities, the infringement courts should also consider decisions by foreign opposition divisions and decisions by the TBA or BPatG.

The second speaker was Dr. Stephan Altmeyer. Providing an industry perspective, he illustrated the need for (further) harmonisation from a practical perspective. He emphasized the risk of irreparable damages due to insolvency of the patent holder: if the implementer is sued on the basis of an invalid patent, the damages suffered in the time between the judgment in infringement and validity proceedings cannot be claimed back. He also called for courts to consider the risk of a later invalidation when determining whether the patent holder’s license offer was FRAND.

As a solution to the injunction gap, he proposed to cut back the competence of the BPatG, limiting it to the control of decisions by the patent offices while infringement courts should also be competent for the ruling on the validity of the patent in suit. For this he proposed to extend the tribunal with expert judges that have a specific technical background. The decision on validity by the infringement courts would then however have inter-partes effect.

Part 2: potential solutions

The second part of the discussion shed light on the advantages of bifurcation and on the means to eliminate the weaknesses of bifurcation from the perspective of the courts. The injunction gap also results from the efficiency of infringement proceedings which serves the interest of legal certainty and makes infringement proceedings relatively cheap.

The third speaker was Judge Peter Tochtermann, presiding judge of the 7th Chamber of the Mannheim Regional Court. For Tochtermann, the central problem of bifurcation is that infringement courts need to forecast the outcome of validity proceedings. This is a particularly difficult task in first instance proceedings, when the judges cannot rely on information from previous validity proceedings. They must therefore predict how the BGH would eventually decide upon this question.

As a possible solution he proposed to promote information transfer by exchanges of judges between the bifurcated systems, technical training and file sharing.

The fourth speaker was Beate Schmidt, former president of the BPatG. She outlined the reasons for the current length of proceedings before the BPatG: while new responsibilities have been conferred to the BPatG, the number of judges is stagnating or even decreasing. This also revealed a major obstacle to a possible exchange of personnel: limited staff and financial resources. While the BPatG recently had reduced the number of outstanding cases, the Corona pandemic has led to a new backlog with the consequence that long proceedings are to be expected in the next few years if staffing levels remain unchanged.

The fifth and final speaker was Dr. Regina Hock, the current president of the BPatG. She focused on the qualified indication according to Sec. 83 GPA. She pointed out that qualified indications under Sec 83 GPA are not meant to replace validity proceedings. In order to meet the deadline of six months, sacrifices must be made in the right to be heard. The possibility of a full hearing with rebuttals lead to extensions of the time limit and thus to delays. Therefore, as Hock pointed out, it is important to understand Sec. 83 GPA as a mean of support to the infringement court when deciding whether to stay the proceedings for concerns of validity.

After all the speakers presented and discussed their views with the audience, a participant that is well aware of the potential problems of the injunction gap made a stand for the German system of bifurcation. While recognizing the shortcomings, this system leads to fast and qualified decisions and keeps the court costs so low that even small and medium-sized companies do not shy away from court proceedings. He concluded that there are many good models, but the German model is still not that bad. We should give the new modifications a chance and first see what the effects will be before we change the model.

To put it in Frost's words:

Two roads diverged in a wood, and I—

I took the one less traveled by,

And that has made all the difference
."

[Conference report] Whither will bifurcation go? A critical discussion on Germany's bifurcated patent proceedings [Conference report] Whither will bifurcation go? A critical discussion on Germany's bifurcated patent proceedings Reviewed by Annsley Merelle Ward on Saturday, October 09, 2021 Rating: 5

8 comments:

  1. What justifies bifurcation?Monday, 11 October 2021 at 14:27:00 BST

    It would be interesting to know why Germany has at decided for a bifurcated route. Dealing separately infringement and validity does not seem logical.
    Normally, there cannot be infringement if a patent is not valid.
    The question is thus why such an injunction gap has at all be created.
    On the other hand, the German Supreme Court (BGH)is well known for its pro-patentee position.
    Requesting the German Patent Federal Court (BPatG)to deliver its decisions within a tight time schedule without giving it the staffing needed is not very coherent.
    The argument that by having a bifurcation the costs are lower only applies when the basis fee for infringement is way lower as the basis fee for nullity.
    The question to be answered is thus quite different: is the bifurcated system not unduly favouring the patentee to the detriment of a potential infringer?
    I would say the reply is positive and to reduce the injunction gap would simply be to order a stay if the validity is challenged. If it turns out that the stay was lacking a proper basis and is simply to gain time or even boils down to deceitful manoeuvres, the corresponding penalties for infringement could be increased by a certain percentage.
    It should not be forgotten that the judges at the BPatG are mainly technically qualified judges which can even return to the German Patent Office after having served on the BPatG.

    ReplyDelete
  2. In Germany, infringement is determined by the Länder. A patent is granted by the Bund (Federal state). It is not possible for the court of a Land to annul a property right granted by the Federal state, hence the infringement courts of the Länder are mainly concerned with the Infringement issue. Revocation can only be promulgated by the Federal Patent Court in Munich, with appeals to the Constitutional court.

    So it is not a matter of Germany "deciding" for a bifurcated route. Bifurcation is a hack to get around constraints imposed by the German constitutional settlement. A German correspondent might wish to "circle back" with more detail, and particularly to what extent the Infringement courts of the Länder are allowed to consider validity during the infringement trial (for procedural/case management reasons on a prima facie basis?).

    ReplyDelete
  3. Thanks for the explanations.
    The problem is thus a question of coordination between the judicial authorities of the Länder and the Federal Patent Court.
    I would nevertheless think that it does not bring much to decide on infringement before having decided on validity.
    This is the more so since both procedures end up in the Federal Court (BGH).
    The problem is to be solved, but this needs a political will.

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  4. The local courts are capable of deciding on the validity of a utility model on an inter partes basis. Since the validity of a patent would involve the same considerations, there is no real reason for patent infringement matters to consider validity at such a superficial level other than that because the patent is an examined right there is the presumption of validity.

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  5. As Patentee, it's great if you can have a positive decision on infringement and leave the tricky issue of validity for another year or two...!

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  6. "The problem is thus a question of coordination between the judicial authorities of the Länder and the Federal Patent Court."

    This is doe-eyed innocence, implicitly assuming that it would be a good thing for the gap to disappear.

    A DE patent has been examined by the mighty DPMA, and assumed to be valid from the point of grant. Analogously for an EP(DE). In fact, if the DE patent or EP(DE) has survived an opposition, the presumption is so strong that a preliminary injunction can be obtained much more easily.

    So the default assumption is that the patent is valid. Why would an infringement court need to bother itself about validity? It is being asked to adjudicate based on a patent that must be valid, by virtue of the patent's own existence. Questions of validity at that point are somewhat vulgar, and besmirch the reputation of the respected DPMA.

    Patentees in German industry, too, have not expensively and laboriously amassed portfolios of tens of thousands of DE patents each with a scope of protection measurable only in angstroms, only to be told that they may not enforce them when the time is right. That would be an outrage. Questions of patent validity are a trifling distraction to the main goal - that of bankrupting the competition.

    Think too of the respected lawyers of Oberkassel (Dusseldorf) or Solln (Munich) and the associated brave estate agents, car showrooms, housekeepers, decorators, gardeners, restaurants, au pairs, and private schools sustained by dint of honest exploitation of the injunction gap to the benefit of the clients of these lawyers, without fear or favour.

    No, the injunction gap is a great trickle-down success story of the modern German economy. Anybody arguing otherwise is simply jealous that they don't have the required monies to survive an 18 month preliminary injunction. Mind the Gap and zum Wohl!



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  7. The question is, how much is intent here, and how much is simply history.

    Until 1961 the patent office had "senates" (plus a board of appeal) to decide on validity. But since there is a right to have a court review decisions of an office, the Federal Patent Court had to be set up, and the senates were taken out of the patent office and turned into a court (any parallels to the EPO boards?).

    If anyone wants to change this, this would mean a major overhaul of the patent act and the institutions.

    Vice versa, the Länder would not accept moving infringment suits to the Federal Patent Court, as they would loose a cash cow of their judicial system (since the "Streitwerte" are often so high in patent matters)...

    ReplyDelete
  8. What about the validity of the patents granted by the EPO?Sunday, 17 October 2021 at 15:55:00 BST

    The problem is when you see decisions after appeal in opposition before the EPO, around two thirds if not more of the patents are either revoked or maintained in amended form.

    And more than often the revocation or amendment is due to documents which were available at the time of the search but were not retrieved during the search (even Art 54(3) prior art from the applicant!).

    It would be wise to wait for the result of an opposition when there is an opposition pending at the EPO before deciding on the validity and hence the possible infringement of the German part of an European patent.

    When extrapolating the figures from oppositions at the EPO which roughly concern 5% of the granted patents, it seems also advisable to wait the result of the validity examination of the German part of an European patent before deciding on infringement.

    I claim that when hit by an infringement action before a German court, it is clear that in most cases the alleged infringer will hit back with a lack of validity. The chances of succeeding on the validity side are quite good when looking at the prior art dug out by opponents.

    The EPO claims that its quality has improved since 2010.
    An analysis of the decisions of the BA in matters of opposition show that this is not, and by far, the case.

    ReplyDelete

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